5 Reasons You Can’t Retire Early

Whether it’s friends, family members, old co-workers or even acquaintances, it can be baffling to watch young people (maybe even younger than you!) enjoying retirement. In addition to wondering how they did it, this scenario can also leave us wondering what is holding us back from living the good life.

Since most of us won’t win the lottery or inherit billions, retiring early will likely take some careful planning. While you dream about your new life of traveling whenever you want, relaxing every day or taking more time for your hobby, it’s important to calculate how much you need to save for retirement and take a look at the financial choices you are currently making. If calling it quits (or working for yourself) before age 65 is a serious goal, it’s a good idea to make sure you are avoiding these roadblocks to early retirement.

1. Waiting to Save

Not saving for retirement is probably the No. 1 thing holding you back from retiring early. The sooner you want to leave the work force, the longer you will need your nest egg to last and the sooner you should get started. It’s a good idea to start early and continually increase your contributions to get to your goal. Making your contributions to various retirement saving options automatic can help stave off any temptation to spend this money now.

2. Not Taking Advantage of an Employer Match

If you are lucky enough to work somewhere that has a retirement plan with matching contributions, it’s important to make the most of it. This means putting at least enough money into the company 401(k) to get the full match. Otherwise, you are leaving free money on the table.

3. Carrying Debt

Student loans, mortgages, car payments, credit card debt — it seems there are a million obligations for your money. This may be holding you back from early retirement, since debt can cost you tens of thousands of dollars over the course of a lifetime. The best thing you can do for your financial health is make a plan and pay these debts down aggressively. If you need some extra motivation, crunch the numbers for how much you pay in interest over time versus the returns you could be earning in a retirement account or other investment. Then, once the debts are paid off, continue to aggressively put that money away — into a retirement account.

Also, keep in mind that your credit score can save you money by earning you lower interest rates on the debt you already carry. For example, if you improve your credit, you can refinance your home loan at a lower rate and save money that can then be put toward your early retirement goal. You can check your credit scores for free on Credit.com to see where you stand.

4. Ignoring the Budget

Making a carefully crafted budget is a great first step — but you have to stick to it. It’s important to make sure you are calculating your expenses (now and for the future) realistically. This includes housing costs, utilities, transportation, health care and food as well as whatever extras are important for you, whether it is vacations, eating out, car, home or clothing upgrades.

5. Forgetting About Taxes

When you are ready to take money out of a tax-advantaged account like 401(k) or traditional IRAs, your money will be subject to your regular income tax rate. If that seems obvious, don’t forget about early withdrawal penalty, where you pay 10% on money you take out before age 59½. It’s a good idea to consider and calculate your taxes before you leave your day job without enough money socked away.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.