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How to Save Money and Retire Early

Don’t let the thought of early retirement overwhelm you—begin preparing for your future today. Individuals with a retirement plan are reported to have saved significantly more than those without a plan. With the right knowledge and tools, you will know how to retire early and work toward financial independence.

Here are some simple strategies to start saving money for retirement.

How Much Should I Save for Retirement?

learn how to retire early

If you want to live comfortably during retirement, and especially if you’re looking for ways to retire early, experts recommend saving as much as possible early on. Some financial experts recommend saving as much as 10–15% of your income beginning in your twenties.

You won’t be eligible for social security payments until your sixties, so keep this in mind when considering an early retirement. Use a retirement calculator or consult a financial advisor to better understand your current financial standing.

What Should I Consider If I Want to Retire Early?

If you want to know how to retire early, here’s a tip—having your mortgage and other large expenses paid off by retirement is ideal, but at the very least, you should be prepared to cover the following:

  1. Cost of Living—Ideally, you will have paid off your mortgage—if you have one—by the time you retire. If not, consider minimizing your cost of living by downsizing or relocating to a location where the cost of living is cheaper.
  1. Health Insurance—You won’t be eligible for Medicare until you turn 65, so if you plan to retire early, having reliable health insurance in place is necessary to avoid paying for costly and unexpected medical bills.
  1. Taxes—Even after you leave the workforce, you will still be required to pay taxes, so take this into account when deciding how much money you will need for retirement.

Increase Your Savings with Retirement Accounts

retire early with savings accounts

If you’re currently working, a 401(k) is a great way to maximize your savings since many companies will match a percentage of your contributions. According to a national survey, 41% of workers are enrolled in 401(k) plans where their companies match up to 6% of their contributions.

Another way to extend your savings outside of your 401(k) is an Individual Retirement Account (IRA). There are different types of IRAs, such as a Traditional IRA and Roth IRA. Synchrony Bank does not offer financial advice so be sure to consult with your financial advisor before opening up or contributing to an IRA.

You can also keep your savings in a money market account (MMA) and earn interest based on current market rates.1

Learn How to Retire Early with Synchrony Bank

Named one of the 10 Best Money Market Accounts, High Yield Savings Accounts, CD Accounts and Online Banks in 2016 by GOBankingRates.com, Synchrony Bank can assist with your pre-retirement needs.2

Learn how to retire early and start saving now by calling Synchrony Bank at 844-345-5789 to learn more about our offerings.

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Sources: 

Employee Benefit Research Institute: https://www.ebri.org/pdf/surveys/rcs/2017/RCS_17.FS-3_Preps.Final.pdf  

IRS: https://www.irs.gov/retirement-plans/traditional-and-roth-iras

Time.com/money: http://time.com/money/4584900/ages-people-retire-probably-too-young-early-retirement/  

Money.cnn.com: http://money.cnn.com/retirement/guide/basics_basics.moneymag/index7.htm 

Bankrate: http://www.bankrate.com/calculators/savings/moving-cost-of-living-calculator.aspx

U.S. Bureau of Labor Statistics Latest Numbers: https://www.bls.gov/opub/mlr/cwc/how-does-your-401k-match-up.pdf 

GoBankingRates.com: https://www.gobankingrates.com/banking/banks-offer-money-market-rates/

1National Average APYs are based on specific product types of top 50 U.S. banks (ranked by total deposits) provided by Informa Research Services, Inc. CD Rates: Average APYs are based on certificate of deposit accounts of $25,000. High Yield Savings Rates: Average APYs are based on High Yield Savings Accounts of $10,000. Money Market Account Rates: Average APYs are based on Money Market Accounts of $10,000. Although the information provided by Informa Research Services, Inc. has been obtained from the various institutions, accuracy cannot be guaranteed.

2Synchrony Bank was named one of the 10 Best Money Market Accounts, High Yield Savings Accounts, CD Accounts and Online Banks as well as one of 31 Best Banks for 2016. Source: Based on GOBankingRates.com; January 2016 survey.


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