Want to retire early? Or. maybe mini retirement every 5 years? Sounds good, doesn’t it? Either way, you can arrange this for yourself. However, you have to do something for it. Want to retire early? Then you should go do these five things anyway! Read along quickly and join us to discover how you can plan for that wonderful sabbatical or early retirement.
Retire earlier? These five things you shouldn’t skip
- Get insight into your finances
- Calculate how much you need to live on
- Build equity
- Create an additional source of income
- Pay off extra on your home
1 | Gain insight into your finances
What comes in, what goes out? If you want to retire earlier, or retire occasionally, you need a buffer. You do that by making the gap between your income and expenses as big as possible (in a positive sense, lol). Therefore, be aware of what you are spending money on (unnecessarily). Do you really need that cute 100 euro dress? See which expenses are really necessary, and which ones mainly thwart your goal of retiring earlier. In fact, the money you save can be invested, giving you more returns in the future.
2 | Calculate how much you need to live on
A tricky calculation, but an important one: how much money per month can you make ends meet as a retiree? If your goal is to stop working five years earlier, and you expect to live comfortably on about 2,500 euros a month, then it’s 12 x 5 x 2,500 = 150,000 euros. That means you want to have 150,000 euros in assets around age 62.
3 | Build power
Building wealth (and getting that 150k, that is) is not necessarily done by saving, but by investing! In fact, by investing, you can take advantage of the return on return effect. This is because the money you earn from your investment portfolio can be reinvested, eventually growing your wealth exponentially. Sounds complicated, but it’s not. You can also build wealth by investing in real estate.
4 | Create an additional source of income
Do you want to secure income for yourself in addition to your investments? Then create an additional source of income! A
side hustle
, that is. With a small business, such as a blog, a web shop or an Airbnb account, you can already secure yourself an extra amount per month. And you guessed it, you can invest that amount again, bringing your retirement closer and closer.
5 | Pay off your owner-occupied home
An oddball, this tip, but no less valuable. When you are retired, you want to have as few fixed expenses as possible. And let your mortgage be one of them. Paying off extra on your mortgage is reflected in your costs in several ways. So your monthly amount goes down, and at some point the bank treats you to a lower interest rate. And are interest rates very low in the current period? Then you can also get your mortgage refinanced.
Do you also want to get started on getting your affairs in order financially and plan for that early retirement? Start with Elfin by receiving your personalized roadmap for free.
