The Pax Financial Blog

3 Ways to Retire Early in Texas

3 Ways to Retire Early in Texas

retirement, financial advisor San Antonio Jan 10th, 2022 by: Darryl Lyons

The average retirement age for Americans is 62, although there are many who work longer, and a few who choose to hang up their aprons earlier. You’ll sometimes hear about bond traders and startup co-founders who were able to retire while in their 30s or 40s, which is why most people think you have to be a millionaire or receive a huge financial windfall in order to retire young. 

But what if we told you there are things you can do now that might help allow you to retire earlier - maybe a lot earlier - than you originally planned? How great would it be if you were able to retire while you’re still young enough to enjoy yourself? You might be able to do it, but it’s going to take work, and you need to start right now.

 

relocating to an area with a lower cost of living

Where you choose to live matters a whole lot when it comes to how far your retirement money will go. 

According to a 2020 SmartAsset analysis, a million dollars can cover more than 30 years’ worth of living expenses in McAllen, TX, whereas the same amount will only last about 12 years in San Francisco, CA. The costs of living differ that much between the two areas. This is one big reason many people choose to retire in states like Texas.

 

RETIRING IN TEXAS? SCHEDULE A NO-OBLIGATION CONVERSATION WITH THE TEAM AT PAX FINANCIAL GROUP TO SEE HOW WE CAN HELP.

 

If you currently live in a region with a high cost of living, you’re paying more for the same expenses, goods, and services than you would in a region with a lower cost of living. It’s pretty simple. 

If you relocate now, you may be able to save more for retirement by paying less for housing, healthcare, groceries, transportation, entertainment, and so on. 

If moving for a lower cost of living now is not an option, perhaps you’d consider relocating in retirement, as a way to stretch your retirement dollars further.

Not sure where to look? The Council for Community and Economic Research maintains a very useful Cost of Living Index, which uses data gathered annually to provide the current cost of living information and comparisons for areas all over the U.S.

 

Getting rid of debt and extra costs

If you thought the best way to use any discretionary income you have is to invest it all in your retirement, you’d be mistaken. As a matter of fact, experts say it would be more effective to pay off things like credit card bills, student loans, and other high-interest consumer debt. 

Why you ask? Well, the short answer is about the long run. The more time your dollars have to work at reducing big balances and high interest, the less time (and dollars) you’ll have to contribute to your retirement accounts. When it comes to investing, remember that time is money, so having less is never a good thing.

You also absolutely, positively, do not want to be continuing to pay off credit cards and high-interest debt once you retire and are living on a fixed income.

Once you are rid of those debts, try to keep them in check. Whatever you do, don’t run them back up again! If used responsibly, credit cards can actually be a useful financial tool, but only if you know how to use them right. You need to have a budget plan to pay back what you spend each month to avoid paying interest.

 

Saving and investing earlY

If you decide you want to retire early, that means you need to be aggressive with your retirement savings plan, because not only will you have fewer working years to contribute, but you’ll have more retirement years to finance. 

Set your aim to have an amount in your retirement accounts by the time you call it a career that will be enough to comfortably provide for your retirement expenses. In order to do that, you’ll have to work out a careful and realistic saving and investment plan and commit to setting aside a certain amount from each paycheck. The more you invest now, the more growth potential your money will have.

And so it goes without saying that the younger you are when you start planning and saving for retirement the better, especially if you have your heart set on retiring young. You may also have to re-evaluate things a bit if you discover your plan is too ambitious - it might not be realistic to retire at 35 if you’re already 30 and haven’t saved anything yet.

If you haven’t yet taken advantage of your employer-sponsored 401k plan, sign up today and start making the maximum contributions you possibly can. Save more when you’re able, and make increases to your contribution amounts in accordance with increases to your income.

It might seem counterintuitive, but establishing a rainy-day fund is another way to work towards early retirement. Having an emergency fund can protect you against financial situations which might otherwise affect your ability to make consistent retirement fund contributions. If you have money set aside to cover unexpected expenses or financial insecurity, you won’t have to take on high-interest debt, reduce your contributions to cover your day-to-day expenses or take early withdrawals from your retirement savings (along with significant penalties).

And don’t be discouraged by a dip in the stock market. Investing consistently in both good and bad markets is one key to making the most out of your retirement savings. When you’re saving for retirement, you’re looking at investments over the long haul, so don’t let a bear market make you panic and lock in temporary losses by selling when stock values are down. Remember, the silver lining of a market downturn is that it’s a great time to buy low.

Whenever you plan to retire in Texas, or elsewhwere, you need to make saving for retirement a priority, and it might mean making some changes, sticking to a tighter budget, and saving more in the short run, so that you can make your long-run dreams come true.

At PAX Financial Group, we have more than 100 years of combined experience helping families retire in Texas – and nationwide – and one thing has become inherently clear: Everyone is different! What works for one person may not work for another. We will take the time to construct a custom retirement plan created just for you.

 

The team at PAX Financial Group is here to help with all of your retirement planning needs! Schedule a no-obligation conversation today.

 

Retirement Guide - PAX Financial

 

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.

 

Darryl Lyons

Darryl Lyons

CEO and co-founder of the PAX Financial Group, Darryl Lyons has been a licensed professional in the financial services industry since 1999. A lifelong Texan, Darryl began his career in the financial sector just one day removed from earning his bachelor’s degree in corporate financial management and accounting at St. Mary’s University. Throughout his career, he has won awards for recruiting and development from Fortune 100 companies. In January 2007, he chose to begin and develop his independent practice. He joined Andres Gutierrez and Joseph Schuetze to form the PAX Financial Group. Darryl also served as the Chairman for Brooks Development Authority. Shortly after his service, Mayor Julian Castro, named a park “The Darryl W Lyons Park” in honor of his service. He was named to the 2010 San Antonio Business Journal’s “40 Under 40 Rising Stars,” which honors people making a difference in business and in the community.

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