retirement is something that many people can only dream of. The reality is that,
most of us will have to work until we are in our 60s or worse – work for the
rest of our lives without retiring at all. But what if retiring early actually
is possible? What if I told you that, you could even retire at the age of 30?
I’ll go over the different steps you should take to successfully retire at 30 and become financially independent.
1. Start early
If you want to retire before the age of 65, you have to start planning early. If you’re between 18-20 years old, this is the perfect time to start preparing for retirement.
When you’re young, you have the advantage of time. Figure out a way to make as much money as possible – either through a lucrative job, a business, or maybe even both – and spend and invest that money wisely.
If you’re already in your mid or late twenties, retiring in your thirties will be a bit more challenging since you don’t have the luxury of time. But what you do have is the advantage of income.
If you’ve already been working for a couple of years, you probably have some savings and capital to invest already. Plus, you have the potential to get a higher paying job since you already have experience.
2. Figure out how much money you need to retire comfortably.
The next thing you should do is run some numbers and estimate how much you will need for you to retire and sustain your lifestyle.
You can either do this by using your current income and expenses or your ideal or preferred income and expenses. Obviously, if you plan on living a simple life, you’ll need a lot less.
The most basic rule of thumb is to multiply your current or ideal annual income by 33. You should also consider that we have longer lifespans now you’ll need enough money that will last you at least 50 years.
3. Cut your expenses
If you enjoy a lavish lifestyle-eating out every week, buying the latest gadgets, partying every weekend-that’s probably not the best way to allocate your hard-earned money. Making sacrifices is necessary if you want financial freedom.
Sure, you may not be keeping up with your friends and peers, but it will be so worth it once you can comfortably live off of your investments and spend your time the way you want.
Set a budget and stick to it. You can spend on your wants once in a while but always keep your goal in the back of your mind.
4. Maximize your savings and investments
Cutting down your expenses will certainly help you increase your savings and extra money to invest. But there are also other ways you can maximize this:
Keep your money in a high-yield savings account. These days, digital banks are offering high interest rates up to 6%. Compare that with traditional banks that are often only 0.5%. Take advantage of Pag-ibig MP2 and PERA (Personal Equity and Retirement Account), which are kind of like the equivalents of the 401k retirement savings plan in the US.
Diversify your investment portfolio by investing in stocks, mutual funds, real estate or Real Estate Investment Trusts (REITS), and if your risk appetite is high enough-cryptocurrency.
5. Boost your income
Let’s face it, if you’re earning a minimum wage, retiring early is going to be very, very hard. That’s why, as much as possible, you must look for a higher-paying job or look for side hustles that can increase your income.
If you already have a job that pays you well, try gunning for a promotion or asking for a raise. Some people are even taking on two full-time jobs, which has become possible in remote work setups.
We all want to be financially free and enjoy our lives without worrying about money. Taking control of your finances gets you one step closer to taking control of your life and living it on your own terms. It won’t be easy, and it will be a lot of work. But that will make achieving your goal even sweeter.
Let me know if these tips were useful by liking and sharing this video, it really helps a lot. If you want to know more about other personal finance topics, leave it in the comments below!
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