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I have a great contributed post for you today on early retirement. It's for informational purposes only, so please consult a financial professional before making any money decisions. Got it?
Most of us dream of being free from work. Imagine the joy of having a monthly income without having to get up in the morning for a boring job. The trouble is fewer, and fewer of us are in a position to retire when we reach state pension age. The chances of retiring earlier than that might be slim to none. Times have changed, and pensions just aren’t what they used to be.
Let’s face it - too many of us owe too much money to even think about quitting our jobs.
Getting rid of any debts should definitely be your priority. The longer you have them, the more they are going to cost you. Don’t feel bad. Too many of us have had to borrow just to make ends meet. But if you’re in a better place financially now, then it’s time to clear the loans and credit cards once and for all. Sounds easy, but the reality of it might be more challenging than you thought.
If you’re struggling to clear high-interest loans, then now might be the time to consider a different approach. Contact the companies you owe money to and try to negotiate a lower rate. You can have a look at websites like www.DebtConsolidationLoans.com for more details on how to approach these lenders. Nobody likes the idea of borrowing money to pay a debt. But in some cases, it can be cheaper over the term to do so. It might make your monthly outgoings more manageable too.
As time goes on and you start to pay off these loans and cards, you’ll find that you have more disposable income. What you do with it is up to you, but it’s worth considering the long-term future rather than the fun you might have now. Good pensions can be tricky to find. You might decide to invest or find other options to fund your later years. Still, if you put everything away now that you can, you’ll have more chance of retiring at an age where you can enjoy being off work!
Remember the things you’ll need might be a lot different to what you need today. If you haven’t been taking good care of your health, you might need to spend a lot of money on healthcare. Save yourself big bills in the future by protecting and improving your health now. You might also decide that you want to live in a different neighborhood when you reach a more mature age. If you’re not willing to downsize, you might need to find the money to fund this.
If you are healthy and young when you retire, you’re more likely to spend more at this time enjoying it. You’ll be out at events and clubs. You might want to travel the world taking in lots of vacations. Funding this lifestyle will need to be carefully considered today. Put as much away as you can so you can enjoy that cruise or ticking off those bucket list items.
Speak to a pensions or retirement investments advisor. They can help you to determine how much you need for the lifestyle you desire. From there, they can let you know how much you need to put away and for how long. The longer you have and the more cash you put in, the more (in theory) you should get out. It might involve a few sacrifices now to ensure the future you want.
Of course, one debt you probably can do little about is the mortgage. You need that roof over your head. You might have a family that also needs that house. There are many options with mortgages. You can choose a fixed rate for two, three, or five years. This fixes the rate of interest on the loan so you know exactly how much you must repay each month. When the interest rates are low, it’s worth grabbing one of these for a long-term fixed rate. It can protect you from rises. Of course, at the end of the term, you will probably end up back on a variable rate. Then you need to shop around for another good deal.
Most mortgage lenders allow you to overpay by up to 10% without a penalty. This means you can pay off the mortgage a little quicker, reducing the amount of interest you’ll end up paying. It’s usually worth doing this if you can. Another handy tip to get rid of your mortgage a little quicker can be found at websites like https://www.thebalance.com/how-to-pay-off-your-mortgage-faster-1388092. Why not plow cash into a high-interest savings account during your fixed term? Then, when the deal is over, and you’re free to move the mortgage, you can pay off another chunk with the savings. This practice can help you reduce the term by several years each time you renew your mortgage deal. The monthly repayments might stay roughly the same.
It’s a good idea to be mortgage-free before you draw on your pension. You don’t want to be paying for accommodation when you’re living on just that. As an asset, you might consider selling it and using the proceeds to fund your retirement years. Some people have seen that money cover them, others haven’t. Sometimes it is too hard to leave the home you have made so many wonderful memories in. Other people let their kids’ families move in and offer them company and some caring facility at the same time.
You might be planning to retire at 55, but that doesn’t mean you will want to when you reach that age. You would need to speak to a financial advisor about what to do with any investments or pensions that mature before you actually retire. Locking them away for another few years can be a good idea, but also restrictive if you change your mind about retiring. Do you think you can be ready to retire early?