The pop-culture myth of retirement as a fun-filled stage of life and leisure and a rite of passage is just that — a myth.
Retirement is really about creating a post-work lifestyle. To fund that, a retired person should have a dedicated retirement account, or several accounts, in addition to Social Security benefits, that will last throughout their retirement life.
Even though the typical age of retirement is 62, most people actually retire by age 66. Many retirees, however, end up becoming semi-retired and work part-time for as long as possible.
Plus, in this pandemic-wrecked economic environment, money is tight. Meanwhile, inflation is always rising. And quite frankly, most Americans are not financially ready for retirement.
About 41% of Americans aged between 40 to 49 only have $50,000 or less saved for their future retirement. Unfortunately, the typical retired couple needs about $50,000 to cover annual expenses for a single year in retirement.
Want to retire early? Here is what you need to know.
If you want to retire in your 30s, 40s, or 50s, then you should have started saving 25% or more of your monthly income long ago. The earlier that you start saving, the more money you will have to fund your post-working lifestyle.
Remember, the average human being lives to be 80. Most traditional retirees may outlive their retirement funds and end up working for supplemental income in declining health. If you are middle-aged and want to retire early, you need to be realistic about your retirement planning or find a way to make more money quickly.
Create your retirement plan
Consult with a financial advisor. You should start planning for your retirement as early as possible, especially if you want to retire early.
That means you should have a monthly savings schedule, a mock budget for your retirement, and a preliminary future start date for your early retirement.
This way, you understand what you are working towards and how to really get there.
Don’t try to figure out how to retire early on your own. This is a serious life decision. Any mistakes you make will only be fully revealed years later.
Get the help of a professional financial advisor to help you plan out your early retirement. If possible, develop a diversified investment portfolio that could pay out in returns years later as you retire early.
The main determining factor relative to how long your retirement lasts depends on where you live and your cost of living. Carefully consider where you will live and your cost of living costs if you want to retire early.
The golden estimate for a retirement fund is $1 million. However, when you consider inflation and the increasing cost of living in the 21st century, you may need $3 million to retire comfortably, early or otherwise.