Why Early Retirement Planning? So You Can Retire When You Want To

An Early  retirement   planning  for you?

You wan to retire in your 30s, 40s or 50s?

That sounds too good to be true? No, it’s possible.

After all, it may not be a good idea to work until you aged or die.

Retire early is achievable if you start working on it earlier. In fact, as soon as possible….

Because it’s never, never too soon to start saving for  retirement .

Besides getting to enjoy everything you want in your  retirement , it’s also one of the critical steps to achieve financial freedom, earlier.

Of course, retiring early also implies lots of works and many things to consider, ahead of you.

Never mind that…..

I’m going to show you 5 simple, do-able steps to start you off.

1. Set A Clear Goal

You need to know what kinds of  retirement  lifestyle you want. Knowing how you want to live now and in the future will help you set your financial goal.

Write down your needs and rank each of them as either absolutely necessary, most important, nice to have or not important.

Some of the things you might want to consider and plan for:

  • At what age you want to retire?
  • How do you want to spend your time after  retirement ? Ahemmm…., travelling all year round?….
  • Where do you want to stay after  retirement ?
  • How much you need to maintain your desired lifestyle?
  • Children education if you already have kids
  • Any mortgage payments during  retirement ?
  • Life and healthcare/medical insurance coverage
  • Contribution to society? Other than financially, volunteer your time and talents to help others?

2. Decide Your Financial Target

Based on your desired  retirement  lifestyle, project the required expenditure.

3. Take An Inventory of All Your Financial Assets (and Liabilities)

Estimate your current financial situation by doing an inventory count of what you’ve now. It’s simply a list of what you’ve and where you have.

List down your inventory like this:

-Assets

-Liabilities

-Calculate your net worth (i.e. Assets minus liabilities)

-Income

-Expenses

-Calculate your net income or savings (i.e. Income less expenses)

Once you know your financial “health”, you can start your savings rolling….

4. Save, Save, Save

To quote you an example.

My friend Eric, who’s an engineer, got serious about saving for  retirement  way back when he was 25 years old. Eric started saving ferociously, sometimes up to about 50% of his gross income. He invested the savings aggressively in mutual funds and individual stocks.

Then at the age of 38, he had accumulated a  retirement  portfolio worth $500,000. He then quit his job.

For the first few years of his  retirement , he worked as a consultant on project basis. Then, when his  retirement  portfolio reached $1 million, he quit working altogether and carved out an entire new life for himself – travelling, vacationing, skiing, dining and wining, entertaining…..

The point I want to get across is this – start savings as early as possible, to achieve financial freedom sooner and  retirement  earlier.

How much should you save then?

The basic rule of thumb (for most people) is if you can set aside 25 times your estimated annual post-retirement expenses in savings and investments, and draw down no more than 4% of your savings every year, you’re there.

5. Go Into Semi-Retirement First

You could do like Eric did – working half-time or part-time, you can make some meaningful income as well. It helps to catapult your savings to higher levels too.

You can be a shining example of how early  retirement   planning  works out for you. The choice is yours.

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