You can retire years earlier than you think by taking some simple steps as outlined below. The question is – Do you want to retire early?
Are you dreaming of the day when you wake up without an alarm, open your eyes and smile – because you don’t need to go to work today – or ever again? This is the time when you finally get to do what you want to do, free from the demands of paid work.
You may be surprised to hear that not everyone wants to retire early. Some people love their work and can’t imagine life without it. Others believe that working into their 80’s will keep their minds and bodies young. The people I speak with who don’t want to retire early or retire at all, generally:
- do not find work stressful
- have less social networking happening outside work
- have a small circle and friends
- and really enjoy going to work each day and perhaps taking a holiday once a year.
‘Why would I stop work?’ is a common question asked by them and so far, no one had given them a compelling enough reason. It’s predictable that they will be content and happy keeping things pretty much as they are until the end.
But that’s not me – and given that you are reading this blog – it’s probably not you either.
What are your reasons for wanting to retire early?
Reasons FOR retiring early:
- You will be more relaxed as you will gain back 9 or 10 hours a day (including preparation and travel to work). This extra time opens a myriad of possibilities for what you could do. Perhaps you will do that walk or gym session and finally get into shape. Or take up golf or tennis or other sports? Learn to play bridge? Volunteer more? The possibilities for new hobbies and interests are endless.
- Start that long-term project you always promised you would do. You could write a book, build a car or boat, redecorate the house etc.
- Connect more often with friends and family and have more time for the grandchildren.
- Travel more. Visit those places that have been on your bucket list for so long and stay there longer than you ever would have before retiring. You will still be fit and vibrant enough to really enjoy your travels.
- Develop a spiritual wellbeing practice. You may start meditation, yoga or another spiritual practice you don’t have time for now, to help you become the calm and serene person you imagined you could be.
The list of possibilities is truly endless
Reasons AGAINST retiring early:
- If you don’t have an ongoing income you will need to manage your retirement savings carefully. This will ensure they will last to the end of this lovely long retirement or until your pension entitlements can be accessed.
- You and your partner will have to learn to live together with both of you at home all the time and crossing over into each other’s space and routines.
- Your friends will be jealous that they can’t do what you did.
- You may miss your friends from work
- You will have to work out what to do with yourself now that you have so much free time.
You and your partner or spouse will need to do some maths and spend time planning to help you make the decision of exactly when you can retire. These suggestions may help:
- Work out exactly how much money and assets you have. Calculate the current value of everything you have and your current debts. The difference between these is your net worth. If you have an investment property or two, be realistic about where the property cycle is at the moment in those areas and where it is likely to be in the next 5 or ten years. Is now the right time to be thinking about selling or should you be waiting for the property cycle to pick up?
- Know when you can access your retirement funds. Study up on the laws and regulations in your country for accessing retirement savings such as superannuation or other funds. Find out if there is an early access plan or if there is a ‘pathway to retirement’ that may allow early access to part of the money in preparation for retirement. Factor this into your timing for exactly when you will retire. Each country has different rules and they vary significantly. Check with your tax advisor.
- Consider where you will live. Many people retire early to travel and live in countries with a much lower cost of living. The income earned from renting the house out can often cover living expenses and leave some spare in a less expensive country. Google to find the websites, articles and blogs that contain a wealth of information about all the possible countries you could choose. You may remain in one place for many years or move around every few years and try different places. You may come back home in your 80’s to be close to family – or you may be able to pay for a live-in assistant or carer in a less expensive country.
- Calculate your expenses. Use some of the free tools available on the internet to help you do this. Add in some extra for unexpected health costs which will increase as you age. Multiply your monthly living expenses by twelve and then divide your net wealth by this number to tell you how many years you can live on this amount. Then factor in your age pension when you get to 65, reduction in some costs when you get your seniors card and any other benefits available in your country to those over 65.
- Continue to top up your retirement funds. This can be done in many ways. Beware the ‘get rich quick’ schemes that are advertised so often. The rule is – if it sounds too good to be true, it probably is.’ I have found a model that is easy to follow, high quality, involves some work to set up but then becomes a maintenance only online business that gives me a steady income even when I’m asleep and has allowed me to travel the world while I keep an eye on my business using my laptop. Further information here.
- Consider how you can deal with any emergencies. Perhaps a reverse mortgage is possible as you own your home? This loan lets you access the equity in your property without selling it. You have gathered up some assets, jewellery and other collectables over time. Which of these could be liquidated quickly if you needed some cash fast? Factor in any inheritance you know you may receive in years to come. Make sure you have health insurance and can continue to pay this premium for life.
It is possible to retire early and start living the life you want rather than the one you must live to get ahead. It’s all about planning, saving, timing and being completely informed about where you are on the journey towards your early retirement. You can pick the date, then stay completely focused on what you need to accomplish by that date, so you can say farewell to the workplace forever.