Nowadays, there is more and more pressure to stay in work, and with money becoming tight, an easy retirement can seem like a pipe dream. However, it’s important that we approach retirement in the right way. While it may seem complicated, a few simple processes can have you on the right path to early retirement.
Don’t Rush into Retirement
While there are many who have reaped the benefits of an early retirement, there are just as many who felt they may have retired too soon. Retirement can take a lot of readjustment, so if it’s possible, it’s best we ease ourselves into retirement.
For example, if you have recently paid off your mortgage, then you will be in apposition to switch over to part-time work. This gives you the best of both world before making a final decision.
Save As Soon As Possible
This may seem obvious, but the sooner we are able to start saving, the sooner we can retire. While we shouldn’t look to work ourselves into the ground, it does mean that we should treat our money with care. It can also mean making decisions that could change circumstanced in our current situation.
If you are due a pay rise, you could request that the additional funds are placed in your pension fund. Not only does this allow you to save for your future, but is also more cost-effective for your employer. However, it isn’t a decision that should be made lightly, as the last thing you want to do is push yourself into financial hardship.
If you’re looking to retire at 55, you would need to be saving £1,600 per year from the age of 25. The longer this is left, the higher the figure goes. As such, you can expect to make some difficult decision, and stick with them for the long haul. If you’re able to maintain this, then retirement could be closer than you think.
Break Your Retirement Plan into Stages
If you’re looking to retire sooner, then it makes sense you may want to explore the world a little, or seek out some adventure. However, this won’t always be the case, and as such, means that you may not need as much as you first thought to retire.
It makes sense that we get less active as we get older, and we need to ensure we’re looking after ourselves to ensure we’re getting the maximum quality of life. Taking factors like this into consideration may help reduce the retirement you need, meaning that retirement isn’t as unattainable as we thought.
Lower Your Cost of Living
It stands to reason that the more we spend now, the less we will have in the future, unless there is some dramatic change in our income. With this in mind, many look at their current lifestyle, and make changes where they can. What these changes depend on your lifestyle, but it could mean opting for a cheaper vehicle, cheaper holidays or a smaller house.
It may not be the most appealing aspect of planning for your retirement, but it’s one that needs some consideration if you’re looking to retire at an earlier age.
Can You Increase Your Current Income?
If you’ve been doing your sums and have realised that your current income isn’t going to cut it when it comes to early retirement, then it may be time to consider some changes. The first thing we should consider is whether we can get a raise in our current position. If this isn’t possible, then we may need to look for an alternative position or secondary role.
If we do need to take on a second job, this evidently means we will be working harder as a result, so it’s not a decision that should be made lightly. However, it is one you may need to consider if you’re looking to retire sooner rather than later.
Pay Off Any Current Debt As Soon as Possible
Avoiding debt can be nigh on impossible, but when we’re looking to retire early, debt is something we need to take control of as soon as possible, otherwise it can hinder our retirement plans moving forward.
When looking at our current debt, it’s not only the amount we owe, but also the interest. Depending on how many loans and credit cards we have, we could be paying an excessive amount of interest, something which would be better invested in our future.
Depending on the amount you owe, a consolidation loan could be the answer. You need to look at the current interest you’re paying, and then look at the interest of the loan. If the loan offers a lower interest rate, then it makes sense to take out a loan, pay off our current commitments, and the repay the loan at a lower interest rate.
If you do take out a consolidation loan, it’s important that you not take our any other lines of credit. Taking out credit on top of a consolidation loan is only going to add to our debt, which defies the object of the exercise.
Retiring an early age is certainly possible, but it can mean making several changes, meaning that it may not be for everyone. However, if you’re able to make a few changes and tighten the purse strings, then early retirement is certainly still possible.