How early do you want to renounce the corporate race, reduce your work tensions, and have more time to pursue what you like the most? Everyone dreams of it, right?
Early retirement has its own perks. You get to spend more time with your family, travel more or even start your own business. Although retiring early seems like just an imaginary dream, it is quite possible if you plan intelligently. Let us discuss below some tips to make it possible:
1) Compute your financial needs
Calculate the amount of money you will need during your retirement. Arrive at these two essential parameters:
- The annual amount of income which you need after you retire
- The size of the retirement corpus required to generate that income
Plan to retire on an income which is 80% of the pre-retirement income. Also, take into account your future plans, wherein the actual number could vary. Once know the income figure, you can then calculate the size of the corpus necessary.
2) Cut Household Expenses
Cutting down expenses by making short and long-term sacrifices will benefit in several ways:
- It adapts you to spend less; this habit will come handy during your retirement life when your earnings reduce
- It frees up more money to pay debt
- It increases your savings
Stop using and spending unnecessary services. You can start by cutting down frequent dining outside, expensive entertainment plans every weekend, and services or subscriptions you hardly use.