Huffington Post: 15 Ways to Retire Early

Dave recently gave his thoughts to Lou Carlozo, contributor for the Huffington Post, to help compile a list of 15 major financial and lifestyle moves you can make to help you retire early. When asked about actionable tips people can use to retire before the standard retirement age, Dave noted that there’s a degree to which the financial forces at work when you plan for retirement are a little bit like the laws of physics: there’s no free-lunch and there are inevitable tradeoffs that cannot be avoided. Specifically, you have three levers or dials at your disposal when you try to manipulate your plan: Time-to-Retirement, Savings-Level, Spending-in-Retirement. Once you set any two of those, the last one is out of your control.  If you choose to dial down the Time-to-Retirement dial and aim for an early retirement, you’re left with two choices, you’ll have to either increase your Savings-Level or reduce your Spending-in-Retirement. In this instance, the major financial moves are going to have to come in one of those two realms. Dave’s advice on how to dial down in both of these realms appeared in Lou’s recent article, 15 Ways to Retire Early:

• Jump on Employer Stock Purchase Plans
  • How about some free money? The ESPP typically works by payroll deduction, with the company converting the money into shares every six months at a 15 percent discount. “If you immediately liquidate those shares every time they’re delivered, it’s like get a guaranteed 15 percent rate of return,” said Dave Yeske, managing director at the wealth management firm Yeske Buie and director of the financial planning program at Golden Gate University. “Add the after-tax proceeds to your supplemental retirement savings.”
• Don’t Let Your Money Sit Idle
  • To get to an early retirement, you have to periodically revisit your IRA, 401(k) or other retirement account to make sure your money doesn’t grow cobwebs. For example, the way your retirement account is diversified shouldn’t put too much emphasis on low-yield investments — such as money market funds and low-yielding bonds. “Dividends can pile up in the money market account, typically earning one one-hundredth of a percent,” Yeske said. “Make sure your cash is invested properly.”
• Start That Retirement Account Today
  • That is, the earlier the better. Millennials who kick off retirement accounts early will reap big rewards later. A 25-year-old who socks away $4,000 a year for just 10 years (with a 10 percent annual return rate) will accrue more than $883,000 by the time she turns 60. Now then: Can’t you just taste those pina coladas on the beach?
• Plan Smart Vacations and Travel — and Invest the Difference
  • There’s no sense in depriving yourself of every single thing, especially well-deserved time off. But Yeske points out that you can save a ton in 150 countries through a service called HomeExchange.com. “My wife and I have stayed for free in London, Amsterdam, New York and Costa Rica,” he said. “And when you’re staying in someone’s home or apartment, you don’t have to eat out at a restaurant for every meal, so your food costs nothing more than if you were at home.”