How to Retire Early

How to Retire Early
By Anna Vander Broek
Forbes.com - Thu Nov 4th, 2010 3:00 AM
EDT
You can live the dream and retire before
50.
Imagine living a life in which your suit is
one for swimming, your only appointment
is walking the dog and the most important
report of the day is on the Weather Channel.
Actually, this life isn't that hard to picture
because this is how many American's view
their retirement.
Now imagine living this life before turning
50.
It may sound fantastical, but there are ways
to retire young without winning the lottery
or having valuable options to cash out.
Savvy investing, smart spending and very
strict saving can pave the road for the
average American to find a way to live out
the dream of early retirement.
When planning for early retirement, you
must first understand just how much
money you are going to need. If you retire
at age 50, you could very well have another
35 years or more left to live. Americans in
their 20s probably won't have Social
Security or pension plans to lean on.
To understand how much money you'll
need after you say good bye to your nine-
to-five, take your pre-retirement income and
multiple it by 35 (assuming you'll live to age
85). For example, if you are living off $
100,000 now, you'll need about $3.5 million
when you retire. Not a small sum.
Saving is essential for most people who
want to retire early. Max out your 401(k)
and consider an IRA. Put money into safe,
long-term investments, and don't gamble on
the stock market.
To retire in your younger years, you'll have
to work for it in your much younger years.
In order to retire young without an income
of hundreds of thousands of dollars, you'll
have to live below your means, not within
your means -- and it's not going to be fun.
Don't buy a new car -- or even own a car --
or designer brands. Skip eating out,
smoking cigarettes and traveling. Even
consider lifestyle decisions like not having
children or only marrying someone with
your same financial goals.
If being painfully frugal isn't your ideal way
of life during your youth, you could start
your own business, which is one way to
manage early retirement.
Hire someone else to run the company
while you kick back and relax -- still
bringing in cash. Even if it's a small sum, if
you're able to continue "earning" your
spending money even after you're done
working, your savings will stretch farther.
However, there are never any guarantees in
business. It may be difficult to predict how
successful your idea will be and, if it is, how
long that success will last.
Not everyone has entrepreneurial instincts.
Instead, live out that childhood dream of
becoming a firefighter. Many government
jobs still offer pensions that usually
continue to pay a percent of your wages
after retirement and, in many cases, kick in
after just 10 to 20 years of service.
Unfortunately, as you grow older, your body
does too, which greatly increases your
chances of incurring health expenses. If
you're not working, it's up to you to pay for
poor health. A couple looking to retire at
age 65 might need to spend about $
200,000 during their retirement on health
care costs.
Your chances of pulling a Mark Zuckerberg,
the 26-year-old who created the
networking website Facebook and is now
worth $6.9 billion, are slim. And many of us
are not ready to join the police force for a
pension plan.
So, if you want security after the checks
stop coming, emulate oilman John D.
Rockefeller and start being prudent. Albeit a
billionaire, Rockefeller carried around a little
red book and wrote down every single
thing he spent his money on. You may have
a lot to save before you can say good bye to
the working world, but at least it's a start.

so, are you on the right path now??lets rock the day