How to Retire Early

The Golden Years are every American’s dream; with no work schedule, plenty of retirement funds, and the world at your feet, the possibilities are endless. The average retirement age in America is somewhere between about 62 and 65, but some people prefer to retire early and begin their relaxation as soon as possible. How does one achieve this? How do you retire early? Keep reading to learn tips that can help you reach retirement before everyone else. 

Meet With an Advisor 

The first thing you need to do is hire a financial advisor and meet with them regularly. Advisors are your go-to experts on planning for retirement and managing your wealth. With expert advice and strategies on how to invest your money wisely, you’ll have a fuller and more secure retirement fund to invest in. 

Advisors will charge a fee for their services, but the advice they can offer is well worth the cost. Navigating saving for retirement, or really any kind of investment without the help of an expert can be pretty tricky, and you wouldn’t want to lose all of your assets because of a single bad decision. Choosing from the top financial advisors in the industry will help ensure your retirement fund has the most support it can possibly get. 

While you may have heard of robo-advisors before, generally they’re not used to manage something like a retirement fund. Robo-advisors are great for new investors due to their low cost and ease of use, but with your retirement, you’ll want hands-on human help for the best results. 

What Kind of Lifestyle Do You Want?

Now that you’ve chosen an advisor, it’s time to determine the type of lifestyle you want to save for in retirement. Are you hoping to keep your current lifestyle when you retire? Perhaps you want to downgrade a bit (or upgrade)? Will you be traveling a lot, or staying within your locale? 

Determining your lifestyle with have an enormous impact on how much money you’ll need to have a successful, work-free retirement. Poor planning could mean you’ll have to return to work at some point, either part-time or in some cases, full-time. Imagine being retired and having to return to full-time work! If that doesn’t sound pleasant, you’ll want to seriously consider replanning the kind of lifestyle you’re saving for. 

Determine Costs For Retirement Month-to-Month

Now that you know the kind of lifestyle you want to have, you’ll want to create a mock budget or financial plan that can show you exactly what your expenses will be during retirement on a month-to-month basis. Include things like medical insurance, your mortgage (though paying this off before retirement is usually your best bet) any vehicle payments you’ll have, food, and of course, leisurely activities. After all, what’s retirement without a few trips to the golf course or a leisurely vacation?

Once you’ve created your mock budget, you can add up the numbers and multiply it by about 20 (the average life expectancy of Americans is around 78 years). This will give you the true cost of your retirement so you’ll know how much you need to have saved to retire early. Let’s say you’ll be living on a $2,500 budget per month. That’s an estimated $30k per year for 20 years, which comes out to around $600,000. 

Analyze Your Current Finances 

You’ve got your retirement goals set, you know how much money you need, and you’ve spoken with an advisor; now it’s time to take a look at your current financial picture. Do you have a budget already in place? If not, that’s a good place to start. Listing all of your expenses, income sources, etc., will show you just what you’re working with as far as how much extra money you can dedicate to your retirement fund. 

Reducing your expenses and paying off debt is probably the absolute best way to ensure an early retirement. If you go into retirement with a mountain of debt, you’re likely not going to stay in retirement for long. Focus on paying down your debts, especially high-interest accounts like credit cards. This “bad debt” is like a black cloud hanging over your finances; get rid of it! 

Once you’ve paid down your debt, the money you were spending on those monthly payments can now be saved toward your retirement. How much extra money could you save by paying off debts and eliminating those costly monthly payments?

Make Smart Financial Decisions From Now On

Once you’ve pulled yourself out of debt and started seriously saving for retirement, it means absolutely nothing if you don’t stick with it and keep yourself from acquiring further debt. You’ll likely experience temptation more than once in the years between now and your early retirement; a new TV on sale, a vacation package, etc. While you shouldn’t refrain from buying anything, putting yourself into debt to pay for material items only serves to further postpone your retirement. Remember the plan, and stay focused; the sunny beaches of California are waiting!

Retirement comes early to those who plan their financial futures accordingly. With the right level of discipline, a little help from an advisor, and getting rid of debt, you can retire early and be debt-free for the rest of your life.