An early retirement seems like a dream. You get to relax a little sooner, remove yourself from the rat race a little faster, and spend more time doing what you love. And most importantly, you will get to spend time with your partner, children, and grandchildren. If you’re aiming to retire early, you might be wondering where you even begin. Don’t worry, we’ve got you covered.

Today, we’re going to dive into the different ways you can prepare for retirement. Be forewarned, this path isn’t for everyone and means you’ll need to practice financial discipline early on in your life – even when others around you are spending frivolously.

 

1. Stay away from new cars

 

Look, we get it, keeping up with the Joneses is a really thing! But buying new cars constantly is a financial disaster. Instead, invest in trustworthy used cars. Just make sure that they come with the “Certified Pre-Owned” designation. 

 

2. Keep a budget

 

When you have a goal of retiring early, you’re not just magically going to come up with the money to make it happen – unless you hit the lotto. One of the best ways to keep track of where all of your money is being whisked away to is by keeping a close eye on your budget. You can download an app that alerts you to subscriptions, use a paper ledger to handwrite expenses, or use an app that squirrels away money for you – whatever you do, just make sure you’re monitoring your finances. 

The average retirement income for a retired household is about $48,000 per year. So, keep that in mind when you calculate how much you need to save to be comfortable. 

 

3. Start investing

 

All investments have some element of risk but if you start early, you can reap the rewards of compound interest. It’s best to talk to a financial advisor when you decide to invest, however. You don’t want to end up putting all your money in highly volatile stocks and losing it. While an advisor can’t totally protect you from losing money or not making anything at all, he or she can help guide you, so those scenarios are more unlikely occur. 

 

4. Rethink what retirement means

 

Most people imagine retirement as sitting on a beach, reading books, and hanging out. After a while, that can get a little boring. This is especially true if you retire fairly young. So, instead of imagining that your retirement as a series of lazy days, imagine instead that your retirement is simply the time you get to do what you really wanted to do.

For example, maybe you never pursued painting because you were afraid you wouldn’t make a living. Now is the time to pick up the paintbrush again. Maybe you love history and children – perhaps it’s time to get your teaching credential and teach history. 

If you think of your early retirement as a way to make ends meet while you pursue your true life passions, you might find yourself more motivated to make it happen.

 

5. Meet other likeminded people

 

It can be hard to go it alone – especially when it comes to saving for the rest of your life. There are plenty of people who are making the same journey to early retirement like you, so take the time to network and find likeminded early retirees. 

It can be helpful to meet other people trying to reach the same goal and they may have resources that can aid you as well. 

 

6. Be flexible

 

Although your goal might be early retirement, sometimes life doesn’t work out exactly as you planned. Be prepared to change your savings strategies, wait out market downturns, and always have a plan B if you don’t meet your savings goals. Even if you have to wait a few more years and work a little more, the financial security is worth it.

And as always, it’s helpful to have a side job to bring in extra income should you find that you want to a slightly more luxurious lifestyle while retired.

Save now to retire early

The most important part of retiring early is starting your savings as early as possible. In most cases, this means that you begin saving in your 20s. For recent college grads, this isn’t always possible once you start a real job, make sure you’re setting aside 5-10% of your income. It might not seem like a lot, but over time – those numbers can really add up thanks to the snowball effect of compound interest.

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