8 Shortcuts to a Successful Early Retirement

successful early retirementIf your goal is early retirement then listen carefully.

Special challenges are created because the time horizon to build savings is shortened while the amount of time your money must last is greatly lengthened.

Traditional savings and passive investment strategies won’t likely achieve the goal. More is required.

Early retirement doesn’t have to be a pipedream or an exclusive club reserved for the lucky few. If you’ve ever thought about retiring early, then the following dos and don’ts will help you to get time â” and financial freedom â” on your side. And before long, you could be living the early retirement life you’ve always imagined:

The Dos

1.             Do commit to an early retirement. This is a critical first step on your path to early retirement. Unless you have a clear goal in mind, you won’t have any motivation to resist giving up when the going gets tough. There will be inevitable stumbling blocks along the way. But when you have a goal in mind, you can always remind yourself why you are doing what you are doing. Write your goal on paper, and post it in a highly visible location, like your door into the garage. You’ll see it every time you leave the house to drive to work, and you’ll keep yourself on track. Persistence is the key.

2.             Do make yourself a student of wealth building. If you want to retire young, then you will need to learn all you can about achieving financial freedom. Study investing and risk management as though you will be writing a dissertation on the subject. Learn from a retirement coach how inflation market valuations impact your financial security. From this point forward, your entire financial life should be centered on early retirement and financial independence. You must design your life to achieve the goal or it won’t happen.

3.             Do cut your expenses. Think back to a time in your life when you didn’t have much money to burn, such as college or even your first job out of college. With an entry-level job, you probably had just enough for food, shelter and the occasional night out with friends. The key to wealth building is to continue spending in this manner even when your income rises. The money you save by keeping your expenses low should then go in the bank. With this simple rule of spending less and saving more, you will gradually grow your savings. At the same time, you will spare yourself the burden of huge debts and financial headaches.

4.             Do estimate how much money you need to retire. You need a definite tangible goal. A common mistake made when estimating when you can afford to retire is to think in terms of assets. Retirement is about cash flow â“ not assets. Sure, you need assets to produce cash flow but the focus is in the wrong place. When you think in terms of assets it frequently causes people to invest in the wrong types of assets. You need cash flow producing assets. It’s all about cash flow.

 5.             Do focus on business and real estate. Research on wealth building indicates that business is the primary source of wealth accumulation, followed by real estate. These two sources will allow you to build wealth quickly in a way that you could not do with conventional earned income or paper assets. They also will get you to your early retirement goal faster than you could through traditional passive investing. Essentially, you will leverage resources that would otherwise be inaccessible, including tax advantages, other people’s time, and technology to produce the result in a shorter amount of time.


The Don’ts

1.        Don’t rush into retirement. You needn’t look at retirement as a single day in your life. You don’t have to wake up one morning and shift from contributing income to savings to living off of your savings. That’s the kind of dramatic life change that could leave you in an emotional upheaval. Rather, phase in your retirement over time as your passive income grows to exceed your expenses.

2.             Don’t expect your spending to decrease. The traditional approach when using retirement income calculator is to assume your spending will decrease in retirement because your activity level will presumably decrease proportionately. However, it’s different if you retire young. Your spending is actually likely to increase and remain high in early retirement because you will maintain an active lifestyle and better health. You’ll also have more years of inflation to eat away at your assets, along with more years without Social Security and Medicare. To offset the costs, you must strategize early on to have a growing income base when you retire.

3.             Don’t beat yourself up if you make mistakes. There are plenty of financially free individuals who didn’t do everything exactly right on the path to early retirement. Nor is every path the same. If you make mistakes along the way, simply remind yourself of your objectives. Stick to the proven dos❠outlined above, and you will ultimately reach your goal.

This Is Your Life

The dos and don’ts above are merely guidelines on your path to early retirement. The same formula will not work for everyone, and you must take it upon yourself to assess your strengths and weaknesses when playing the early retirement game. Be honest about your skills, spending habits, interests and goals. Then create an action plan that matches up with your unique needs and wants. As long as you stick with that plan, then your early retirement will become a reality.

(Karen E. Spaeder is a former managing editor of Entrepreneur magazine and a staff writer for FinancialMentor.Com. When she’s not busy working on her early retirement plan, Karen enjoys practicing yoga and karate as well as exploringSouthern California with her 9-year-old son.)

photo by tomsaint


Written by Jon the Saver

This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER
. Happy investing 🙂

Jon the Saver

This post was written by yours truly, Jon Elder. My mission is to help you succeed in your personal finance life. Join me on the journey to financial freedom! You can subscribe through RSS FEED or EMAIL updates. You can also find me on TWITTER and FACEBOOK . Happy investing 🙂

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