Sunday, December 16, 2012

10 Steps to Retiring (Really) Early

I consider myself pretty much retired these days (I know I am working myself silly right now but it is for a good cause--a cruise--and my attitude going to work is entirely different when I don't HAVE to be there and can quit at any time).  The hubby has been retired on and off since he was 40 years old, and together we have "officially" been retired for two years.  Here's how we, and other people I know, have been able to "retire" either officially or unofficially, much earlier than what is considered the norm:

  1. Be debt free.  There is no other way to retire than to have the most minimal monthly bills possible.  Carrying debt is like an anchor around your wallet and will keep you on the work-spend-work more treadmill forever.
  2. Have minimal needs.  There is no way we could live on a small income if our previous "needs" (expensive shoes, brand new cars, lavish gift giving, etc) were what we currently consider needs.  Now we need very little to be happy which makes life much less expensive.
  3. Have minimal stuff.  The more stuff you have the more it costs to keep, maintain, insure, store, etc.
  4. Have a source of income.  For the hubby, he has had a military pension since he was 40 years old.  Now he also has Social Security.  We can both easily live on his income.  Some people have hobbies that could bring in enough of a side income to allow them to leave a "regular" job.  Some people have investments that bring in a small but consistent income month after month.
  5. Look at your few remaining needs and get creative.  One family I know went camping for three and a half years as they did a 17,000 mile bicycle trip (that saves a TON of money on housing).  Other people live in RVs or boats or in countries where the cost of living is super low.  In other words, the things you thought were necessary for living (like a big house and big utility bills) really aren't necessary and in some cases can be done away with all together.
  6. Get in the habit of saving money.  If you retire early you will need a big emergency fund to tide you over in times of disaster.  While your small income may sustain you just fine month to month, the occasional crisis may arise that requires cash and without a steady income, that cash will have to come from your savings.
  7. Enjoy the free things in life.  After all, the best things in life are free and free is a very good way to save money in your retirement.  When you are retired you will have a lot of free time.  Often people fill their free time with shopping and buying things but if you want to retire early and on a shoestring budget, free entertainment is the way to go.
  8. Realize that retiring early may not be feasible.  There are a number of circumstances that may make you put off retiring simply because too many people depend on your income.  If you have kids or are supporting elderly parents or a disabled sibling, needing a large, consistent income may make it impossible to retire in the foreseeable future.
  9. Consider "mini" retirements.  There is a new trend where people will take off a few years at a time to travel, write the great American novel, or otherwise enjoy themselves in ways that are impossible with a full time job. Then they will go back to full time work, save money like crazy, then do another mini retirement.
  10. Realize that retirement in the future may not look like it did in the past.  Years ago people worked until they were 65 then stopped working completely, collected their pension each month, and lived either frugally or lavishly (depending on the size of their pension) until they died.  Now days people may retire early (either by choice or by circumstance) yet they will dabble at small jobs off and on, for the rest of their life (which makes sense now that life spans are so would be boring if you didn't do anything for decades on end).

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