Many of us want
to retire early. That early retirement age might be 35, 40, or 50, but the idea
is to retire sometime before the age of 65 and start enjoying life — before age
and infirmity catch up with you.
The reality,
though, is that the dream of early retirement will remain a dream unless you
take action.
Here are 5 steps to take that will help you reach your goals of
early retirement:•
Make early retirement a priority
You say you want to retire early, but have you
made the necessary commitment? Look at the way you use your financial
resources. What do your actions say about your financial priorities? If you
really want to retire early, you have to make it a priority — and you’ll have
to make tradeoffs.
That means that you have to give up less
important things in the present in order to achieve your long-term priority of
early retirement.•
Be Realistic in your expectations
Next, you need to look at your financial
situation realistically. If you’re 35, have no savings plan, and $10,000 in
your retirement account, you’re going to have to make some very big changes in
order to retire by age 50. Look at realistic investment returns (not the 10%
predictions that many tout for stocks), and plan for conservative returns. Any
plans you make must be based in reality.•
Create a plan
Armed with the willingness to commit and
realistic expectations, it’s time to create a plan. Your early retirement plan
should help you save enough money each month to reach your retirement goals.
This means that you have to consider cutting your expenses, and changing what
you do with your money, in order to meet the requirements of your plan. And
don’t forget about having an investment strategy, as well. Investing is the
only way to build up enough wealth to retire early and comfortably.•
Make your plan work
You need to put effort into making your plan
work. This might mean cutting unnecessary expenses from your budget. It might
mean spending less and hoarding your money until you reach your goals. It’s
true: trying to retire early can mean sacrifice now.Another way to make your
plan work is to increase the amount of money you make. If you know you won’t
make your goal of early retirement in 20 years and you just can’t cut it
anymore, try to earn more money. Improve your marketability so that you qualify
for a pay raise.
Start a side hustle.
Look for ways to increase your income so that
you can put more money towards making your early retirement plan work.•
Don’t forget diversity
Don’t forget diversity as you invest and adhere
to your plan. You need the right asset allocation to see retirement portfolio
success. It can also help to build diverse sources of income that can help you
weather various storms before and during the retirement years. With the right
income sources and asset allocation, you can get through setbacks without
putting your early retirement goal at risk.
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