An important first step in early retirement planning is to have a goal in mind. If your goal is to retire living the same lifestyle that you are living at the time of your retirement, then you need to figure the annual expenses involved to live that lifestyle and how much income you need to cover those expenses and multiply that number by the number of years of your life expectancy.
Don’t forget to account for inflation and unexpected emergencies such as medical emergencies due to accidents or natural disasters.
You can do this calculation yourself or you can get help on the Internet with free retirement planning tools to make the math easier. If you can afford it, you can hire a professional that provides the best retirement planning advice to help you.
Choosing the Right Retirement Savings Plan
Having the right retirement savings plan will go a long way to getting you to where you financially will be able to retire. Luckily, there are many different types of retirement plans to choose from.
Some of the most popular plans include the Traditional Individual Retirement Account (IRA), Roth IRA, Keogh plan, and 401(k) plan. All these retirement savings plans offer some tax advantages that help the money invested in them grow faster than if the money was invested outside of the plans.
Don’t overlook some of the more traditional investment vehicles outside of the IRA, Roth, Keogh, and 401(k) plans, such as individual stocks, bonds, and mutual funds to diversify and spread the risk of investing. While the investments may not offer the same tax breaks as the IRAs and 401(k) s, they provide more options for your investment money.
Other types of investments you may want to look into include rental real estate and gold coins. But remember not to put all your money in one place and don’t spread yourself too thin.