Retiring early is a dream for many, but few actually prepare to make it a reality. However, with proper planning and effort, you may be able to enjoy retirement ten years ahead of schedule.
With some simple calculations, investment strategies, and budgeting tips, you can get on track to make your retirement dreams a reality.
If you’ve ever asked, “How much do I need to retire?” you’ll want to dive into the world of early retirement:
Assess How Much You Need for Retirement
The first step in retiring early is knowing how much you need. During your assessment, you may want to consider the amount you need for a comfortable life.
A good rule of thumb is to save about 70%-80% of your current income to live comfortably. Estimate the amount you’ll need by reviewing your current expenses and projecting them to cover 15-20 more years.
Be sure to account for the following:
- Inflation
- Healthcare
- Property taxes
- Travel and other recreational activities
How to Save for an Early Retirement?
Once you have a rough estimate of how much you’ll need to retire early, focus on your savings.
You’ll need to save aggressively for early retirement—especially if you start saving later in life.
Open a dedicated retirement account and contribute as much as you can each month. If your employer offers a 401(k) or IRA plan, take full advantage of it.
Contributing to a retirement account could help you save on taxes now and grow your funds over time.
Consider Saving More
Saving more for retirement may involve making some sacrifices and cutting back on your expenses. You can start by creating a budget and keeping track of your costs.
Determine where you can cut back on dispensable expenses like reducing your monthly subscriptions or eating out and redirect that money toward your retirement savings.
You may also consider taking on a side gig such as a part-time job, food delivery, or ride share to earn extra money, which you can add to your savings.
Invest Wisely for Growth
Several investment options, from stocks to bonds and mutual funds, could help you grow your wealth over the long term.
Consider working with a financial advisor who can help you make investment decisions that align with your financial goals and risk tolerance.
Remember, the earlier you start investing, the more time your money has to compound, and the more wealth you might accumulate over time.
Stick to Your Budget
Saving for an early retirement requires long-term goals and staying on track. So, keep an eye on your spending and build a monthly budget that you must follow.
Consider big-ticket expenses and cutting out unnecessary expenses to boost the percentage of savings.
Every penny truly counts to reach early retirement, and if you can invest a little more each month, that adds up over time.
Bottom Line
There’s no straight answer to how much money you need to retire ten years early.
Deciding to follow this path is an incredibly personal undertaking, and everyone’s situation is unique.
Staying proactive about planning for your financial security is vital, though it takes considerable effort and determination.
When all the pieces are in place, you may find that 10-year early retirement is more realistic than you might think!
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