Your early retirement plan
We get it! You’d rather wrestle with a cactus than spend another second in that beige cubicle, but retirement might feel like a distant dream. Good news! With this 5-step early retirement plan, you could be sipping margaritas on a beach sooner than you think.
5 steps to early retirement
There’s a whole community called FIRE. Yes, just like Trekkies and Furries, these are folks with a shared passion and, let’s be honest, a certain flair. The FIRE community stands for Financial Independence and Retire Early. Think of them as the rebels of the working world, plotting their escape from the 9-to-5 grind with precision and a touch of whimsy.
Now, don’t worry; we’re not suggesting you swap your work desk for a palm-fringed lounge chair in Palm Springs—unless you’re into that kind of thing. Our aim isn’t to be lounging in leisure suits but rather to achieve geoliberation and boss-liberation. That means being free to work from anywhere (hello, beachside office!) and ditching the daily grind for good.
So, while we’re definitely on FIRE, we’re not talking about any “down there” action. Instead, we’re igniting our financial freedom with these five sizzling steps. Get ready to fan the flames of your future success
1. Learn more
First things first: You need to define what retirement means to you. For some, it might look like a traditional scene with black knee-high socks, sandals, and endless rounds of Bridge in Boca Raton. For others, it might be the more contemporary approach of working part-time at a job you actually enjoy or volunteering for causes close to your heart. And then some dream of never facing rush hour traffic again—because, let’s be honest, nothing says “freedom” like avoiding gridlock on your way to the grocery store.
Once you’ve nailed down your retirement fantasy (or realistic goal), it’s time to put a price tag on it. Figure out your living expenses—yes, that includes the cost of those knee-high socks if you’re going that route. Determine how you’ll cover essentials like healthcare and insurance, and tally up what it’ll cost you week-to-week, month-to-month, and year-to-year. Think of it as planning a lifelong vacation but with fewer souvenir t-shirts and more spreadsheets.
2. Earn more
Right now, you might be thinking, “Gee, thanks for the groundbreaking insight, Sherlock! If I had a handle on this, I wouldn’t be here reading your so-called ‘5-step plan for early retirement.’” Fair enough. But bear with us—this isn’t just another round of financial déjà vu.
Here’s the thing: It’s time to rethink how you’re earning money. Stop fixating on just that “earned income” from your day job because, let’s be honest, it’s rarely the golden ticket to early retirement. Instead, explore other sources of income that could fund your dream life of early retirement. Think outside the cubicle:
- Income from Your Own Business(es): Starting a business can be as liberating as finally ditching those fluorescent office lights. It’s not just about selling products; it’s about creating a revenue stream that grows while you sleep.
- Real Estate Income: Invest in property and let the rental checks roll in. It’s like having a money tree but with more paperwork and fewer leaves.
- Investment Income: Stock markets, bonds, or mutual funds—if you pick the right ones, they can turn your cash into a steady stream of passive income.
Members of the FIRE community (that’s Financial Independence, Retire Early, not the “I like fireworks” kind of fire) almost always have multiple income streams. So why not join them? Start by launching a business, and if you need inspiration, we think every boy or girl needs a blog. It’s a fun way to share your passions and maybe even make some money on the side. Plus, if nothing else, it’ll give you a reason to wear pajamas all day.
3. Invest more
Since the stock market’s debut, it’s been playing a lucrative game of financial ping-pong, returning an annual average of 11.69% to investors. And if you’ve been living under a rock since Bill Clinton’s presidential era, you might be surprised to know that even then, the stock market was handing out over 9.00% annual returns. Sure, some years have felt like watching paint dry or witnessing your favorite sports team lose, but averages are your friend here. And let’s not forget about long-term dividend stocks, which can be like a cozy blanket during a market storm—providing some security even when the financial skies get a little tempestuous.
