The dogmatic perception of a retiree is often someone who is physically slow and uninspiring or someone who enjoys living by the beach. While this is somewhat true, in reality, most retirees struggle in between. Retirement can be a challenge if we are not financially prepared or don’t know what to do with the ample time that comes with the golden age.
By this time, we have probably stopped working full time. However, we still need the money to pay the bills, especially for medically related issues. Traveling and hobbies are only reserved for when we have some extra funds left. Planning for this phase can be a complex process and while there are no magic formulas to achieve a perfect retirement, there are definitely ways to make it better. Here are my personal 5 tips for early retirement.
Early Retirement Tips
# 1 – Track Your Spending
Knowing how your money is going out of your pocket is the first important aspect of the financial assessment. Be it paying your debts or daily expenses, you should identify your spending behavior and routinely cut back on excessive or unnecessary purchases.
With constant practice, you can live below your means and ideally, enjoy a debt-free retirement.
# 2 – Save and Invest
At any point in your working life, you should allocate 6 months to 1 years worth of income savings as an emergency reserve. Most retirees agree that by saving about 10% to 15% of gross income every year, you can create a fairly good pension fund.
Do consider investment option when you have an excessive saving. Investing in retirement plans and equity assets are recommended ways to leverage your future income.
Essentially, the higher your salary increment, the more you should contribute to your retirement plan.
# 3 – Add More Income Streams
As the saying goes, never put all the eggs in one basket. Therefore, you shouldn’t rely on one income alone. At any point in time in your career, you can always lose your job earlier than expected due to unforeseen circumstances.
Instead, learn to leverage your skills and turn them into business opportunities that can generate new income streams during the retirement phase.
# 4 – Keep Life Simple
A quick look at your current lifestyle can project how you would live during your retirement. If you are a spendthrift and desire to be surrounded by luxuries, you’ll have to earn a lot more than your current income to sustain that lavish lifestyle during the retirement age.
However, if you can settle for a simpler lifestyle, you’ll find that the cheaper options for basic living aren’t such a bad idea after all. In the long run, you are still able to save more and accumulate less debt.
# 5 – Find a Purpose in Life
Most people who retire at 55 to 60 years old, hope to live the remaining 20 years or so in a ‘comfortable phase’. If this phase means idling around, a retiree can suffer from disorders such as social decline and loneliness which can actually result in earlier death. Experts now believe that the key to longevity isn’t just about balanced diet and exercise; it’s also about family bonding, spiritual faith and having a purpose in life.
So instead of ‘shutting down’ during retirement, you should convert your retirement into a productivity phase, engaging in social activities and pursuing a passion to stimulate the mind and body in order to give your life more meaning.
Never Too Early to Get Started
Early retirement planning is a lifelong process and the outcome greatly depends on the choices we made today, which is during the peak of our careers. We must learn not only to survive it financially but also to enjoy the luxury of time that comes with the golden years.
Starting an online business is one of the many ways that you can plan for retirement and with the technologies these days, it’s not as difficult or as expensive as you think. Here’s an awesome entrepreneurship training that has helped many people achieve great retirements. You could be one of them too.
Do you have any thoughts or questions about planning for early retirement? Feel free to leave them in the comment area below and I will get back to you.