For many people, retirement is a goal that they want to achieve as soon as possible. But not everyone is ready to retire at the same time. There are various reasons why some people want to retire early, but the biggest one is financial security.
By retiring early, you can wind down your working life in your own time and avoid the stress of retirement planning. If you're interested in how to retire early, read on for four simple steps that will help you get there!
If you want to retire early, it's essential to take the first step and identify your spending patterns. Diligently document every dollar coming in and going out of your accounts and review the results with your partner. For those serious about retiring early, reviewing your budget at least every week is recommended. Doing so keeps your spending top of mind and can reduce unnecessary spending.
Once you know where your money is going, it's time to start cutting costs. Spending on frivolous items can sneak up on anyone. Reviewing your budget regularly makes it easy to avoid unnecessary purchases. The next step is to chip away at reducing your recurring monthly expenses. For some, like your electric or water bills, changing daily habits can have a significant impact on reducing your costs. Other regular payments, such as your cell phone, cable, or internet, could be lowered by making phone calls asking for better rates.
The best time to start saving for retirement was yesterday! Once you have your budget organized and you’ve cut as many expenses as possible, it is time to stash your cash and save as much as you can. Just as important is to put your savings to work for you by selecting investments matching your retirement time horizon. For some, this may mean secure but low-yielding CDs or savings accounts, while others with a longer time to save can consider stocks and bonds.
Retirement means different things to different people. Many want to get out of the rat race and try something new. If this is the case, consider learning an exciting new skill or turning a hobby into a money-making venture. By earning enough money, you can leave your current position. You may not be technically retired, as you will continue exchanging "work" for some income. But as they say, if you do what you love, you'll never work a day in your life!