This is a question that many people have been asking for decades. Is it possible to retire in your 50s or even 40s? If so how? Here are 3 tips to help answer this question.
1. Don’t spend unnecessarily
This is probably the key to retiring early. During those years of earning money (say between 20 and 40 or 50) live well below your means. Buy used cars so you don’t have to take on debt. Shop at used or budget clothes stores. Resist buying your child that extra toy they want but will be gone in a few month. Don’t eat at restaurants too often. Buy bulk where you can.
The bottom line is to reduce your expenses as much as possible. It will be tough, but you can do it and it will give you a firm foundation to build your early retirement plans on.
2. Commit to investing every month
Put aside that money you are saving by not overspending and invest in growth stocks and funds that can build over time. For example, investing $1000 per month into a medium risk fund (averaging 6%) will result in $462,040 after 20 years. Leave it in for another 10 years and it accumulates to a whopping $1 million.
There is no exact formula for how long investments will take to grow but wise investing can substantially increase your ability to retire early.
3. Purchase a revenue stream with your investments
Once you hit the age and resources to retire early you can consider using the investments to finance your retirement. Many people use real estate and rental properties for this purpose. By renting out properties, or the very common VRBO or AirBnB model you can continue to earn a good income during your retirement years with little involvement.
Wisdom will be needed in this last critical stage. If you have been able to grow your investments to a large amount it might be possible to live just off the interest you make each year. There are many possibilities.
If you plan to retire early it can be done. Make a plan. Set goals that will achieve the results you want and stick to them. The choice is yours.