Millions of Americans have at least contemplated retiring earlier than they originally planned. Does exiting the workforce before you reach the traditional retirement age appeal to you? Good news! It is possible.
Experts recommend defining what early retirement looks like to you and determining how much you want to have in savings and investment accounts. Financial pros have found that most people will need 55% to 80% of their preretirement income to maintain their lifestyle in retirement. Once you have settled on an amount, you can develop a plan to build up to it.
There are many ways to save money for early retirement. Some are significant, while others are small but will add up over time. Following are several methods that you can incorporate into your daily life right away.
Max Out Your 401(k)
Some personal finance experts suggest saving at least 15% of your annual income for retirement. If that amount isn’t feasible, aim for at least as much as your employer will match since the company contribution amounts to free money. You also can contribute several thousand dollars to a Roth IRA each year, which allows your savings to grow tax-free.
Moving money out of your primary account automatically is an effective way to build your savings. Many experts recommend “paying yourself first.” One way to do so is by signing up for your employer’s retirement plan. Another is to use tools provided by your bank account, such as automated weekly transfers from checking to savings. A third option is to use apps that round up any purchases you make, and then that small extra amount is sent to a savings or investment account.
Switch To Free TV
Switching to over-the-air (OTA) television can also help you put more toward retirement savings. Not only is OTA television easy to watch, but it’s also totally free.
By switching to fully high-definition television broadcast over the air, you can still watch the local news and weather, live sports, shows and films. However, over-the-air TV is free. Everything is available from game shows and sitcoms at regularly scheduled times, special programs and movies, favorite shows in syndication and more. All you need is your existing TV and an antenna.
How To Switch To OTA TV
To find out what you need, take our short quiz to determine which antenna is best for you.
Though you’ll need some equipment to start off, these purchases are affordable one-time investments that can save you thousands over the coming years. Here are our top picks.
If you live in an urban area or nearby suburb:
$64.99 from Amazon
This highly-rated indoor antenna is designed to receive frequencies 50+ miles away from broadcast towers. It easily grips smooth surfaces like walls or windows for optimal placement to pick up as many channels as possible.
Recommended antenna if you live in a far suburb or rural area:
$130.20 from Amazon
This powerful antenna has a range of 70+ miles and can be installed inside, outside or in the attic. It has UHF and VHF multi-directional elements designed to deliver reception in remote areas.
Pair your antenna with an OTA DVR to record your favorite shows:
Here are the products we recommend:
- Tablo DUAL 128GB Over-the-Air [OTA] DVR: Record up to 80 HD hours and stream up to two free broadcast channels from your HDTV antenna simultaneously.
- Tablo QUAD 1TB Over-the-Air [OTA] DVR: Record up to 700 hours and stream up to four free broadcast channels from their over-the-air HDTV antenna simultaneously.
If you have an external hard drive sitting at home collecting dust, consider these options as cheaper alternatives. Then, connect your antenna and portable hard drive to these Tablo DVR devices and you’re ready to go.
- Tablo DUAL Lite: Equipped with built-in Wi-Fi, it lets you position the antenna and DVR for the best signal reception.
- Tablo QUAD: Record up to four OTA channels simultaneously. This model connects to your router rather than your TV, allowing you to stream live TV to any device.
If you need to purchase a portable hard drive, we recommend USB-connected portable hard drives (USB 2.0 or 3.0, 1 TB to 8 TB in size). These are the ones we recommend: WD 1TB Elements Portable External Hard Drive and the WD 2TB Elements Portable External Hard Drive.
Wipe Out Debt
Work toward becoming free of credit cards, auto loans and other debts that require monthly payments. Some financial professionals advise paying off debts with the highest interest rate first. Others prefer the “snowball” approach, in which you pay off the smallest debts first. Then, you move on to the next bill, freeing more income as you pay off more debts. You can decide which method will work best for you.
Reduce Utility Bills
The average U.S. household spends more than $2,000 per year on utilities. However, you can cut these costs every day with minor changes or improvements. For instance, you could save 15% on heating and cooling costs by air-sealing your home and adding insulation. Check air filters monthly and change them if they look dirty. When not in use, turn off lights and fans, and use power strips to turn off electronic devices.
Create Passive Income
Research ways to make money while you’re sleeping. One option is to invest in crowdfunded real estate or peer-to-peer lending. Other potential passive income sources include creating apps, renting out your space, pool or objects and selling digital products.
Invest In Your Health
Medical expenses for preventable conditions can cost thousands of dollars every year. For example, the American Diabetes Association reports that medical costs of people with diagnosed diabetes average $16,752 per year. However, regular exercise, kicking unhealthy habits like smoking or excessive drinking and losing even a modest amount of weight can reduce your risk of chronic disease.
If you can afford to pay for minor repairs and issues yourself, raising your insurance deductibles can help you save quite a bit, especially over time. For instance, you could save up to 30% on auto collision and comprehensive coverage by increasing your deductible from $200 to $500. Raising that amount to $1,000 could cut your bill by 40%. Homeowner’s insurance offers similar savings. Talk to your insurance agent and shop around to compare prices before deciding.
Clean Out Closets
You may want to downsize or relocate once you retire. Make money now by getting rid of your clutter and as a bonus, you’ll have less to pack or deal with later. Have a yard sale, sell your items on Facebook Marketplace or the Nextdoor app or list it with a consignment shop.
You don’t have to forgo vacations while saving for retirement. Instead, choose the most affordable times and locations. Look for last-minute deals, and don’t be set on a specific spot. Think of creative ways to enjoy the time, such as fewer crowds and unique photo opportunities.
Pick Up A Side Gig
Spend some of your spare time earning extra cash. Consider what you enjoy doing and find a side job that suits you. For instance, if you love working with your hands, you might enjoy doing odd jobs. If yoga helps you stay grounded, start a neighborhood class.
It will take some effort, extra work and creativity, but saving enough to retire early is possible. First, make a plan and then chase your dreams.