The word \u201cretirement\u201d can conjure plenty of different images depending on who you\u2019re asking. Whether you see yourself exploring the world, casting a fishing line into a babbling brook, or simply relaxing at home with a good book, retirement means living life on your own terms.<\/p>\n\n\n\n
To create the life of your dreams, you’ll need to build your financial independence before you leave the full-time workforce. Here’s how to do it.\u00a0<\/p>\n\n\n\n
See how Quicken helps you plan for retirement. At the ripe age of 90, Hirumo Inada is a champion triathlete still competing in grueling Ironman competitions<\/a>. The Stones are still rocking stadiums well into their late 70\u2019s. Johanna Quaas broke the Guinness Record for oldest active gymnast at 86. Even Tony Hawk is blasting head-high frontside airs out of half-pipes at 54. <\/p>\n\n\n\n The theme here? Not only are people living longer, but they\u2019re actively pursuing their passions well into their golden years.<\/p>\n\n\n\n Early retirement today looks like, well, anything you want it to look like. Healthy lifestyles, increases in longevity, and strategic financial planning put people in the driver\u2019s seat to live the lifestyle they\u2019ve always dreamed. In many cases, people can spend up to a quarter<\/em> of their lifetime retired.<\/p>\n\n\n\n Whether you want to remodel a chateau, get involved with local activism, follow your favorite band on tour, or just chill and relax, retiring early is definitely achievable.<\/p>\n\n\n\n It\u2019s important to decide exactly when you want to retire and crunch a few numbers to see if that age is right for you. It\u2019s feasible if you can sustain yourself, even if it\u2019s before the federal retirement age when you can receive full Social Security benefits. <\/p>\n\n\n\n Take a look at your expenses to see where you\u2019re spending money and which bills will follow you into retirement age. You\u2019ll still need to pay any bills associated with homeownership or renting (think utilities, internet, etc.), as well as the occasional medical bill. And don\u2019t forget lifestyle purchases, like dinner, drinks, and travel. It\u2019s helpful to get an idea of what you\u2019re spending monthly to know what you\u2019ll need in the future.<\/p>\n\n\n\n To retire early, you\u2019ll need to be able to support yourself before your Social Security benefits kick in. Saving is crucial to early retirement \u2014 consider what your needs are and determine the amount of money you\u2019ll need to pursue the lifestyle you have in mind.<\/p>\n\n\n\n When you start thinking about how long you might need that nest egg to last, the idea of early retirement can sound intimidating. But with careful planning, a commitment to saving, and maybe a few sacrifices along the way, you can start building a foundation for early retirement. The goal here is financial independence, so you can enjoy your freedom with the means to support yourself. <\/p>\n\n\n\n These two simple questions can determine your retirement income. <\/p>\n\n\n\n If you want to retire early, the best thing you can do is to save, save, save. Setting aside extra money today to replace your working salary in the future is a surefire way to move closer to retirement. Also, be sure to build up a short-term emergency fund so you don\u2019t have to tap into your retirement to weather life\u2019s surprises.<\/p>\n\n\n\n Take a close look at your budget and see how much you can set aside for your retirement \u2014 it could be more than you think. The best rule of thumb is to set aside 10-15% of your salary, but if you can stash away more, you\u2019ll save up that much faster. Maximize your annual contributions to your 401(k) and IRA, and consider opening a savings account for your emergency fund. <\/p>\n\n\n\n Social Security benefits offer retirement income for qualified individuals and their families based on their earnings. Partial payout can begin at 62 for early retirees, but you won\u2019t receive your full benefits unless you wait until your full retirement age to claim that income.<\/p>\n\n\n\n Employer-funded retirement accounts are a great avenue to tap into \u2014 in some cases your employer will even match your contributions up to a certain amount. If you don\u2019t have access to a retirement plan through your job, that\u2019s fine too. You can still start your own tax-advantaged retirement account.