Studies have shown that most individuals are not financially stable to retire before the age of 60. For a large fraction of the population, early retirement means retiring at the age of 40 or 50.
Contrary to such beliefs, an individual can retire at any phase of life provided they have planned well ahead to prepare for such a situation.
Strategies for retiring early on
Financial experts have said that for the most part, the decision of early retirement is a carefully planned and executed one. Early retirement requires proper financial goals and these are set from very early on.
Experts say that if an individual wishes to retire early on in life, he or she must plan it from a very young age. It involves setting up some clear financial goals and making smart choices.
Another important step in preparing for an early retirement is to clear off all existing debts and to try and steer away from any potential debts unless absolutely necessary.
Financial analysts have stated that the key to saving up good money lies in consistency. They speak about compounding, which is a means to earn money by accumulating interest. This is an effortless way to save money provided the habit is incorporated into an individual's lifestyle right from when they are in their mid-20s.
The crucial advice given by most financial experts is to refrain from delaying the contributions towards a savings account. The sooner the savings start, the higher is the accumulation of savings.
For the average American, housing costs remain at the top of the expenses in managing a family. This is especially true for those with large families. Experts suggest that to see better savings, it is important to keep housing costs under check. Under most circumstances, housing costs should not go above 30 percent of the earned income. The ideal threshold is between 15 to 20 percent.
Although the figures sound conservative, mortgage and maintenance are two aspects of housing that eat up through income rather rapidly and if not monitored, it can have a dire impact on savings as well.
The income left after housing costs should be flexible when considering savings in order to make sure that one can still stay in line with the proposed financial goals to see through an early retirement.
A well-planned and meticulously executed retirement schedule according to experts, enables even a person with modest earnings to retire early in life.