Want to Retire by age 40?

Hi, I am Caroline and I’m a guest blogger. A few years back I noticed that more and more people have started planning an early retirement. Some work very hard in their 20’s in order to be able to retire by 30, others manage to retire by the time they are 40. It leaves them with ample time and money to pursue their dreams, travel the world and live their life to the fullest.

So I did some research and came up with these tips that can help you plan an early retirement as well.

Plan retirement today – Planning an early retirement starts with being proactive. If you really want to secure your future tomorrow, you must act today. Start with getting rid of any debts you may have accumulated over the years. Keep a close eye on your monthly cash flow and track your major expenditure, recurring expenses and expenses you can do away with. You may be just 25 years old, but getting an early start on making smart investment choices means banking upon an early retirement plan. Also, keep in mind that the earlier you get a life insurance policy and a medical insurance policy, the safer your future will be.

Put away a retirement budget – When I say put away a retirement budget, what I mean to say is that a part of your monthly salary must go into savings for the future. Create a new account where you deposit whatever extra money you can spare. And guard this money with your life! This is an emergency fund, which you want to see growing over the years. So don’t use it up in a spontaneous moment for a trip to Europe. Even if you can spare just $200 a month, put it in to your retirement fund and watch it grow with all the additional interest money added over the years.

Make Smart investments – Making smart investments is the key to ensuring an early retirement. There are several ways to invest your money. Savings accounts, fixed deposits, stock market and real estate are all great options. However, at any given point of time do not invest more than 60% of your retirement funds in the volatile market. When you are planning for an early retirement, all your money must never be in the market linked plans. Play it safe and always invest a minimum of 40% of your retirement funds in safe investing methods like fixed deposits, mutual funds, recurring deposits and insurance policies. As you grow older and near your retirement age, reduce exposure to market linked schemes to 20% to ensure more security. However, real estate is a lucrative market that promises big return on investments, so don’t miss out on that opportunity.

Consider inflation over the years – While you are busy planning your retirement and putting away a chunk of your monthly salary to ensure a secured future, do not forget about future inflation. If you need $3000 a month to run your household today, 10 years down the line it could be $6000 or maybe even more. So make sure that your retirement funds keep growing in the same ratio if you want to continue with your present lifestyle even after you retire. You can easily download a retirement calculator online to get to know the extent of your expected expenses will be post retirement. This will, at least, give you a vague figure to go by.

Planning an early retirement is a great way to keep your finances in check. You could hire a financial advisor to help you plan better, but you could also do the planning yourself by keeping a close eye on the market. Keep in mind that in your 20’s you should go for aggressive and lucrative investment plans but as you hit your 30’s, your investments must be safer, tension free methods to ensure that you can safely retire by the age of 40.