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12 Tips To Retire Early And Live Well

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Early retirement may seem like a pipe dream for many people. It sounds pretty great, but how in the world do you make it happen? About 20 percent of workers think retirement in general just isn’t possible.

Another 54 percent have no idea how much money they’ll need to retire. I can definitely see why early retirement doesn’t seem possible.

After doing some research, I was happily surprised with what I found. It’s possible for people to retire in their 30’s, 40’s, and 50’s. And you don’t have to be a millionaire to make it happen. The main factors are planning, researching, and investing. Below you’ll find 12 tips to retire early to help you get started.

1. Review Your Current Monthly Expenses

Reviewing your current monthly expenses is crucial whether you retire in 10 years or 40 years. Of course, it’s a top priority if you want to retire early. There are a few very helpful tools you can use to calculate your spending. I like the Quicken budget calculator because it’s easy to use, but a simple spreadsheet works just fine.

You likely know your main expenses off the top of your head – car payments, rent/mortgage, and so on. But don’t forget things like toiletries, your Netflix bill, and other small things. These really add up! Consider writing down everything you spend money on over the course of 30 days, too.

This step is essential in order to move on to the 2nd tip. Once you know your exact monthly expenses, you can start lowering them. That may not sound easy, especially if your budget is already tight.

But I’ll offer up some examples of ways you can cut costs here and there. Every cent you save for early retirement is important.

2. Reduce Monthly Expenses Now Versus Later

To start building your nest egg, reduce your expenses as soon as possible. The earlier you start saving money, the sooner you can retire. Now that you have your expenses outlined, you can see where there’s room to reduce spending. The examples below are based on a goal of retiring in 20 years. See how much you can start saving and how quickly it adds up.

  • Downsize from two streaming services to one. Based on average prices, this will save you $10.99 per month. Over 20 years, you’ll save $2,637.20.
  • Choose a less expensive cell phone plan and eliminate your landline service. According to this article, a simple landline service averages about $25 per month. The average cell phone bill averages about $60 per month. By getting rid of your landline and choosing a $35 per month prepaid plan, you save $50 per month. Over 20 years, you’ll save $12,000.
  • Tighten up your grocery budget. Data from 2017 USDA reports a thrifty grocery budget was $162.80 per month for an adult male. A liberal budget was $365.30 per month, and there are also low-cost and moderate budgets. If you go from a liberal budget ($365.30) to a low-cost budget ($237.20), you’ll save an extra $128.10 per month. Over 20 years, you’ll save $18,446.40.

By reducing only three monthly expenses, you’ll save $33,083.60 over 20 years. That much money can easily cover 1-2 years of frugal retirement living. And keep in mind these are just three examples. When you trim a bit of spending from every expense, your savings can soar.

3. Downsize Your Home Or Apartment

Downsizing your living arrangements can increase your 10 to 20-year savings by several thousand dollars. If this is an option for you, it’s absolutely worth doing. Selling your home may sound tedious, or you may love your current apartment. But let’s take a quick look at some more stats and examples.

  • Move from a 3-bedroom apartment to a 2-bedroom apartment. According to ADOBO statistics, this saves you $399.80 per month. By downsizing your apartment, you can save $47,976 over 10 years.
  • Move from a 3-bedroom house to a 2-bedroom house. The cost and savings vary greatly depending on your location, mortgage payments, and more. Use a website like Trulia to see housing costs in your area.  

If you currently rent, moving is fairly easy. It’s understandably more difficult for homeowners to downsize. Still, explore your options a bit to see what you can do. When you add up the savings, you may decide it’s the best choice for you.

4. Increase Your Current Income

Increasing your current income is one of the easiest ways to retire early. And this doesn’t mean you have to work 80 hours per week. If you earn an extra $100 per week after taxes, you’ll earn $52,000 over 10 years.

Many people earn this by picking up a traditional part-time job. If you land a job that pays $12 per hour before taxes, you’ll only have to work 8-9 per week. That’s not bad at all.

