Do you want to retire early, but money is a problem? Find out what you can do!
According to the statistics from the Pew Research Center, 29% of Americans haven’t saved anything for retirement. These statistics are concerning and reflect the fact that there will be a lot of people who will probably not enjoy their retirement because of financial worries.
But you can still have a wonderful retirement even if you are not part of the financial elite. When you want to retire early, there are numerous strategies that can help you, and we are here to share them all with you.
Get ready to explore the actionable steps you can take when you want to have a carefree retirement earlier than the term. Learn how to optimize your budget and break free from the traditional retirement trajectory.
1. Try living below your means
When you don’t have a nest egg and you want to retire early, it might sound like an impossible task. But you can still get that sweet financial freedom if you just follow some simple steps. One of them is to reduce the cost of the things you need to live.
Yes, this is possible, and you might be surprised by how much money you spend on things you don’t really need. There are three main objectives you should have in mind: housing, food, and transportation.
If you feel like the expenses of your home are overwhelming, you can try downsizing. This will definitely save you money, and you can use it to retire early. Also, you could consider renting a space that seems more profitable for you.
Regarding food, home-cooked meals are going to be the best strategy. Try to limit ordering and dining out. Also, plan your groceries and don’t fall for impulse purchases.
All these changes might seem daunting at the beginning, but keep in mind that they will help you retire earlier.
Also, easy savings in retirement accounts like 401(k)s and HSAs (Health Savings Accounts) can give you some incredible tax advantages once you retire. You will pay less taxes, which means more money for you.
2. Prioritize your health
If you want to retire early, you might already know that healthcare costs can be a barrier. And this gets even more real if you consider that Medicare benefits become available only once you are 65 years old.
A 2023 report by the Kaiser Family Foundation tells us that premium family health insurance averages $1,398 per month, not considering the $8,620 deductible. This can intimidate even the most practical and organized individuals who already have a plan they follow.
Hopefully, there is a way you can somewhat control your future healthcare expenses. If you want to retire easily and do it in style, you can start to prioritize your health as soon as possible.
There are three main causes of illness-related deaths in the US: heart disease, cancer, and respiratory diseases. What you can do to minimize the chances is to prioritize physical activity and a healthy diet. And maybe fresh groceries and the money you spend at the gym might seem like an expense now, but in the long term, you will be thankful you made this decision.
3. Try automated retirement savings
Your goal is to retire early, right? But for this, you need to contribute to your retirement account. So, relying on whatever’s left at the end of the month is no longer a sustainable strategy.
But the secret weapon that can help you retire early is right here. We are talking about automated retirement savings. Set it and forget it is the best tool you can use, and get ready to learn more about it.
Start by calculating the necessary contribution amount from each paycheck. Then you need to set the chosen contribution as an automatic transfer. The secret is to start small, and from there, if it’s comfortable for you, try to increase your contributions over time.
You will adjust to living on less, and the money you save will help you retire early. Try to imagine this as an autopilot mode for your retirement savings. Keep in mind that consistency is key!
4. Get rid of debt
When you want to retire early, there is one thing you should focus on immediately, and that is paying off debt. Inflation made stock market returns average 6–8%, and nowadays credit card interest rates can be as high as 19.2%. This means your debt is growing much faster than you expected, and this is a threat to your savings.
The first thing you can do is get rid of the high-interest debt. Any debt that has an interest rate above 6% is part of this strategy. Once you get rid of this debt, you will be able to get a return that is equal to the interest rate you were previously paying.
But besides the financial benefits, having no debt to pay gives you an incredible psychological boost. Once you have no debts, you will feel completely free, and this can motivate you to achieve the retirement of your dreams.
Keep in mind that you can retire easily, and this is not a privilege only the wealthy can access. If you make a goal out of this and use some smart strategies, everything can be achieved.
If you want to know more about this, the following book might help: How Much Money Do I Need to Retire?: Uncommon Financial Planning Wisdom for a Stress-Free Retirement (Financial Freedom for Smart People)
You should also read: Mindful Aging: 7 Things You Should Know About Life After 55
