The subject of retirement may not be popular with most young people, but they certainly desire to have a great life after retirement. While most of the older adults and senior citizens remained in the active workforce all through their productive years into old age, the trend is changing for younger people as early retirement is becoming a fashionable plan for them. However, the difference between the young person’s idea of retirement and those of the older generation is that young people still desire to be productive in one way or the other when they retire from regular jobs.
To retire early is possible but you need to put in the required work. This article gives insights into how to translate the seemingly vague conversation about early retirement into an actionable plan.
When it comes to early retirement, the first question you should ask is what retirement means to you. Think about what retiring at 40 would mean to you and what your life would look like post-retirement. If your expectation is to live until age 85, how will you spend the 45 years between retiring and hitting that age? Be specific about what your goals are. Answering these questions form the basis of your entire plan for retirement. While there is a general definition of retirement, life in retirement varies from one person to another, and this also reflects in how you plan for it. Whether you plan to live a conservative lifestyle or globetrot from one exotic place to the other, your idea of life in retirement will determine what it will require of you to actualize it.
While there is a general definition of retirement, life in retirement varies from one person to another, and this also reflects in how you plan for it.
If you plan to retire completely from any kind of work, you will need more savings, and if you still plan to work on your own terms, you may be able to retire on lesser savings because you will have a continued inflow of income to maintain your lifestyle.
Furthermore, if you are in your 20s or early 30s and want to retire at 40, you will need to run your numbers to see how realistic your goal is. The first step here is to know how much you plan to spend in retirement, this will give you an idea of how much the baseline of your current earnings should be.
Start with your retirement budget when determining how much you need to save for early retirement. Note that your estimated retirement budget should include expenses like clothing, healthcare, housing, utilities, food, transportation, hobbies, recreation, education for kids and other personal development expenses.
Also, given that the general retirement rule of thumb is to replace 80% of your pre-retirement income, have 10% of your income go into your Retirement Savings Account (RSA). Your RSA is money set aside from each paycheck and deposited with a Pension Fund Administrator (PFA) for a financially stable life in retirement. For more info on RSAs, contact Oak Pensions via www.oakpensions.com, info@oakpensions.com or call the Marketing Manager on 09087448661. It is also ideal to seek the assistance of financial experts to create a personal financial plan that works for your lifestyle.
In essence, audit how much you already saved, what you currently earn, your expenses, how long you have until you turn 40 and compare it with what your retirement needs are. This gives you a framework for how much you will need to save each year, and each month to cover for retirement.
In essence, audit how much you already saved, what you currently earn, your expenses, how long you have until you turn 40 and compare it with what your retirement needs are. This gives you a framework for how much you will need to save each year, and each month to cover for retirement.
Lastly, the easiest way to retire at any age you desire is to simply earn more. Explore other means of increasing your earnings, both short term and long term. Beyond work, think of other ways your money can appreciate. You can check our article on How to Make Your Money Work for You for more insights.
ABOUT THE AUTHOR:
Ernest Ademola Ehigie is a Copywriter, Content Developer, Author, Brand Consultant, and Communications Manager with over 5 years in marketing communications. He has written several articles, policy documents, press releases, radio and TV adverts for businesses and organizations. He's the author of the book, "Why You Must Lead" and currently works as a content manager for Detail and Avedia, a leading retail and media consulting firm.
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