Do you wish to escape from the rat race and retire right away?
Are you looking for a life of independence that has zero stress?
Do you want to spend more time with your family?
This may seem like a fantasy; but if you follow the right steps it is very much possible to convert your dream into reality.
You don’t have to be a millionaire to retire early. All you need to do is come with the right plan and execute it efficiently.
Here are a few steps you can follow if you wish to retire early:
Step #1: Estimating the amount that you need to save
A better way to define retirement is to be financially independent. Retirement is nothing to do with your age. It is about deciding whether to work or not. It is about living life on your terms. You will have to decide on the kind of lifestyle you want to lead and find out how much money you would need to support that lifestyle. Accordingly you will have to come up with a way that will generate that kind of money.
Estimating how much you have to save will also involve estimating how much you want to spend. To find this out, you have to check where your money is going. Your aim should be to reduce your expenses and free up more money that can be added up to your savings. Living a simple lifestyle is the key to retiring early.
Ideally you should save about 25 to 30 times of what you spend in a year.
Step #2: Investing right
Investing money in the right way is very important if you want to retire early. There is just one secret here. You have to be disciplined; you have to diversify your investments and you have to use low-cost funds that can help you lead a comfortable retired life. Do your research well and make wise choices. Make sure your money starts working for you.
Step #3: Keeping your Housing Costs low
If you want to retire early you have to make sure your housing costs are really low. There is no point if you have to pay regular rent even after you retire. Make sure you own your house before you retire and make sure there is no mortgage on it. You can even sell your home and buy a smaller home. The excess money can be invested to create a steady source of income for your retired life.
Step #4: Getting your Health Insured
Once you retire your health care costs will start going up. Investing in a good health insurance will keep you worry free as it will take care of all your hospital bills and medicines. Do your homework well and choose an insurance that gives you what you need.
Step #5: Managing your taxes
Taxes are something you need to think of when it comes to retiring early. In case your retirement income is coming from a brokerage account that is taxable, you may have to pay up capital gains. If your retirement account comes under IRA or 401(k), you may have to pay up income tax. The social security benefits you receive may also be taxable in case your income is more than a specified amount.
Living a simple lifestyle can help you save money faster, which in turn leads to better investments. Also, if you can take care of your health, you can keep your health care expenses at bay. Managing taxes can be done by doing your research well. The result is a better retired life at an early age!
To your success!
Dr. Hitesh Sharma