Articles 6 Shortcuts to Retirement

June 22, 2016

Early retirement may seem like something only the wealthiest individuals of the world can achieve. As hard as it may be to believe, retiring early can be done (although retiring in your 20s or 30s may be difficult unless you create the next big social media craze and are worth a lot of money). Bear in mind that you’ll need to save more money to carry you through those added retirement years, and Social Security won’t kick in for a while. That is where careful budgeting—including expenses that may grow over time, such as increased health care costs and figuring out exactly how much you’ll need to retire—is crucial. (Need help with your finances? Navy Federal Credit Union offers financial planning assistance.)

Here are six shortcuts that can help you realize the dream of early retirement:

1. Max them out. That is, make the maximum contributions to your retirement savings, especially if your employer makes matching contributions. Current yearly limits for retirement accounts are:

  • up to $18,000 for 401(k), 403(b), and most 457 plans and the Thrift Savings Plan. Those age 50 and older can contribute an extra $6,000 in catch-up contributions (for a total of $24,000; this limit doesn’t include employer match).*
  • $5,500 for individual retirement accounts (IRAs). Those age 50 and older will be allowed an extra $1,000 (for a total of $6,500).*

2. Save in unexpected ways. If you live in a more urban area, biking to work can help you save over the costs associated with owning a car. Cable TV can also make a dent in your budget, so consider whether streaming services make sense for your needs.

3. Manage your credit debt and reap the benefits. Certain costs, such as health care expenses, are unavoidable. High-interest credit card debt isn’t one of them. Find a card with low rates and great rewards instead, and pay off the balance each month.

4. Get your partner on the same page. Make sure you both share similar retirement goals, agree to a more modest way of living and are willing to work diligently to pay off any debt.

5. Be your own boss. If you’ve always dreamed of owning your own business, maybe now is the time to go for it. Consider starting your business off as a side venture to see if it will be financially rewarding and if it has the potential to become something more full time and lucrative.

6. Consider a government job. Like military-related jobs, police officers, teachers and firefighters can be eligible for a pension after investing 10 to 20 years.

Check out Navy Federal’s online Retirement Center to help you achieve your goals, no matter what stage of planning you may find yourself in.

*Contribution limit for 2015, and is indexed to inflation for future years. Maximum contribution is $5,500 or your taxable compensation for the year, whichever is less. Non-wage-earning spouses of wage earners may also contribute to an IRA.
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