Your Guide To Early Retirement
Is Early Retirement In Your Future?
How To Retire Early
Many people want to retire early but even with proper planning few can afford to. But why? Well, some financial experts will tell you that the low percentage of folks able to enjoy early retirement is due to factors beyond their personal control. That may be true to some extent. However, if you are serious about early retirement, do not use that as an excuse. Even though there are a lot of factors that you have zero control over there are still many, many factors within your control. If you identify what you can control and then focus on that you will be more likely to reach your early retirement goal.
Unfortunately folks become intimidated by investing, so they shutdown and never start saving or investing. People think that they have to be financial experts to invest money for their retirement, which is entirely untrue. You do not have to be a sophisticated investment guru to simply save money. All that is required to accumulate enough money to retire early is a commitment on your part and the willingness to learn. Saving money takes more mental training and discipline than anything else.
Step #1 – Pick Your Date
The first question you may want to ask yourself is when should I retire? Unless you are thinking about an extremely early retirement, setting a target age (even if it’s just a guess) is a good place to start. We only get so many working years. After we reach a certain age many of us may not be physically or mentally able to perform our current job duties; at which point, we will be forced to retire. When we are young and feeling great we all think we will be able to work forever. But, it doesn’t always work out that way. Energy levels, attitudes about the workplace and interests change over time.
Step #2 – Do It On Your Time
It’s your work life, your retirement life. If you want to choose your own retirement date you have some choices to make about your finances. These are choices you have to make. You need to pick the time in your life when you want to save money and the time you want to spend money. It is impractical to believe that you can be a big spender during your working years and still have money leftover to save enough to retire early. You do not have to live like a pauper during your younger, working years, you just need to be frugal.
Step #3 – Learn The Meaning Of Frugal
If you want to retire early, not only do you need to learn what frugal means, you also need to embrace it as your way of life. Frugal living gets a bad rap. Unfortunately people associate frugal with cheap, tightwad, misery, boring. In reality all frugal living means is the avoidance of excessive spending. You can still have fun without spending lots of money. You can still plan nice vacations without overspending. You can still buy a nice house, live in a nice neighborhood, send your children to nice schools by living a frugal lifestyle. Frugal living does not mean that you isolate yourself and never enjoy your time with your family and friends. It just means that you learn how to live within your means.
Step #4 – Start Early On
If you learn to trim back your spending habits early on, you will not fall into the trap of over spending. If you start out with high spending habits you will get used to living at that level and never have any money to save. Remember, it’s not what you earn that will help you reach your early retirement goals, but how much of your earnings you keep. If you develop good spending habits you will save yourself a lot of financial headaches. If you train yourself to save first and spend what’s leftover you will be amazed at how much extra money you will accumulate over time. Financial discipline is the key to retiring early.
Step #5 – Don’t Take The Easy Way
It is so easy to spend money. Saving money can be a chore; which is precisely why a lot of people are unable to retire early or retire at all. Make saving automatic. The more ways you can find to automate your savings, the better. Maximizing your contributions to your retirement plan at work can be the easiest way to sock away retirement money. In effect you are saving money before you get your hands on it to spend. And if your employer matches your contributions, you are receiving free money (what could be better than that?). When you get a bonus or a raise, have it automatically invested into your retirement plans. You lived without that bonus or raise and you can continue to do so.
Step #6 – Prioritize
Until you make saving for an early retirement a priority, you may have a difficult time staying committed to the goal of saving. Financial discipline takes a personal commitment and it can be very difficult at times to stay focused. However, if you really, really, really want to retire early, you can do it. But retirement must be your number one financial priority otherwise it can be too easy to get distracted and fall back on old financial habits. If you do lose your financial perspective once in a while, it’s okay, just be sure to get back on track as soon as you can.
Step #7 – Visualize
Unless you have a vision how will you stay focused? Set your vision and work towards it. If you can create a positive vision of what you want to do when you stop working you will be more inclined to modify any excessive spending habits you may have. By following a vision, you will be less likely to make financial excuses. A visualization of your retirement will help guide you when you are tempted to overspend vs. invest or save.
You do not have to be a financial wizard to save enough money during your working years to retire early. You just need financial discipline and a personal commitment to do the best you can. People are retiring early every day and you can to.