For the majority of people, early retirement sounds like a dream come true. However, a lot of those people think that early retirement is just that – a dream. However, by setting clear goals and with the help of some careful planning, this goal is not so unattainable as it may sound at first.
Listed below are 5 useful strategies that will help you retire on your own terms. So, if you too are dreaming of early retirement, pay attention.
1 – Decide what you want to do when you retire
Before you start calculating, you first need to determine what you plan on doing once you retire. If your dream is to travel the world, be ready to set aside a hefty budget. On the other hand, if you wish to commit more to your hobbies and catch up on all those books you bought but failed to read so far, your retirement budget can be significantly slimmer. Therefore, determining this should be your first step.
2 – Plan carefully
The next step requires careful planning. Note down all your current expenses – mortgage, debts, groceries, etc. included – and see how much money you need to cover all of them. This will help you determine your current monthly expenditures. Now, if you plan on retiring early, know that it would be best to pay off your mortgage and cover all the debts before you actually do so. This will significantly reduce your monthly expenditures which will, in turn, lower your retirement budget.
Photo credit Pexels
3 – Think about your living space
The next step should be determining where you’ll be living once you retire. A three-story house is neither affordable nor practical to live in once you reach a certain age. That’s why a lot of people usually opt for downsizing. Another interesting trend in developed countries, such as Australia, comes in the form of choosing to move to a retirement village. For example, the cute little retirement village in Central Coast offers more of a resort vibe, which some people find particularly appealing. Therefore, consider all the options and choose the one that works best for you personally.
4 – Boost your current financial situation
If planning on retiring early, you need to boost your current financial situation, to increase your chances of achieving that goal. Once you’ve determined your approximate retirement budget, you’ll need to come up with a way to reach it faster, the sooner you intend on retiring. Therefore, find out how you can do that, some of the most popular options being getting a part-time job, investing smartly for the maximum ROI and even alerting your lifestyle (more on this in the next paragraph).
Photo credit Pexels
5 – Implement lifestyle changes
Finally, you need to keep in mind that you’ve got to give some to get some, which means that you’ll have to make some sacrifices now if you want to be able to relax and enjoy your retirement later on. Some of the things you should consider altering include:
- Cutting your unnecessary expenses – Ask yourself this: do you really need to spend that much money on makeup and beauty products, clothes, getting your nails done and/or gas?
- Improving your monthly savings – Instead of allocating only 10% of your monthly income to your retirement fund, increase it to at least 15%.
- Getting rid of the second car – Owning two (or more) vehicles is not only wasteful, but it also increases the overall pollution. So, instead of getting a car for every member of your family, consider carpooling, cycling or using the public transportation to get to work/school.
Yes, the truth is that being able to retire early is not a piece of cake, no matter how good your current financial situation is. It does require some serious sacrifice and you will have to give up some of the luxuries you are used to but, in the end, it will all be worth it.
Claire is a personal and professional development expert who believes that a positive attitude is one of the keys to success. You can find her online writing and giving tips about positive lifestyle and development. Find Claire on Facebook and Twitter