How to plan for an early retirement

Retirement is no longer just an option for silver-haired members of the workforce like the Baby Boomers or the older Gen-Xers.  

Even millennials who have reached their mid-thirties want to retire early. Regardless of their generational demographics, all these hopeful early retirees are governed by similar desires: to finally pursue a passion that they love and which might provide them a sustainable form of living. They want to quit jobs that they are forced to hold for economic reasons. They also want to avoid having to face every single day a boss that they do not like, let alone respect.

Early retirement is something many wants to achieve. (Source)

CNN gives several strong and detailed tips how to plan and finally realize your retirement plan. After all, it is not advisable to simply quit; there will always be bills to pay, and you don’t want to jump into the next job that comes along and get trapped again. Retirement is supposed to allow you the provision and the space to do what you have long dreamed of, like travel, non-profit work, running your own business, while enjoying quality time with your loved ones.

The first tip has to do with laying a strong foundation that will allow you to retire. You have to do the math and check if you have enough savings to make that leap. Your savings should be more than enough to let you live your preferred lifestyle; otherwise, just relying on subsistence would make retirement dull, unhappy, perhaps even scary. In computing your savings, you also have to take into account the monthly expenses you do consume—and see if your savings will hold up.

Chances are you would have to save a lot more than your usual if you want to retire early. The rule of thumb is: save 25% of your income from for every $1,000 that you spend. If you’re earning $40,000 a month, you need to save up for at least one million dollars. Lower down the price if you can’t manage it, e.g., try for $500,000. But saving up earlier is always better. And that might mean cutting down on a few sacrifices, e.g. annual travel vacations, weekly dining at fancy restos. Reduce unnecessary expenses now in order to retire early and happily.