What to retire young? The idea of retiring sooner, at the age of 40, may sound illogical when you consider that people now live longer and healthier lives than ever.
Still, it’s a path that many are exploring, although only a few are able to achieve.
As you can imagine, there are a lot of conditions that need to be fulfilled before you decide that you don’t want to work anymore, but plan on living for a few decades more without receiving a regular salary.
So, let’s take a look at some important things you need to do if you want to retire much sooner than most of your peers.
How to Retire Young
What kind of retirement are we talking about?
To begin with, you need to know exactly what kind of life you’re expecting and whether your goals are attainable.
Staying at home doing nothing comes at a price and without a regular income, you’ll soon find yourself in financial problems. The situation is even graver if your plan is to travel a lot since that kind of life requires substantial funds.
Retirement doesn’t necessarily have to mean that you shouldn’t do anything that generates income.
On the contrary, you may still do some work, but only under your conditions.
Also, such long-term plans require very careful planning, which includes choosing the right and affordable accommodation and having sound retirement house plans, so that you know how much money you need for that kind of life.
Depending on your plan, you’ll need some income to make it possible for you to give up your regular job.
The general plan is that you need about 80% of the money you were earning while working once you retire young.
Now, look at how much you can save and when you want to retire and check if you can save enough by the planned retirement day.
If you realize you won’t be able to save enough, postpone the retirement age or look into the ways of saving more or generating more income.
You’ll most likely have to rely heavily on your savings once you retire young. Which means you need to be very motivated and diligent when it comes to setting some money aside regularly.
You need to determine how much of your income you can save. If that’s not enough, look at the ways of cutting expenses and don’t forget that any help counts.
Make more money now
While still young and full of energy and enthusiasm, you need to make sure you generate as much income as possible.
You can do it by either working overtime or finding some other way to use your resources, such as renting out your room on Airbnb, dog-sitting or freelancing.
Invest your money
If you’re able to save some money to retire young, you might consider investing it in something like a retirement fund or shares of companies that are stable.
This does involve a certain risk, but you should definitely consult an expert before making such a decision.
Remember that there’s no risk-free business and that only those who make the right calls can hope for the best.
Read also: How to Use Annuity Investments to Unlock Financial Stability
Create a habit of tracking expenses
One of the most important habits you’ll have to develop to retire young, not only in order to save enough but also to better prepare for the future, is tracking your expenses.
If you keep a detailed record of how you spend your money, you’ll be able to make better predictions and plans on how to retire young.
Also, you’ll be able to see if there are any areas where you’re spending too much, which should help you come up with a plan to cut such expenses.
Retiring at an early age is possible and can bring many benefits. But in order for such a plan to become reality, you definitely need to start working on it as soon as possible.
The more you procrastinate, the less chance you have of setting yourself free from your mundane daily job.
So, if you really want to be able to afford quitting your job, start working on it right now and expect to go through some tough times. Still, the benefits of a brilliantly executed plan when it comes to early retirement will reward you for many years to come.
About The Author
Claire Adams is a personal and professional development expert, writer and frequent traveller from Perth, Australia. She loves cooking, enjoys music, and has a passion for protecting the environment. Currently exploring Europe with her travel partner in crime.