The average American retirement age is rising. Just two decades ago, the average retirement age was 57. Today, that age has increased to 61, and it’s expected to only keep increasing. In fact, the average non-retired US worker plans to retire at 66, compared to 60 in 1995.
But who wants to work forever? None of us dream of working our whole lives away. Early retirement is the true American Dream. We work hard while we’re young so we can enjoy the fruits of our labor later in life.
The question is: In spite of the fact that people are retiring later in life, how can someone achieve an early retirement? Here are 7 tips that will help you get on the path to your ideal retirement.
- Set your goals right now—First things first: what are your goals for retirement? When do you want to retire? What type of lifestyle do you want to lead during retirement? How much money will you need in order to retire comfortably? By setting your goals and defining them as clearly as you can, you’ll have the motivation and guidance you need to get started with your financial planning.
- Start saving and investing aggressively—If you haven’t started saving for your retirement yet, you can’t afford to wait another minute. Start saving right this moment. The sooner you start saving and investing in your retirement, the more money you’ll have when it comes time to call it quits. Take a look at your personal finances and set a realistic budget that includes allocating money to be saved.
- Be willing to make sacrifices—Want to retire early and live a life of leisure? You won’t be able to do that if you live beyond your means right now. If you’re spending every dollar you make and taking on debt, early retirement just won’t happen. It’s going to require some sacrifices on your part. Maybe you don’t get that brand new luxury car. Or maybe you don’t book that super expensive vacation. Even small sacrifices can make a huge difference. By cutting down on the number of times you go out to eat, you could save hundreds or even thousands of dollars each year!
- Take your career plan seriously—It’s time to take the long view when looking at your career. Sure, you might be happy with what you’re doing and how much you’re making right now, but where will you be 5 years from now? What about 15 years from now? 25 years? You need to take career planning very seriously. Figure out your strengths and weaknesses. Build your skills, and find ways to maximize your earning capacity, all while ensuring you’re doing something that makes you fulfilled.
- Get your debt paid off—Retiring early won’t be possible if you’re buried in debt. The average American has around $200,000 in debt when you add up their credit card debt, mortgage debt, and student loan debt. Your debt can cripple you if you don’t take care of it. If you want to achieve financial independence, you need to start eliminating your debt immediately. That means paying more than just the minimum monthly payment on your credit cards, and it means not taking on any new debt unless absolutely necessary.
- Find ways to generate passive income—Just because you plan on stopping working doesn’t mean that the money has to stop flowing in. Your best move is to find ways to expand your sources of income during your retirement. You can do this by creating passive sources of income. For example, you might invest in properties that you rent out to tenants, allowing to collect a rent check each month. Or you might have a website that generates some passive income for you on a regular basis without requiring much work from you.
- Track your progress—How can you know if you’re on track to meet your retirement goals if you aren’t monitoring your progress? You should always have a clear view of the whole financial picture. That means knowing how much money you have in savings, tracking your retirement accounts, investment tracking, and so on. The good news is there are plenty of great tools you can use to track your retirement planning, such as Quicken Personal Finance.
Early retirement doesn’t have to be a pipe dream. If you follow these simple tips, you can achieve the lifestyle you desire!