Turn your dreams of spending your days traveling the world while still relatively young into reality by learning how to retire in 20 years. Although many people would love to retire early, not everyone has the self-discipline necessary to save for early retirement. It can be difficult to save aggressively, but if you have the willpower to do so, you can ditch your nine to five by the age of 45.
- Define your goals. To be able to retire in twenty years of work takes self-discipline, but it is totally doable if you have a plan in place. Do you want to spend every day playing golf? Would you like to visit every country in Europe? Write it down. Not only will this help you clearly define where you want to be in twenty years, it will also serve as motivation.
- Calculate your living expenses in retirement. Traditional wisdom is to save between ten and twenty percent of your income for retirement. This advice isn't very practical, though, because it does not take in to consideration an individual's personal lifestyle and spending habits. To figure out how much you will need to save in order to retire in twenty years, estimate how much you will spend in retirement. Create a spreadsheet with estimated monthly or yearly expenses you will have. If your mortgage will be paid off, your housing expenses will be low, but make sure to include things like taxes, healthcare, entertainment, travel expenses, and food. Also, keep in mind that by retiring early, you will need more money saved than someone who retired after forty years.
- Live frugally and save aggressively. If you wish to retire in twenty years, you will need to save more aggressively than most Americans, who retire after forty or more years. Although you may be tempted to buy a luxury car or the newest high-tech cell phone, it is better to live frugally right now. Create a reasonable budget and stick to it. You do not have to live like a pauper, but if you wish to exit the working world after two decades, you must resist the temptation to keep up with the Joneses.
- Invest wisely. If you choose to include investments in your retirement portfolio, choose wisely. Put your money in investments that are stable and guaranteed rather than taking risks. A risky investment gone wrong can shatter hopes of retiring after only twenty years.