So, buckle up because the next step in your early retirement roadmap is to dive into investing—early, regularly, and with gusto. If you want to retire before your grandkids go to college, you must start investing in the stock market pronto. First, if you’re sporting a W-2, max out your company-sponsored retirement plan. That’s your golden ticket. Next, funnel some funds into a Traditional or Roth IRA, and if you’re still itching for more, consider throwing money into a taxable brokerage account.
Now, we’re not here to transform you into the next Warren Buffett overnight. This isn’t about chasing after that one stock that will turn your pennies into piles of gold or getting lost in the crypto hype train. That’s not how you achieve FIRE (and not the kind you need a fire extinguisher for).
Instead, aim for a balanced portfolio. Think ETFs, bonds, a bit of cash, and maybe sprinkle in some REITs or crowdfunded real estate. It’s like making a well-rounded meal: you need a bit of everything to keep things satisfying and nutritious. So, invest wisely and regularly, and let your money work as hard as you dream of not working!
4. Save more
Alright, let’s get down to the nitty-gritty of stashing cash and cutting costs—because, let’s face it, your plan for early retirement isn’t about hiding stacks of bills under your mattress (figuratively speaking; literally doing that would be a great way to make your home a target for burglars and your mattress a moldy mess).
First things first: Yes, you should definitely be saving money in retirement and savings accounts. But let’s not stop there. If you’re serious about ditching the 9-to-5 grind and strolling into early retirement like you own the place, you might need to rethink some of your spending habits. Those brown Salvatore Ferragamo Tramezza Special Edition Medallion-Toe Oxford shoes? They might not be worth the splurge if they’re standing between you and a future of financial freedom.
Consider this: If your current lifestyle is one of constant partying and high-end indulgence, you’re basically setting yourself up for a reality check worthy of a ‘Party Monster’ sequel—minus the sequins and plus a hefty dose of regret. Your early retirement dream shouldn’t be a pipe dream fueled by pricey nights out; it should be a reality you’re working toward with smart, intentional savings and spending.
So, do a little soul-searching: Does your current lifestyle align with your future goals? It’s not about living like a hermit—it’s about making sure your fabulousness doesn’t come with a price tag that derails your retirement plans. Every FIRE (Financial Independence, Retire Early) enthusiast knows that the secret sauce to their success is cutting out any unnecessary expenses that don’t contribute to their early retirement.
Take a page out of the book of those who’ve successfully achieved FIRE.
Spoiler alert: They didn’t get there by splurging on every whim. They’re more likely to be found channeling their inner frugality while still living a fulfilling, fabulous life. So, get inspired by the pros and start trimming the fat—financially speaking, of course. Your future self will thank you, and you’ll be well on your way to enjoying those retirement years sooner rather than later.
5. Borrow less
Successful FIRE enthusiasts are debt-free or at least free of credit card debt. Let’s face it: when we were buried under $51,000 of credit card debt, we were hemorrhaging $10,000 a year in interest payments. That’s like throwing money into a bonfire and roasting marshmallows with it—except way less fun.
It’s no wonder people get trapped in this cycle. Credit card debt is like that one ex who can’t take a hint: it’s always hanging around, draining your resources, and making your life miserable. To escape this financial nightmare, you need a game plan.
Start by tackling your credit card debt with the urgency of a cat chasing a laser pointer. Find out how to pay it off fast, save money, and boost your credit score. Remember, this is about fast-tracking your freedom—if you’re shelling out 18% to 23% in interest, your early retirement plan is more like a long-term fantasy.
And if you’ve got student loans hanging over your head like a Damocles sword, pay those off as quickly as humanly possible. Waiting for student loan forgiveness to swoop in is like waiting for a unicorn to deliver your pizza: it might happen, but don’t bet your retirement on it.
The silver lining? Many FIRE aficionados turned their financial lives around after wrestling with debt. They decided that paying off their debts and taking control of their finances was a much better deal than living under a pile of bills.
So, channel your inner financial superhero and start eliminating that debt. Your future self will thank you, and you’ll be one step closer to living the retirement dream—minus the debt drama.
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