Money Moves You Should Make to Retire Early

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Want to retire early? Make these smart moves to get on the fast track.

The average retirement age is 65. But what would it take to retire at 60 or 55? Or even 40?

First, define your timeline. Then decide if you want to leave your corporate job for something more flexible or focus on hobbies. Maybe you want to travel the world and work in spurts.

No matter what you choose, there are a few catch-all money moves that'll set you up for a brighter financial future.

Here's how to retire early and relax on your own schedule.

1. Protect Your Family for $16/Month

Before you work on building wealth, make sure your family's taken care of. When you have people who depend on you, a life insurance policy is more important than ever.

How would your family manage if they lost your income? Could they cover the mortgage or college tuition?

A company called Bestow lets you leave your family up to $1 million in coverage. It takes less than 10 minutes to get a quote, and you don't need a medical exam.

If you're in good health right now, it's the cheapest it's ever going to be. Rates start at just $16/month. And it's completely risk-free: If you don't love having Bestow, just let them know within 30 days and they'll refund your premium.

That's a huge weight lifted off your shoulders. Once that's in place, you can shift your focus toward making your money grow.

2. Earn Passive Income with Real Estate

Real estate consistently increases in value over time. But the cost is out of reach for most investors. Rental properties cost hundreds of thousands of dollars, and finding the right projects might take months.

The Fundrise app makes things a lot easier. You just need $500 to start. Fundrise will purchase undervalued houses in major cities, fix them up and resell them at a profit. Plus, they pay out dividends every quarter.

Real estate is a long-term, stable investment. You'll need to invest for at least 5 years before getting substantial returns, but it's worth the potential capital gains.

3. Save Up to $300 in Big Bank Fees

Most national banks charge a $10 - $15 monthly maintenance fee. To waive that pesky fee, you need to jump through hoops like monthly direct deposits or qualifying debit card purchases.

Save up to $300 a year in fees by switching your checking account to an online bank.

Online-only banks don't have the expensive overhead that brick-and-mortar banks do. So, they're able to pass along their savings to customers with higher interest rates and fewer fees. Plus, they're safe and FDIC-insured just like "big banks."

But the major downside is that they have no physical locations, so you need to do all of your banking on the web or mobile apps. If you prefer in-person transactions, stick with physical branches. Otherwise, online banks are your best option for maximizing earnings.

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4. Find Out if You Pay Too Much for Car Insurance

Do you get a loyalty discount from your car insurance? If you do, it's a red flag you might be overpaying.

See, car insurance companies are pretty sneaky. They'll throw you a small discount for being a loyal customer... and jack up the price to spin a profit. The only way to outsmart them is to compare quotes every year.

Don't worry. You don't need to spend all day calling up every insurer in your city. Instead, check out this car insurance comparison tool. It's completely free to get quotes, and you can save up to $600 per year.

Most importantly: That cash can go toward your goals instead of making insurance companies even richer.

5. Protect Your Assets In 5 Minutes

As you work towards financial independence, make sure the money will go to the right place.

Do you care who gets your property if you're no longer here? This includes any bank accounts, real estate, and other assets you own. Or, if you have children, who's named as the legal guardian?

Then you need a will. Otherwise, the government decides how your finances are distributed. According to Caring.com, a whopping 68% of Americans don't have a will.

Take back control. An app called Fabric helps you create a legally-binding will in about 5 minutes for free. You can appoint a guardian and beneficiary, mirror the will with your spouse and get affordable insurance from one easy-to-use interface.

6. Buy Fractional Shares for Just $1

High-performing stocks like Tesla are too expensive for most investors. A single share could cost hundreds or even thousands of dollars.

Luckily, Stash lets you invest in a sliver of Tesla, Amazon, Google and other household names, starting at $1.

These "slivers" are called fractional shares, and it means you own a piece of these valuable companies. When they do well, some of them even send you a cut of their profits in the form of "cash dividends."

Old-school online brokers like Vanguard or E*TRADE don't support fractional shares. So if you're set on big-name companies, use Stash. Right now, you'll get $5 for joining - a nice way to double your $5.

To reach your early retirement goals, cut back on expenses and pour every extra dollar you can into investing. Usually, you can cut the fat with:
  • Clothing
  • Entertainment
  • Haircuts or beauty
  • Gym memberships
  • Subscription or streaming services

7. Prepare for Financial Curveballs

Everyone has a different lifestyle: from where you live, paying rent or a mortgage, raising kids and more. But no matter where you're at, life is sure to throw the unexpected at you. When that happens, an emergency fund can save the day.

Let's say, your car breaks down. If you charge your credit card and don't pay it off right away, you'll lose an additional 15% - 20% to interest.

Instead, hold 3 - 6 months' worth of expenses in a savings account so you have easy-to-access cash when you need it most. (Not sure what that number should look like? Use our emergency savings calculator to find out.)

Savings accounts are not one-size-fits all. Choose one that offers low fees and high interest rates to help pursue your dreams (like a new house or your child's college education) and prioritize goals.

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Bottom Line

Early retirement is within your reach - if you make the right moves.

Once you approach your peak earning years, think about your retirement location and how to manage income streams. Know when you want to take money out of your IRAs, 401(k)s, real estate and brokerage accounts. If you withdraw too soon, you'll be hit with a big tax penalty.

Don't lose sight of your goals and you'll be well on your way to financial independence.

Write to Amber K at amber.kong@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts. And remember that you can listen to CreditDonkey Radio any time.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

CreditDonkey is a paid Affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.

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