According to experts, early retirement does not mean complete work stoppage, but is an opportunity to pursue the jobs you love without financial constraints, according to Forbes.
However, this requires a solid financial plan and psychological preparation to avoid feeling bored or disoriented.
To prepare finances for early retirement, you need to take the following steps:
Determining retirement goals and expected costs
Estimated savings needed to maintain a life after retirement, including essential expenses such as housing, food, healthcare and entertainment.
Normally, you will need about 60% to 70% of your pre-retirement income to maintain the same standard of living.
Early retirement is a plan that can be achieved through living frugally, investing more and spending less after retirement.
Establish a clear financial plan when retiring early
Assess the current financial situation, determine assets, savings, investments and debts. From there, develop a detailed plan to achieve the goal of early retirement.
Shared your current monthly living standards with 35%. This is the amount of money you need each month from passive income to cover living expenses, save 40% of passive income to reinvest and calculate 25% tax.
Accumulate and invest effectively
Positive savings and smart investment help increase assets. Find a way to " tu lo pagate" to ensure a stable source of income after retirement.
Saving 20% of your earned income and creating a disciplined cash flow management approach. The important thing is not how much you earn, but what you do with your income.
full repayment of debt and limit new debt creation
No more debt helps reduce financial pressure and facilitate savings and investment.
Building an emergency fund
Spare some money to deal with unexpected situations, ensuring that your retirement plan is not interrupted.
Buying health insurance and long-term care
Make sure you have enough insurance to cover future medical and health care expenses.
Seek financial advice from experts
Consult financial experts to have an investment and savings strategy suitable for the goal of early retirement.
