Why wait until you’re in your 60s to start living the life you want.
While the age of the average retiree has been steadily getting older — that doesn’t mean you need to wait that long to retire yourself.
You can comfortably retire at any age, all it takes is some thorough planning and preparation.
If you’re considering early retirement, but aren’t sure what you need to do to make that dream a reality, we can help.
Here are ten must-know tips to help you prepare for a comfortable early retirement so you can get to living your dream life as soon as possible.
1. Plan Your Retirement Budget Now
After you retire, you’re not going to have the steady incoming stream of money you’re accustomed to anymore.
Because you’re only going to have the money you saved and what you get from investments, you’re going to have to keep a close eye on any outgoing cash.
By creating a feasible post-retirement budget now, you’ll be able to track how much you need to save beforehand much more easily.
2. Cut Unnecessary Expenses
If your goal is to retire early, then you’re going to have to give something up now.
By not giving yourself as much time to work, you’re depriving yourself of a lot of paychecks. To make up for this, you’re going to need to change the way you think about spending.
Everything that is unnecessary for your survival is disposable — especially if you’re retiring early. While you don’t need to cut all the fun out of your life, you’ll need to cut down a bit.
Instead of going to the movie theater, watch movies at home. Replace eating out with homecooked meals. While you may feel like you’re missing out now, you’ll be glad you made these cuts when you start enjoying your retirement.
3. Crush Your Debt
Debt does not go away just because you’re retired.
Before you can even think about saving up for your retirement, you’re going to have to get rid of every shred of debt you’ve accumulated over the years.
Pay off and cancel all but one or two of your credit cards and take care of any loans or mortgages you’ve taken out.
Any of the money you were planning on putting toward your savings should go to canceling your debt. And, once you’re completely debt free, you can start saving for your early retirement.
4. Get Healthy
No matter how much you saved, one or two severe medical emergencies can spell financial ruin for a retiree.
One of the best ways to avoid massive medical bills down the line is by taking good care of your body right now.
Try to start working out, getting more sleep, and eating better as soon as possible. The healthier you are now will help you save on medical expenses once you start to get closer to the average retiree age-range.
5. Boost Your Savings Rate
If you’re not going to give yourself as much time, you’re going to have to save more.
While the average savings rate is somewhere between 12-20% of each paycheck, if you want to retire earlier you’ll need to boost that percentage.
For early retirement, you should strive to put 50-70% of your annual income into savings.
Because you have to put such a large chunk of your earnings into savings, you’ll need to alter your spending habits to accommodate that.
6. Downsize Everything
Having a big house and a few big cars may be nice — but bigger doesn’t always mean better.
Bigger usually means more expensive, which can be a serious issue if you’d like to retire comfortably, early.
Take a hard look at your life and try to determine how much space you need to live comfortably. How little space the average person needs may surprise you.
Once you’ve figured out how much room you need, it’s time to downsize. While most people go for a small apartment or townhouse, you may want to consider joining the tiny house movement.
After all, they say good things come in small packages.
7. Get a Handle on Your Current Spending
We mentioned earlier in this article that you should put together a retirement budget for yourself. And while having and sticking to a budget is necessary once you leave the workforce, you should also be using one right now.
Take a look at where you’re money is going right now and try to figure out ways to cut your spending. Then use that information to build a budget you can start using right now.
Getting control of your spending now will make saving for your early retirement easier and less stressful.
8. Consider Moving
Certain places are just more expensive than others.
While moving abroad may sound expensive, you can maintain your current lifestyle in a different country for almost half the cost.
If you aren’t interested in moving abroad, then look at tax rates and cost of living in the US. Odds are, you’ll find a state that’s a little cheaper than the one where you’re currently residing.
9. Evaluate Why You Want to Retire
Sure, there aren’t many people who genuinely enjoy going into work five days a week. But, feeling unfulfilled in your work does not mean you should retire early.
Take a good look at why you want to retire early.
If you want to retire to pursue other interests or passions, then you should try to move forward with your plan. But, some studies have found that people who retire early do not live as long and are more susceptible to depression.
If you know your retirement will give you more time to get out and do the things you love than you should try to follow through. But, if you want to retire because you don’t like your job, you may want to consider a career change instead.
10. Create a Strong Investment Strategy
As we said before, when it comes to retiring early, saving isn’t enough.
To make sure you’re financially secure for your retirement, you also need to come up with a reliable investment strategy.
Smart investing doesn’t mean having to play the market or stay two steps ahead of the latest trend.
The trick to real investment success is keeping inflation in mind, and choosing a strategy that never puts your money at risk.
Preparing for Early Retirement
While early retirement may seem like a dream — it’s an attainable financial goal. As long as you put a solid plan in place and prepare the right way, you’ll be able to clock out once and for all much sooner than most.
Now that you know how to prepare for your early retirement, it’s time to start creating your game plan.
Need some help preparing for retirement? We can help.
Contact us for more information about our services and resources, or to start planning for your financial future today.