While it can seem difficult to get ahead with your finances, there are many people dreaming of retiring early, and many people succeeding at that. While most people work until their mid-sixties, early retirees are quitting the rat-race in their fifties, forties, and in some cases even their thirties.
Whether you are seeking early retirement, or simply getting an early start on your retirement funds, there are a few tricks you can rely on to get your finances in order.
Hustle for Extra Cash
The number one way to have more money in retirement is to have more money now – assuming you don’t go on to spend it elsewhere. Most people receive a basic ‘cost of living’ raise each year, which has nothing to do with their skills as an employee, it’s just simple economics. However most people have never considered asking their boss for a raise. In many cases when working for an employer for more than a few months you will pick up more responsibilities – if pitched to your boss correctly, this can lead to a pay rise.
While most people focus on their employer as their one and only source of income, we only spend 8 hours of each day at work. After adding in a couple of hours for commuting, and a few hours of sleep, most of us could find a spare hour, or half an hour in a day. With half an hour a day you could set up an online business, pick up freelance work, or fit out your house to pet-sit or rent out a room on Air BnB. With the right side hustle you could pull in thousands extra each year to put towards your retirement.
Start a Retirement Account
Check with your employer to see what they offer in the way of 401(k) accounts. A basic 401(k) account is set up by your employers as a retirement savings and investment plan. You can decide how much of your pay check is taken out, which makes a great way to save without the temptation to spend, because you never see the money.
There are two big benefits to an employer sponsored 401(k). Firstly (and in all cases) any money deposited directly into your 401(k) is not taxed until you withdraw it. Depending on your tax rate this can mean anywhere up to 40% back in your pocket, with absolutely no effort from you!
As a second, even bigger bonus, is that in some cases your employer will match how your 401(k) contribution, up to a certain amount. Check with your employer, and take advantage of whatever free money they are offering.
Reconsider Your Spending Habits
Finally, there is no point in making more money, or upping your investment account contributions if you continue to spend in the same way. The quickest way to bulk out your retirement accounts is to spend less, because not only does it free up money to save and invest, by lowering your living costs, you will need less when you finally hit that magic retirement age.