Looking for ways to retire early? You’re not the only one. There are many people out there just like you looking for ways to say ‘goodbye’ to their offices forever before the age of 40. Some are even hoping to retire by the age of 35.
Though it might seem impossible, there are ways you can achieve it. The following includes the top 4 ways to achieve early retirement so you can enjoy the fruits of your labor much earlier.
Early retirement needn’t be a pipedream. Here’s how you can do it.
What is “Early Retirement”?
When we talk about early retirement, we typically mean ending your career early and, having planned for early retirement in advance, being able to pursue your hobbies instead of working a standard 9 to 5 job.
You might retire early having gained full financial security. You might choose to retire early but still work on certain projects from time to time.
More and more people are retiring early with side hustles and many of them are retiring before the standard retirement age.
What is the standard retirement age in Australia?
Though the standard retirement age in Australia ranges between 55 (if you were born before July 1960), and 60 (if you were born from July 1964), the key factors that influence when you can retire in Australia are the preservation age and the pension age.
The preservation age is the earliest age in which you’ll be able to retrieve your super, whereas your pension age refers to the specific age at which you can access your pension – depending on whether you’re entitled.
With early retirement, though, you can bypass these completely.
4 Top Tips To Help You Begin Preparing For Early Retirement
Here’s the advice you need – the top tips you’ll need to prepare for early retirement are just below. Take a look to find out how to do it.
1# Creating a budget and sticking to it
The first way to begin preparing for early retirement is by creating a budget. Now, to create your budget you should consider your outgoings and your income and think of ways to regulate how much you spend. The difficult part when it comes to creating a budget is sticking to it, but you can make this easier by:
- Reviewing your spending each week and making adjustments where you might have spent too much
- Create a small nest egg to cover unexpected expenses, and
- Plan ahead in terms of larger purchases that might exceed your budget amount
Here’s a little bonus tip. Managing money can be a challenge, but you’ll make it much easier with an app or program that helps you monitor your savings, investments, debts and – importantly, your budget.
2# Paying off your debt and high-interest loans
If you want to retire early, one of the first things you should consider is paying off your debt. Did you know, though, that the average Australian household owes $250,000 in terms of debt? The main categories that contribute to this debt are mortgages (56.3%) and investor debt (36.5%).
Bear in mind that some debts, like mortgages, can be considered ‘good debt’ which you might even think of as investments, and others should be thought of as ‘bad debt’, which you should aim to pay off straight away.
Some examples of ‘bad debt’ includes personal loans, credit card debt, and payday loans.
3# Consider making smart investments
By investing your money, as opposed to letting it sit in your bank account, you’ll find it easier to prepare for early retirement.
You might want to consider various investment strategies and diversify your investments. By distributing your investments, you’ll reduce the potential risks of having one asset type.
Your portfolio should reflect your comfort level and you should always be aware of the volatility of the market, but investments such as real estate or buying bonds can help you increase your income in view of early retirement.
4# Think about relocating to an economical area
Our final tip that will help you prepare for early retirement is to consider relocating to a more economical location. As we’ve mentioned, one of the largest debts you’ll have is your mortgage or rent, and if you’re concerned about how to make savings, relocation might be the answer.
Once you’ve begun to make savings, you’ll be able to invest the money and reap the rewards.
Start putting plans in place to retire early and achieve financial security
Yes, early retirement can be difficult. But you can achieve it. Keep these takeaways in mind to begin planning ahead:
- Consider downsizing or relocating to make savings
- Pay off your debts to retain more of your income each month, and
- Invest and diversify your savings to prepare for an early retirement
Put your plans into action and begin looking ahead to an early, and comfortable retirement.
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Author: Luke Fitzpatrick