Can You Retire in Five Years

Wednesday, August 22, 2012

Can You Retire in Five Years

Everyone who's ever worked has a daydream about retiring. No matter what you imagine your retirement to be like--Mediterranean vacations, working in your garden, or riding your chopper across the country--you can't get there without good financial planning. If you're in your 40s and 50s, don't have a retirement plan in place, but are still wondering whether you can retire in five years, this article is for you. Here are some tips to keep in mind.

Where Do You Want to Retire? 

Many people are choosing to retire in low-cost countries such as Mexico. Here's the big advantage of foreign retirement: You can live comfortably on either a fixed income or a one-time cash infusion from an event like a home equity loan, home sale, or business sale. Remember, there are two parts to the retirement equation: How much money you can raise, and what your cost of living is. Retiring abroad, or even in a lower-cost part of the U.S., automatically means you can retire with less. That's why you should give serious thought to where you want to retire.

What are Your Assets? 

There are many people in their 40s or 50s who might not have a retirement fund, but who have substantial equity in their homes. Now that the housing market is rebounding, you might not need a major cash infusion between now and retirement. If you have substantial equity, are debt free, and invest in blue-chip stocks for annual income, you can subsidize retirement in five years.

Can You Develop Passive Income Streams? 

In the ideal retirement scenario, you receive passive income--that is, money for nothing. Social Security is passive income, in that you collect it without having to work. But there are other effective ways to add passive income to your retirement plan. For example, if you have a house, you can rent all or part of it. If you own your house outright and can collect rent for the basement or a guest house, the passive income from your tenant alone might be enough to finance a no-frills retirement (especially if you are also collecting Social Security). 

You can also pick up passive income by re-investing proceeds from a home sale in a mutual fund or other investment vehicle. Particularly entrepreneurial retirees can set up a home or small business, hire employees, and live on the proceeds.

Have Your Considered a Working Retirement? 

A lot of people surely fantasize about a retirement in which they have enough to live on for the rest of their lives, no working obligations, and no debt. This scenario is an ideal one; it can't be achieved by everyone, and certainly not by people who aren't willing to wait and plan 30 years or more for their retirement. 
An intriguing option is the working retirement, in which you can scale your work down to half time. People who go from a lifetime of working to stopping work completely can be subject to depression, divorce, and even early death. No one's saying you have to work your way to the grave, but a working retirement can add substantially to your leisure time while also providing you the material and mental comforts that come with working.

Start Saving Now

Pulling off retirement is ultimately, a triumph of planning. The vast majority of us aren't fortunate enough to spend freely and still retire. If you really want to retire, ask yourself whether you're willing to defer the pleasure of needless expenditures today in order to enjoy retirement down the line. If so, then start saving today, 

About the author:

The article is written by Lindsey Judd-Dembiczak. She writes on finance and also offers information and guide on life insurance.


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