Retiring early is no easy feat. Many years of sacrifice, planning and hard work will get you there though. Here’s my list of suggestions for getting there (in no particular order).
- Find an employer with a healthy defined benefit pension plan (Not Detroit or Stockton).
- Quit buying stuff you don’t need. Money you don’t spend can be saved and invested, or at the very least keep you out of debt. Learn the difference between needs and wants. If in doubt ask someone else… You don’t usually NEED a new car, you WANT one. Let someone else take the depreciation hit and buy something used and reliable in the 3-4 year old range.
- Make your savings automatic and pay yourself first. Set up an automatic savings program with your bank where you transfer out 10-15% of your earnings to invest (I’ll leave the how-to’s of the investing to you to investigate).
- If you are married, stay married to the same spouse. Consumer debt and financial worries are one of the leading causes of marital stress and divorce.Giving away half of everything you have puts a real crimp in your retirement plans. I know it’s not always within your control, but do your best to keep it together.
- Don’t count on marrying well, inheritance or the lotto to pull your ass out of the retirement fire late in life – odds are it’s not going to work out for you.
- Maximize your pay by upgrading your education / skills. Always keep learning so that you can do higher level work thereby making yourself more valuable to an employer (hopefully higher wages result). If you don’t get rewarded for your new-found skills it’s time to move to an employer who will appreciate you financially.
- Take on new challenges and promotions where possible to earn more money. Higher wages should mean that you are able to save more.
- If you get a wage increase try banking the increase instead of spending it which is a tendency for most people.
- If you live in a depressed area, and some areas seem to be chronically and perpetually depressed, it’s time to move on in spite of the fact that your forefathers forefathers settled the place.
- Don’t go out to eat all the time. Making dinner is not really all that hard especially with a little planning. Going out for dinner and wine / drinks with friends can be incredibly expensive.
- Entertain in more. Rotate having dinner parties with your friends and make it a BYOB event. If you are part of a group of 3-5 singles/couples you only have to host once in a while. Lots of fun, more privacy and, in my view, more relaxing than a restaurant.
- The old saying of "take care of the pennies and the dollars will take care of themselves" is quite true. Examine your daily expenses - those lattes, cigarettes and snacks to start with. At home turn off lights that don't need to be down. Turn the thermostat down and put on some socks and a sweater. Little things make a real difference if you make an effort.
These things are all a start. You just need to be planned and deliberate about retirement. The money will not simply and magically appear when the time comes. You need to pay attention and work at it, and if you do, you will be rewarded.