The dusty old school concept revolving around retirement, where one reaches old age and stops working forever, is obsolete. Early retirement offers you the opportunity of saving enough money, so you stop working for money and start working on things you enjoy doing.
Do not get this concept twisted; early retirement doesn't dispute the fulfillment that comes from working. According to research and statistics, not working presents the possibilities of mental disorders, you don't need to stop working. You would instead get flexibility and freedom options. Get to choose to work in fields you enjoy working in and possibly leaving work when you get tired of a particular area.
Contrastingly the idea seems to be a farfetched reality for many in the current world—the constant facts such as stagnant wages, unfavorable working hours, and the runaway costs of housing. The probability is close to zero possibilities; many may not fathom the idea of even retiring ever.
A famous Chinese aphorism "The best time to plant a tree was twenty years ago, the second-best time is now" resonates well with early retirement. Everybody has a starting point; start now where you are, and it's better to start late than never starting at all. However, you need strategies to help you create a well-working plan.
A good strategy in implementing your retirement plan is to optimize your income, expenses, and saving. Analyze keenly these aspects;
How Much you Need to Retire
The first step requires you to come up with a clear, well-thought set of numbers depending on your annual expenses, well accomplished by tracking your yearly expenses. A sample paper by Trinity studies clearly illustrated that you need to save 25 to 30 times of expected annual costs for you to have enough money to last you a lifetime.
In an instance, you project your expenses as $100000 annually; you need to save between (25 * 100000) $2,500,000 and (100000*30) $ 3,000,000. Factors such as if you have kids or will have kids in the future, or maybe you want your house in a porch locality, will gravely accelerate the numbers.
The bottom line of this step is the less your expenses, the more you can save towards early retirement.
Reduce Costs on Major Expenses
You need less money than you think. Minimizing expenses is one sure way of boosting savings. You will probably identify you spend a lot on costs such as housing, entertainment, travel and transportation, and food. Average families spend 70% of their income on transport, accommodation, and food.
A workable strategy is to look for all possible ways to eliminate or even reduce such costs. That designer's shoes and watches won't make you happier. Set standards correctly and meet your need in a certain way.
For instance, minimize housing costs by subletting the extra rooms in your 2 or 3 bedroom house. This way, you earn additional rent; this is the fastest way to increase your savings. To cut off transportation costs, don't buy a car if you do not need one. Evaluate if you need one. In cases where need one, cheaper options are viable too. In cases of commuting to work, opt for economical options that will create more room to save. On food, make food from home, buy food in bulk, and east less. You certainly don't need a fancy wardrobe as well.
Diversify Your Income Streams
One sure way of increasing saving rates is finding ways to make more money. The more money you can make, the more you can save and invest. Learn new skills.
Remember that the old days you would go to school to get a job and reach retirement age, these days are long gone. Thankfully the current digital era presents so many opportunities to make money, only learning a skill or joining a money-making community offers you that extra buck.
Optimize 9am-5pm
Negotiating with your employer is a key to optimizing your 9-5 pm. Make a point of asking for a rise and taking advantage of your employer's bonuses or other facilities. Some employers offer you the opportunity to work remotely, optimize your time, and do other activities that make you money.
Set Daily, Weekly, Monthly Reminders on Saving
The goal of retirement significantly relies on saving, especially if you are still young. Luckily there are a ton of apps that can quickly help you achieve your saving goals. Some systems can track your consistent savings for free.
If you can save $50 a day, this would exponentially accelerate you to financial freedom. Even $1 a day could reap mind-blowing results.
Accelerate your Early Retirement by Investing More.
You can invest in anything nowadays; A pure focus on bonds, shares, money markets, mutual funds, and expert advice from investment specialists. Ideally, your investment strategy should include both a long term strategy and a short term strategy.
Understand all the viable investment strategies; the aim is to make your money pull the muscle for you, which requires investing in the right way.
Track Your Progress
Keep track of your saving rate and your net worth. There is an excellent correlation between your saving rate and the years it will take you to retire early. The higher the saving rate, the shorter the period.
On the other hand, net worth will inform you of how much you are worth, by removing liabilities from your total income. Early retirement doesn't promote deprived living; with the time, you will note a high abundance in not only money but also time.
Money is Infinite, but time is finite. Prioritize your time by implementing these strategies. Once you realize you no longer need to work for money, you will evaluate your options. Implementing these strategies needs close attention to dynamics like taxes and interest rates.