Retiring early is one of those frequent thoughts that cross our mind during work-weary stress filled days. Giving it a thought is not bad and acting upon it might just work out great. So if you happen to be one of those thinking of work-free days and spending quality time with family, here are a few pointers, which might be useful for a realistic and practical early retirement plan. Remember, you just can’t skip this step – it will decide whether you can or cannot retire just yet.
Among Americans keen on retiring early, a new blog “Mr. Money Moustache” has become extremely popular as it combines advice on investment and managing funds in a thrifty manner. The excitement behind 417,000 visitors to his blog on a monthly basis is to understand how his family of three members in Colorado manages expenses with part-time jobs as both Pete and his wife retired when they were 30 and have been giving company to their only child. While their investments have helped manage expenses, they also take up assignments when funds run low, at their own convenience. According to Pete, their living expenses are few as they happily survive on $25000 every year. Their philosophy is to be satisfied with things, which are absolutely necessary and avoid shopping. According to MarketWatch, Pete is a “financial super-hero” in the current scenario when the economy is slowly emerging from the financial crisis.
Here are a few tips from Pete, which can help people retire early by the proper management of their current earnings and expenses. By the estimation of earnings from your savings and investments during your earning period, you can plan a stress-free retirement period, which will allow you to live in existing standard of living.
- Learn to live frugally
- If you want to retire early, then understand your priorities and work towards them from the day your first paycheck arrives. While buying food, clothes, home furnishings, toiletries, and other daily use stuff, look for bargains which can help you save money as much as possible. Try to differentiate between needs and wants as that will help you cut down on unnecessary expenses.
- Set a date and budget
- If you have decided to retire early, set a definite date about the amount of funds you would like to have at that time and how you are going to reach that number. Create a realistic retirement budget from the date you decide to retire early and stick to it diligently without making any allowances for deviation.
- Realistic estimation of expenses after retirement
- While making retirement plans, people disregard healthcare costs, which can eat into a family’s budget within days if a family member has an unfortunate accident or a long illness. Instead of getting into a debt trap after retirement, it is best to invest in a suitable health plan that would take care of these needs. If you are planning to retire in a low cost area, then it is sensible to buy a house there when the costs are low to remove the monthly expense of rents.
An early retirement is not a pipe dream if you plan your present and future expenses and make savings, whenever possible, by taking control of your finances at an early stage. People should realize that handling materialism is a simpler exercise than managing spiral credit.
Author Bio : Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He regularly writes for blogs at MoneyForLunch, Biggerpocket, SocialMediaToday, NuWireInvestor & his own blog for Self Directed Retirement Plans. He writes about topics related to retirement planning, investing, and securing future.
