Is Early Retirement An Impossible Dream? Act Now!
Saving for retirement is essential if you would like to enjoy life in your later years. As the age for retirement steadily rises, unless you put plans in place now, you will have less chance of enjoying your retirement when fit and healthy. Thanks to advancements in healthcare we are enjoying longer lives, however chronic, but manageable ailments mean that as we age out activity levels can become restricted due to how we physically feel as wall as being tied up with hospital and clinic appointments.
Many people are researching options available to them which will enable an earlier retirement. Thinking “out of the box” a little will open up possibilities of saving for an early retirement that you may not have considered. The earlier you start saving the better, but the dream of earlier retirement may be more tangible than you thought!
On average it is estimated that to retire early you need around 40 years of savings behind you. That sounds impossible, right? Thankfully (and surprisingly) with careful financial management it is actually achievable.
This article aims to highlight options available to you that will help you plan for an early retirement.
When do you hope to retire?
Most people plan for all sorts of things, such as buying a house, saving for holidays, selecting a life insurance policy and getting married, but planning for retirement seems to feature way down at the bottom of everyone’s list! Perhaps this is because when we are younger it is unimaginable that you will ever become old. Age however is a fact of life and time passes very quickly. So planning as soon as possible is essential.
It is a good idea to decide how old you would like to be when you retire. Early retirement means different ages to different people. If you can pinpoint the age that you would like to retire you will be able to plan how much money you will need to have saved by this point.
Also, decide whether you would like to fully retire, or go into semi retirement. Any income at all that you have coming in will help towards retiring earlier. Some people choose to earn money from their hobbies, such as arts and crafts or web design, meaning that they are earning money doing something that they enjoy. If you don’t plan on working for financial gain at all in retirement you will need to save a lot more.
The next stage is to work out how much you need to live on once retired. Remember that if you are paying a mortgage, you should have paid it off before retiring, this will lessen outgoing considerably as well as give you the option of downsizing to increase your disposable cash. It is usually possible to live much more frugally once retired as you will no longer have the costs related to the daily commute and children will hopefully become more financially independent.
Often people only consider the more traditional ways of saving for retirement ie paying into a pension fund and saving. However there are other more lucrative ways of making money to ensure an early retirement. You could consider investing your money in order to achieve your goal. Investing your hard earned money is not without risk, but pension funds are also a form of investment with no guarantees. There are many forms of investments available and there is a plethora of information available, both online and through financial advisors that you could tap into. Investments could be made by trading on the financial markets, commodity trading or investing in real estate.
Although investing in stocks and shares has the potential to be extremely lucrative, there are risks involved. Before you embark on investing your money you should take professional advice from trading experts and independent financial advisors.
Property has always enjoyed a good reputation as being a great investment for the future. You may decide to delve into the benefits of renovating properties to sell on, or create a rental property portfolio. Before purchasing any property as an investment research the area carefully and look at how much similar properties have been sold for. Otherwise your investment could turn into a money pit, losing you more money than you make.
Another possible investment relating to property is to buy a holiday property abroad, so that you can rent it out to the holiday market. In the right area properties can attract a great return on your investment.
Always ensure that you have paid off your mortgages and loans at the point in which you want to retire. Most mortgage lenders will let you make over payments without penalties.
Here’s to an early, healthy and happy retirement!