Friday, September 07, 2007

Business Week - Retiring Early Strategies: The Twenties

Busness Week's 2007 Annual Retirement Guide is dedicated to retiring early. The issue covers recommendations for what to one's 20s through 50s. My Wealth Builder will be discussing these strategies over the next few Fridays.

Business Week recommended the following strategies for one's twenties and I included my brief comments in blue:

  1. Tighten up spending; ratchet up savings. Target to save 12 to 20% of one's income.

  2. Put savings on autopilot. I would add to pay oneself first.

  3. Live beneath your means. This is a must.

  4. Start an "escape" fund to be used before retirement accounts become available at 59 1/2. This can also serve as one's emergency fund initally.

  5. Revel in the Roth because withdrawals are tax free. I would max out the matching amount of a 401K first.

  6. Watch the investment fees and keep them low. I would add invest in a good domestic and foreign diversified equity fund.

Overall, I would summarize the twenties as "Build a good foundation of habits." The recommendations were a good starting point for someone in their twenties. I also would include having the right insurance - i.e. health, disability, auto, and renters/homeowners.

For more on Reaping the Rewards , check back every Saturday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

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