How To Retire At 40
For many, the dream of retiring at a young age will never happen because they simply do not know how to retire at 40. Others feel that retiring at this age is just impossible. However, with hard work and a strong plan, almost anyone can achieve this dream. Here are the steps you need to take to retire at 40.
- Calculate how many months you have until retirement. Simply subtract how old you are by 40 and then multiply by twelve. This is the number of months you have until retirement. You will need this information to find out how much you need to save every month.
- Decide how much you will need in order to retire comfortably. Estimate how long you think you will live after age 40 and multiply that number by how much you think you will need in order to live every year. Then make sure to add an additional 6% to that amount to help with inflation.
- Divide the number you calculated in step two by the number of months you have until retirement. This is how much you are going to need to save every month in order to reach your goal to retire at 40. So it is time to start thinking about how you are going to save that amount every month.
- Start reducing your expenses to reach your monthly retirement goal. If you are like most, you likely do not have enough money in your current budget to retire at 40. So start cutting down unnecessary expenses like eating out and extra cable packages.
- Find a second job if cutting your expenses will not free up enough money for you to retire on. Working more is one of the best ways to get enough money every month to retire at 40. Start working extra hours, babysitting or even freelance to earn more money. Remember, the extra work you are doing now will let you stop working before almost everyone else. So get out there and find ways to make extra money so you can retire at age 40.
- Invest conservatively and diversify your investments. Because you are retiring sooner than most, it is important that you protect the money you invest. Stick with more conservative investments that have performed will over the last five years and spread out what markets you invest in. This way you do not have wait 15 or more years for your investments to mature and if one market crashes, you do not lose all of your hard work.
- Keep going until you reach your goal. Don’t quit saving and investing until you reach age 40 and are able to retire. If you give up too soon, you will inevitably fall short of your goal. So keep saving and investing no matter what so you can retire at 40.