Do you find yourself counting down to Friday each week â even when itâs only Monday morning? Do you wish you could ditch the daily commute and long hours at the office? Have you got a secret desire to drive across America or buy a second home in the South France?
If one of your main aims is to realise your dream of retiring early, take a look at these five steps. It may not be as unattainable as you first thought.
1. Take control
Retiring early wonât just happen. As life expectancy increases and governments raise the age at which you can take the State Pension, you could find yourself working for much longer than youâd anticipated. So if thatâs not in your game plan, you need to take positive steps to build up a pot of your own money. The State Pension should just be seen as an added extra.
2. Set realistic goals
Once youâve decided youâre serious about retiring early, you need to draw up a plan with attainable goals. A yacht and a penthouse suite might sound idyllic but if such a lifestyle is not achievable then itâs no good setting yourself up for failure.
Instead think about the net figure that will give you enough to live on each year, with a lifestyle that suits you. Everyone is different. Some people may want to eat out frequently, some may be keen to travel the world, others may prefer more time at home with the family.
3. Crunch the numbers
Nowâs the time to get down to the nitty gritty. It obviously depends on how early you are going to retire but if you are planning on retiring in your forties, a good rule of thumb is that you need to accumulate a pot of money worth 25 timesâ your annual living expenses before you give up work. As well as thinking about what level of luxury youâre going to allow yourself, donât forget to also factor things in such as insurance and care costs.
4. Start early
Save as much as you can while youâre working and start investing early. Compound interest can have a significant impact on your original investment over time. In fact, when you start saving can be even more influential than how much you save. For example, if you started saving when you were 25 you could accumulate 35% more over the length of your career than somebody who started saving the same amount at 35. Itâs also important to make sure youâre investing with the right level of risk depending on what stage of life youâre at.
5. Donât be led by FOMO
The âfear of missing outâ or FOMO can make us do things because everyone else is doing them. But making large purchases or taking on a large mortgage could steer you off course if your real goal is to retire early and travel the world. So keep focused on your goals. Remember, itâs your retirement plan, unique to you, not a colleague, neighbour or relative.
If youâd like to talk over your goal to retire early in more detail, do get in touch with us.
