Strategies for Early Retirement Moves – Things to Consider
A comfortable retirement can depend hugely on the steps you are taking, during the different life stages. It is not too late to start planning for your retirement, if you have not already started doing so.
When you are at age 20s to 30s, you need to contribute a lot of money to the IRAs, 401-K’s, and other retirement savings programs. All this needs to be done while at the same time you may have other goals like starting a family or buying a home. Also, you will need to keep the debt from your credit cards and other debts at manageable levels.
If you don’t own a home, then this is a good option in your interest. A purchase of a home can be an expensive proposition, but it can be a very good investment and can give you some tax breaks and savings.
When you are at your 40s to 50s in age (mid career level) you can continue plowing as much as you can into the 401-Ks, IRAs, and other savings for retirement accounts. By this time in your life, if you have not purchased a home already, consider doing so, as it can be a source of equity and a safe place to live in during your retirement age. If you have current house mortgage plan, then you need compare the interest rate to current rates periodically. If the current rates seem to be better than the interest rate, consider going in for a refinancing option on your mortgage. As you draw closer to your age of retirement, you need to consider reducing the investments you are making on stocks, and add more of conservative, income-producer investments.
During your age of early 60’s (late career level) you can contact your financial advisor or consultant to help you determine how much Social Security pension you can get if you choose to “retire early”. You may also need to consult your legal/financial advisors about estate planning so that your property, assets, etc. can go to your heirs with a minimum of costs and hassles.
You may also want to buy long term care insurance or health insurance policies at this age level. You will want to reduce your existing debt as much as possible and then see if you can pay off your existing mortgage early. It is always important that you keep your debt level manageable.
During your actual retirement age, about one year before you plan to retire, discuss with a SSA (Social Security Administration) representative. Apply for the Social Security pensions and benefits package at least four months in advance. You will want to arrange your payments like the Social Security payments to be directly deposited into your bank’s checking account. You may also want to ask your financial consultant about whether you can receive your 401K money as periodic payments or as one lump sum.
At the age of 62, you become eligible for taking out a reverse mortgage on your home or property. This is when the lender gives you money monthly or as lump sum or as a credit line, in exchange for an agreement on your home. You don’t have to repay this money until you sell or move out of the home you are currently living in. You can continue to live in the same house for as long as you wish for. This can be a better option to get more cash from your equity invested in the home. This can be a good one to go for, if your children do not need the inherited property and they are all well-settled on their own with finances and investments and properties of their own.
