How to retire early: Tips for young families

Starting to invest early and following some important guidelines can help you on the way to an early retirement.

With daycare costs, soccer practice and dirty diapers, you may feel like you’ll never reach retirement, much less retire early. But with some prudent decisions and careful planning you can raise a financially stable family and keep your dream of retiring early within reach.

Don’t forget to pay yourself
There are no scholarships or loans to help fund retirement. That’s why it’s so important to begin saving for your future at a young age. Although you may have a lot of expenses at this time of your life, be sure that you “pay yourself.” This means putting aside money each paycheck or each month into a savings or retirement account. It’s also critical that you don’t lose sight of your own future while you are saving for your children’s educations. Try to find a manageable balance of contributing money to a retirement account while saving for college tuition. If you need help with this, you might want to talk to a representative of your bank or a financial planner who can help you with budgeting, saving and investing strategies so that you can accomplish all of your financial goals.

Keep your expenses in check
The more money you spend, the less money you have to contribute to your future. Similarly, the longer you save and invest, the more time your money has to grow. That is why it is critical that you make purchases you can afford, keep you debt as low as possible and start saving and investing sooner, rather than later. To do this, you will need to know how to budget your money, keep your expenses low and use credit sparingly so that you can stay on the road to an early retirement.

Go beyond your employers plan
Does your employer offer a 401(k) plan? If so, and you make solid contributions each pay period, you get a pat on the back for being well on your way to an early retirement. But did you know that you can do more? You might want to look into IRAs, which are retirement accounts independent of what your employer offers. Also, depending on your age and career, you might want to look into annuities, especially if you have already maxed out your other retirement resources. If you have questions about what resources are available to you, and which are your best bets for an early retirement, you might want to enlist the help of a financial planner, who can help you navigate the rest of your course.