Millions of people want to retire early, but many don’t achieve that dream. Unforeseen financial challenges – a bout of unemployment, a child’s college tuition, a big home repair – can lead the best-laid plans to go astray, forcing you to keep working longer than you’d hoped. But that doesn’t mean you shouldn’t try. Saving more and spending less is a good idea no matter when you retire. Keep these three basic steps in mind as part of a long-term retirement plan that includes early retirement:
- Start saving as early as possible. Early retirees often are those who began stashing away 10% to 15% of their salary in their 20s. It’s also important to maximize savings during periods of life when financial demands are lower: before having kids, for example. And save, rather than spending, financial windfalls such as tax refunds and bonuses.
- Embrace saving as a reward, not a punishment. Successful savers actually enjoy putting away money for retirement and finding ways to cut back on expenditures so they can save even more.
- Once you retire, maintain the “saving” mindset. It’s much easier to retire early if you continue to seek bargains, cut costs and offset expenses as much as possible – for example, by renting out your home if you go on an extended retirement vacation.