A Savings Strategy that Leads to Early Retirement
by John Bearss, Retirement Specialist
If you desire to retire early, you will want to tune in to the Retirement Minute over the next several weeks. Today, I want to share with you a savings strategy that leads to early retirement.
This week I saw an interesting article in the Financial Planning Magazine written by Larry Barrett called the 7 Roadblocks to Early Retirement and I wanted to share this information with you over the next several weeks.
These days, investors of all ages are understandably concerned about socking away enough income and making the best investments today to ensure a comfortable retirement later in life.
Only 20 years ago, more than half of all American workers said they were on track to early retirement, before they reached the age of 65. Today, only about 23% of Americans say they’ll be able to retire by that age.
Here is Roadblock number 1 – Not Saving Enough, Early Enough
The best advice is often free and surprisingly simple. This is the case with retirement planning: save early, save often, save consistently. It's a savings strategy that is easy to state but harder to implement, and that's usually the trick with great advice. It's surprising how few people actually stick to a rigorous saving schedule.
Adding cash to your retirement account as early as possible during your working lifetime is the single most important factor when saving for retirement. For example, a 25-year old, who funds a traditional IRA with $5,000 in 2011 which is the maximum amount allowed, and the investment earns 5% annually for 40 years, he will have almost $635,000 at age 65. If the account averages 10% a year, the total will be over $2,434,000.
So save early, save often and save consistently to give you the best chance of early retirement.
Thank you for joining me this week for your Retirement Minute.