Alternatively, you can choose a side hustle or two. These are less traditional methods of earning money, and we often discuss them at Frugal For Less. Check out these posts for a few examples:

The articles above are some of my top picks, but there are hundreds more. Browse our Make Money Archives to discover so many unique ways to earn extra money. You’ll quickly see that making an extra $100 per week is very easy.  

5. Create A Retirement Budget

You’re off to a good start if you follow the two tips above. Now you’ll need to crunch some numbers and create a retirement budget. Overall, this budget is based on:

  1. When you plan to retire / how many years you’ll be retired. Let’s say you plan to retire at 50, and the average life expectancy is just under 79 years. You’ll need enough money to cover at least 29 years of expenses.
  2. Your monthly or annual expenses for retirement. Vanguard offers a free retirement expenses worksheet to help you figure this number out. This projected retirement expenses tool factors in when you plan to retire and how long you’ll be retired.

Recent statistics show that the average person needs $738,400 to retire. And this is based on retiring around 65 or 70 years old. You might feel overwhelmed once you add up your retirement expenses. But despite this high number, you shouldn’t panic just yet.

You aren’t starting with $0 and reaching a huge goal of $738,400 within 20 years. There are other factors to consider that will help build your savings and cover costs. Some examples include your 401(k), investments, and Social Security income. You’ll read more about these below, so don’t panic!

6. Use Free Budgeting And Financial Planning Apps

Keeping your finances in order is easier than ever thanks to free apps and websites. There are tons of options that allow you to track spending, set savings goals, and much more. Here are a few popular and highly-rated picks:

  • Mint – Mint is a well-known personal finance app that you sync with your bank accounts, credit cards, bills, and more. The app shows you how much money you have on hand, your debt, your budget, and bill due dates. This is a good option if you’re not too familiar with managing personal finances.
  • Credit Sesame – Credit Sesame lets you monitor your credit score and helps with paying off your debts. You’ll see different refinancing options with lower interest rates, and they’re all based on your credit history. If you want to start eliminating debt, check out Credit Sesame.
  • Wally – Wally is an app that focuses on helping you meet your savings goals. You can even scan receipts to see where you’re spending the most money. This is a great tool if you’re looking to cut expenses. You can view your daily spending, set reminders, and more with this free app.

Try out these user-friendly options to help get your finances in order. When you can easily track your spending, budgets, and goals, saving money for early retirement is much easier.

7. Prioritizing Paying Off Your Debts

By the time you retire, you should be as debt-free as possible. You’ll be living on limited income and savings, so the last thing you need are large monthly payments. The financial apps listed above can help you set goals for paying off your debt. You may also go the old-fashioned pen and paper route.

My personal preference for paying off debt is called the snowball method. However, this isn’t an ideal fit for everyone. Some people prefer to pay off their largest debts first. You may also want to consider debt consolidation if you owe money to multiple creditors.

No matter what option you choose, aim to pay off your debt before early retirement. If you have 10 or more years before you retire, this is very doable. It isn’t possible for everyone to pay off every cent they owe. But getting as close as possible will help you enjoy a less stressful retirement.

8. Begin Using Investment Apps And Sites

Investing your money wisely is a key factor in early retirement. Some people have successfully invested their money and retired in their 30s. If you aren’t familiar with investing, that’s alright. I recommend reading this Investopedia article for beginners. There are a few helpful apps and websites that make the process easy, too.

  • Acorns – Acorn is a very simple app that allows you to invest your spare change. You start out by connecting your debit and credit cards to the app. When you make purchases, you round up the purchase to the nearest dollar. Acorn automatically invests your spare change, so you can easily increase your wealth. This app has over 2 million users, and it’s very user-friendly for new investors.
  • Digit – Digit describes their service as a “smart money sidekick”. The app calculates how much money you should save on a daily basis. This number is determined by your income, budget, and other factors. You also get 1% cash back on your Digit savings, and it’s paid out on a quarterly basis. This savings tool makes investing in your future retirement a breeze.
  • Stock Trainer: Virtual Trading – This unique app features a stock market simulator. It lets beginners learn about investing through experience, but you don’t have to actually invest your money. The app uses real data from current stocks, so it’s a risk-free look at your potential investment earnings. If you’re interested in learning about stocks, this interactive tool is a great choice.
  • Fidelity Investments – Once you get familiar with investing, give the Fidelity Investments a try. This app lets you track your stock portfolio performance, and it offers much more than that. You can create investment watch lists, set alerts, trade stocks, open brokerage accounts, and more. With this app, you get all of the benefits of investing for early retirement.

