Plan Now for Retiring Early

The likelihood of you stumbling on a billion dollar business in college like Mark Zuckerberg, founder of Facebook, is slim to none. Do you have a dream to retire early while you are still young and fit enough to enjoy it? It is possible. However, it usually takes a very frugal approach to life from the start. The sooner you come up with a plan, the more likely you will be able to realize your dream. Retiring early will require a particular mindset.

It’s a great plan to have even if you don’t end up retiring a millionaire. The likelihood of social security supporting you in your old age is also slim to none. Right now you do not have a choice in contributing part of your paycheck to social security, but you should plan your retirement money on the presumption that there will be no social security.

The Little Things Add Up

  • Little spending adds up to a lot of spending. Gum, candy, coffee, and impulse purchases account for a pretty big dent in your budget.
  • If you truly want to retire early, you need to make a commitment to avoid these purchases, which basically amount to throwing money away.
  • A cup of coffee might only be three dollars, but if you add up five coffees a week times 52 weeks, you are now talking about $780. If you could put in an additional $780 into your IRA or 401k, you will be a whole lot closer to that retirement than before. This gives you over $30,000 more to invest over the course of your adulthood.
  • Now add up the gum, candy, and other impulse purchases and you will see how you are wasting thousands of dollars and making yourself work longer and harder! Why would you want to work longer just so you can chew gum?
  • Other expenses that eat away at a budget are cigarettes and alcohol. Quitting smoking can save you as much as $1000 each year. Assuming a mid-range of $500 per year, if you smoke from the age of 21 to 65, that amounts to $22,000. If you invested this money instead of smoking it, not only would you have so much more to retire on, you will also be more likely to live longer to enjoy it.

The Big Things Add Up, Too

  • Don’t buy a new car. Ever. You waste too much money in losing equity immediately after driving it off the lot. Buy something that is a few years old and either pay for it up front, or use a very short term loan option, two years or less.
  • Don’t buy a house based on the amount the bank is willing to lend you. Buy a house with an eye to the future and for the most economical price. If you think it will be a house you will live out your entire life in, make sure that it will still fit your needs when you may need a walker or wheelchair such as a one level house. If you assume you will be moving in the future, buy it with an eye for resale. If you have any carpentry or construction skills, buying a solid built older home that you can spend sweat equity in while you are still physically able is a great option.

Build a Side Business for Long-Term Residual Income

  • While you are young and energetic, work two jobs, but make one of them your own business that you can build on when you are older and employ others to run.
  • While there are no guarantees on the success of your business, using smart marketing techniques, building your brand, and making yourself an integral part of the neighborhood or urban landscape will help to firmly establish. so that you have steady income even after retirement.
  • For your main job, do your best to work your way into an employer who has excellent benefits and retirement options. While there is no guarantee that you will get to remain with that company for your entire working career, it will help to build your nest egg.
  • Another option is to look into state and federal jobs. They often have good retirement benefits.

There are no guarantees in life. However, if you start out with a mindset and a purpose to live simply and save as much as possible, even if you don’t retire early, you will be better off than most. Retiring early is not something you can start wishing for when you are 50. Start with the mindset young and have a plan.