Retiring a decade before full Social Security benefits kick in is achievable without making punishing cuts to your budget.
” will yield millions of results, many of those about retirees who saved aggressively and exited the workforce before age 40., Americans who aren’t yet retired but plan to retire say they plan to leave full-time work at age 57, on average. That still qualifies as early — it’s a decade before the full Social Security retirement age of 67 — but it’s achievable without making punishing cuts to your budget. Here are five steps you can take to hand in your notice 10 years early.
But let’s say you want to leave work at age 57. With all the same assumptions in place, you’d only have around $570,000 when you retire, which isn’t enough to cover your expenses without drastically reducing your lifestyle during those later years. According to the calculator, to have enough to retire at 57, you’d need to save more than double — roughly 22% of your pre-tax income each year.
That’s a significant difference, but if you plan on retiring early, spending less and saving earlier in your career is especially critical because it gives your money more time to grow.According to the survey, more than 1 in 5 Americans say they don’t know much they will need to retire comfortably. Replacing 70% of your pre-retirement income is a common rule of thumb, but you can customize that for your circumstances.
For those retiring early, it may be a good idea to use a variety of accounts to save for retirement, including a Roth IRA and a taxable investment account. Contributions to a Roth IRA can be withdrawn at any time without penalty. Taxable accounts aren’t tax-advantaged, so that money is yours to withdraw whenever you’d like. Ensure you know the withdrawal rules for each account to avoid surprise penalties.
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