How to Retire Early
Maybe, while considering how to retire early, you’ve resigned yourself to hit 60 so as to safely reap all retirement benefits.
Yet, an early retirement age could be a more attractive vision, as you probably have a whole list of what to do when you retire early. You could bring this vision to life merely by following some simple lifestyle changes.
Have the Cake and Eat it Too
Retire early seems to be the latest mantra replacing the ‘retire at 55’ one.
What’s even more important is that you could successfully retire early and still have enough savings to last you the rest of your life.
Now, if that seems like having the cake and eating it too, it’s true and completely possible.
Speed your Exit
According to Employee Benefit Research Institute reports, American workers are becoming more confident about early retirement options along with leading a comfortable life.
Many have begun to retire early and work from home as it offers a more convenient alternative.
Yet, the issue of how can I retire early is not a cakewalk. There are ways to retire early and you will need:
- Proper Saving for Retirement
- Retirement savings plan
- Right mindset
- Daily Goals
- Wise Investments
Before you turn your dreams of early retirement into a reality.
Checklist for Early Retirement
The best way to retire early is to go through this checklist of early retirement strategies. Believe me, you’ll soon find yourself well on your way to an early retirement.
Tighten the Belt
No, not literally. You need to make a complete turnaround as far as your savings are concerned while considering when can you retire.
- Make conscious decisions while making purchases and weigh it against your objective to retire early.
- A slight tightening of the belt may not be enough. It’s the big purchases that count, not just missing out on your daily coffee.
- Live below what you can afford, so that you can shovel the additional income into savings. You cannot live above your means or even at par with your means. I’d say you could plan to save around 30% of your earnings against the conventional 15%.
Beware of Lifestyle Creep
If you are planning for early retirement, don’t fall prey to what is called the Lifestyle Creep. When you get your next raise, don’t raise your standard of living as well. I’ll explain this better. You were probably sticking to dining out once a month. Now, after a raise, you’ve probably started dining out twice a month or even once a week.
Lifestyle creep can be the perfect recipe for disaster and a stumbling block if you want to retire early. When you earn more money, the additional amount needs to go into the kitty and not into additional expenditure and not in keeping up with the Joneses.
Create a Budget
I know creating a budget and preparing for retirement takes time, but believe me it’s totally worth it!
While using a retirement calculator, keep your goals in mind, layout your monthly expenses, savings and the average retirement income you will need.
STICK to the expenditure schedule and don’t make impulsive decisions that breach the budget.
According to Benjamin Franklin:
“If you know how to spend less than you get, you have the philosopher’s stone.”
Become financially intelligent. You need to learn in order to earn.
- Study market environments and learn how to profit from market conditions by making intelligent investments that can pay you dividends for the rest of your life.
- Go through courses, read articles and research material for increasing your financial intelligence as well as your wealth.
- Get experience in investment and don’t miss opportunities.
- Subscribe to Investment newsletters. These could be a storehouse of investment information and it’s available for free.
Growing Assets Automatically
Make arrangements to automatically grow your assets through investing to retire early. This will keep you on track with your early retirement plans.
If you are wondering how to invest to retire early, you can:
- Buy a personal residence. It will appreciate with inflation. Make sure that the mortgage payoff for the home coincides with the set retirement date.
- Become a landlord. Owning other houses where you can receive payments from others is a great idea. It will build your wealth automatically.
- Contribute more towards retirement plans, so that it is taken automatically out of the paycheck. You will not miss what you haven’t even seen. Avail of all such savings programs that offer a tax break. It’s a no brainer.
- If you tend to be an impulsive spender, join investment clubs where you will be forced to save.
- In short, make your money hard to access.
The numbers here will be the amount of funds that you need for living after retirement.
- You will need to calculate the amount of money that you need annually after retirement.
- Secondly, you have to assess your retirement portfolio for generating this amount. Begin with the amount of money needed and then determine the investment portfolio that is necessary for generating the same.
Let’s Walk the Talk – How to Retire Early
I rest my case for early retirement advice. But to know is not enough. You need to act now. Even a monk has his moments of weakness.
The rules are very simple to understand, but admittedly difficult to follow. The rules for early retirement that I’ve laid out is surely not rocket science and I’d say you probably know some of them. But are you following even one of the tips? You need to walk the talk. It’s really that simple. Just ask yourself this questions:
Are my financial habits in consonance with the tips mentioned here? Give an honest answer and you’re halfway down the road to an early retirement. Do not procrastinate – Begin today.