How to Retire at 30?
To dream about retirement as a goal for decades down the road is one thing, but to reach it by the time you’re 30 is another. While early retirement may sound like a dream for people in their 30s, it’s possible you get into your 40s or 50s and realize you still have some work-related goals you’d like to accomplish. As with all financial goals, you have to keep your options open.
The strategy is simple and obvious: earn a good income, save a large part of it and invest the savings well. It’s all about hard work, skill, and perfect timing. Here we talk about 2 important steps for everyone who wants to retire early:
Planning and managing your finances
If you want to stay financially fit when you retire, you need to think about what retirement means to you. Where will you live and how will you spend your time? Calculate what this lifestyle will cost you each year. It might not be easy, but these calculations are essential for knowing how much money you’ll need.
First you need to figure out how much money you’ll need when you retire and start saving your money. As a rough rule of thumb, we can say that your future expenses will be about 20 to 50 times your current spending. For example, if you spend $20,000 per year, you’re likely to need about $400,000 to $1 million in savings for your retirement.
Decide how much money you’ll need to save to retire successfully and comfortably. This will depend on other factors, such as how many individuals there are in your household and your lifestyle choices. Sit down and choose a rough amount, higher than you might need, and work towards that goal every single day.
Earning money and reducing costs
Saving hundreds of thousands of dollars before you turn 30 is no easy task. You need to think about different ways to earn more money and reduce your living expenses at the same time:
Start your own business
Starting your business is probably the best way to become wealthy enough for early retirement. There are many million dollar companies which started their business in a small office with a couple of people. But before quitting your job to become an entrepreneur, learn about the pros and cons of starting your business.
Pay off your debts
If you have multiple sources of debt, try to consolidate them into one account with the lowest interest rate. Pay off as much as possible every month until the debt is paid off. Then, avoid getting back into debt through the use of credit cards or loans. Keep your credit score healthy and remain debt free.
Reduce living expenses
If you are renting an affordable apartment or living space, focus on cutting down on other expenses like your internet costs, energy costs, and your food costs. Reducing your expenses by $10 to $20 a month can add up to more funds in your savings account, towards your retirement.
Invest your money
The final step towards reaching your financial goals for retirement, is to invest your money. The sooner you start investing, the more you’ll benefit from compounding interest. Talk to a financial advisor before investing to reduce the chances of losing your money.