Friday, October 19, 2012

7 Ways to Retire with Financial Freedom

7 Ways to Retire with Financial Freedom

You are new able to live longer than before because of better health care. It means you need to have more money to spend and cover inflation as well. According to data compiled by the Social Security Administration:

A man reaching age 65 today can expect to live, on average, until age 83.
A woman turning age 65 today can expect to live, on average, until age 85.
And those are just averages. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.

1.      Be debt-free: The biggest enemy of financial freedom is debt because you are going to pay more than what you have actually incurred. The longer you delay, the more interest will be added to the outstanding amount and it will be more difficult to clear as the amount grows bigger over time. 

2.      Continue to work and earn: If you enjoy what you do, it would be prudent for you to continue working. When you work, there is a source of regular income and you and your employer will continue to contribute towards your retirement fund. Another point is that you are not touching your retirement fund and it continues to grow.  The longer you work your retirement years will be shortened and the less money you will need.     

3.      Focus on sources of passive income: It is a smart move to build a constant stream of regular income during retirement. One such source is shared which are making regular dividend payments. When one regular source of income stops, another one takes over.     

4.      Build new sources of income during retirement: Another wise move is to start a second career during your retirement. What is your expertise? Can people pay you for your services? While you can continue to earn during your retirement, it is more important to keep your mind active and alert. 

5.      Spend less: You will never know how long you are going to live. It is prudent to adopt a frugal lifestyle so as to last your retirement fund as long as possible.

6.     Save as much as you can: Save your bonuses, if any. Don’t spend your tax refund check. The more you save, the bigger will be your nest egg.

7.      An emergency fund:  It is also good to set aside an amount to cover unexpected expenses such as a major car repair or illnesses. Such expenses, more likely than not, are excluded in your retirement fund.   

Take action now and enjoy financial freedom later.

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