Monday, September 20, 2021

Your 6 Step Guide For A 10-Year Retirement Plan


Know all the aspects of retiring early before you reach a decision.


Work hard, play hard is a concept glamourized by the fast and furious generation that we are. But who doesn’t love a lot of leisure time in hand spent doing what you love without any worries of tomorrow? Such is the pleasure that comes with retirement.

However, it is a general conviction that retirement is a concept of older age and that your youth is best spent preparing for the last few years of your life.

Here is what you actually need to hear-

Retirement has nothing to do with age, and the best days of your lives shouldn’t be saved for the end game.

With the correct planning, smart work, and sheer dedication for a few years, you can, without a doubt, retire in a decade, even less, if you start today. It doesn’t matter what age you are right now. All it takes is a mindset.

Even if you prefer to retire at a later stage, it’s always a good idea to start working on your retirement plan now. It’s always advisable to build a fire exit before the fire breaks.

Before we tell you how to do it, let us answer some of the questions related to early retirement that resonate the most among the current generation.

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What age is early retirement?

The commonly accepted age of retirement is 65. And therefore, any age before 65 is early retirement. You should know that if you are planning to retire early, you won’t be eligible for Medicare benefits for which, the qualifying age is 65.

Is it worth retiring early?

While it depends a lot on what an ideal life looks like to an individual, there are a lot of benefits of retiring early. This includes more time to travel and explore, pursue hobbies and even make a living out of it, more time to spend with family and friends, and doing things that you really love to do. It also comes with fringe drawbacks like lesser social security benefits and deteriorating mental health.

Can I retire at 62 and get a state pension?

Although you can retire at any age you like, however, retiring before the age of the State Pension program makes you ineligible to claim the amount. The exception to this condition is if you have a serious illness and your life expectancy is less than a year. In this case, you can claim the lump sum of your tax-free pension amount.

What is the IRS rule of 55?

If an employee is fired, laid off, or quits between 55 and 59 1/2, the IRS rule of 55 allows withdrawal of money from the 401(k) and 403(b) plan with an early penalty of 10%.


ALSO READ: 401(k) Plan Explained- Basics, Advanced and Everything In Between

In any case, the action plan that we have compiled for your retirement plan is what you need to hear and start working on today. If you know of better techniques or are practicing a plan that is working for you, tell us in the comment section below.

Your 6 Step Guide To Retire In 10 Years From NowWith A Lot Of Money

Step 1- Begin with assessment

Begin with gauging the depth of your financial health. What is your current state of earnings, what sources of earnings you have, what are your biggest liabilities, and what activities or purchases consume most of your income?

Look back to the investments that you might have made in the past, any government grants you are receiving or have received, and run through pending payments that you are entitled to receive. These can be payout for some freelancer project that you might have done in the past but didn’t get paid for or money that your friend or a relative borrowed.

While evaluating all of the things mentioned above, don’t forget to assess the taxes you are paying or are payable in the near future. That is how you will get your true earnings on paper.

ALSO READ: Here is everything Americans must know about Social Security

Step 2- Set a goal for yourself

Now that you know how financially strong you are, the next step is to make it clear what exactly you want. Are you looking to retire in 10, 15, or 20 years? Do you wish to live a modest post-retirement life or an affluent one? Do you want to live on your savings after retirement or do you still want to keep a few income channels open?

There are many factors that determine your retirement goal and, therefore, affect your plan and execution. After retirement, too, you would incur expenses and bills to pay off. How do you plan to do that, etc? Take a multi-dimensional look at what exactly you want from your retirement.

Step 3- Explore your income sources

One thing is for sure. If you are striving to retire in the next 10 years, you have to put in real hard work, which will definitely be the amount of work you don’t see people around you doing very often. Now that you know your current financial position and how you see your life after retirement, it’s time to bridge the difference between the two. This is done by working on your income sources.

In order to retire in a decade, a large sum of your existing income should go directly into savings and safe investments. This means you either have to start living frugally (which is not sufficient in this case) or start exploring extra sources of income.

The most basic suggestion in this direction would be to start freelancing apart from your regular job or business. Your Social Security benefits are another factor you need to be vigilant with, as they would make up for a decent portion of your post-retirement funds. Make sure you are covered under pension plans if eligible.

Step 4- Eliminate your debts

Nobody built castles on loaned money. This holds equally true for your retirement plan. No matter how much you save or how much you expand your income stream, all your money will one day go down in the repay funnel if you ignore the pile of debts that you have collected.

Debts amplify with time (unless you were lucky enough to find a benevolent lender who doesn’t charge you interest). What you borrow, you always end up repaying more. This repayment value increases with time. Therefore, your first priority should be to pay off any debts that you have acquired and start living a life without borrowings.

For the inevitable expenses like your wifi and telephone bill, set the auto deduction option from your salary account. This way, you won’t accumulate any liabilities for later.

Another thing you need to pay special attention to is your credit card debt. Americans are increasingly burying themselves under credit card debt. This debt comes with a high-interest rate. Once you make it a habit to settle your credit card debt on time, you will notice a drastic improvement in your financial handlings.

Step 5- Invest, invest and invest

Leverage the power of compounding to your advantage. Saving is a great idea. However, you can consistently achieve that extra mile by putting that money in your bank account to work. When we say invest, we don’t only mean retirement plans.

Though there are a lot of retirement investment options like 401(k), IRA, 403(b), 457(b), etc., that are also state-protected and highly safe, however, you shouldn’t limit yourself there. Go the extra mile and start researching investing in mutual funds, stock market, SIPs, etc.

ALSO READ: 5 mistakes that the ultra-rich(s) avoid while investing

For this, you first need to follow a very crucial process which is, gauging your risk-taking capacity. Even though with the right research and professional advice, you can always make safe money in these markets, if you are an amateur in investing, don’t blindly put in money. In this case, go for a professional, trusted financial advisor, which is also our next step.

Step 6- Keep a financial advisor handy

Unless someone has millions or billions in the bank account to manage, it is rare to find people who believe in the need of having a financial advisor. This is the mindset you have to do away with. To fulfill a financial vision, especially like this (retiring in the next 10 years), it is always a great decision to invest in resources that can help you achieve that vision.

We all might have plans with our money, but not all of us are experts in money management. Your retirement portfolio deserves extra attention since the key is to make it risk-averse. Your assets can earn you savings for your 10 years plan, but they also have to be allocated in the safest manner possible.

However, choosing the right financial advisor is also a task that would require good research. Most financial advisors care about their commission and, therefore, may suggest investment plans that might be unfit for you.

Check out our guide to choosing the right financial advisor near you.

And the final tip

Stay consistent and determined. Whatever steps you take in a few years from now will build a lifetime of comfort for you. Don’t distract from the decision that you have made and practice perseverance. The current world is designed to feed people’s pockets by serving them temptations like junk food, shopping, expensive hotel stays, and more. If you are really serious about the 10-years retirement plan, consider it your absolutely essential bet to stick with the vision through thick and thin.

Tell us in the comments if you also have better retirement plans.

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