Quitting while you’re ahead

Strategies to employ for an early retirement

invest, as well as reduce your tax bite.
Allocate more money for higher-return investments like aggressive growthstocks.
Develop a budget and stick to it. Do you really need the most luxurious car or the largest house to meet the needs of your family?

Reduce or eliminate your debt
Start paying down as much of your debt as possible so you won’t be saddled with it as you get older.

Do the 401(k) rollover
When leaving your employer, resist the temptation to take the money. Roll your 401(k) over into an IRA. Avoid the 20% tax bite by designating a direct rollover from your employer to your IRA.

Draw up an investment plan
Work with a professional advisor or do it yourself. Retain an advisor that comes well-recommended and develop an investment strategy. Software programs such as Quicken or online sources such as www.vanguard.com let you do your own financial calculations.

Buy a home
The psychological, as well as financial, rewards of owning your own home are great. Remember that property taxes and mortgage interest can be deducted from your federal income taxes.

Invest separately for your children’s education
Set up a separate college fund so that you don’t deplete you retirement funds to pay for their education.
Set up a contingency (rainy day) fund
This should generally cover six months worth of living expenses that you would need in case you fall ill or lose your job.

INSURE YOURSELF

  • Evaluate the proper amount and type of insurance you need to protect your family and your investments. Start purchasing long-term care insurance to get the best rates.
  • Start investing in less-risky vehicles such as bonds in order to protect your portfolio.
  • Write down three specific financial goals and a plan to achieve them
  • “I want to be well-off” won’t do. Be specific with numbers and dates. Also be realistic. Most people will never own a 65-foot yacht.
  • Diversify your portfolio
  • Prepare for retirement by moving some of your assets into less risky, incomeproducing investments.
  • Review your financial plan to make sure you have enough money to retire.
  • Make sure you have adequate disability and medical insurance.
  • Long Term Care Insurance will save your assets from $4,000 to $6,000 a month in nursing home care.
  • Buy stock in companies you know
  • Develop a plan to pass your wealth on to the next generation
  • Prepare a will, trust or estate plan. Make sure you have ample life insurance.
  • Plug into online information.

Many Websites offer investment tips such as www.morningstar.com, www.thestreet.com, and, of course, blackenterprise.com.

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