5 Things You Can Do to Achieve Early Retirement Before 50

 In Personal Finance, Retirement

early retirement

Most of us dream about early retirement, but very few of us will make it. Some won’t be able to retire at all, and will be working well into our 70s.

However, there are quite a few things that you can do to actually ensure that you’re able to retire well before the age of 50 provided that you start early and are savvy with your money.

Take a clue from Jeremy Jacobsen and Winnie Tseng, or to Farnoosh Torabi, all of whom have managed to succeed financially well before traditional retirement age.

Not convinced that this is something you can achieve in your own life? Let’s take a look at five things that you can do to achieve early retirement.

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Develop the Right Mindset for Early Retirement

Yes, you want to retire early and live a life of ease and enjoyment.

However, you need to be willing to put in the hard work now if you want to enjoy those benefits later. That means developing the right mindset, and living with less right this second in exchange for something better down the road.

That might sound a lot like the conventional sales pitch for working your life away while scrimping for a normal retirement, but it’s not. If you want to enjoy all the things possible when you become a millionaire, it requires lifestyle changes now.

Pay Off Student Debt to Enjoy Early Retirement

Before you do anything, you’ll need to spend time paying off your student loan debt. As Jacobsen and Tseng explained in their story, they spent several years paying off those loans before the even started their plan to strike it rich and retire early.

So, while it is possible to follow a simple secret to get rich in five years, you might have personal liabilities that need to be taken care of before your plan is implemented.

Build a New Lifestyle

Take another cue from Jacobsen and Tseng and create a new lifestyle that gives you room for the sacrifices that you’ll need to make. The couple sold their home and their car, moved into an affordable apartment and chose to live in a walkable neighborhood.

Getting to and from work was done on bicycles or the area bus system, and they hoofed it to wherever they needed to go in many instances. If that doesn’t sound like something you can do, then you might not be in the right mindset for this.

It does require sacrifice, quite a bit of it. Remember that you’re going to be repaid for these sacrifices many times over when you’re able to retire early and travel the world, living the life of your dreams, but you must be willing to cut out expenses ruthlessly in the meantime.

Another area that you’ll need to revamp when it comes to your new lifestyle is entertainment. If you dine out a lot, invest in all the latest gadgets and generally spend money, you’ll be in for a surprise. All of that needs to go.

Instead, you’ll need to embrace cooking at home and start finding your entertainment in nature and low-cost entertainment options. What might you do for “fun”?

Actually, anything from hiking to swimming to just enjoying a local park. In terms of other low-cost entertainment options, consider a Netflix subscription instead of paying to see movies in the theater.

The key here is this – live below your means, and do it by a substantial amount. You also need to be prepared for the time it will take.

Depending on the amount of money you’re able to save, and the amount by which you cut your expenses, it could take as little as five years or as many as 10 years before you get to the point where you can turn in your resignation and work and enjoy your early retirement.

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Save, Save, Save

It’s not enough to cut down on your expenses and spending. You also need to save. To give you a hint of just how much you’ll need to save, Jacobsen and Tseng were earning $135,000 per year combined. They managed to save 70% of that money and sock it away.

They were smart with their money and chose ways to save that ensured growth in their capital.

After all, you can’t expect money to remain stagnant. Inflation will decrease your wealth even if you don’t spend a dime, so you need to find a way to put that cash to work for you, which brings us to the next tip.

Investing Wisely

One thing that has ensured Jacobsen and Tseng have the life they want is that they were able to become savvy investors. They used a number of different vehicles, never putting all their eggs in a single basket.

A Roth IRA can be an incredibly beneficial option, but so can playing the stock market to a limited extent (even more limited today, as we near peak valuation and the inevitable crash of the market).

They’ve invested in plenty of commodities and equities, as well as a wide range of bonds, and a great deal more.

In addition, they have diversified their investment options to include both US equities and international equities (at a ratio of 78% to 22%).

Today, the happy couple has welcomed their first child into the world (and they paid significantly less for medical care by going international for the birth) and are traveling the world living on about $4,000 per month.

It’s an enviable position, but one that anyone can achieve themselves with the right mindset and a true dedication to being capable of early retirement.

It means sacrifice now, but the rewards are not that far down the road, and it sure beats the prospect of working for 40 years to enjoy a life of insecurity and financial austerity in return.
early retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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