Early retirement is the dream for most workers in Australia. There are many benefits that come with retiring early, including improved health as well as allowing you to venture a new career. Early retirement also enables you to enjoy travelling while you are still energetic and can enjoy even the most challenging hikes.
However, the decision to retire early from your job comes with a cost. You need to plan and plan well to ensure that your life in retirement is secure. If you are thinking of early retirement, we have a handy retirement guide for you. We have rounded up some of the things you should do an ideal early retirement.
1. Define Your Early retirement
The first and most important thing is defining your early retirement. Every early retirement plan is different depending on what you are planning to do with your retirement life. If you are planning to exit the workforce to travel the world, then your early retirement plan will be different from a person planning to venture into another career. So, you need to understand and define the reason for your early retirement first. From there, it will be easy to create a perfect plan that factors all aspects of your dream retirement.
2. Create A Retirement Plan
After defining your early retirement, the second thing should be creating a retirement plan. A good plan should enable you to save up enough money to take care of you for the rest of your life. There are several things that you need to consider when it comes to creating a perfect retirement plan. First, the plan must consider the target retirement age. If you want to retire at 45, you need a different plan from someone retiring at 55 years. Your estimated life expectancy is also an important factor to consider when creating a retirement plan. Consider checking retirement age Australia calculator to help you estimate a perfect plan for your early retirement.
3. Reduce Your Spending
For your early retirement plans to be successful, then you need to save extra money. The best way to achieve this is to buy cutting your expenses to the lowest figure possible. Living below your means will help achieve your saving goals faster. You may not need to buy the latest car model in the market since the current model is cheaper and still doing fine. You can also opt to live in an inexpensive neighbourhood so that you can achieve your saving goals. Make sure that you are always adjusting your budget to remove unnecessary spending and put this money towards saving.
4. Find Ways Boost Your Income
If you are planning to exit the workforce early, maybe at the age of 45, then your current job may not be enough to provide saving that you need for your retirement life. That’s why looking for other revenue sources to boost your income is a brilliant idea. There are a number of ways that you can achieve this. First, you can work overtime if your job allows it. The second thing you can do is taking up gigs during your free time. You might also look for a better paying employer. Last but not least, start a side hustle.
5. Pay Off Debt
The biggest mistake you can make when planning an early retirement Australia is failing to pay off debts. Debts eat into your income and thus making it impossible to maximise your savings. If you go to retirement with debts, then that becomes a huge problem as you will be servicing debts using your retirement saving. So, pay off all high-interest credit card debts if you have any to help you save more money for retirement. Try the best you can to live below your means to help you avoid getting into debts.
6. Pay off the Mortgage
The other things you need to take seriously is the issue of the mortgage. If you have a mortgage, you need to find a way that you can clear it before retiring. You can’t afford to go to retirement if you still have some debts to pay. Besides, you need your own home, not rentals when on retirement because anything can happen. Your money might get depleted faster than you had expected. If you get yourself in such situations, then you need to have at least a home where you can be in peace. So, pay off your mortgage before exiting gainful employment.
7. Invest! Invest! Invest!
There are many investment plans that you can exploit in Australia. The trick is to put your money where it is safe, and interests are a guarantee. Otherwise, you might lose your money and have your early retirement plans collapse. For instance, you can put your money in government bonds. This is one of the smartest and safest investment ideas since income is a guarantee. You can also invest in shares for established companies as well as corporate bonds for promising projects. However, seek expert advice when planning to invest for early retirement purposes.
8. Make a Backup Plan
It is always wise to a back plan for your early retirement. Not all plans come to fruition since things can go wrong along the way. What if you lose your job? Or what would happen if the employer winds up the company? These are factors that are sometimes beyond our control. So, check the worst-case scenarios and provide a backup plan.
9. Review Your Retirement Plan
You must keep reviewing your early retirement plan from time to time. Things change, and thus you need to keep adjusting the plan where necessary if you want to get the most out of your early retirement. If your side hustle is doing well, you might need to add more money into the saving account. You need a financial expert to help you review your early retirement plan.
10. Work Hard and Be Disciplined
Last but not least, is working hard and be disciplined. You must work hard to achieve your early retirement goals. Make as much money as you can in between the period that you are active in the workforce. However, you must also develop a strong financial discipline to get the most out of your plan.
If you are planning for an early retirement Australia, these are ten things that you need to put into consideration. You need to know what you want in your retirement and save up enough money to meet your needs. We recommend that you work closely with a financial expert to make your early retirement plan is a success.