Do you remember when people used to ask you what you wanted to become when you grow up? If you’ve chosen that same career path, congratulations. If not, you’ve probably embraced a completely different profession. Now, when someone asks you what age do you want to retire, you don’t want to give an unrealistic answer, nor do you want to brag that you plan for an early retirement. So, you envision your retirement years somewhere after your 65th birthday, although you’re not sure you’ll respect it either. Early retirement is not science fiction. It can be done! But you have to plan ahead.
However, a Gallup poll reveals that the vast majority of non-retirees plan to retire at age 66, six years later than in the last decade of the second millennia. At the same time, this poll shows that the younger we are, the sooner we want to exit the workforce. Since 2011, the average age of retirees is 61. Those who were born in 1955 can retire at 66 years and two months, yet they may even retire early at 62 with reduced benefits. Somehow, we have come to accept that the government should decide our retirement age. But in most countries, governments don’t want to pay pensions for too long, so they are increasing the retirement age using the excuse that life expectancy has also increased. Early retirement sounds like an act of rebellion. Indeed, going against the current is not what we normally do. We tend to copy widespread opinions and behaviors. So how to retire early at 55, for example? We have a few strategies in our magic hat for you that we will reveal in the next paragraphs.
Choosing a military career
As you know, there are a few careers that allow you to retire early. Serving in the military is one way to achieve this dream. As one of the top 5 benefits of a military career, early retirement is possible after only 20 years of service. So, the sooner you enroll, the better. For example, a 19-years-old private may retire at age 39 but will be entitled to only 50% of the average salary received during the last three years of his or her career. So is the case with cops and detectives.
The main drawback for military personnel and police officers is the low income they will receive afterward. Without significant savings to compensate for the sudden drop in their monthly income, early retirement is simply not an option for these employees. Isn’t it strange that the law grants the right to early retirement on paper but in reality, the economic conditions don’t allow the law to be put into effect literally? Besides, a military career is not for everyone.
Other careers that allow early retirement
If savings are so important for a successful early retirement, then we have to find what are the jobs with the highest annual revenue. A survey published by Glassdoor reveals that physicians top the list with a median base salary of $195,842. The second best-paid employee is the pharmacy manager who pockets $146,412 a year. Pharmacists also boast a median salary of $127,120, so the medical field may provide the financial means to leave the traditional job in order to pursue other passions.
Let’s not forget about the Silicon Valley either. The IT sector is also full of high-earners and there’s no sign of recession looming on the horizon for this industry. If you have a good job, you’re one step closer to achieving your goal of retiring earlier than most of us. Still, you may be wondering what else might stay in your way. Well, your spouse!
Early retirement when married
Close your eyes and describe the first image that you see when you think about retiring sooner than everyone expects. You’re probably alone, on a remote island, sipping from a cocktail on a beach. It’s such a selfish thought, isn’t it? And you probably think that early retirement is only for those who are single. It doesn’t have to be like that.
If you as a couple would like to enjoy life to the fullest, nothing should stop you from planning for early retirement. Here are a few questions you should answer first:
- What age do you want to retire?
- How much money do you think you will need per day to live comfortably in retirement?
- What type of health insurance is available for early retirees?
- What activities will bring your extra income in retirement?
- What are the best cities to retire in?
Besides these questions, you may be put in front of the following decisions:
Should you pay off your mortgage or sell and downsize?
Having a mortgage shouldn’t stop you from retiring early. Most homes are purchased with a mortgage and it doesn’t mean that homeowners can’t retire before their last installment. So, if you bought a house in your 30s with a 30-year mortgage you can safely retire before you turn into your 60s. And it’s even better if your income is high and allows you to save a considerable sum of money every month. It would be great if you could make ends meet with one spouse’s salary and put the other salary aside every month, wouldn’t it?
Another strategy would be to sell your house, maybe even attempt a short sale, and move into a tiny home or RV that is more suitable for a couple like you. Defaulting on a mortgage should be a measure of last resort. Don’t ruin your credit score! Instead, keep an eye on the real estate market, watch the local news and try to find more about the best and the worst times to buy a home.
Another interesting strategy if you have a mortgage is to tap into your home equity and access a reverse mortgage. Once you do that, you no longer have a monthly payment on your house. Of course, if you want to keep the house or leave it to your children, then you should try to pay it off. Maybe you should also reveal your early retirement plan to your children and let them know about your decisions. However, they don’t have to agree with you.
