Can I Retire With 500K?
Most experts suggest you’ll need to save $1 to $2 million to retire comfortably. While that is a good rule of thumb, it certainly is possible to enjoy retirement without saving that amount of money. In many cases, 500K will be enough to retire on. However, you will need to work out a smart budget and live wisely for your present and future years.
Here are a few tips to follow:
- Save money early and often.
- Always maintain a budget.
- Choose the right location.
Save Money Early And Often
The more money you save during your younger years and working days, the better equipped you will be for retirement. Saving money early and often is a crucial step toward an early retirement. The good news is there are currently many ways to get creative and save money. Take advantage of any extra cash that may come your way, such as a work or performance bonus. Put your extra money into an IRA or a 401(K) plan. Check with your employer to see if they’ll fully match any contributions made toward a retirement plan. If they do, capitalize on this savings opportunity.
Always Maintain A Budget
Enjoy your current lifestyle, but always live within a strict budget. This is another key when building toward a happy and healthy retirement at 60. Keep all your basic living expenses, including housing, healthcare, utilities and transportation on a budget. Go back and look at your monthly or your past year’s expenses and come up with a budget based on those figures. Now, find out what you can cut back on. That might mean fewer nights dining out or vacations, but in the long run the budget will be well worth it.
Choose The Right Location
So, what exactly does this next step mean? Well, you may love the area you live in and trust the school systems, etc, but the experts suggest evaluating everything, and that includes location. Consider the idea of relocating to an area with lower housing prices, if possible. This move, of course, could also apply to your future retirement. With 500K in the bank, you may have to settle on location. You might not be able to live in the location of your dreams. But, if retiring at 60 is one of your dreams, make sure to follow these three steps.
Retiring Without A 401K Plan
There are a few ways to save money in the absence of a 401k plan. Whether you are unemployed, self-employed or simply seeking other investment options, there is always a plan for your needs. Let’s take a look at a few of the alternatives for savings:
- Open a solo 401K
- Save tax refunds
- Open an IRA
A solo 401k, also known as a self-employed 401k, is perfect for those not expecting to make a large yearly income. With a solo 401k, you are eligible to contribute twice, once as an employee and once as the employer. Participants are allowed to contribute their entire yearly earnings, as long as it does not surpass $19,500. When contributing as the employer, though, the amount will differ. You are allowed to contribute up to 25% of your earnings as the employer. Spouses of solo 401k contributors are eligible for this plan, as well.
Everyone’s gut instinct is to spend, spend, spend when that tax return finally comes back! But, if you can just hold off the urge to spend this money, it could pay off in the long run. Simply saving any tax refunds is the simplest way to invest in your retirement. IRS Form 8888 currently allows taxpayers to deposit refunds directly into two or more savings accounts.
Opening an IRA tends to be the most popular option for individuals without a 401k. There are a couple different IRA options available. A Roth IRA and a traditional IRA can both be great investment options. The only requirement for anyone opening an IRA is that they must be earning an income. However, if you are unemployed but married to someone earning an income, you are eligible for this plan. Self-employed workers commonly choose to open an IRA.
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