Retirement is often thought of as a time to relax. You stop working and take time off to rest. However, these days, it’s becoming a time to travel, train for marathons and even start a new business. The convention of sitting around and doing nothing is changing.
With the change in the retirement activities, our timeline for retirement is also changing. Earlier, people used to retire from work. Now, they are retiring to something. So, many people want to retire sooner to make sure they do what they actually wanted to do.
However, retiring early needs to be planned. You must have the resources that are required for an early retirement, You need to make a financial plan. You should estimate the amount needed for retirement using a spreadsheet or a retirement calculator.
The financial plan is a good measure of the amount of money you should be having to have enough when you retire. By considering the interest rate, inflation, spending pattern, taxes and other expenses, the retirement calculator can give a rough estimate of the amount you need to have. Taking the worst case scenario, you must run this plan to an age of about 90 or 95. That way, you’ll be on the safer side and definitely have enough.
The beauty of this plan is that both positive and negative events can be forecasted using the retirement calculator. Whether you’re afraid of a long-term illness or think that some investment might benefit you, you can predict everything, and get an estimate of how much you’ll need to save.
If you plan to retire early, you must take into account the risks, savings and all the things that follow this step. Here are the five things which you can do that can make this happen:
- Downsize to a smaller home
Generally, people’s home is the largest expense they make. However, a big home comes with a bigger mortgage. Going into retirement with such a mortgage is not a good idea. For retiring early, you must downsize to a smaller home and look to pay your mortgages sooner. This way, you can be free of any dues while retiring and you may even leave the job sooner.
- Relocate to a less expensive place
Most people living in cities feel that the place is expensive to live. Moving to a more rural area, or an area with lower cost can help you save more, making your early retirement dream come sooner. Places such as Tennessee, Florida, Arizona and North and South Carolina have a lower cost of living. The money saved will last you longer in these areas. However, you must take note of the lifestyle in such a place. It is advisable to rent a place for a few months before moving there to familiarize yourself with the place.
- Use home equity
If you own a home worth thousands of dollars, this option can help you a lot. If you sell your expensive home, downsize and buy a cheaper one, the money saved by this can be used as a source of income for years.
- Part-time jobs
After you retire, you have got loads of time. A part-time job can be useful for spending your time. Not only does it earn you the extra money, it is also helpful for mental stability and physical exercise. It also helps reduce the stress.
- Retire abroad
Compared to other countries, the lifestyle in the US is an expensive affair. Many Americans in their golden years are choosing this option as they plan to retire soon. Based on the cost of living and the friendliness of the locals, you can choose your new location.
If you’re able to do what you love after retiring, it makes you a lot happier. But this takes a lot of planning. Keep these five things in mind if you plan to retire early.