No matter what your age, most people plan to eventually retire. However, not everyone has planned well for retirement.
Some Gen Xers, for example, have either not saved anything for retirement or not saved enough. This may make retirement difficult for them.
But what about people who wish to retire early? Is early retirement a pipe dream?
1. It Depends on Your Lifestyle
One of the factors that may determine whether early retirement is a pipe dream for you or not is lifestyle. How do you plan to spend money during your retirement?
If traveling and eating out frequently are part of your retirement expectations, your monthly budget during retirement will likely be higher than it currently is. For some people that means early retirement could be out of the question because they need to continue working in order to afford those retirement goals.
But if instead you plan to live more frugally during your golden years, you may be able to get by with less money each month. This could make the difference between early retirement and late retirement.
2. Preparation is Important
In the past, retirement was thought of as the time when people get to finally kick back and enjoy all that they have worked so many years for. In other words, it was to be a time of celebrating success and hard work.
Of course, our economy has changed over the years. Whatever your age it is possible your social security benefits will be either limited or non-existent by the time you are ready to retire.
Can that be changed? The answer is that it can if you are ready to live a more frugal lifestyle. Preparation for retirement is important and this is especially true if you want to retire early.
3. Making Touch Choices
If you are wondering how to prepare for early retirement there are some ways it can be done. You must plan and save now in order to retire early a few years down the road.
One way to avoid early retirement being a pipe dream is to cut your expenses now and pay off debt. Slash your monthly budget as much as you can. Use the extra money to pay off debt until everything you own is free and clear.
To do that you may need to get a second job or side hustle. Having extra income could help you not only pay off debt but it might make the difference between retiring at 65 or 70 and retiring at a much younger age.
You must take part of the extra money you are saving in your budget and invest it for the future. Doing so is critical if you expect to have money for your retirement later.
When it comes to investing, it helps if you invest often and diversify your investments. Put a portion of them into low risk investments, some in medium risk investments, and some in higher risk investments. Talk to a financial advisor if you are uncomfortable doing this on your own.
It is true that for some people early retirement is a pipe dream. But with planning and preparation it is something that could be achieved.
Do you plan to retire early? If so, how will you go about it?