Latest statistics put the average retirement age at 62, but poor money management and student loan debt may push the age further for some people. If you want to retire earlier, you won’t do it by wishing. You’ll have to adopt some critical money management habits if you want to shave a few years off your retirement age.
Most people pay all their bills and expenses then save what’s left – if there’s anything left to save. If you want to retire early, you have to make saving a priority. Reverse your thinking and put money in savings first, based on a budget of course, then live on what’s left. To make it even easier, set up an automatic savings transfer to occur regularly a day or two after each payday.
Plug Up The Leaks
You’ll be able to save more money if you can cut back on spending and cost of living. Review your spending and identify places where you’re spending money unnecessarily. Cutting back may require more drastic measures like moving into a smaller home or trading for a less expensive home. Not only do spending reductions let you save for early retirement, they also minimize your living expenses and the amount you need to retire early.
Start Saving Early
If you haven’t started saving for retirement, you’re already behind. The longer you wait, the more you’ll have to set aside to reach your retirement savings goal. Don’t wait for some elusive milestone (like paying off debt or getting your next raise) to start saving – do it today.
Avoid Debt Like The Plague
Every dollar you spend on debt is a dollar you could have contributed to your retirement. Paying interest on debt is even worse because you’re paying a cost for the convenience of paying your lender over time instead of all at once. Work aggressively to pay off the debt you already have, then start saving all the money you were putting towards your debt. In the future, save up for big purchases rather than financing with expensive loans or credit cards.
Maximize Your Income
This might mean getting a second job, starting a business, or owning rental property. Or, it could mean advancing in your career, getting promotions and raises. No matter which path you choose, making more money means you have more money to set aside for an early retirement. If you can figure out how to create a reliable stream of passive income, it can serve as a revenue stream that can help you retire earlier.
Live Like You’re A Millionaire
If you think this means you should go on expensive vacations, buy a luxury car, and start wearing designer labels, you’ve been watching too much television. Most millionaires don’t live the lavish lives you see on the big screen – they don’t spend money on things that lose value. Instead, they’re more frugal than not and very disciplined with spending. Reaching your early retirement goal will require the same of you.
Get Professional Help When You Need It
You may not be able to save for an early retirement all on your own. A financial advisor can help you figure out the best way to save and invest so you can reach your goals. Make sure you choose an experienced, licensed advisor who can clearly explain various investment options and strategies to you.