A comfortable retirement is easily one of the goals that we strive for when we’re making financial decisions. But what steps can you take to retire early? Let’s find out.
No matter what stage of life you’re at and what your financial goals are, one of the goals that everyone is aiming for is retiring comfortably. You may easily be a few decades away from retirement, but if you start taking the right steps now, you might even be able to retire early.
It won’t be an easy, smooth road to retirement though. This will involve considerable legwork, some belt-tightening and maybe a few financial compromises. One thing to keep in mind, however, is that early retirement is not for everyone. You will need to start making small changes to your life now if you want to retire early. Here are seven simple steps to take to achieve your goal of hanging up your boots early:
Take Stock Of Your Retirement Budget:
A great way to start planning for your nest egg is to first assess how much you will need in order to live comfortably. Do you want to maintain the kind of lifestyle you have now well after you retire? Or can you make small alterations here and there? Given that there will be no regular flow of income, you might not want to burn through your retirement corpus in a few years. In order to decide how much you should save for your retirement fund, calculate how much you would need to spend on a monthly or yearly basis in order to live comfortably.
Overcome Your Current Financial Hurdles:
You might already be saving up for your retirement fund, but if you’re planning to retire early, get started now by assessing your current financial liabilities and commitments. Monitor closely where your money is going. What returns are your investments giving you? What is the scale of debt on your hands? If you’re looking to end up with a nest egg that is enough to last you all thorough your silver years, focus on your financial flaws now and plan on how you can overcome them. Keep a lid on your debts and draw up a plan to pay them off as soon as you can.
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Define A Retirement Fund Goal:
Once you’ve carefully assessed your current financial liabilities and found out your financial flaws, it’s time to set a retirement goal. Decide on a timeframe and an amount you want to accumulate. Once you have a goal in place, it’ll be easier working towards it. Start small, aiming for more obtainable goals and then work your way up. Step up your goal every year otherwise, you won’t ever be able to reach your end goal of an early retirement.
Pick The Right Investments:
If you’re considering early retirement, you can’t hope to get there if you don’t start investing. Early retirement means you won’t have a lot of time to save. Investing can actually help you reach your early retirement goals faster. However, this doesn’t mean that you throw your money into a ton of high-risk investments even if they promise big yields. A shorter period of time would mean pooling your money into smart investments. One way to achieve that is to diversify your investments. Real estate, for instance, will earn you passive income in your silver years. Pick investments that will help maximise your retirement savings.
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Limit Your Personal Spending:
Retiring early would entail making cutbacks in your personal spending here and there. Frequent ordering in, eating out on the weekends, online shopping, multiple foreign trips, etc. are expenses that you’ll have to cut down on first. Assess your needs and separate them from your wants. Try to achieve a balance between what you absolutely need and what you can afford to give up. If a good portion of your income goes into satisfying your wants much more than your needs, it’s time to make some serious changes.
Pay Off Extra Debts:
Another way to inch closer to your early retirement goal is to pay off your outstanding debt. The longer you have outstanding debt, the more you have to pay in terms of interest charges. Reduce your outstanding debt to manageable levels so that it doesn’t eat into your retirement savings. Aim to pay off all your Home Loan, Car Loan, Credit Card or Personal Loan debt before you retire.
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Check If Early Retirement Is Really For You:
Before you go down the path of preparing for early retirement, weigh in on the pros and cons to check if early retirement is really for you. You’ll need to consider a lot of things before you make up your mind: a tight budget, considerable research, unwavering resolve and rigid savings. Factor in curveballs like medical issues and other unexpected life events when you prepare for early retirement. If you have the discipline to aim for an early retirement, go for it.
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