For every retiree who says things are going according to plans, you can find another who says they retired earlier or later than expected. Often those early retirement situations involved job market conditions, disability, or illness… But what about the ones who retired early due to personal choice? How do some people manage to do that?
They planned early, and consistently. Many of these early retirees planned it that way from the start of their careers. As early as their twenties, they crafted an ambitious retirement plan and started saving right away.
Other components of early retirement plans include an aggressive growth strategy, taking advantage of the power of compounding interest. These savers also accounted for the cost of healthcare, knowing they would retire well before the age of Medicare eligibility. And they frequently checked in with their financial advisors to make sure their plans were still on track.
They set realistic expectations. Most people who plan to retire early do so with the knowledge that they will trade some luxury for timing. They aren’t planning to travel the world and stay in the finest hotels but want to live a simple and relaxed life in an area with a low cost of living. Of course, that doesn’t mean no fun at all! They simply align their hobbies and lifestyle with a reasonable budget.
They lived on a budget. In preparation for retiring on a budget, early retirees usually lived on a sensible budget during their working years, too. While many workers make the mistake of continually increasing their lifestyle to match rising wages, early retirees devoted extra income to savings.
They diversified their incomes. Earning income from more than one source means a greater ability to save for the future. It usually also means a more stable retirement income in the future.
They utilized smart tax strategies. Income taxes can either wipe out a portion of income or be utilized to create savings. Meeting with a financial advisor and/or tax professional can help you unlock the secrets of the tax code and take advantage of opportunities.
If early retirement sounds like a desirable goal to you, let’s schedule an appointment to talk. This dream is not out of reach for many, when they plan appropriately and stick to their plans.