Early retirement, whether it’s at 30 years old, 60 years old or anywhere in between, is a common goal for many people. However, regardless of the age you’re seeking to retire, there are some steps you must take in order to retire comfortably.
Disclaimer: following the steps in this blog post will not guarantee early retirement. This blog is simply meant to inform readers of practices that may help reach financial goals.
Steps to Early Retirement
1. Articulate your Desired Lifestyle
When planning for retirement, people often overlook this step. It’s important to consider the type of life you’d like to live in retirement.
For example, do you have ambitious plans to travel the world? Or would you prefer to focus on relaxing and spending time with your family? Your desired lifestyle in retirement will influence your savings goals during your working year.
2. Develop a Pretend Budget
Once you’ve put into words the type of life you’d like to live in retirement, create a pretend monthly budget. Try to be as realistic as you can. Take into consideration everything possible, including relocation to another state, costs of recreational activities and potential health care expenses.
This will help you estimate your monthly expenses so you can aim to save more than necessary.
3. Assess Your Financial Situation
Successful retirement planning requires a hard, honest look at your current financial situation. Assess your current savings, income and investments, including retirement accounts like 401(k)s.
Based on your current situation, your target retirement age and your desired lifestyle, can you reasonably project that you will succeed in reaching your goal? If the answer is “no,” then it’s time to make some significant adjustments.
4. Hire a Certified Financial Planner™ Professional
During your assessment, you will likely realize it’s not exactly easy to make an accurate projection of whether or not you’ll be able to retire by your desired age. As a result, it is wise to consider hiring a Certified Financial Planner™ professional.
A Certified Financial Planner™ professional can help you lay out a Formal Financial Plan for your retirement. This Formal Financial Plan is a comprehensive document that includes everything from your risk tolerance to projected economic inflation by your retirement age.
5. Commit to the Process
Achieving the goal of early retirement requires heavy commitment to saving and growing wealth. Your Formal Financial Plan is not simply a suggested set of guidelines. It’s a document to take seriously and follow closely in order to meet your financial goals.
While early retirement is a common goal for many people, only the ones who truly commit and manage their money wisely typically reach it.