Retiring early is part of many people’s “dream life”. Sure, we spend the first twenty years of our lives preparing to work at a job (for the next thirty plus years), but the ultimate goal is to be able to do no work at all.
While there are very obvious reasons that some people reach this goal sooner than others, like being trust fund fanatics, having amazing high paying jobs, or winning the lottery, there are other things that you can do to reach retirement earlier. Yes, your income versus outcome has a lot to do with how quickly you can save, but you can also make sure you are saving effectively so that you get the most out of your money.
First and foremost, the easiest way to reach retirement early is to start saving for retirement early. This seems like a no-brainer, but saving is often the last thing on a young person’s mind when they first get a job and start earning money. Start a 401k as soon as you possibly can. Simple math shows you, however, that saving early only helps you in the long run. For example, if someone starts putting away three-thousand dollars a year at twenty, then stops at thirty, they will have more money when they retire than someone who starts putting away three-thousand dollars a year at thirty and pays that much until they retire. The interest rates on savings accounts pay off hugely if you give them a lot of time to work for you. In essence, the earlier the better.
Next, if you live modestly throughout your early adult life it will aid you in an early retirement. Establishing a lifestyle that is below your means not only helps you save money towards retirement (and perhaps other more enjoyable things) but it also helps you budget when you are retired and live on a fixed income.
Have an actual retirement plan- and not just a financial one. It is common for people to retire, realize that they have nothing else to do, get bored, and go back to work. This doesn’t really do one a whole lot of good because it lands you right where you started; working. Even if you are absolutely sure that you will love the time off, have a plan of what you want to do in that time to make the most of your retirement. Sign up for classes, join a club, start a garden, or decide to travel the world. Whatever you want to do is up to you; just make sure you have enough activities to occupy your time. A lot of people find it helpful to phase themselves out of work and into retirement by switching from full time to part time and then decreasing hours from there. Working fewer hours over an extended period of time will help you ease into retirement and allow you to earn a few more dollars for whatever hobby or trip you decide to turn to.