The FIRE movement (Financially Independent, Retire Early) is gaining momentum.
More people are retiring long before the typical age. How do they do it? What can you learn from them? It’s not all fun and games as the people who have already retired early will tell you, but we can all live and learn from their experiences.
The term rich is just that, a term. Just because you make a lot of money doesn’t mean you have a lot of money. Most people that retired early agree that it’s all in your mindset. It doesn’t matter how much money you make. What matters is how much money you spend. If you overspend, you’ll never get ahead and that’s the case if you make $50,000 or $1 million a year. Live below your means, and you’ll be well on your way to retiring early and enjoying it.
When you retire early, you’re retiring from the 9 to 5 rat race that quickly turned into a 24/7 endeavor that took you away from family and fun. That doesn’t mean you can’t work and make money. When you retire early you aren’t dependent on the income. You have more time to do what you want (enjoy life) while still dabbling in making money but this time the way you want to.
The first thing anyone should do who wants to retire early is to eliminate debt – all of it. Credit card debt isn’t the only debt (although everyone should get rid of it). Pay off your car loans, mortgage, and student loans. Don’t retire with the burden of debt. The interest takes away from any investments you could make. It’s an opportunity cost and could make early retirement less successful than you’d hoped.
Just because you retire early doesn’t mean you’ve struck it rich. You’ll need a budget more than ever when you retire, so start now. You don’t want to make the major life change of no longer working AND living on a strict budget. If you’re used to living on a budge, when you retire the only adjustment will be no longer working.
Don’t retire early just to say you did it. Know your reasons or you’ll get bored and frustrated fast. When you retire early, you give up your ‘purpose’ as most people use their job as their purpose. Find something to replace that feeling and make sure it lights you up before giving up your profession.
Retiring early can be great for many, but it’s not a one-size-fits-all approach. Know what you want out of retirement, plan ahead for unpleasant surprises, and always have fun. Retiring early may mean living a more frugal life or constantly finding ways to keep yourself busy. Prepare yourself for the good and bad and you’ll make the most of your time.