You’ve probably heard or read about people who have retired early and are now living their best lives. They’ve relocated to a new country, are touring the globe, or are working on personal projects. These early retirement stories have most likely piqued your interest.
Indeed, it’s possible that it’s sparked your interest in learning how to retire early yourself. So, before you reject early retirement as unattainable, consider this: it may be something you can do as well.
So, let’s look at how to retire early so you may begin working toward your goal now!
Determine how much you’ll spend on retirement each year
You’ll need a good grasp on your expenditures to begin constructing a clear image of how much you’ll need in retirement. You’ll need to know and comprehend your monthly spending, and you’ll need to make sure you’re not making drastic lifestyle changes that could deplete your future earnings.
Key items you may want to track include: Rent, food, utilities, transportation, health insurance, clothing, entertainment, and any donations. You may have additional categories to keep in mind.
P.S: Let’s say you do the math and figure out that you’ll need ₹7,00,000 every year to live comfortably; to retire, you’ll need ₹7,00,000 x 25 or ₹7,00,000 x 30. (Numbers will change greatly depending on your lifestyle choices.)
Find out what your present net worth is
It’s a good idea to know your present financial situation, or net worth, before making a substantial commitment to early retirement. We frequently associate net worth figures with celebrities, but understanding your whole personal net worth will help you better comprehend your financial situation.
You can complete this task by hand or using a net worth calculator. Your assets (minus) your liabilities are what you want to figure out. This is an important metric to understand, particularly if your net worth is negative.
Create a budget and strategy based on what you know
The capacity to live within your means is crucial to a successful early retirement. If you set a monthly spending budget of Rs. 10,000 but end up spending Rs. 25,000 instead, your retirement plan may be jeopardised.
As you go through the budgeting process, keep in mind that, as previously said, you should create realistic predictions based on your spending habits. Include take-out in your budget if you know you enjoy it, rather than budgeting based on lifestyle choices you aspire to make in the future! Read more about Budgeting here.