Want to retire early? Or maybe take a mini-retirement every 5 years? Sounds great, doesn’t it? Then we have some good news, because you can make this happen. But it does require action. If early retirement is your goal, here are five things you need to start doing right away! Read on and join us to discover how you can plan for that amazing sabbatical or early retirement.
Want to retire early? Make sure to do these five things!
- Gain insight into your finances
- Calculate how much you need to live on
- Build your wealth
- Create an additional income stream
- Make extra payments on your mortgage
1 | Gain insight into your finances
What comes in, and what goes out? If you want to retire early, or take mini-retirements, you’ll need a solid financial buffer. The key is to widen the gap between your income and expenses as much as possible (in a good way, of course). Take a close look at where your money is going—especially on unnecessary purchases. Do you really need that €100 dress? Identify which expenses are truly necessary and which are standing in the way of your early retirement goals. After all, the money you save, can be invested and potentially growing your returns for the future.
2 | Calculate how much you need to live on
It’s a tricky but important calculation: how much money will you need each month to cover your expenses as a retiree? If your goal is to retire five years early and you expect to live comfortably on €2,500 a month, the math looks like this: 12 months x 5 years x €2,500 = €150,000. This means you’ll want to have €150,000 in assets by the time you’re around 62.
3 | Build your wealth
Building wealth (and reaching that €150,000) isn’t necessarily about saving—it’s about investing! By investing, you can benefit from the power of compound returns. This means the money you earn from your investments can be reinvested, allowing your wealth to grow exponentially over time. It might sound complicated, but it’s really not. You can also build wealth by investing in real estate.
4 | Create an additional income stream
Want to secure additional income beyond your investments? Then create an extra income stream with a side hustle! Even with a small business like a blog, a webshop, or an Airbnb account, you can earn a little—or even a lot—of extra money each month. And as you might have guessed, you can reinvest that income, bringing your retirement closer and closer.
5 | Make extra payments on your mortgage
This might seem like an unconventional tip, but it’s incredibly valuable. In retirement, you want to reduce your fixed expenses as much as possible—and your mortgage is a major one. Making extra payments on your mortgage can lower your costs in several ways. Your monthly payment decreases, and eventually, the bank may offer you a lower interest rate. If interest rates are currently low, you might even consider refinancing your mortgage.
Want to start organizing your finances and planning for early retirement? Get started with Elfin and receive your personalized roadmap for free.
