You don’t necessarily need a lot of money to set up a financially secure retirement. If you’re willing to carefully manage your expenses, you may be able to retire with a modest budget.
Here’s how to retire well on less money:
- Know what you want.
- Start saving early.
- Don’t chase high-risk investments.
- Save above-average earnings.
- Reduce housing costs.
- Line up utility payments.
- Get rid of car debt.
- Move to a less expensive area.
- Stretch small items.
Know What You Want
Thinking about your interests can help you set aside funds to cover retirement activities. If you’re married, “Take the time to agree on what you want retirement to look like,” says Mike Smith, who retired at age 63 and currently lives in Windermere, Florida. That’s what he did prior to leaving the workforce. “We have traveled the world and will be leaving our family well set,” Smith says.
Start Saving Early
Putting aside funds well before retirement can provide the chance to build wealth through compound interest. “When money is saved and invested, then your money makes more money; then that money makes even more money,” says Marco Sison, who retired in 2015 at age 41 after working in business development for Erickson helicopters. “I funded my first retirement account at age 20.”
Don’t Chase High-Risk Investments
While some financial opportunities may look incredibly promising, diversifying savings and taking a slow and steady approach can lead to higher long-term results. “Don’t look at bitcoin, starting a new business or chasing individual stocks,” Sison says. “I keep my retirement savings in a bond and broad market ETF portfolio.” One rule of thumb to diversify involves subtracting your age from 100. The result can then be the percentage of your portfolio that is invested in stocks. For example, if you