How Anyone Can Retire In 10 Years (Or Less!) Surprisingly, it’s not that hard.
It doesn’t require hitting the lottery or inheriting a windfall from ol’ Aunt Myrtle. Similarly, you don’t have to become a brilliant investor or possess any unusual skill. Also, the title claimed “anyone” can do it so the strategy has to be repeatable and predictable. We’re talking science – not random luck. In a word, the answer is “frugality” – extreme frugality by most people’s standards – accompanied by basic investing. Anyone can do it, but almost nobody will… and therein lies the rub. Let’s start by proving the theory with mathematics, and then we will explore the rest of the strategy in greater depth… How The Math of Saving Your Way To Early Retirement Works Let’s play with some simple equations to illustrate the point… We will assume $48,000 per year earned income to keep the taxes low and the math easy.
(BTW – the actual income level is irrelevant to the calculation as you will see below so use whatever income works for you. Quieting the Naysayers. How to Retire When You Have No Retirement Savings. Unless you're Rip van Winkle and have been asleep for the past 20 years, you know about the paucity of Americans' retirement savings and their resulting lack of confidence in their ability to retire.
So if you're one of the millions of boomers approaching retirement age with low to no retirement savings, should you just wring your hands in despair and give up? No way! You'll just have to be resourceful, and make the best use of the assets you have. Let me offer an example of how you can be creative to have a good retirement. Suppose you're part of a married couple, both age 60, you're earning about $75,000 per year, and you've earned a similar amount throughout your career, adjusted for average growth in wages.
In this case, your Social Security income at age 66, which is your Full Retirement Age (FRA), will be roughly $2,000 per month. Beating the Averages And there are a number of ways your situation can get better. Don't Spend it All in One Place. Steps to Take to Avoid Retiring in Debt. Two Changes That Will Improve Your Odds of Retiring. If you're over age 50 and worried about your retirement, consider making two changes that could significantly improve your odds of retiring.
Ten years ago, I used to hear lots of people talking about traveling the world, buying vineyards with their Cisco (Nasdaq: CSCO - News ) stock, and endowing their Alma maters with legacy buildings bearing their names. Well, I don't hear many people talk about those things too much these days. But just because you can't get a building named after you, doesn't mean you can't have a secure retirement. If you're over age 50, and feel like you're behind with your retirement goals, you need to make a realistic assessment of what's achievable.
For many people, the lifestyles they're leading while working won't be supportable by the income they can generate from their retirement savings at age 65. That means you've got to change your retirement goals. 1. First, consider how much of an impact working five more years could have on your retirement. 2. Start With $10,000 and Retire a Millionaire. The 7% solution: Let money and time work for you, no matter your age.
The millionaire next door could be you. All it takes is money and time; it always does. But what this really means is you have to save money over time, and that's where so many of us struggle. Reaching age 65 with $1 million saved requires strong discipline and sustained effort. You need to recognize the importance of starting early and putting money away regularly. It can be done -- even if you start with just $10,000. "Whether you're 25 or 45 or even 55, you've got to start somewhere," said Nathan Dungan, founder of financial education firm Share Save Spend. Call it a 7% solution. "In order to save, you have to understand your spending," said Eric Kies, a financial adviser with The Planning Center, an investment manager in Moline, Ill. Of course there will be bumps along the road -- potholes, even, that challenge your resolve. 25 Years Old: Starting Out Forty years is a long time.