If early retirement was possible, most of us would do it. But how can it be achieved? Here are some tips to retire sooner rather than later.
How to plan for an early retirement
Retirement, it’s something many of us don’t think about. Why isn’t it covered in the schooling curriculum alongside tax and entrepreneurship? As it is often said, there are many ways to skin a cat and with good planning and good execution, you can face the possibility of early retirement.
Start with your retirement age
The sooner you start thinking about early retirement, the better. The problem is that unless one of your parents was a broker or financial planner and took out a RA (Retirement Annuity) for you at the age of 18, you’re probably like many who have not given early retirement much thought. For some, early retirement is at 45, for others, it’s at 60. Every bit counts, even a year can have a major impact. Once you’ve decided upon your age of early retirement, you’ll need to do some projecting mainly around how much money you’ll foresee yourself needing at that age – taking into account your lifestyle, your expenses, and your hobbies.
Are you still going to work in retirement?
There are various definitions of retirement or put another way, retirement can mean various things depending on the individual. Some see it as a point at which they will no longer have to be in their current vocation but can instead pursue a passion, while others view it as a time in their lives when work will no longer be required. If you’re not looking to work ever again, then you’ll need to save big time. Taking out a series of RAs (Retirement annuities) and consulting regularly with a financial planner will greatly enhance your ability to see such notions materialised.
Consider downsising
If your kids have moved out, you might consider downsising your property – sell the home and get an apartment instead and you’ll definitely have lower and fewer overheads. Even if you don’t have kids, the sale of your home is still something to consider for retirement as property is an asset that constantly accrues value. Also, you don’t have to sell your home; you have other assets that you can cash in. You could sell your car. The point is that downsizing doesn’t mean your quality of life also has to downsize.
Passive income or investments?
Most people cannot just sit around and do nothing. Yes, sure, it’s early retirement, so the odds are that your reading list will dramatically increase and time spent in your favourite chair might also increase, but there are only so many leisurely activities that one can subscribe to. A passive income is a great early retirement tool, especially if the route taken is successful. These days one’s ability to earn a passive income is more likely thanks to the inventive and innovative nature of the internet. There are thousands of businesses out there that you can market to receive kickbacks.
The most effective way to go about it is to become involved in affiliate marketing – driving traffic to a business and receiving a cut when a sale is made. This model applies to all kinds of businesses. There’s gaming, banking, insurance, and even online trading.
However, this can become time-consuming and those who do not wish to work at all when it’s time to lean back in that rocking chair should look at various passive incomes such as properties, funds, shares and trading commodities. If you already have paid off your house bond, and are maybe even getting a rental income from a tenant, it could be a good idea to supplement this income stream with trading stocks and shares. It has never been easier to get started as you do not need any equipment, and a simple smartphone will do. Watch a few Youtube-tutorials and read up on what potentially will affect the market to understand share prices better, and try it out on a small scale without risking large sums.
Passive income in the digital age is by far one of the most appealing post early retirement vocations to pursue. It’s something you can do on your terms, and once successful, its upkeep is easily managed.
Photo by Dino Reichmuth on Unsplash