How To Make Early Retirement A Reality

Early retirement is a pipe dream for many people. However some simple goal setting and planning, could make your retirement dream come true much sooner than you thought.

Many people talk about wanting to retire early, but how many people actually really believe that early retirement could be a reality. Do they have a plan? Do they know why they want to retire? Have they taken any steps to make quitting work early possible?

If the answer to the above questions is no, then the chances are they will have to work much longer, and will probably have less money to retire with.

If you are serious about retiring early then there are certain steps you need to take in order to make your retirement dream come true.

Here is a guide to making early retirement possible:

What Does Retirement Mean to You?

Like most things in life, people need to have a real reason and drive to make things happen. We all talk about things we would “like” to do, and say things like “it would be nice to”, however human beings tend to really need, or have a real passion and drive behind what they do in order to make goals a reality.

The first step in your retirement plan is to figure out exactly what retirement means to you. What do I mean by this? Well, what will retiring early mean to you and your family?

What will it allow you to do that you can’t do now? Who would you be able to spend more time with if you weren’t working? How would you spend your time? What would you like to do with your time? Where would you like to travel?

Having answers to these questions will help you focus on what retirement means to you, and why it is so important for you to achieve early retirement. Once you have a big enough set of reasons for your goal, putting in the necessary work and effort to make it happen will become easier.

Make it Vital

You must make a real commitment to leaving the 9-5 grind as early as possible. Once you have decided in your own mind that this is what you want to do, then you can set a plan in motion, and begin making financial decisions towards your goal.

Whilst retirement is just an idea in the back of your mind you will not make good choices. Once leaving 9-5 becomes your ultimate goal you will be more likely to stick to any financial rules and boundaries you set yourself.

Financial Steps

So what can you do in order to create enough money to quit work early? There are many ways to generate a nice retirement fund, and below we will look at some ways you could do it:

Start saving early – If you begin saving early then you will benefit more from the power of compounding. Interest will have longer to earn more interest, and thus your savings will grow much faster over time.

Aggressive asset allocation – One of the benefits of planning retirement early is that you can start out with a more aggressive investment strategy, or asset allocation.

Asset allocation is a term used to describe how a person splits up their investments. You may be a conservative investor who prefers to put 80% of their investments into a safe fund where growth is very small, however your money is not at risk of losing value, and just 20% into a higher risk fund with better chance of bigger returns, but increased chance of loss.

Someone who has a more aggressive asset allocation approach will maybe invest 60% of their money into a high risk, high reward investment, and only 40% into a safer fund.

The earlier you start investing the more aggressive you can be in your approach, which can (if you’re lucky) mean bigger returns.

Stay out of debt – A very important step in retirement planning is to stay debt free. This means not taking out any risky loans or credit cards.

Living to a sensible budget is a very good idea, as well as not overspending. This does not mean you have to become a skinflint, but it does mean you should think twice about those impulse buys, (we all do it!).

If you are able, work more! – The key is not to take on more than you can physically cope with, but if you can increase the amount you are earning then you will have a much better chance of reaching your retirement dream.

Think of different streams of income you could create. Obviously if overtime in your current job is possible take that option first, then you could think about maybe clearing out the attic and selling some unwanted items on Ebay. Car boot sales are another useful way of earning extra cash. They are also a great deal of fun, and lovely in the summer time!

Maybe there is a local store that could use some extra help on the weekends, or perhaps you could even do some freelance writing? Have a look in your local paper, and you will often find possible income streams available close to home.

Stick to Your Guns

Once you have made the decision to retire early, plan and attack! Having a retirement plan is great, but only taking action will make it reality.

If it helps write some motivational notes to leave around the house to remind you of why retirement is important to you. Making the effort and sacrifices now will give you more time in the future.

Putting the hard graft in today, means you will have tomorrow to do what you want! Quitting work earlier in life gives you the chance to enjoy more freedom. The chance to spend time with family, to travel, to just live without having to get up and rush around in the morning!

As far a fetched goal as early retirement may have seemed to you, hopefully reading this will have giving you the motivation, and ideas you need to start planning, saving, and working to your retirement!

The sooner you start, the sooner you will make it a reality!

This article was written by Timothy Ng who is a regular writer and part of the team at Credit Card Finder, a 100% free Australian credit card comparison and application service. Visit the Credit Card Finder website for more information or subscribe to their RSS Feed.