Retirement? Now? How?
Not a lot of people think about it, those that do don’t think it’s possible, why?
Well for one, I think in order for you to consider early retirement, you need to ask yourself these questions;
- How much do I have saved?
- How much do I spend?
- What is my net worth?
- Do I have investments and or assets?
Most people suggest the 25x approach, which is multiplying your annual expenses by 25 which means if you can save or get up to 25x whatever amount you currently spend annually, you’ll be set for retirement, I’ll suggest making that number 30.
So, if you currently spend about $40,000, in order for you to consider retirement, I’d say you need about
30*40,000 = $1.2million. Unless you have that laying around somewhere then I’d say you aren’t really ready for retirement yet. So how do you get there then?
Cut Down Expenses
The first step to early retirement is to reduce your annual expenses, find a way to get your spending as low as possible, how do you do that? Track your spending, use apps like Mint, Expensify, or you can use my Free Excel sheet at the bottom of the post to track and manage your expenses.
Getting your cost of living as low as possible without sacrificing your quality of life is important. The top 3 expenses according to CreditLoan are;
If you can find a way to reduce them, you are on the right path to early retirement.
Increase Your Income
Earning $30,000-$40,000 a year isn’t bad, but it’ll be near impossible to consider early retirement with an income like that, so what is the next step?
Increasing your income by either picking up another job, getting a raise or by starting a scalable side hustle or hustles. this is a way to increase what you make and also increase how much you save. A number of side hustles that have been on the rise recently include but are not limited to;
- Real Estate
- Drop Shipping, etc
You can also go through my posts on side hustles you can start to get more ideas on what you can do.
Invest Your Money
So, you have finally reduced your expenses and started earning money with your side hustle, do you then start saving your money under your mattress in a piggy bank? No, you shouldn’t.
While I am not a Financial Advisor and I can’t tell you where or how to invest your money, you should definitely look for a way to get positive returns on the money by making your money work for you. Let the money grow, some people have been known to invest in Stocks and Dividends while some invest in Real Estate, find one that works for you.
Getting positive returns on your money is a very important process and will have the most impact on your ability to retire early and continue to live off your assets.
PS: Views expressed are that of the author’s, do not take them as solid financial advice, remember to do your Due Diligence before investing in anything.