In 2018, people are living longer than ever before. The average life expectancy has been getting higher and higher every single year and right now it looks like no end is in sight. And that’s great. I think everybody would be in agreement that this is a good thing for humanity overall. However, this change is not without its disadvantages.
With extended lifespans, people are now expected to spend even more of their lives working. Health and medicine may be on the rise, but the retirement age is on the rise too. In fact, by the 2020’s it’s expected the retirement age in Russia will be higher than the current male life expectancy in Russia.
Crazy right? I’m sure there’s many people out there who would love to be working well into their 70’s or even later, but just as many would rather an early retirement. Having thirty of forty years at the end of your life to relax and experience the world is a fantasy for a lot of people.
Well I’m here to tell you that doesn’t need to be a fantasy. It’s not going to be easy, but there’s ways to do it. You might have to make certain sacrifices, but if you’re willing to put in the work, you can retire a lot younger than you’re expected to. Without further ado, here’s some of the things you’ll need to do to retire young:
1. Save. A Lot.
When I say save, I don’t mean but a little bit of your paycheck into a savings account every month and then dip into it every time you want to go on a road trip. Save like a maniac.
Ideally you should start saving as soon as you start earning from your first job, but I know that ship has probably sailed and that’s fine. Regardless of what stage of your career you are at, it is never too late to start. And the best time to start is right now. While it might not be a very appealing idea, saving is really not all that complicated. Almost everything you earn that doesn’t go towards your bills, you should be putting into saving.
So obviously everyone’s income is different and depending on your career, bills might take up a larger percentage of your bills than someone else’s, but the same principle applies. No matter how much of your paycheck is left after you pay all your bills, I think you should always make sure you put some of it into savings.
If you are left with half of your paycheck after you pay your bills and pay for essentials, then put at least two thirds of that remainder into savings. Give yourself a monthly budget for personal spendings and then stick to that budget. Resist the urge to get a takeout when you can cook for yourself.
If your friends are going out but you’ve expended your monthly budget, maybe think about staying at home. A few Friday nights at home instead of on the town won’t kill you. If you start doing this now and be diligent with it every month, you’ll start to notice the build-up in your savings very quickly.
And then after several years of working your saving should be sufficient enough for you to be able to comfortably retire early on them.In addition to setting yourself a monthly budget, there’s a whole load of different little things that you can do to make sure the savings keep piling up.
2. Reduce Your Bills
This is probably something that you will end up doing naturally while trying to save, but let’s think about those bills and essentials that you have. There’s ways to cut them down.
The less of your paycheck you have to spend on bills, the more you can put into a savings account for early retirement. Think about what subscriptions you have. Are you signed up to any streaming services that you don’t use or any subscription based websites?
If these are things that you regularly get enjoyment out of, then by all means, keep the things you enjoy. But if you think you could do without them, then go ahead and cancel. If you like to read, get yourself a library card. I completely understand the appeal of owning your own books, but if you’re trying to save money, there’s no logic behind buying books.
Libraries are not going anywhere, and library cards are completely free. That’s kind of extraordinary when you think about it. Hundreds of books that you can read for free. I’d say it’s a sacrifice worth making if you want to retire young, but it’s not even really a sacrifice when you think about it. If you drive to work, maybe think about getting a bike. You will save so much money on fuel and it will get in some daily exercise too.
If that doesn’t sound like something you’d like, you could try carpooling to work with someone and splitting the cost of fuel. It would be a good idea to buy your necessities in bulk. Anything that’s non-perishable at least. It will cost more when you actually buy it but long-term it will save you money.This goes without saying, but you shouldn’t use this as an opportunity to spend more on yourself. If it’s early retirement you seek, whatever you save by reducing expenses you actually need to save.
3. Buy Appreciating Assets
There’s two different types of assets. Appreciating assets, and depreciating assets. Depreciating assets are the ones that lose value over time such as vehicles. Appreciating assets then, are things that will increase in value over time. This is not the easiest thing in the world to do, because it’s hard to know what assets will actually increase in value. Houses and property used to be assets that you could rely on to be appreciating, but that’s not always the case anymore. Stocks are probably your most reliable option here.
The stock market has been steadily climbing for over a hundred years now and it’s a good way to make money if you invest wisely. For this to benefit you in the long-term and aid you in retiring early, you need to consistently make money from the stocks you’re investing in.
The best course of action, is to invest mainly in high dividend stocks. Suredividend.com goes into detail on what this means here.The gist of it is basically that these are stocks which will payout to their investors from their own profit. Companies that pay dividends are shareholder friendly and unlike investments that may not pay off if the stock takes a nosedive, high dividend stocks will payout regardless.
Conclusion:
Retiring young is difficult. If it wasn’t, everybody else would be doing it too. You will have to make changes to your lifestyle and you will have to make sacrifices with your spending.
But when it comes time for you the reap the rewards, you’ll find that it was worth it. So if an early retirement is what you truly want, take these steps, set your mind to it, and you will succeed.