It’s a common misconception that early retirement is only for the rich and privileged. While this may be true for the most part, the fact is that with the correct planning and proper counseling, anyone can retire early.
To retire early, you don’t have to stop working altogether. Early retirement could mean working at your convenient time only, having a part-time job, occasional consultancy in your field, and other tasks that aren’t too stressful. This way, you can control your work environment, your earnings and be your own boss.
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This article will guide you on how to retire early to help you make informed decisions about the subject.
How To Retire Early
There aren’t many things as liberating as retiring early, but before you finalize your decision to do so, you should plan ahead. You have to consider the possibility of not receiving regular income while handling heavy bills.
Some employers cater to a percentage of certain bills such as healthcare, housing, or car allowance. But without an employer to take care of such bills, you’ll need a lot of money to keep up with the lifestyle you led while employed.
That being said, there are specific measures you can put in place to ensure you stay financially stable in your retirement years.
A common concept for retiring early is the FIRE movement which simply means Financial Independence, Retire Early. It strongly advises early retirement for individuals so they can have more years to enjoy the money made from their labour.
FIRE allows individuals to make sustainable income in their working years. A more rewarding benefit is the more considerable sum to make from passive income when one is retired.
Here are a few retirement tips to help you on your journey to a debt-free early retirement.
- Review Your Lifestyle
If you are seriously considering early retirement, this is the best way to begin your quest. Critically review your lifestyle and implement necessary changes immediately.
It’s crucial to examine every detail if you want to have enough resources at your disposal when you retire. For instance, you could cut down on unnecessary spending and eliminate expenses you can get by without.
This could mean treating yourself to something special once in three months rather than every month or turning off the lights when you sleep to save some bucks on electricity. Denying yourself of these things would be of great benefit later on.
- Make More Money
Considering that in retirement, your income stream may not be as regular as when you were employed, you should make more money while working.
Note that you are not earning the extra income to spend before your early retirement starts. Your added income should be strictly for your retirement account or investments. You can earn more money by taking on a part-time job or through profitable investments.
- Draft A Retirement Plan
Most people don’t like to stay idle. So, it’s important to make plans for activities to engage in after retirement to avoid idleness.
You have to fill up the years your early retirement will create with activities that should keep you busy and active. These activities may include volunteering, touring and traveling, or even consulting.
As mentioned earlier, your retirement years can be spent earning more money. You can make income from a hobby or learn something new and lucrative.
- Plan Your Finances
You have to make dependable plans that will help you sustain your retirement savings for the rest of your retirement years. Consider portioning your savings to cover all your expenses, including your healthcare, traveling, feeding, and so on.
Although you may be eligible to receive pension and social security benefits, you would not have access to them until you reach the average retirement age. So, it is crucial to make plans to bridge this gap. It’s advised to engage a financial planner to assist you in creating feasible plans.
- Pay Off Your Debts
Your early retirement years will not be fun and convenient if you have to start it off by paying off one debt or the other. Ensure that you take care of all your debts, such as the mortgage, while actively working. Try as much as possible to avoid incurring debts as well.
- Make Investments Early
It is important to make profitable investments in time to increase resources and income for your early retirement. Take advantage of the growing investment interest.
- Stick To Your Plans
It is one thing to make plans and another to execute them. After laying out your perfect retirement plan, you should stick to it for a successful outcome.
Advantages Of Early Retirement
Retiring early comes with some perks. Let’s see what they are.
- You Are Your Own Boss
At this point, you don’t have to answer to anyone or put up with a mean boss. You get to make decisions on your own and do things at your convenience.
- Personal Freedom
Early retirement gives you so much time and a chance to do whatever you want. You get to travel as you please, spend more time with family and friends, and explore new fields of interest.
- Improved Health
You have more time to rest properly and regain your strength after working for several years. Retiring early also allows paying closer attention to your health.
- Exploration Chances
In the absence of a 9-5 job or employed labour, you’ll finally have the chance to explore new interests and build recessive skills. You can also travel the world, learn a new language, or practice your favourite hobbies.
Early retirement is achievable if you understand and follow these few applicable retirement tips. Ensure you involve a financial adviser to help you check available options and guide you in stopping work early.