Learning and utilizing the 5 best investments for early retirement can greatly lessen the chance of struggling after retirement. According to the 2008 Retirement Confidence Survey by the Employee Benefits Research Council, only 18% of Americans are confident that they have enough money to live comfortably on after retirement. Here are five of the best investments that can help secure a comfortable retirement:
- 401(k) Plan: The first step is maximizing the money you put into your retirement account with a 401(k) plan. From the first day of employment, a retirement plan needs to be in place and growing every year. A 401(k) plan is a win-win situation as long as you continue investing for the long run. For early retirement, it is possible to withdraw from a 401(k) plan earlier than expected.
- Mutual Funds: Placing any left over money in non-tax-sheltered mutual funds is the second area for investment. The best choice is funds with no custodial fees and no commissions. While mutual funds outside an IRA or 401(k) may not be tax sheltered, they can still be tax efficient. Investing on a regular basis is important as well.
- Roth IRA: This is the next best investment opportunity. However, there are limitations for opening a Roth IRA, such as a cap out of adjusted gross income of $101,000 for single filers and $159,000 for joint filers.
- Traditional IRA: This is a good investment if requirements for a Roth IRA cannot be met. If your income level is too high for a Roth IRA, a traditional IRA can be started.
- Real estate: This can be a great investment as well, but more precautions need to be taken depending on the location and age of the real estate as well as the downward or upward turn of the economy.
When wanting to retire early, the number one key is planning ahead. Planning ahead is the most important step and it allows preparation so that when the day comes, you will be ready to retire.