Tall Boys at the Laundromat and Saving for Early Retirement (4 Video Links)

So, my washer broke and I had to take clothes to the laundromat.

It’s been years since I’ve been to a laundromat, and I didn’t realize that there was a system in place. The idea is to put your laundry in the washer, then walk across the street to 7-11 and buy a tall boy of Miller High Life (you know, the champagne of beers…).

Of course, the key is to drink the beer fast enough so it doesn’t get warm.

When you walk into a new situation, you need to learn the ropes, and that includes ways to save for retirement, and investing to retire early.

Can I retire early?

Even though you may still only be in your 20s or 30s, it is never too late to start planning for retirement- particularly if you want to retire early (before age 65).

People who start thinking about retirement earlier are often those who end up retiring a lot sooner. So, if you have plans to quit work at an early age, it’s important that you start to plan for that stage of your life as soon as you start earning a regular income.

The ability to retire early depends on a number of factors, including the market risk you’re willing to take, your investment costs over time (they can really impact your earnings), and how much you save to invest. If your a freelancer or self-employed, you can still create a plan to save for early retirement.

Ready to think about how to save for retirement, and how you will be able to stay financially stable without a job? Here are some key points to bear in mind:

 

Do You Budget?

 

First of all, it’s crucial that you establish a budget that covers all of your finances. This needs to detail what you have coming into your household on a monthly basis, and the regular expenses that you need to keep up with.

Even if you’ve had a financial setback, you can get back on your feet and meet your early retirement goal.

 

Change is hard

 

Creating a budget may require you to change- maybe to change a lot.

 

The reason that people don’t diet, don’t exercise, and don’t resolve bad personal relationships is that change is hard. As a result, we don’t really, truly change and grow unless we’re in real pain. When we’re at that point, the pain of change is less severe than that pain of not changing.

If you want to retire early, your goal may require you to change quite a bit.

Many retired people choose to relocate, so they can pursue hobbies and enjoy recreational activities. For example, Tellico Lake is a great location for the 55+ community in Tennessee. You can enjoy golf, water activities, and other hobbies in a beautiful setting.

Discipline and time

 

With discipline and time, I think most people can accumulate far more wealth than they think is possible. But growing wealth requires change- which is precisely why most people don’t make the effort. The changes I’m suggesting involve an old friend:

Delayed gratification

 

Some decisions are relatively small:

• Dropping a subscription music service and just listening to the free version (Pandora, for example).
• Making coffee at home two days a week, which means that you stop by Starbucks less often.
• Buying more generic products when you go to the grocery store and Target. (I’m not going generic on salad dressing, however).

 

Since these are smaller decisions, the amount of gratification you’re delaying is small. You don’t mind listening the commercials on Pandora (I certainly don’t- I just turned down the sound), and the coffee at home isn’t bad.

So, what do you get?

 

OK- so what do you get out of all this delayed gratification?

You build wealth- which can help you reach that early retirement goal.

The Magic of Compounding Interest

Compounding interest refers to earning interest on both your principal (original investment) and prior interest earned. You earn “interest on interest”, and it’s the best way to build wealth over time.

Here’s an example.

Assume that you invest $1,000 at a 5% annual interest rate, and you earn $50 in year one. In year two, you invest the original $1,000 and the $50 in year one interest. In year two, you earn ($1,050 X 5%), or $52.50. You earn $2.50 more, simply by reinvesting your interest.

Using this strategy over decades will allow you to build far more wealth than you would by taking out the earnings each year. Reinvesting is the key.

Get Help

 

There are plenty of financial experts out there who can help you achieve your retirement goals. If you are currently a federal employee, you can always get in touch with the Federal Retirement Services , which is an organization that has been set up specifically to help people in your sector.

Contact a financial advisor, who can research financial products to find out which are best suited to achieve your financial goals.

 

Are You Funding?

 

If you do speak to an expert about retirement,  they will probably advise you to start paying into a retirement plan (pension plan) as soon as possible. The more you save into a pension plan throughout your working life, then the more you will receive as an income once you hit retirement age.

 

If you’re a full-time worker, you should already be paying into a pension plan via your employer. Fund out what types of plans your company offers, if any.

 

Max It Out

 

Your pension shouldn’t be your only form of savings for retirement, and you should build a savings account to fund an account for pay for emergencies, such as a car repair.

 

You can also fund long-term investments that mature around the time you retire. If you’re 40 and want to retire at 55, for example, you can work with a financial advisor and plan to start taking money out of your investments in 15 years.

Find available dollars in your budget to maximize the amount you can save.

Get Started

 

The sooner you start implementing these ideas, the closer you’ll get to reaching your early retirement goal. You got this!

 

This post is for educational purposes only.

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl