5 steps to retire when you want

This five-step plan will help you choose your retirement timetable and get you there on schedule.

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Mar 4, 2014 7:30AM
Here's the path to retire on your own terms, in 7 steps:

1)  Pay off your debts as fast as you possibly can.  If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it.  If you want to buy a car, get a reliable beater.  Forget about buying a house until your debts are paid off.

2) Once you are out of debt, stay out of debt. The only exception to this rule is a vehicle and a house. If you want to get a nicer car, buy used and be able to pay it off in a year or 2.

3)  If you are going to stay in the same spot for at least 10 years, buy a house, preferably with at least a little bit of usable land.  An acre is good, 5 acres is better.  Take the amount you are pre-approved for and cut it in half - that's how much you should spend on a house.  Come to the table with at least 20% down and make a couple of extra mortgage payments every year.  If you're going to be transferred or relocate every 5 years, forget about buying a house and rent instead.

4)  Develop multiple revenue streams.  Do contract work.  Start a business on the side.  Invest in a business as a silent partner.  Raise chickens, breed dogs or grow apples.  Build websites. Buy and sell antiques.  Acquire rental property.  Sell something that generates residual income.  Learn to play the currency markets or trade stocks.  Do whatever you can to generate income from multiple sources.

5)  Grow these multiple revenue streams to the point that they generate enough consistent and reliable cash flow to replace your current income.

6)  Make as much as you can.  Save as much as you can.  Give away as much as you can.

7)  Retire!- the sooner, the better.  Be sure you understand that "retirement" doesn't necessarily mean you stop working, it just means having the freedom to do what you want to do, when you want to do it.

Don't be foolish and fall into the trap of trying to measure your wealth by the value of your assets. Markets change.  Valuations fluctuate.  Instead, measure your wealth by the amount of cash flow your assets consistently generate.  
Mar 4, 2014 9:03AM
I started putting money in an IRA at 21 and I'm just about to turn 60. Back then IRA had just come out and the formula then was if you put the max allowed in an IRA every year you would have a 1 million dollars at 60. Well I've put the max in every year and there was about 10 years were I had a Sep IRA that I put in a lot more and I still haven't hit a million yet. I've been invested with Vanguard all this time but all those recessions over the years really set you back. They say buy and hold is the key but this last recession is the first one that I sold off before the market tanked and bought back in before it took off again. Otherwise I wouldn't even be half way to a million dollars. The theme of this whole post, Don't always believe all the B/S that is thrown out there. You can write up all the retirement plans you want, 40 years is a long time to try and stick to a plan, **** happens!       
Mar 4, 2014 12:19AM
When you have enough assets and income that you no longer need to work, retire.  When you can no longer get a job that pays more than sitting on your backside, retire.  When you can no longer get a job, you ARE retired.  I think I've covered the three steps to retirement.  End of story.
Mar 4, 2014 1:53PM
Does no one at MSN know how the tax code works!?!?

"For example, if you withdraw $60,000 from tax-deferred accounts, you could end up paying $15,000 or more to the IRS if you're in the 25 percent bracket, and you may owe state taxes, too."

