One of the best gifts you could present yourself is a 401(k) acceleration plan to early retirement. In other words, the ability to boost your 401(k) savings so that you are better positioned for early retirement. The reality is, most of us can’t afford to retire early due to our financial commitments. According to a bloomberg article, Americans are retiring later to boost social security benefits.
According to U.S. News, people between Age 25 to 34 have a 401(k) account balance of $24,728. This age group saves at average rate of 5.9% of their income. However, people that are age 45 to 54, have a 401(k) balance of $129,051. This age group save at the rate of 7% of their income. That trend is consistent as the ages go up. In other words, folks tend to increase savings rate as they realize mortality is getting nearer. Here are a few things to be cognizant of as you put together a 401(k) acceleration plan to early retirement.
Boost your 401(k) acceleration plan by anticipating your finances better
Why exactly do we work for so many years knowing that we only live once? Is it because of the love of what we do? Perhaps. Is it because this is what we saw people who came before us do and thus feel like this is the norm? Maybe. I believe though that the reason why most people work for so long is because they want to stack up as much dollar as possible as well they should. One of the biggest monthly financial commitments probably for 90% of the people is their mortgage/rent. Now if you could eliminate that huge monthly expense wouldn’t that go a long way? The goal of this article as well as some other articles referenced in this article is just that.
Keep yourself honest by assessing how you stack up in comparison to your age group
You can jump in front of the proverbial line by getting crafty in terms of your finances. Precisely, your mortgage, so that you can get out of the rat race sooner than most. This blog talks about how I shaved 10 years off my mortgage term and save hundreds of thousands of dollars in the process. One of the biggest time and money saving approach was a DIY project. If you are into DIY projects, there’s a detailed step on how to pull off a basement renovation project.
Now the ultimate goal
The ultimate goal here is financial freedom. If you had the chance to read the blogs linked above on how I shaved 10 years off my mortgage then you’ll realize that financial freedom (or at the very least, mortgage elimination) is only a few actions away. In theory, if you were able to apply the steps in the article above and ultimately shaved 10 years or more off your mortgage term, you could remain in the work force. Now with no mortgage, and extra couple of thousands to “play with”, what could you do with it? How about accelerate your 401(k) plan so you can close the gap (assuming you are lagging behind….or just bump your balance up even if you are not)? Here’s the link to the U.S. New stats article that breaks down the 401(k) balance by age group.