It would be fair to say that retirement is something that sits at the back of our minds most of the time. Then, as our 40s and 50s start to creep by, we suddenly start to give it some serious consideration.
However, today’s article is for those of you who want to be even more proactive, and think about retirement much earlier than the above ages. It’s for those of you who want to think about it in your first couple of decades of employment; as this is the time where you can start to build up a plan that will allow you to retire much earlier than the national guidelines (which is unfortunately increasing).
Following on from this, let’s now take a look at some key tips that can facilitate early retirement.
Have a thorough understanding of post-retirement living
First and foremost, you need to understand just how your life is going to be in the years following retirement.
This comes from both an income and expense perspective. Sure, you might have paid off the mortgage, but what about other expenses that tend to hit you later in life? We’re referring to care costs, college fees for the kids and even the cost of paying for a funeral. It’s things like this which are easily forgotten, but can really cripple you if you don’t plan for them accordingly.
Then, there is the income-factor. Your salary has obviously stopped, but what about your pension? Understand how much you are receiving, and just how this will fund your lifestyle.
Cut your debt
For some of you, this might also mean cutting your lifestyle. While credit cards and similar initiatives might seem like a great method to fund holidays and other luxuries, if you look at the bigger picture they are harming your chances of early retirement immensely.
Ones of the interest-free variety can sometimes be very helpful, but as soon as you start paying interest on these cards you are asking for trouble. You are eating money into your savings; and this is the exact thing that can fund an early retirement.
Use your savings wisely
Following the last point, we really can’t emphasize the suggestion that you must use your savings wisely. Quite often, this doesn’t involve shoving them in a supposedly high-interest bank account and hoping for the best. Unfortunately, savings accounts will grow less than the rate of inflation and this means that over the long-term, you are losing money.
The only way to truly grow money and ultimately fund that elusive, early retirement is to invest. There are risks attached, but if you can at least turn to low-risk options over the course of several decades you will be doing your pension strategy no-end of good.
Consider retirement jobs
Some might suggest that this defeats the purpose of retirement, but in a bid to stay active and still allow some money to trickle in a lot of newly retired people will turn to part-time work.
This might just be once a week, even for a few hours. However, it might be that small step that allows you to knock a few years from your original retirement date, just by freeing up some much-needed cash for when you do take the plunge.