Canada has recently raised its retirement age from 65 to 67, but even 65 years of age is an older age than many wish to retire at. As a result, many people look for ways to fund their retirements as early as possible. While early retirement will entail some sacrifices, some people find it to be a worthwhile goal. Here are a few tips for those who are considering trying to retire as early as possible.
Retirement investments increase in value over time, and the often outstrip inflation by a considerable margin. As a result, those who begin funding their retirements at a young age will be better prepared than those who start later. Further, consistent investments through one’s career are the key to establishing a significant retirement fund. However, there are still options available for those who cannot start saving at an early age.
Save on major investments
People often fail to consider the cost of their mortgages and how it will factor into their retirement plans. However, those who purchase a less expensive home will have more money available each month to put into their retirement funds. In some cases, it may be wise to sell your current home if your children have already grown and moved out, and relocating to a cheaper area may be a wise decision. While downsizing your home upon reaching retirement is an option to consider, it is generally better to pay less for a mortgage and invest more into a retirement fund.
Plan your future life
For those who wish to travel as much as possible upon reaching retirement age, it may be impossible to retire early. Those who are content with pursuing local activities, however, will be better prepared. Before making a decision to retire early, it is important to determine what your retirement will entail. While early retirement is an attainable goal for most, those who wish to have a relatively expensive retirement may need to adjust their expectations.
Consider taking risks
Investments are inherently unpredictable, but some offer a better potential return than others. For those who are beginning to save at a young age, it may be best to consider some relatively risky investments. Doing so can lead to substantial funds in the future, but there is always a risk of your investments losing value. It should be noted, however, that older investors do not have the time to recover from a failed investment and should stick to more dependable investments recommended by a financial advisor.
Consider partial retirement
Another option to consider is cutting back on your work schedule as you approach retirement age instead of retiring early. A 20-hour workweek may provide a good balance between having more free time while still being able to fund a future retirement. Further, doing so may give you the ability to travel more once you have retired. In addition, retirement can be a shock to some, and instantly ceasing all work can be overwhelming. A partial retirement eases this transition. Talk with a financial advisor to determine an appropriate partial retirement schedule.