Retirement in the United States is a very serious issue because a large proportion of United States citizens try to achieve it as soon as possible. This is because Americans who reach a very advanced age and still cannot retire may regret some of the decisions they made during their working lives.
Even so, in recent years a different form of retirement to that related to Social Security is becoming increasingly fashionable. In this sense we are talking about FIRE (Financially Independent, Retire Early). If we can be part of FIRE, we can enjoy retirement for longer.
But that is not something that all United States citizens can do. Furthermore, it is also important to consider that not everything depends 100% on the citizen, but that there are other external aspects that we must also take into account when planning our retirement. In any case, one thing that is certain is that we must consider all possible options when planning our retirement.
Basic principles for Early Retirement
Regardless of whether we have the FIRE movement in mind or simply want to retire as soon as possible, what is certain is that we must organize our finances in order to be able to enjoy everything related to our retirement.
Thus, we must pay attention to certain basic principles. We cannot miss this opportunity to have a better life early on. These are the basic principles for Early Retirement:
- The 70-90 rule. If we want to retire early, the ideal is to be able to replace around 70% and 90% of our usual income through the Social Security check and the private retirement account. So, if this is possible, then we will have done a good job.
- The 4% rule. In addition to the above, there is also the belief that if there is no annual excess of 4% of your diversified portfolio, the money for retirement will be sufficient. Of course, we must bear in mind that we have to adjust for inflation.
- Moving can be a good option. The house we live in during our working life does not have to be the same one we have during retirement. If we plan to retire as soon as possible, cutting back on expenses in this respect can be key and fundamental. It is essential to be realistic when it comes to retirement and to think carefully about what the next step will be.
With all this in mind, each person must make their own final decision and see whether or not they can apply for Early Retirement. Even so, we must bear in mind that Social Security is not available until the age of 62.