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Being able to retire early won’t just happen; you need to have a plan in place to enable you to make it a reality. You can’t rely on government benefits or a pension either; it is generally agreed that these benefits will not be available as the population ages. Here are some ideas to help you put an early retirement plan into action.
How To Retire Early
Know How Much You Are Going To Need In Retirement
Few people look forward to a retirement where they have to scrimp and go without. Most dream of a lifestyle that allows them to pursue the interests that they haven’t had time for while they were working. This is going to take money.
If you have become accustomed to living on a certain amount of money, you are going to need a similar amount to live on in retirement. The average age the scientists say we are going to live to is now 85; if you plan to retire at age 50, you will need 35 years worth of your current income.
Do your own sums; know how much you are going to need in retirement to determine how early you can retire.
Manage Your Expenditures
While you are working, you need to carefully manage your expenditure and debts. Eliminating, or at least reducing, your debt is a great way to fund an early retirement plan. Get out of the trap that many households are in, spending up to 20% of their total income on servicing their debts.
Set up a realistic budget and stick to it. Look for ways you can reduce your expenditure on consumable goods.
Start Saving Early
You need to start early to fund your retirement, especially if you want to retire before age 65. There are numerous ways that you can make the most of your savings and have your money work for you. Make an appointment with two or three different financial advisors to discuss your financial future. Seeing more than one advisor will give you a broader perspective on the issue.
You need to very disciplined when you set up a financial plan for early retirement. Consistency is the key with retirement saving; regular saving adds up to a larger amount at the end.
If you want to retire very early, but are not interested in living a frugal existence to do so, look for ways to increase your income.
Find A Way To Bring In Extra Cash
If your current earnings won’t be sufficient to fund early retirement, you might look for a way to earn extra money. Maybe a part-time job or a second job will be for you. Maybe you could start your own business with the goal of employing someone to run it when you want to retire, so you will still have an income.
Many people are turning to the internet to earn extra money, but be warned. Of the thousands of people who try to make money on the internet, the majority fail. There are many scams or offers of useless information out there, so you need to be very cautious where you spend your money. Beware of the programs offering you huge riches in a short time; if it sounds too good to be true, it probably is. Having said that, many folk are able to make money online, even into their retirement.
Investment is a way many people are able to make extra money to fund their early retirement. Again, you need to get professional advice to avoid losing money. You can invest in real estate, stock and shares, government bonds and a variety of other areas. Look at reducing commissions and fees by learning how to manage your own investment portfolio. What you save on fees will help your retirement fund grow faster.
Work on your early retirement plan, calculate how much money you will need, make the difficult decisions now and get good advice. Follow your plan and you can enjoy your free time when you retire early.
So, do you have a plan in place for retirement?
[Photo Credit: Steven Depolo]