Retire Early! You Don’t Need To Win The Lottery!

We have been looking at what we need to retire earlier than 67 years of age. The thing is most people respond with they would need to win the lottery. The thing is, you don’t need to be a millionaire to retire early. All you need is a plan and a calculator.

If you can get rid of debt and when I say debt, I mean anything you have a monthly payment on, including a home. If that means downsizing, then it might be in your best interest to do so. Buy what you need, not what you think you want or what the neighbor has. Do you want to look good or feel good.

We have figured out in about 5 years time, all our bills including our home will be paid off. After that, what you need to figure out is how much you need every year to live, once all you bills are paid.

If your needs go over $100 000 a year, it might take you a bit more time to do, but if you can get by with let’s say $25 000 a year or even $30 000 a year until your pension checks come in, you then need to figure out how much you will need until you reach those years.

I’ll give you an example of what my husband and I have planned. Let’s say we are looking to retire in about 10 years time.

While we are retired and taking care of all our monthly bills and food we will need around $16 000 a year (I counted only one phone, $300 worth of groceries a month $300 of gas to get around with only one car). That is taxes, insurance etc.

For arguments sake we would like to get a bit more every year for incidentals, medication, a bit of travel etc. So let’s say we want to save $30 000 a year (an extra $14 000 a year).

We want to retire at 57 years of age, so that will leave us 10 years to live on that money until we receive pension checks. So for 10 years (from 57 to 67)we will need $300 000.

So if we wanted to save up for 5 years after we pay off our bills and house. We will need to save $60 000 a year for 5 years to get our total.

And let’s say we make around $100000 gross a year between the two of us (which is the total you should never use to calculate your income when saving) which comes out to $75 000 a year. We need to put 80% of our money aside every month to save the money we need to retire at age 57. Doable if you are really strict with yourself and you will not spend one single dime on upkeep of your home, any emergencies, medical or otherwise.

60% of that would be $45000 a year. If we retire in 6 years instead of 5 bringing our total for the 9 years remaining to our pension checks to $270000 needed for the remaining years. We could save that amount in 6 years. $45000 x 6= $270000 for 9 years.

And gradually getting ourselves used to living within our means instead of wasting money is also a good way of ensuring that when retirement comes around we won’t have the shock of the lower income bracket.

The less you need to live, the more you save, the more you save, the faster you can say goodbye to the workforce.

The upside to this is you really start paying attention to where your money is going, then you can really get down to saving and getting used to living without wasting.

And remember, this is just living on what you saved. If you want to work at something else or part time or even explore at working at something more for pleasure than money, if you do make a salary, that money is there to do with as you please. Your basic needs are covered.

You could probably invest as you are saving to increase your monies. And continue investing the years that you are retired for a few more bucks. Bucks to pay for travel?

This plan is to have your bare bones minimum paid every month without any bells and whistles.

So is it possible to retire before the government checks arrive and have more time for yourself. Absolutely. Will you be able to buy a Mercedes Benz etc.. Probably not.

It’s about¬† your priorities. What is important to you.¬† Material things and wealth or your own personal freedom to discover yourself and your surroundings, debt free with your basic needs met?

This is not for everyone I’m sure, but the more I work the more I know it is for me as I spot one day bleeding into the next as I work for someone else to get rich.

So for us it’s a very important decision and one we are looking forward to as we work to our decade (or so) to freedom!

No lottery needed. Just careful planning.


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