You may be nervous about investing your money, and that’s very understandable. But these apps and websites are great first steps. You can learn a lot about how investing will boost your savings. You should also discuss investing with a financial advisor, which I’ll discuss later in this post.

9. Consider Relocating For Lower Cost Of Living (Now Or Later)

The cost of living varies drastically throughout the country. In Mississippi, the average home price is $199,208. In Connecticut, the average home price is $275,000. As you can see, this is a major difference. Cost of living trends also applies to apartments and rental homes.

Relocating can save you a significant amount of money over time. For some people, moving to another state isn’t possible due to employment, family obligations, and so on. This is understandable, but there are other alternatives. Look at the different cost of living in your city or county.

I’ll use where I live as one example. This county has 5-6 primary cities. The rent for a 2-bedroom apartment in the cheapest city is approximately $500 to $600 less than a 2-bedroom apartment in the most expensive city.

The areas are fairly similar, and the distance is 25 to 30 minutes. A small move in my area can save residents about $6,000 to $7,200 per year.

You can also look into relocating for your early retirement. Doing your research now can help you determine your future living costs.  Explore your options for moving to see what works for you. Whether it’s across town or across state lines, you may be surprised at how much cash you’ll save.

10. Review Your Current Employee Benefits

If you work a traditional full-time job, you likely have employee benefits. These are very helpful now, but they can also help you retire early. Here are some examples:

  • Paid time off (PTO) –Many employers offer paid time off. Some employers will allow you to opt out of PTO, and you can receive an annual check instead. This isn’t always the case, but it’s worth looking into. If your employer offers this, add up how much money you can save by accruing PTO.
  • Life insurance – Life insurance is another common benefit offered by employers. You can often get a life insurance plan at a heavily reduced rate. You may not think it’s necessary, but it’s incredibly beneficial if you have dependents. Get cheaper life insurance through your employer instead of paying more for it when you’re older and retired.
  • 401(k) – A 401(k) is one of the most crucial employee benefits. Unfortunately, it’s common for people in their 20’s to overlook this benefit. A 401(k) is a retirement savings plan offered by your employer. You invest a portion of your paycheck into a retirement savings account. You also have the option of investing this money into stocks and more. The exact benefits depend on your employer. Discuss your options with your human resources department and a financial planner.

11. Learn About Social Security Benefits

Social Security benefits are available for 96% of retired workers, but they aren’t available unless you’re 62 or older. This means you won’t get the benefits during early retirement.

However, you should still learn about them to plan for your future. This Social Security Administration PDF outlines retirement benefits and eligibility.

Some of the information you’ll find is about family benefits, Medicare, and what benefits you’ll receive based on your age and work history. It’s important to understand that Social Security benefits don’t usually cover all retirement living expenses.

But you can factor the money you’ll receive into your future budget and plans.

12. Speak With A Financial Advisor

Throughout this post, I’ve mentioned speaking with a financial advisor or financial planner. A financial advisor is a licensed professional who helps you save and invest your money.

It’s very important to meet with one no matter when you retire. It’s especially crucial for early retirement, as you want to increase your wealth as quickly as possible.

Your local bank or credit union will typically employ financial advisors. It is their duty to act in your best interest. You can set up a consultation to cover your questions and concerns. Compile a list of questions using these posts from CNBC and Forbes.

If any financial terms confuse you, don’t be hesitate to get clarification. Thoroughly understanding where your money goes allows you to plan for early retirement successfully.

Final Thoughts About Early Retirement

As you can see, there are many ways to plan for early retirement. Again, saving, researching, and investing are very crucial. Use the tips and free resources above to get on the right path.

You may find that retiring in 10 to 20 years is a realistic goal for you. It will certainly take some hard work and life changes, but it’s worth it in the end.

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