Do you dream of early retirement? Many people do. Thinking about retiring early and not following someone else’s schedule is appealing.
As many young people dream of retiring early, there are many workers in their 50’s and 60’s that wonder if it will be possible to retire at regular retirement age. Some feel they will need to work till 70 and beyond.
What about you?
Are you interested in exploring an early retirement?
Early retirement is possible but it requires planning, sacrifices now, and focus on a long term goal. Planning from the perspective of finances and all the perks that come with having a full-time job such as vacation time, sick time, health insurance, etc. Will you replace them and if so, how?
There is a current movement toward Financial Independence, Retire Early (FIRE).
Greg Daugherty, a Personal Finance Writer, who has researched people who retired in their 30’s, points out the three steps to make early retirement a reality:
- Embrace a frugal lifestyle.
- Save like crazy – 75 percent or more of your income — and invest the money.
- Once your investments are sufficient to support that very frugal lifestyle for the rest of your life, consider yourself free to retire.
The FIRE movement is not for everyone. If you have children or other responsibilities, saving 75% of your income might be impossible. So are you doomed to work till you are 70?
You don’t have to retire in your 30’s. Making adjustments when young can allow you to at least be on track to survive leaving your job at normal retirement age or to perhaps retire 5 or 10 years early.
Some adjustments that are easy to implement now no matter what age you currently are:
- Earmark any raises, bonuses, and tax returns to go directly to savings.
- Buy used cars instead of new and invest the difference.
- Learn to cook so you will spend less on meals out and eat healthier.
- Take care of your health. It is easier to retire healthy than if you have a lot of medical issues that will make insurance expensive.
- Learn to live with less. You don’t have to make drastic cuts but small cuts to expenses every month add up. Do you need all those extra cable stations, do you need a new cell phone, do you need the latest tech, are those designer clothes a must? Little savings add up.
- Cut back on luxury vacations.
- Research costs of things such as health care, etc. so you are prepared and don’t have sticker shock after you quit your job.
- Invest the money you save so it works for you.
- Plan ahead. Do you want to retire 5 years early, 10 years? How much money will you need?
Sometimes retiring early doesn’t mean you stop working. It means you no longer work the job that is currently paying the bills. It might mean you now have the time to work on your own schedule. Maybe you now have time to start your own business or work for a non-profit that you are passionate about on a part-time basis.
Mr. Money Mustache, a financial writer states, “Financial independence is not an age-related concept,” he says. “It simply means your income from sources other than work is enough to pay for your lifestyle.” Those sources can vary from pensions, savings, passive income, to part-time work.
It Is Possible
Whatever you are dreaming retirement will be, just know it is possible. But to make it a reality you need to plan ahead and make some changes now while you are employed to make it happen.