Thinking about the future is always a little daunting. However, it’s always a good idea to consider your retirement plan, including what you would like to do in your golden years. Would you like to travel, or move to a quiet beach town, or downsize but stay close to family? Then there is also the possibility of retiring early so you can enjoy even more time to yourself. It’s certainly possible to do so. However, it’s crucial to have a solid plan in place so you don’t have the disappointment of financial shortfalls.
If early retirement is a goal of yours, we have gathered our top 5 tips to help you retire early!
1. Start Planning Now
You won’t be able to access your KiwiSaver balance before the age of 65, even if you retire early. Therefore, it’s a good idea to start planning how you will fund your early retirement before you can receive that KiwiSaver balance. The earlier you can start savings and investing outside of your KiwiSaver, the better. Consider opening and funding more than one investment account and also put aside savings each payday into a savings account with a high interest rate. It’s a good idea to chat with a financial advisor to help you choose the right investment direction depending on your goals, and how long you have before you retire.
2. Clear Debt
The best way to retire is to retire without debt. It’s important to make proactive steps as early as possible to pay it all off, so you can enjoy your golden years debt free. Start by creating a list of all the debts you need to pay. It might help to use a spreadsheet to easily keep track of their interest rates. Plan to pay them off in order of their interest rates, highest to lowest. Pay off the more expensive debt first so you can pay less interest.
3. Pay off your Mortgage ASAP
The sooner you can pay off your mortgage, the better. Once that mortgage is paid off, you will have more options and a lot more expendable income to play with – and strategically save or invest for your early retirement. Your mortgage repayments are likely your more expensive monthly bill. Think about how much money you will free up when you pay it off in full. It’s especially important to make sure you can pay off themortgage before you reach the age of 65 and leave work. You don’t want that stress when you are trying to enjoy your golden years!
4. Consider a Term Deposit
Term deposits can be a great way to establish peace of mind. They are a relatively safe investment that enables you to hold cash and protect your retirement savings. Term deposits can be a great way to store a portion of your income, and can act as emergency funds that you can access to avoid taking on debt during your retirement years if something unexpected happens where you need the extra cash. It can be a great safety net, offering you peace of mind that you will be protected if something sudden happens.
5. Cut Down on Expenses and Spending
It’s important to put steps in place now that will help you achieve financial security and wellbeing in your retirement years, and even help you retire early. Form healthy money habits now, such as creating a budget, and tracking your expenses and spending. One effective way to reduce your expenses, particularly your household bills, is to compare. When you compare your bills on a regular basis, and switch to a new plan or provider, you can unlock a wealth of benefits including savings, avoiding loyalty tax, and keeping up with market trends and changes.
Here at Money Compare, we have a range of comparison tools to help you compare bills such as your mortgage, personal loans, and insurances so you can find yourself the best deal for your unique needs. Our other NZ Compare brands enable you to compare broadband, power, and mobile.
When you compare, and empower yourself to make a fully informed choice, you are more likely to find yourself the best deals for you and your household’s unique needs. Find the best deals, and unlock savings that make a true difference, and free up some hard-earned money that you can save and invest towards your early retirement.
Need Help with Your Mortgage?
We have a range of resources to help homeowners navigate their mortgage. If you are interested in making changes to your mortgage, or would like to pay it off as soon as possible, and wish to seek help, we can get you in touch with a mortgage advisor who can offer free advice and answer any questions you may have. Simply click the button below and a fully qualified mortgage advisor will be in touch! You can also try our retirement calculator to help you figure out how much you need to save to have a comfortable retirement.
Further Reading:
Record Number of Homeowners are Switching Banks for Better Long Term Deals
