If you’re not interested in going the traditional route and working until age 65, then you’ll need to start immediately taking action so that you can retire early. Even if you’re just starting your accounting career, now’s the time to begin planning how you’ll achieve financial independence in your golden years. Retiring in your early to mid 50s is possible for accountants who use their financial expertise to wisely manage their money. Typically, early retirement is only realistic for those who have no debt, good pensions, medical insurance, and plentiful savings. In this article, we’ve highlighted four tips you should follow to realize your dreams of retiring early.
Maximize Your Salary as a CPA
Making enough money is key for accountants who are seeking early retirement. Going the extra mile to become a Certified Public Accountant (CPA) will help maximize your earnings. According to Becker, CPAs have a $1 million dollar advantage over non-certified accounting professionals. CPAs must pass a challenging exam for certification, so they’re considered more authoritative and prestigious in the accounting world. This makes CPAs more likely to receive higher-level promotions that widen the salary gap to up to $50,000. Accountants who reach the role of Chief Accounting Officer (CAO) make an average of $180,700 annually! Pursue every opportunity to increase your value to your company and receive a raise or bonus.
Pay Off Student Loans Fast
College accounting coursework isn’t cheap, but there are alternatives to fund your education. Do plenty of research to find grants, scholarships, tuition waivers, and other financial aid options. Taking on federal work-study and graduate assistantships can help too. However, it’s likely that you’ll have to use some student loans. Getting debt-free quickly after graduation is essential for retiring early though. Trim your budget to consistently make more than the minimum payment due. Do the math to calculate your payoff date. If necessary, consider consolidating your loans and/or refinancing for lower interest rates. Keeping your living expenses low and avoiding spending splurges is important early on.
Save Money with Smart Investments
Saving a decent portion of your income is crucial for the possibility of early retirement. Money won’t grow enough locked into the bank. CPAs should take full advantage of employer-matching 401(k) plans. Contribute the maximum amount each year so that more tax-free money accrues over time. Small amounts saved early in your career could turn into thousands of extra funds. Building a diversified investment portfolio with a financial advisor is also recommended. Investing in mutual funds, stocks, hedge funds, and cap funds is best. Spreading your money across various industries in international and emerging markets will up your chance of success in retiring early.
Accounting can be a fascinating job for math lovers with sharp analytical and problem-solving skills. Devoting your entire life to studying balance sheets, payroll, tax returns, and other financial records may not be your goal though. Early retirement can give you the rewarding chance to focus on your family, start a second career, or travel the world. Retiring early poses a slew of financial worries that must be planned for and resolved. Accountants who use the above tips will begin building a nice nest egg to consider retiring early with little stress.
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