<\/p>\n\n\n\n See how Quicken helps you track your IRAs, Roth IRAs, and 401(k)s. <\/p>\n\n\n\n A pension pool is a type of employee benefit plan in which employees regularly contribute to a fund \u2014 in this case, a pool of money \u2014 which is paid out to employees after they retire. Pensions are becoming more and more scarce in the private sector, but they\u2019re still common in government positions, teaching, and nursing. <\/p>\n\n\n\n There are two major types of pension plans: the Defined-Benefit plan and the Defined-Contribution plan. In a Defined-Benefit plan, retirees receive a predetermined amount regardless of their performance or contribution. In a Defined-Contribution plan, the benefits depend on the amounts contributed by both the employee and the employer. <\/p>\n\n\n\n A 401(k) is a retirement savings plan that\u2019s offered by employers throughout the United States. The name comes from the tax code that lays out the rules in the Internal Revenue Code (IRC). <\/p>\n\n\n\n In a 401(k), an employer sets aside part of an employee’s income in an investment account, typically a mutual fund, for the employee\u2019s retirement. The employer may also provide a contribution or even match the employee’s contributions.\u00a0<\/p>\n\n\n\n Similar to a 401(k), the 403(b) plan, also known as a Tax-Sheltered Annuity plan, is a retirement plan offered by public school districts and certain 501(c)3 tax-exempt organizations. As with the 401(k), the 403(b) plan lets employees make contributions to a retirement account.<\/p>\n\n\n\n Most 401(k)s and 403(b)s are \u201ctraditional\u201d retirement accounts, in which the employee\u2019s contributions are pre-tax contributions \u2014 that money doesn\u2019t count as income for tax purposes until they withdraw it during their retirement. In a Roth 401(k) or a Roth 403(b), the employee pays taxes on their full paycheck, including anything they contribute to their retirement account, which means they can withdraw that money in retirement tax free.<\/p>\n\n\n\n With both 401(k) and 403(b) plans, you should consider rolling your balances over to personal accounts if-and-when you leave your employer. Also, be prepared to pay a hefty withdrawal fee if you need to access your savings before you reach 59 \u00bd years of age. <\/p>\n\n\n\n The most common personal retirement accounts are Individual Retirement Accounts (IRAs). These enjoy many of the same tax advantages as 401k(s) and 403(b)s, and there are also both traditional IRAs and Roth IRAs, which affect when you pay taxes on that income. Roth IRA contributions are not tax-deductible, but withdrawals are tax-free and you don\u2019t have to pay capital gains tax either.\u00a0<\/p>\n\n\n\n Maxing out your 401(k) and IRA contributions is a terrific goal to strive for, especially if you want to retire early. The IRS limits the annual amount you can contribute to these accounts, and those limits change year by year.<\/p>\n\n\n\n Once you\u2019re maximizing those contributions, consider opening a personal brokerage account or branch out into other private investments, such as real estate.<\/p>\n\n\n\n Diversify your portfolio, build your nest egg, and retire when you reach your goal.<\/p>\n\n\n\n For most people, the prospect of quitting the daily grind sounds pretty great. What do you think \u2014 are you ready to retire? Let\u2019s take a look and see if you can sustain yourself!<\/p>\n\n\n\n Being able to see and track your financial position is incredibly important as you move into retirement. That\u2019s why Quicken<\/a> offers a complete picture of your net worth, including all your assets and liabilities in one place.<\/p>\n\n\n\n There\u2019s no \u201cone-size-fits-all\u201d retirement age. To figure out when you can reasonably expect to meet your retirement goals, start with Quicken\u2019s free online retirement calculator<\/a>.\u00a0<\/p>\n\n\n\n If you\u2019ve gotten this far, you might be sensing a theme.<\/p>\n\n\n\n Want to retire early? Cut down on spending wherever you can and save, save, save.<\/p>\n\n\n\n Budgeting is key. It keeps you aware of how your money is coming and going and helps you set money aside for retirement savings and investments. <\/p>\n\n\n\n Use Quicken to plan your monthly budget, set savings goals, and project your investment earnings to plan for your future.<\/p>\n\n\n\n
\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\nWhat does <\/strong>early retirement<\/strong> mean today? <\/strong><\/h2>\n\n\n\n
What do you need to <\/strong>retire early<\/strong>?<\/strong><\/h2>\n\n\n\n
How can you build enough income to <\/strong>retire early<\/strong>?<\/strong><\/h2>\n\n\n\n
\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\nSavings<\/strong><\/h3>\n\n\n\n
Social Security benefits<\/strong><\/h3>\n\n\n\n
Retirement accounts (pensions, 401(k)s, IRAs & more)<\/strong><\/h3>\n\n\n\n
\n Continue \u2192<\/a><\/p>\n<\/div>\n\n\n\nPension<\/strong><\/h4>\n\n\n\n
401(k)s & 403(b)s<\/strong><\/h4>\n\n\n\n
Personal <\/strong>retirement accounts<\/strong><\/h4>\n\n\n\n
A nice little <\/strong>nest egg<\/strong><\/h4>\n\n\n\n
So, can you <\/strong>retire early<\/strong>?<\/strong><\/h2>\n\n\n\n
Calculate your <\/strong>net worth<\/strong><\/h3>\n\n\n\n
Test a few different <\/strong>retirement ages<\/strong><\/h3>\n\n\n\n
Save, save, save\u2026 did we mention save?<\/strong><\/h3>\n\n\n\n
Create a budget<\/strong><\/h3>\n\n\n\n