3 Moves to Boost Your Odds of an Early Retirement

51238220_sLet’s start with the facts: Most Americans likely will have a hard time retiring on time, let alone early.

For starters, the average retirement account balance for U.S. households ages 50 to 64 is $150,000 — and the median is only $12,000 — according to a report from The New School. Nearly a third of families have no savings at all, the study found.

Even if your nest egg is substantially larger, you’ll have to account for living longer. If it’s tricky to save for 30 years of income, stashing enough for 40 might seem especially difficult, said Christine Benz, director of personal finance at Morningstar. But that is not to say it can’t be done, she said.

The first step in any plan to leave the workforce ahead of schedule must be acknowledging the obstacles you’re up against. For one, you cannot count on high market returns, said Benz.

“Bond yields are very low, and the recent rally in equities suggest the decade ahead might not be as good as what we’ve seen in the past,” she said.

So — unless you’re on the receiving end of a big inheritance — the most secure way to fund an early retirement might be what’s easier said than done: pumping up savings during your working years.

Sound unfeasible for your circumstances? You’d be surprised. These three moves can bring you a big step closer to your early retirement dreams.

Harness opportune moments

In order to retire on time, experts suggest that people in their 20s should be saving at least 10 percent of income each year. Those who hope to retire early should be saving 15 percent at an absolute minimum, said Benz.

And folks who didn’t start saving as young adults may need to stash anywhere from 35 percent to 50 percent annually if they realistically expect to retire early. While that might seem like an intimidating hurdle to clear year after year, leaping at chances to accelerate savings during “easy” years can balance out shortfalls during harder ones.

“Saving doesn’t tend to be linear,” Benz said. “It’s hard to save when your kids are young, but that empty-nest phase once they are out of college are great years to make up for lost time.”

The time before you have kids and after you secure pay raises are also crucial opportunities for hard-core saving, said Kyle Winkfield, a financial advisor in Washington, D.C.

“If you want to retire at 50, it will certainly help if you figure out how to live on half of your money during the years prior,” he said. “Of course, some years there will be interruptions to saving because of big expenses or taxes.”

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