Lifestyle Archives - Savings Roll

People work because they like to work or because they have no choice. Some of them find work that they love, and at best, they may ease off on their workload because of other interests or commitments. Others work to earn money and build a nest egg for their later years. In either case, you can always pursue your dream of early retirement if you have prudently planned your finances.

How Do You Make Early Retirement A Reality?

How do we know when we have enough money to live on? This requires determining a reasonable estimate of how much money we will need after retirement, after adjusting for cost inflation, and the foreseeable future trends of the economy. While the economy and inflation are factors that can be uncertain, we can have greater control over our basic needs and even build a cushion for the extras.

We can start by understanding our present financial standing and then make a plan for early retirement. Ask yourself the below questions, and the answers should help you make a detailed plan to turn your dream of early retirement a reality.

Are You Debt-free?

Being debt-free means you have no future payments to account for in your budget. Therefore, ensuring that your debts are cleared has to come first. Your monthly expenses may need to be cut down drastically while you are still working so you can pay off your debts that much faster.

Have You Saved Enough?

Saving money towards retirement from the time you start working may sound a little restrictive. But, it is a sound step towards building enough savings to retire on. It’s an added incentive if you plan to retire early and pursue other interests. Whether you have saved adequately can depend on your financial needs post-retirement. Retiring before social security kicks in could mean that your savings should cover the expenses that would have otherwise been covered through your social security.

Is Your Healthcare Covered?

Healthcare is one of the most significant expenses and can make a deep dent in your savings unexpectedly as many people know since the ACA law went into effect driving up health care costs and limiting choices. Retiring earlier than the age when you become eligible for Medicare means having a backup for health insurance. There are two ways to achieve this. You can either go on your partner’s health insurance plan or get coverage through private health insurance. Starting a Health Savings Account (HSA) earlier would be helpful.

Can You Stick To Your Budget?

Retirees have to live on a fixed income, and it is usually lower than they had when they were employed. So, creating a reduced monthly budget and sticking to it is imperative. You may want to start this plan a few months before you retire to get into the habit. To be safe, have two lists drawn up: one that covers only the basic expenses that you can’t do without, and the other a slightly relaxed budget to include a few you don’t need but would like to have.

Some of us may manage to save substantially with a basic budget bringing the retirement age even closer. Others may desire a slightly relaxed lifestyle and may plan a later retirement. Regardless of the plan, a healthy financial lifestyle is one where you have a budget, and you cultivate the habit of staying within that budget.

Have You Made The Right Investments?

Fixed income post-retirement suggests that you aim to maintain rather than grow your income. This means that you must plan for lower-risk investments. While the returns may be lower, they are also less risky investments. Talking to a financial planner when you are still working and can make a few investments to help you later would be wise.

Do You Have A Plan For Unexpected Expenses?

If nothing else, the COVID-19 or Wuhan virus pandemic has taught us that life is unpredictable. Unexpected expenses may crop up post-retirement. It’s smarter to have a backup plan by either accumulating a few assets that can be sold for better returns or building them into your savings plan. You may still have to prepare yourself for taking up some part-time work that can tide you over.

Key Takeaway

Retirement brings about a profound change in our lives, no matter whether it happens early or late. It would be wise to think beyond financial security and include other retirement aspects such as the free time now that you are not working. Perhaps, a plan to occupy yourself with something you have always wanted to do but never could is in order? Having a backup plan for happy times post-retirement could be a poignant incentive to make you work towards early retirement.

A lot of people mistakenly assume that true wealth is simply growing your financial net worth. If you think like that, you could not be more wrong. Wealth is a balanced and holistic concept. In this post, we have listed 10 principles that can help you in achieving true wealth in a deeply personal as well as a purely financial sense.

1. Be Deeply Motivated

You cannot sit back and let luck take over when you want to build wealth. Your motivation needs to come from somewhere deeper than regular external trappings. You need to find a cause that will transform your life and drive you to overcome all obstacles which keep you from attaining financial freedom. Internally driven goals can be:

Charity
Freedom
Growth
Leadership

2. Add Value to Whatever You Come Across

Everyone is better off when they add value to the world. Giving more will only help you in the long run. This is an important step in building true wealth. You can greatly improve your life when you help others get better. Exploitation may bring you initial riches, but they won’t provide fulfilment and happiness.

3. Don’t Compromise on Integrity

People think they need to sell their soul to get rich. That’s not true. You don’t need to do things that would prevent you from meeting your father’s eye. You don’t need to harm others, encroach on their property, or violate moral law despite what we may see the FBI doing and all those rioters undermining their own cities. You don’t need to lie, cheat, insult, or damage the environment in your pursuit of wealth – we’ve seen that too much in certain cities in America that many people have moved away from.

You don’t even have to stretch the truth even though we see that all the time in California and New York politics and the White House. Never compromise on your integrity for expediency. There is no amount of money that can replace a clear conscience, a good night’s rest and a peaceful mind.

4. Be Brave and Courageous

You need to have courage to be responsible and a self-starter. You need to be brave to develop new skills and walk new paths. Courage is needed to put extra efforts for standing out from the crowd. In short, you cannot build wealth if you don’t have what it takes.

5. Stay Disciplined

Wealth is an accumulated mass of many small things that are compounded together over a person’s lifetime. Your daily habits play an important role in making and breaking your success. Investing, reinvesting, saving and growing your business and financial intelligence are vital to building wealth. You need to be consistent and persistent in your efforts. You risk falling prey to procrastination without discipline in your life.

6. Don’t Indulge in Conspicuous Consumption

Wealth is not instant gratification. Instead, you become wealthy when you invest your today’s wealth for a more comfortable tomorrow. You should consider living modestly in terms of time, energy, and money. Happiness is not directly related to material trappings. They only keep one from fulfilling their purpose. You have a decision to make every day – consume today or be wealthy tomorrow.

7. Create Supportive Environment

Life has an endless stream of distractions that can sidetrack your plans for building wealth. You can overcome these distractions with focused, persistent and consistent action. The best way to do this is by creating a support system which helps keep you focused on your financial goals.

Your relationships, family environment, financial habits, work environment, and daily rituals should be designed proactively for keeping you interested in creating wealth. They should support and reinforce your plans.

8. Build Wealth by Applying Leverage

You cannot get wealthy on your own. You cannot build wealth by trading time for riches. You need to work smarter instead of harder. These are a few principles of leverage you need to apply:

Marketing Leverage
Network Leverage
Knowledge Leverage
Financial Leverage
Time Leverage
Systems and Technology Leverage

9. Make Your Wealth Work

Wealth is not a one-off standalone concept. It is similar to a business entity. You need to run your money the way you would run a business. Use competitive advantage, accountability, accurate record keeping and leverage to get where you want.

10. You Don’t Possess Wealth

You need to understand that you are a steward to your wealth and not the owner. You would eventually need to move it to others. Money comes with tremendous responsibility. You need to ensure that you create maximum benefit for others who come across the wealth created by you. This can be done using your temporary stewardship wisely.

6 Signs That You Are Ready For Early Retirement