Retirement Planning

Managing Expenses for Early Retirement

For those wanting to retire early, there are a few simple things you could do that may reduce expenses and decrease the amount of income you need during retirement.

Retire Early: 3 Budget Smart Tips That May Help You Experience Early Retirement

Today, there appears to be a gap between the age that many Americans anticipate retiring, and when they'll actually leave their jobs.1 The fact is, a slow to recover economy has many Americans wondering just when they'll be able to walk away from the daily grind.

If you want to take a more proactive approach to your retirement planning, here are three budget smart tips that may be able to help you to realize retirement much sooner than you realized.

  1. Reduce your monthly expenses - not matter how small.

    Okay, so reducing your expenses may seem like a common sense tip that everyone should know, but we're talking about how trimming even the littlest bill could make a big difference over time. For example, cutting $50 out of your monthly expenses may not seem like much, but instead, think of it in terms of $600 a year, $3,000 in five years, or even $6,000 in 10 years. That insignificant budget cut may payoff in the way of earning financial independence!

  2. Optimize your housing expenses where you can.

    If you're still carrying a mortgage and want to spend your golden years free and clear of mortgage payments, are you making extra payments each month that could help you chip away at that balance sooner rather than later? Any extra income that you can apply to pay down a mortgage loan can be beneficial when retirement planning. And don't put off taking care of major home expenses such as replacing a roof, siding, windows, carpets and appliances. It's better to make these changes now while you're still working.

  3. Figure out your transportation.

    In retirement, the daily commute will be a thing of the past. For this reason, try and resist upgrading to newer vehicle the closer you get to retirement. Having to replace a car with high mileage during your working years makes sense because after all, you need a dependable way to get to and from work five or more days a week. But when you retire, you'll likely drive a lot less. See if you can't simply maintain your current high-mileage vehicle as long as possible, and trade car payments for the dream of being able to retire early.

For more information on how to save for retirement, visit the Protective Learning Center.

1. 2014 Employee Benefit Research Institute survey.

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