How to Plan an Early Retirement
Many of us at some point in our careers have thought about taking an early retirement from our day jobs to pursue our passion and hidden desires. Your retirement age might be a few decades away, but we all think about the eternal truth about the time after retirement – the financial constraints, the old age, the changing economy, inflation in the currency, health issues and other problems. To say that the life after retirement is comfortable is an understatement. There are multiple factors that you need to focus on before you can plan on retiring earlier than the expected time, moreover the whole journey will not be a bed of roses for sure! Lot of effective financial planning will be required; you’ll have stop spending lavishly on things that are not as important as your financial goals (after retirement), moreover you’ll have to think about the bigger picture rather than just sticking to small financial goals.
Financial goals can vary from person to person depending on many factors like- income, savings, investments, inherited wealth, property valuation (if any) and spending habits among others. The important things to discuss are the ways in which people from all kinds of income slabs can use to save for an early retirement. Early retirement means not only will you be financially stable after you leave your job but also will have enough funds to last the rest of your lifetime.
We Know you have a lot of time before you finally decide to retire from your official duties, but there is no harm in planning that phase early in your life as it will give you a more precise picture of your financial goals and will allow you to be in a more comfortable position. We bring you ‘5 essential methods to plan an easy early retirement’.
SET A GOAL FOR YOURSELF –
The most important thing to do before you start saving money for retirement is define a goal for yourself. Decide a timeline, and an amount that you want to save up before you decide to put down your guard. This will help you decide your current expenditure, investments, savings and income that you must generate in order to achieve your goal. Once you have a goal in place it will become easy for you to set financial targets and start working towards them.
CALCULATE YOUR CURRENT FINANCIAL STATUS –
The next thing you need to focus on is keeping a track of your finances. You need to sit down and assess how much money do you spend in a month and how do you distribute your income. It is very important for you to know where you stand financially so that you can calculate how much you need to save to achieve your goal. Once you know where your money is going, you can plan on saving or investing a part of it for the future.
FIX A RETIREMENT BUDGET –
Now that you know your financial position, you can now fix a retirement budget. It is very important to assess how much money will you need to live off the after-retirement life comfortably. Your current lifestyle will give you a rough picture of the future. Calculate your monthly and yearly spends in order to plan the amount you need to save for retirement so that you don’t run out of funds sooner than planned after retirement.
Avoiding liabilities is a primary objective if you plan to retire early. Pay off all outstanding debts within the expected time so that you do not fall into a debt when you are advancing into retirement. The longer you have debts, the longer you’ll have to wait to pay it off and you’ll have to pay more in terms of interest. So, it is important to pay off any loan or credit that you have taken in stipulated time so that you are stress free before you plan to quit your day job to enjoy a never- ending vacation.
INVEST MORE –
It is no rocket science that you need to save money more aggressively and tighten your expenses to achieve your financial goals, but only saving a part of your income won’t help you if you are planning to retire earlier than expected. It is important that you diversify your income into small investments. High-risk investments can be sometimes risky, but will guarantee bigger returns, while small-risk investments will give you smaller but steadier returns. So, you must choose a mixture of both kinds so that you can accumulate a lump sum amount for a comfortable retired life.
Retirement must never feel like the end, rather it must feel like a new beginning…
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