401(k) money now. I hold a large number of stock options, and I also participate in a plan to buy more shares at an employee discount with after-tax dollars,” she maintains. “I know my portfolio should be more diversified, but I’m reluctant to invest elsewhere because my company’s stock has [performed so well].” (Company policy forbids her from sharing the name of her company.)
In the meantime, her husband, Lawrence, 37, a civil engineer who worked for the state of North Carolina’s Department of Transportation for 12 years, has his own retirement fund, a rollover IRA that was seeded by a tax-deferred account from his previous job.
Taiwo has managed to keep her money growing tax-deferred through a rollover IRA as well. But her investments don’t stop there. She participates in a 17-member investment club, Black Women’s Investment Club Inc., which invests in Cisco (Nasdaq: CSCO), Nortel Networks (NYSE: NT), and Microsoft (Nasdaq: MSFT), among others. “With all of these investment accounts, I’m very aggressive,” Taiwo says. “I invest almost exclusively in stocks, especially technology stocks. If I want to retire early, with a large investment portfolio, I know that I have to take some risks in order to receive the returns I’d like.”
Taiwo expects her carefully calculated risks to pay off handsomely in the future. Be
Planning To Retire Early?
Is your lifelong dream to retire before you hit the 65-year-old mark? Great. Before you do, implement these strategies so that you can finally rest easy in your golden years:
- Invest, invest, invest. It’s not enough to invest your hard-earned dollars if you expect to retire before the rest of the pack. You have to devise a strategic financial plan, so that your assets will be there when you need them.
- Figure out your healthcare needs. Since Medicare doesn’t kick in until age 65, it’s up to you to have proper medical coverage to fill the potential gap. Consider your spouse’s plan if he or she is stil
l employed. Otherwise, see if you can continue coverage under your employer.
- Consider semiretirement. For some, retiring early means taking on more work. Not everybody is ready to simply do nothing all day, so part-time work is a viable option. If the tight labor market continues, demand for workers with various skills will too.
Investing for a lifetime
Making the right moves at each stage of your life will ensure that you have a prosperous retirement
Pay yourself first Save 10% to 15% of your after-tax income. Investing $100 per month at age 25 at an assumed return rate of 12% will grow to more than $1 million by age 65. If you wait a mere five years to start (age 30), you will have to invest $200 per month to reach the same goal.
Do your homework
Start with the black enterprise Wealth Building Kit to bone up on the basics of money management. Also read financial newspapers and magazines on a regular basis. This will reduce your reliance on someone else’s advice.
Accurately track your household spending
Join your company’s 401(k) plan