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The dream of retiring at age 55 is not always possible today with increased life expectancy and the rising costs of health care. However, it is still possible to retire early with some advanced planning and flexibility. If you are planning an early retirement, follow these guidelines.
DO: Live below your means
In order to retire early, you must live below your means in order for the math to work. You can't spend everything you have coming in and still expect to have money for your future. Rework your budget to live on a lower percentage of your income.
DO: Save early, and save often
The easiest way to accumulate enough savings to retire early is to start saving at a young age and save with every paycheck. The power of compounding interest works in your favor if you start your retirement savings in your twenties. Contribute the maximum amount to your retirement plans on every paycheck. When you hit age 50, IRS tax guidelines allow you to contribute more.
DON'T: Rule out a part-time job
You can still quit your full-time stressful job and retire while working a part-time job. Sometimes, a part-time job when combined with your savings provides you with enough extra income to manage your cost of living. Find a part-time job in a field you enjoy, so that it doesn't seem like work.
DON'T: Resist moving to a different place
If you live in a high-cost-of-living area, move to a different place to save on expenses. Consider an area where housing and taxes are cheaper. Moving to a lower-cost area enables you to stretch your dollars and live comfortably on less income.
If you are planning an early retirement, you must adjust your lifestyle and plan ahead. If you maximize your savings first and then work part-time in a lower-cost area, you have a greater chance of achieving your early retirement goals.