7 Suggestions to Help You Retire Early

April 17, 2022

Retiring early may seem like a pipe dream, but with careful planning and disciplined saving, it can be a reality. Entering the golden years prior to age 50 is a bit of a rarity, but it is not an intangible goal. Early retirement will take precision in planning, but it is feasible. There is so much to consider entering into the era of retirement. What will you do with your time? Will you travel to see the world? Will you volunteer your time to help a good cause? Will you spend more time with your family and friends? Will you embrace a healthier lifestyle taking time to prepare delicious, nutritious meals? Will you start running marathons because you now have time to dedicate to training for race day? The beauty of the golden years is that your time is your own. It is never too early to start thinking about retirement.

There are a lot of different opinions on when is the best time to retire. There are also a lot of opinions as to how much money you need to have saved to retire. Retirement is a very personal goal. What suits one individual may not suit the other. Everyone’s retirement may look different as well. For instance, one individual’s retirement may consist of planning to maintain two or more homes, whereas another induvial may have planned to sell their $1,000,000 home in Washington D. C. and relocate to a house of the same caliber in a less expensive neighborhood saving on real estate taxes and the cost of living in their new town. No matter what your opinion is, there are some ways to retire earlier than you might think. Here are seven of them!

1.      Define your goals.

What does retirement mean to you? Do you want to travel the world, spend more time with family, or pursue a passion project? Once you have a clear idea of what you want to do in retirement, you can start working towards making it happen. Does early retirement mean that you are leaving your corporate career and gaining money from your side hustle? Do you have a stream of more passive income from rental properties or from an online business? Or, do you have investments that pay out enough monthly dividends that you are able to enjoy life with the proceeds? Do you have a partial retirement plan from the 9 to 5, 40 hour per week position and plan to rely on a plan to accept three travel or consulting assignments per year where you will only be engaging in the workforce for approximately 24weeks per year? 

You are the only person who can set your goal. If your goal involves a spouse or other family members, make sure your ideas are in alignment as early retirement is a life changing event. Take your time with identifying the goal. Make sure that it is specific, well thought out, and realistic. Goal making will be an exciting time.

2.      Make a plan.

Now that you have set a goal, how will you actualize it? You need to take an inventory of your net worth. How much money do you have? Be sure to identify all of your assets. Understand your monthly and annual expenses as you will need to make sure that you have funds to continue to pay the bills. Most specifically, identify what you have versus what you need. You should include a budget into the plan. Your budget will focus in as to where all of those expenditures are going. After you have a complete understanding of your financial situation right now, you will be ablet o start tracking your net worth as time goes forward helping you to see how much growth you’re making towards your goal.

3.      Live Below Your Means.

The fastest way to get to the point of financial independence is to live below your means. A dollar saved today is a dollar that can be used tomorrow (plus if it is invested appropriately, it will grow in value). Do you need 10 work uniforms when you only work 5 days of the week? Make your coffee at home in the morning instead of driving through Starbucks every day. If you really look at your lifestyle, there are probably areas that you could limit your spending without impacting your life to drastically. Instead of eating out at a restaurant for lunchbreak, save money by packing lunch. Invest the extra funds in your retirement account. It is advisable to have 25 to 30 times above your annual expenses saved plus a year worth of expenses in cash at the time of retirement. You can’t plan for the unexpected, but you can save extra money today by living below your means and making small life alterations to save money. Plus, you want to make sure that you have an emergency fund of cash for life’s unexpected moments.

4.      Invest in passive income streams.

Passive income streams are investments that provide regular income payments with little or no effort on your part. There are a number are numerous methods to generate passive income streams, so you can find one that fits your needs and interests. Setting up a passive income stream provides you security in your retirement knowing that your income will not stop regardless of the direction you choose to navigate within life. Imagine enjoying your life while you make money with little or no effort. The biggest bonus to creating a passive income stream is that you will not have to tap into your savings accounts as you will be able to pay your monthly expenses with money generated from your passive income. For example, if you invest your money into dividend stocks, you are guaranteeing a payout despite market conditions. Worst case scenario is that you may be losing money on the actual stock that you are invested in, but you will get paid the dividend regardless of how the stock is performing. Another example of a passive income stream is to have rental properties. Again, you are guaranteed a monthly income when your tenants pay their rent. What if you write a book? The money that you collect from people purchasing your book is considered passive income. There are many more passive income opportunities. These are just a few that would lend to financial independence. You should find your niche and attempt to set up a passive income stream, if you are successful, you are another step closer to sequestering your time for yourself.

5.      Eliminate debt.

One of the great things about eliminating debt is that it's a straight return. For example, if you have a credit card with 9% interest, paying it off is an immediate 9% return on your money. Likewise, if you have a car loan with 7% interest, paying it off gives you an immediate 7% return. Not only do you save on future interest payments, but you also free up cash flow that can be used for other purposes. In addition, eliminating debt can help improve your credit score, which can save you money in the long run. Therefore, paying off debt is a wise financial move that can provide numerous benefits.  

When you eliminate your debt, monthly payments become more manageable. You are no longer wasting your money by paying interest rates to lenders. You are able to capitalize on the saved money. For example, you can invest your in a simple investment like a CD and suddenly the bank is paying for using your money rather than you paying them for borrowing their money.

6.      Stay disciplined.

It can be difficult to stay disciplined when it comes to saving for retirement, especially when you feel like you're sacrificing in the present for a future that may feel far away. However, if you are committed to the goal of retiring early, it is important to stay disciplined in your approach. There are a lot of different methods and strategies out there for saving for retirement, but the most important thing is to find one that works for you and then stick with it. It may not be easy, but if you stay the course, the reward will be worth it. Embrace your vision of what you want your life to be and make it a reality.

7.      Save, save, save!

The most important thing you can do if you want to retire early is to start saving your money. It may seem like a difficult task, but if you start now, you'll be glad you did later. By saving your money, you're planting the seed for higher yielding investments. You're also creating a sense of security for yourself and your family. And, perhaps most importantly, you're giving yourself peace of mind. So, if you're serious about retiring early, start saving your money today.