Friday, September 21, 2007

Business Week - Retiring Early Strategies: The Forties

Business 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 on Fridays during September, 2007.

Business Week recommended the following strategies for one's Forties and I included my brief comments in blue:
  1. Feed your escape fund. Continue to save ruthlessly at 20% or more of one's salary. I like the recommendation of putting the amounts from paid off loans into savings.

  2. Monitor your investments. Check that the one's investments are growing at least 10% per year. Although not technically correct, I include the amounts I save in the "return" calculation.

  3. Refine your retirement plan. I fully agree that most people should plan on needing 100% of one's final take home pay. Also, I plan to target on the low side of withdrawals (i.e. 4%) for the first couple years.

  4. Buy one's retirement home and use it as a vacation home. At this time, we are planning to continue living in our current house after retirement. To me, it makes more sense to buy a retirement home after selling one's current home.

  5. Start transitioning to post retirement work style. I would add to be choiceful on what one does. There will be ample opportunities and ample requests once people realize a person is retiring.

Overall, I would summarize the forties as "maximize income to get maximum savings and investment growth." I also would include having the right additional insurance - i.e. disability, auto, and renters/homeowners.

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

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

Copyright © 2007 Achievement Catalyst, LLC

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