How to Find Your Way to Financial Freedom – On Your Timeline
It’s easy to envision the benefits of early retirement, isn’t it? You could have more time for the people you love, the chance to travel the world, the opportunity to dig into your hobbies, and whatever else you could dream up. It seems idyllic, but it’s unachievable for most people—not necessarily because of lack of funds, but more so because of lack of planning.
The key to achieving early retirement is having a goal in mind and taking the steps to put your plans into action. Here are seven potential strategies you can use to set yourself up for early retirement and get a jumpstart on your golden years.
1. Picture Your Ideal Retirement
The first step you should take is to picture exactly what it is you’d like to achieve during retirement. Do you have a specific activity or hobby in mind? Is there a favorite travel destination you want to spend more time in? Or are you just craving financial freedom and the flexibility that comes along with it? Whether you want to fully retire or perhaps work part-time, gaining clarity on your early retirement goals is a great place to start your planning.
Once you have your plan in mind, you can start working backward to make sure you have the resources and strategies in place to achieve your vision.
2. Answer Lifestyle Questions
Now that you know what you want during your retirement, it’s important to determine how you want to live once you get there. Are you hoping for a quieter life, one with low day-to-day living expenses? Or perhaps you’re interested in traveling and enjoying the finer things? Are you thinking about healthcare options, transportation considerations, and where you might want to live? No matter which path you choose, a thoughtful plan is the key to getting there.
It’s critical to ask yourself all these questions and more as you put more details into your to-dos. The more accurately you can anticipate your lifestyle, the better you can plan financially for what’s to come. Try to plan not only for what you want, but for all the possibilities ahead.
3. Start Saving Today
The general retirement rule is the sooner you start saving, the better. That’s especially true when considering early retirement. Whatever you can put away early will jumpstart your goals and make it easier to get to where you want to go.
Make sure you have a budget for day-to-day expenses and one that accounts for setting aside funds to save up and reach your goals. Consider investing your money to make it work harder for you today. Early retirement comes with so many lifestyle benefits, but you won’t be eligible for traditional financial benefits like Social Security or even accessing your own retirement accounts until you reach a more typical retirement age.
There are other options, however. Consider looking into non-qualified investment accounts, which are usually taxed on an annual basis. They’re typically flexible in terms of how much you can invest, when you can withdraw funds, and how they’re structured.
4. Don’t Be Afraid to Hustle
Savings should be top of mind as you stay the course for early retirement—and sometimes you need to take matters into your own hands. Do you have a special skill you can monetize? Finding freelance work has never been easier than it is today, and the opportunity to make extra money is out there. You can set your own pace—pick up a little or a lot—but make sure to set aside most if not all of the money you make to save for your desired early retirement.
5. Pay Down Debt First
It’s easy to accumulate a bit of a credit card bill or a hefty student loan—but any debt eats away at your early retirement prospects. If you’re spending money every month on debt, prioritize paying it down to eliminate interest and potentially save more money. Every financial contribution, no matter how small, can be a step towards financial freedom.
6. Consider Passive Income
Achieving early retirement will require discipline, focus, and a steadfast commitment to saving money. One of the top ways to save more is to make more, and if a side hustle doesn’t fit your life then consider that another type of additional revenue stream could help you go far.
There are many kinds of passive income. Pick what kind works for your life and your skillset. You can consider selling things like artwork or designs, investing in real estate, renting out a room or any property you may have to collect rental income, or becoming a content creator on a revenue-generating platform like YouTube. These pursuits are easy to have in addition to full-time work, so you can increase your value without putting all your eggs in one basket.
7. Expect the Unexpected
A plan is an ideal place to start, but oftentimes life doesn’t follow a set path. Make sure you factor these unexpected considerations into your early retirement strategy—potential pitfalls like taxes, medical needs, inflation, and more. You certainly can’t predict every possible “what if,” but you can build in an emergency buffer to help protect your budget and vision.
Early Retirement: Final Thoughts
Once you’ve decided to retire early, keep at it. Staying focused and sticking to your plan are key ways to achieve the financial freedom you’re dreaming of.
Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.