NO!!!  Your income is taxed on a progressive basis - for a single filer in 2013, your first $8,925 is taxed at 10%.  The income from $8,926-$36,250 is taxed at 15%.  Only the income from $36,251-$60,000 would be taxed at 25%.  This results in a tax burden of $10793.75 or an effective tax rate of just under 18%.  Simple errors like this make me question any retirement advice from this site...
Mar 3, 2014 9:51PM
I don't need no stinking retirement plan.  You just save everything you can afford to save until you got enough in your retirement accounts to quit (I mean retire)!  That's what I did!  One day I decided I had enough and that was that!  If you can't figure all that out on your own, you probably should not be thinking about retiring anyway!   It helps to only work for a company that offers a pension and a 401K!  I wish I started adding to a Roth IRA sooner than I did but better late than never I suppose.   I quit four years ago and haven't looked back.  The ACA makes health care premiums much more affordable now than when I first walked away but it isn't free so you might consider limiting your income in retirement in order to take advantage of subsidies, at least until you reach medicare age.  My health care insurance premium went from $1054/month to $87.06/month after I dropped my pre-Obamacare insurance and got something through the healthcare.gov website at the beginning of 2014.  Medicare still several years away for me.  But, it's not free either.  However, my free time is now priceless!
Mar 8, 2014 11:44AM
Don't  dawdle  on  retiring  if  you can afford it.    My husband  I   thought  our  retirement  would be filled  with  travel  and enjoying  our selves.   two  years after I retired  he came down  with pulmonary  fibrosis.     Now  we spend  our time  running to and from  Dr  appointments  trying to get to town and back  before his  oxygen tank  runs  out.   Had  we known   his lungs were failing  I would have retired sooner.
Mar 4, 2014 9:41AM
It is odd that we begin to penalize people for retirement savings at such a low level,  $129,000 for singles, $191,000 for joint filers.  Those are good incomes to be sure, but hardly rich.  Saving for retirement should be rewarded far in excess of those amounts, like up to $1 Million.  Saving for retirement is a good thing, and should be encouraged.  The point at which traditional IRA contributions are non-deductible are quite low as well.  Many continue to contribute, cannot deduct those contributions, and must then pay taxes on their withdrawals (traditional IRA).  If you are truly wealthy, sure, but those income levels are far below true wealth.
Mar 8, 2014 10:25AM
Step number one should be Weight Watchers. Over 75% of adults over 60 are overweight and headed for a long suffering retirement. When it comes to your health, there is no "catch-up" savings account. Unlike poor health habits, turning around a poor savings habit is a piece of cake.
Mar 7, 2014 6:59PM
Not one mention of living below your means?  I know people who putting 12% in 401k's but are drowning in credit card debt.
Mar 3, 2014 8:40PM
The five steps; save, save, save, save, save.  Or have a two pension household, this can be done even while in the 15% tax bracket.
Mar 8, 2014 5:15PM
My first year economics professor back in 1966 departed some works of wisdom on a roomful of pimply faced hung over 18 year olds: told us to close our eyes, place yourself around 65 and look back, what do you see.  I saw credit the reason to have to put off or never retire.  Never used much credit, saved 20% of what I made, bought a new car every fives years or so after saving for it, paid my house off in three years.  Never did have what would be considered a high paying job, just lived on less than I made.  Retired four years ago at 62 and have enough to live longer than I will with a calamity or two thrown in along the way.  Think ahead and it's easy, look back and it's hard or impossible to catch up.
Mar 8, 2014 5:03AM
Everyone here is getting it right , get out and stay out of debt and save ! Live Well Also .
Mar 10, 2014 2:43AM
I retired at 52. How I did it is that I lived well below my means. While all my friends, neighbors, and associates played and spent a lot of their money on new cars and gadgets and things I saved and invested. I was always ridiculed for what they said I was "cheap". Today, just five years after retirement my net worth has more than doubled and today I never worry about money. I still am thrifty with my money .Problem is, I found that most people follow the herd and because of that they all get the same results. We live in a culture of greed and lust and are told from birth to consume as much as we like. Then when we get older we find we cut ourselves short. Self control was never part od the American ideal. Hence the results of our overindulgence. Early retirement is possible for most Americans. The word no just needs to used a  little bit more in our vocabulary. My favorite book is "The Millionaire Next Door". It talks about the exact principles I've discussed. I recommend it to all who want a better financial outcome. Happy Investing!
Mar 3, 2014 9:54PM
Save and do not get into anymore debt. Pay off all debt that you can.Someone spoke about having real estate rentals. If you have great paying tenants, God Bless you keep them, until that goes south. Then sell and get into something you do not have to deal with on a monthly basis.  I have a friend who is 73 years old and he had to remove a dead beat tenant recently,had to repair and clean the unit and get a new tenant. He has two empty one bedroom units in Las Vegas which we will have to help him sell. He is paying a monthly HOA on those. Real estate can be good but one must be very careful.
Mar 4, 2014 3:27PM
From what I can see and hear out there.... Most young people's retirement is intrinsically tied to their parents death and inheritance.
Mar 4, 2014 12:53PM
Am I retired? Well, I was fatigued yesterday and, by golly, I'm fatigued again today.
Mar 3, 2014 10:14PM
Those about to Retire, these types of articles are of course mostly pointless. Those starting out now can avoid most of the future issues by first investing in healthy habits and Two, investing in skill sets that assure higher income levels. After that, it's a matter of understanding what RISKS actually are concerning saving for Retirement via the Stock Market.

There is no such thing as a Slam Dunk concerning Stocks. However if you increase your skill sets and income levels, Stocks basically become a mute point. You don't ever want the Stock Markets to be something you feel forced to do. It's a way to increase your asset base but at the same time could do exactly the opposite over time.

Article after article will tell you the wonders of the PAST concerning stocks. The problem with that, the past is never a promise of the future.

Mar 3, 2014 8:43PM
I find it interesting that owning rental real estate is never part of the mix. Hard to run out of money as long as your properties are rented.
Mar 7, 2014 6:55PM
"Whether you're 25 or 70, your retirement stash should include a diversified mix of stocks and a fixed-income component of bonds and cash."

STOCKS!  I retired comfortably at 56 because of stocks.  Put as much as you can in Blue Chips and diversify in the last ten years before retiring.
Mar 8, 2014 3:11PM

Learn to live cheap, the last 5-6 years before you plan to retire.

You will be well-trained to be thrifty & won't have to be

a "greeter" at Wal-Mart.

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