Should you wait until your children turn 18 or not?
Again, you cannot lose sight of your children when planning for an early retirement. What age do you think they will be able to support themselves? When you have dependent children, you have to make sure you can provide for them even if you no longer receive a regular income. So, most parents will be in their 40s when their children approach maturity. Then, as parents, you have to decide whether you can afford to support your child in college or not, and what options are there? Do you think your children might have what it takes to become a successful real estate agent? A real estate career might fit like a glove on their personality, so take it into consideration. However, a good idea would be to keep working until your children earn their first salary, too.
Should you travel or age in place?
Most of those who dream of an early retirement fancy expensive vacations overseas. They want to spend time traveling and discovering the world. It’s just that they almost forget that traveling is expensive and if all you want to do in your retirement is to move from one hotel to another, then your savings may not last as long as you anticipated. You have to balance everything. If you don’t go too far from your home, you can save a lot of money. Also, try to travel out of the season. You should spend more time hunting for last-minute deals, too. Moreover, you may feel inspired by YouTubers who spend most of their time traveling the world and posting great reviews and travel tips on their channels. If they can make a living from it, why wouldn’t you? YouTube and vlogging may bring you a passive income stream once you reach a certain number of monthly views.
Expected vs. unexpected early retirement
Sometimes, you don’t get the time to plan for an early retirement. For example, in the event of a stroke or accident, you can remain immobilized and with various disabilities. Not being able to work like you used to will get you down for a while. This is the kind of early retirement we all fear. In the US, someone has a stroke every 40 seconds, while someone loses their lives due to a stroke every 4 minutes. On the roads, 4.5 million people have been seriously injured last year, and about 40,000 died in car crashes.
Coming up with an early retirement plan in just a few days is really difficult. Of course, some people do recover their mobility after a while, but not as much as to join the workforce again. Prioritizing expenses is a new challenge. Making ends meet with only one salary and Social Security Disability (SSD) benefits or Supplemental Security Income (SSI) is not going to be easy. Stroke patients may even need permanent assistance at home. Unfortunately, strokes and accidents can’t be foreseen. But we can prevent most of them by taking good care of our health, and by driving carefully, without using the phone behind the wheel.
How to retire early at 55 or 45 in good health?
Scientists have agreed – retiring early has plenty of health benefits in itself. But how to make sure you get in your 40s and 50s with a great physical condition? Here are a few tips
Grow your own food
Start growing vegetables around the house. Eat healthier by avoiding the fruits of intensive farming. And cook at home to have better control over the ingredients that end up on your plate. You can also save quite a lot of money by cooking at home instead of eating out.
Work out at home
The more you work to make money for your nest egg, the less time you have to go to the gym and do some physical exercises. Build a home gym and start losing all those extra pounds and lower your cholesterol.
Save money like a pro
Become thrifty and think twice before purchasing anything with your credit cards. Try to keep your fixed expenses low and increase your disposable income as much as possible. In this way, you can direct more money towards your piggy bank. Turn off the lights you don’t need, ditch the dryer, and don’t use your car at least one day a week. Always look for ideas on how to save money! Once it becomes a natural habit, you won’t have a problem to continue this lifestyle long into retirement.
Think about passive income sources
When you have a 9 to 5 job, it’s often hard to be creative and get outside your comfort zone to explore other business ideas that might actually work and bring you a good profit. Don’t give up dreaming! And if you have a great business idea, don’t be afraid to resign in order to work on it full-time, especially if you have support from your friends and family. Also, you may want to become a real estate investor and own a few rental properties. These are a great source of passive income that can not only cover your living expenses but pay off your loans as well.
Take regular breaks and holidays from work
Keep your stress level low. Prevent burnout by planning fun activities every weekend and make some home improvements to help you destress at home on a budget. You may also consider buying a timeshare unit, preferably a used one from someone who no longer needs it.
Even if you could retire tomorrow morning, it doesn’t mean that you should. Retirement is not about being lazy and bored all the time. Use your time to leave a great legacy behind. Get involved in charities or start your own charity to fight for the things that matter to you most. Give your life a purpose and fill your time with activities that take you closer and closer to your goal every day.