Early Retirement Made Easy
Early Retirement, The Impossible Dream
Retiring early should not be the impossible dream, but unfortunately it has become that. There are two impossible dream extremes that people can find themselves in, and it’s all about the money.
There are those folks who have enough money to retire but are scared to for fear of running out of money. And then there are those who dream about retiring but do not have enough money to do so. If you are afraid that you will outlive your money you can get a part-time job or buy an annuity that will payout for as long as you live. If you are short on retirement savings, then you just need to learn how to adjust the financial direction you are headed in. If you do, your early retirement will not be an impossible dream.
How to Retire Early
Tip #1 – Just Start
It is never, ever to early to start saving for retirement. Unfortunately when we get our first jobs we are young and retirement is the farthest thing from out mind. In our twenties we are usually more interested in cars, clothes, a (cool) place to live and lots of entertainment. We also have less money to invest because we earn less when we are young. But regardless, it is the absolute best time to start saving for retirement. Think about it. You will not touch your retirement savings account for at least 40 years. That means the money in that account will have 40 years to grow and compound. You cannot beat the power of compound interest.
It is also never too late to start saving for your retirement. If you are already well into your career, you can play catch up. No one cares about your retirement more than you do and the only money that will be there when you reach retirement age is the money you sent ahead. You can max-out your employer’s retirement plan; if your employer matches you get free money. You can also max-out an Individual Retirement plan. You can invest your bonuses and raises and even tax refunds.
In either case, it is okay to invest small amounts, eventually it all adds up. The key is to just start investing.
Tip #2 – It Can Be Habit Forming
Your spending habits are just as important as your investing habits. If you have developed the naughty habit of spending more than you make it will be quite difficult to find any leftover money to invest. Nothing is impossible, with a little bit of patience and focus you can change your spending habits, if you want to. The key here is your desire to change. If you want to find extra money to save for retirement, it may be as easy as adjusting your spending habits.
Start slowly. Make a plan. Do not go “cold turkey” and try to make all changes at one time. If you change one spending habit at a time you will be more likely than not to stick to the plan.
Spending habits are personal. You know your spending habits, what can you change? Can you change what you spend on food? entertainment? transportation? Maybe you can cut back a little on each category. Do you live on a budget? Could you? Do you know where you currently spend your money? Could you brush up on your financial self-discipline? Do you buy things you really don’t need but just want? When was the last time you reviewed your insurance? Is your car older, can you adjust the coverage on it? Can you increase your deductible? Will that drop your premiums? The holidays are upon us, can you buy a little less expensive gifts this year? Actions and deeds can be just as well received as expensive items. Donate your time instead of money to charities, it is just as valuable.
By setting new spending habits you will be amazed how much extra money you will find to invest into your retirement accounts.
Tip #3 – Prioritize It, Visualize It, Achieve It
Retiring early can be more than conceptual, it can become a reality if you make it a true priority.
People who do retire early do not just wake up one morning and decide to stop working; they visualize and plan that day for years and you can to. It is all up to you.
Either consciously or unconsciously, most people do set goals for themselves. Maybe getting a promotion or a raise is one of your goals. Maybe saving enough money to buy a new house is a goal. Maybe you want to buy a new car but want to put a big down payment down to keep the car payment low. If you can make those goals why can’t you make early retirement your goal? If it truly is a goal of yours you can set it as one and work towards achieving it.
Visualize your retirement days. What will you do? How much money will you need to do it? Where will you live? By visualizing where you want to be in retirement, when you get off track you will have an easier time getting back on track. Visualizing a goal has been proven to work for many individuals attempting to achieve some difficult goals. That visualization method works for any goal not just retirement planning. Olympians and professional ball players use it and you can too.
Don’t Focus On The Extreme
Early retirement extreme used to be when someone retired younger than forty. Anyone who had retired by age forty was either very lucky, inherited a lot of money or was very good at saving their money during their working years. Early retirement was never about an early retirement age but always about how much money you had on the day you decide to call it quits. To have enough money to retire early meant living under the rules of an early retirement calculator or going to an early retirement forum and playing by the rules taught there. If you want to retire early, use those retirement tools as a base from which to work from, not as your end all.
Do not focus on the extreme, instead why not focus on what you have control over. You control maximizing your savings, changing your spending habits, visualizing the achievement of your saving goal. If you want to retire early, with a little effort in the right places you can.