Do you want to retire early? Whether you have dreams of volunteering, lazing on a beach or enjoying your retirement overseas, getting there can seem tricky. With increasing costs for things like healthcare, housing, child care and transportation, it can seem like an impossible dream.
But it doesn’t have to be. ‘Punching out’ early; and permanently, doesn’t have to be a pipe dream. It’s not only possible, but realistic for those who take the right steps.
There’s a catch though: you’ll have to work extra hard to get there. But if you’re up for the challenge; then read on.
Start saving for early retirement now
Gretchen Hollstein, a Senior Investment Advisor at San Francisco Bay Area-based Litman Gregory, says: “not starting early” is one of the biggest mistakes people make when it comes to saving for retirement.
“If you start saving £10,000 a year when you’re 25, which is £833 a month, you could have 300,000 in the bank by the time you reach 55. This may be enough to call it a day on working for a living.”
Jason Sherr, Senior Vice President and Investment Officer at Wells Fargo Advisors, says:
“Most people do not have a plan. Get something in place even if it is really basic, the plan helps to get you motivated and you know what you are working towards.”
Plan as far into the future as possible
With life expectancies now at 87 for women and 84 for men in the UK, more people will be living well past the age they thought they needed to plan for.
That also makes it important that people both plan ahead, and view themselves as the protector of their future self. Planning isn’t a one-and-done exercise though, as life tends to throw curveballs every now and then.
Go through various scenarios to see how your plan fares, and no matter if things go well, poorly, or anything in-between, then you’ll be able to prepare for each eventuality in advance. What obstacles could pop-up and hold you back?
You should start with 2020 and look at what this year has in store for you. Does it include a holiday? Buying a new car? Moving home? If so, try to make a month-by-month plan in order to save money where you can.
Businesses plan their strategies for the year ahead in January. They do so to prepare, allowing them to grow and expand instead of stutter and fail. It should be no different for you, so plan and start saving.
enter retirement without debt
Maintaining outstanding debt balances, whether for loans or credit cards, makes your overall expense load higher.
If your debt is tied to the prime rate or some other floating rate, your interest rates could rise at the worst possible time, like just when you’re facing a large unexpected expense, loss of income or some other financial shock.
So pay off debt as quickly as you can. Then use the cash flow you free up to add to your retirement savings instead
For help and advice on how to reduce your debt, read any of the dedicated articles linked below.
Successful investing requires time, commitment and most important, a diversified portfolio. People face the most struggles with selecting investments and then re-balancing them as the market moves.
Property is usually a safe bet but requires a lot of capital. If you don’t have the capital to invest, check out some of the best articles on MoneyMagpie for investing linked below.
Try to save money every day
A good habit to pick up is to try and save a little bit of money every single day.
That may sound challenging but it is actually an incredibly good way to save up for an early retirement.
Whether you save a pound by leaving that packet of Doritos on the shelf. Or turning the heating down by a few degrees, it all adds up in the end.
If you can get into the habit of saving a few pounds every day, you can save a fortune by the time it comes to a retirement. Hopefully you’ll then be able to do it earlier than you imagined.