5 Tips to Retire Early

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After you have been in the workforce for at least a month, it doesn't take much convincing that retiring early would be a wonderful. The years pass by faster and faster as we age and if you don't start planning today, you could come up short when you hit the average retirement age of 65.  Mastery offers up five helpful tips on how to save a nest egg big enough to exit stage right from your career as soon as possible.

SAY YES TO 401(K)
There is no easier way to get free money than from your employer via a 401(k) or 403 (b) matching program.  A 401(k) also helps to lower your taxable income so you can join the 47% of Americans that Mitt Romney doesn't care about and avoid paying federal income taxes.  Most U.S. employers offer a match of 1 to 6% on the first 6% of your deferment.  Take them up on it even if you only want to elect 1% to your 401(K).  If you defer 1% and your employer matches 1% you are at 2%.  It is easy math and the only 'free money' you are going to get to help you retire ASAP.

 

If you decide to change employers, roll your 401(k) it into an IRA or ROTH IRA (more on that here).  Keep in mind that in 2012 you can contribute up to $17,000 into your 401(K).  Can't afford to defer $17K a year?  Consider that saving $17,000 a year pre-tax is around $210 per week after the tax savings are factored in.  If you can swing it, that $17K will save you approximately $6,000 in federal and state income taxes each year.  That $6K may get you out of paying federal income tax at the end of year.  That means you to could join the 47% that Romney wants to terminate.

 

Get yourself a Tradeking or Zecco account so you can keep those commission costs low. If you are a frequent trader, commission costs can really eat into your portfolio. Both Tradeking and Zecco offer $4.95 trades - some of the lowest in the industry.

 

 

There are so many personal finance resources on the web, it's insane. Try out Mint.com, where you can centralize your banking and see exactly what you're spending all that hard-earned cash on. Mint.com will auto-categorize your spending so you can see charts and graphs of how much that latte is really costing you. Users can also set up budgets and goals

LIVE IN A DUPLEX OR TRIPLEX
Buy a house, rental home, or better yet - a Triplex.  If you can score a Duplex or Triplex then you can qualify under a residential mortgage by living in one of the units and rent out the other one or two.  Becoming a slumlord and living in your own duplex or triplex can greatly lower your taxes.  Talk with you accountant to make sure you take advantage of all the write-offs. Besides writing off mortgage interest, property taxes and mortgage insurance you can also qualify for depreciation and the other deductible expenses. 

 

If you are willing to live in the multi-unit property than you can qualify for a residential loan at the current record low rates.  In our lifetimes, there will probably never be a time again when interest rates will be this low.  Strike while the iron is still hot and buy at record low rates and record low property prices.  Get a 30 year mortgage - if you pay off the loan before you retire you will be sitting pretty on a revenue producing machine.  Your fully owned duplex/triplex will provide you with monthly income for as long as you live.  Retire and manage your multi-unit property and collect the tax deductions from being a 'real estate professional'.

BEAT YOURSELF UP AT WORK
This could get your out of your job tomorrow.  Go bat -hit crazy like Edward Norton did in David Fincher's 1999 masterpiece Fight Club.  You are going to have to do this in your Boss' office so it's credible he/she did it vs. a massive act of masochism.  If you can pull this off you are guaranteed a huge severance that could provide for an instant retirement.

Here's the visual for help:

Shitting yourself while laying on the ground almost unconscious is extra credit.  If you smell like poop, they will have to get you out of there faster.