Early Retirement: How to Prepare for It

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Retiring early has become an essential need for many Americans nowadays. But such a feat isn’t as easy as most think. It takes a lot of planning and hard work to attain it.

An increasing amount of millennials are starting to retire early. Many of them have found various ways to do it. Through these ways, you can also retire early on in your life. But first, let’s talk about averages and how much funds you need once you retire.

How Much Do You Need?

Knowing how much you need for retirement can make a difference in retiring early. Some people might need more funds than others, while others need less. It all depends on the lifestyle they want to live once they retire.

It can be tough to find the correct numbers you need when you retire. But experts suggest saving at least 20% of your annual income to ensure you’ll have enough once you retire. This is because it’s estimated that people spend at least 70% to 80% of their pre-retirement income every year once they’ve retired.

You might think that this is pretty big, and you don’t believe that you’ll be spending as much once you’ve reached a certain age. However, it’s better to safe than sorry. Moreover, there’s also a way you can ensure that you’ll never run out of funds once you’ve reached retirement age. But more on that later. First, we have to talk about planning.


Planning when you want to retire is essential in the early retirement process. Some consider the 50s early retirement, but many millennials aim for something earlier. To be specific, they want to retire a decade earlier. There are also a few people there who think they can retire in their early or late 30s. Being able to picture out when you can retire can significantly help you align with your goal.

You should consider what kind of lifestyle you want to live during the planning stage. You can research how much people spend to sustain that particular lifestyle. Additionally, you should also look into what that lifestyle is all about.

Working Hard

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So here’s a fact: the earlier you want to retire, the harder you need to work. This also means that you’ll have to spend considerably less if you’re going to retire earlier.

Working hard doesn’t mean that you have to do one full-time job and two part-time jobs in your lifetime. However, it does mean that you have to earn money whenever you can. Therefore, you have to take opportunities whenever you can.

You don’t necessarily need to be tied down to part-time jobs. Instead, you can do side-gigs or some freelancing on the side. This will help you manage your time so you won’t drain yourself.

Remember to earn as much as you can before your retirement. However, there is also another way you can earn passive income without working too hard, and that’s through your investments.

Investment Options

If you ask those who’ve retired early, you’ll notice that most of them made investments early in their careers. This is because the earlier you invest, the faster you can benefit from such rewards. However, you also don’t want to take too much risk, so you don’t lose too much money with your investments. Here are some stable and reliable investment options for retirement.

Index Funds

Warren Buffet suggests that people who want to retire early should invest their money into index funds. You might ask why. It’s because index funds are stable and reliable options that require time to grow. On average, the Standard & Poor’s 500 Index has a 10% return on investment (ROI). It might not be a lot, but once it starts accumulating throughout the years, this becomes a good investment option. It can easily pay your debts once you get the ball rolling.


Gold is another stable investment because everyone is either selling or buying gold. It’s an emergency currency and one that won’t lose value in the coming years. Every financial expert suggests that you should have at least a couple of thousand dollars worth of gold in your investment portfolio.

Government Bonds

Government bonds have some of the lowest ROI in the market (averaging at 5%), but they’re still a good option for those who want to make a low-risk investment. Much like index funds, once you get this investment going early into your career, you should be able to make enough to retire early in the future.

Reaching Your 50s

You have to start planning your retirement funds for when you reach your 50s. This doesn’t matter whether you want to retire during this time or not. You’ll need to take into account the cost of in-home health care and other essentials for yourself. You need to average these essential costs and add them with your perceived retirement income to ensure you have enough money to sustain yourself once you’ve reached the later stages of life.

Final Thoughts

Retirement early requires a lot of work, but at least you don’t need to work for the rest of your life. It’s a goal everyone wants to achieve, and you can accomplish this by applying what you’ve learned in this article to your lifestyle.





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