Ric Edelman, founder of The Truth About Your Future, shared some steps Americans can take to achieve early retirement. The number one piece of advice is simply to spend less than you earn. Too many Americans spend more than they earn and turn to credit cards when they don’t have the cash available.
This creates a credit card spiral, which is a death trap. The solution is to spend less than you earn and avoid spending money you don’t have. The second key strategy is to increase your savings, particularly through your retirement plan at work.
Whether it’s a 401(k), a 403(b), or a thrift savings plan, many employers offer retirement accounts. However, most Americans are either not participating at all or are not contributing the maximum amount allowed. Increase your contribution to your retirement account.
Steps for early retirement
It’s a painless process since it comes directly out of your paycheck, often on a pre-tax basis. Many employers even match contributions, which is free money that can significantly boost your savings.
Aim to save about 25% of your income. This might seem daunting, but it includes your Social Security contribution, which is roughly 15%. Adding employer contributions and your retirement plan contributions, you can get close to this goal.
This includes your Social Security contribution, which, combined with employer matches, makes it feasible. The crucial point is to save more each year. No one regrets saving too much; the regret comes from not saving enough.
Save more each year, regardless of what you’re currently saving. You’ll thank yourself in the future.
