Interested in retiring early? 3 lessons from people who retired in their 30s

Retirement has been rooted in history since the 18th century, which is fairly recent. Originally practiced as a choice, it later became a government policy in the late 19th and 20th centuries, setting distinct work prospects for individuals. Can you imagine what it would have been like to live in a time when retirement was a foreign concept? Working from early childhood (in early 19th-century Britain, the average starting age was ten years old) until the later years of life. 

However, as societal norms continue to shift, some pioneers have challenged traditional models by retiring before the age of 40. These trailblazers have demonstrated that early retirement is not only possible but can lead to a life of freedom and fulfillment. In this article, let’s explore how to retire at 30 and three valuable lessons from those who have done it.

Is early retirement for you? Assessing your readiness and motivations

Early retirement is a goal that appeals to many individuals, but achieving it requires careful financial planning and assessment. Crunching the numbers is crucial to understand the expected costs and sources of income during retirement. Merely settling on a vague “comfortable” nest egg figure won’t suffice. 

Instead, you need to make a comprehensive analysis of expenses, encompassing housing, health insurance, food, transportation, and any additional costs associated with your future plans. Bear in mind that early retirement offers more time for travel and hobbies, and these pursuits should be factored into your retirement budget. Early retirement typically involves spending around 80% of your working income annually, but this rule of thumb is a general estimate and may not apply to everyone’s unique circumstances.

Early retirement is an attractive option for those seeking a change in lifestyle or even better health. However, it’s not a decision to be taken lightly, as it requires careful financial planning and may not be suitable for everyone. 

Lesson 1: financial mindset and planning

When considering financial planning, people often focus on managing investments and tax allowances, but there’s more to it than just money. Effective financial planning begins by understanding your goals and aspirations. For those planning for retirement, envisioning the desired lifestyle post-work is crucial. Whether it’s traveling the world, retiring by the coast, or pursuing hobbies, clarifying what brings happiness is essential.

Surprisingly, a report from Aegon reveals that only 1 in 5 people are very aware of the day-to-day experiences that bring them joy and purpose. As retirement approaches, you need to contemplate what you’re looking forward to. This will influence your motivation to acquire assets and your comfort level in using those assets.

One of the reasons retirees are hesitant to deplete their assets is the fear of running out of money during retirement. This concern is sensible. But a financial plan acts as a safety net, providing reassurance and ensuring financial stability throughout retirement.

Lesson 2: passive income and alternative income streams

Relying solely on traditional retirement savings might not be sufficient to sustain an early retirement that could last for several decades. So, passive income sources might fill this gap for a reliable and ongoing stream of funds. Plus, some forms of passive income have the potential to grow over time, especially if, let’s say, investments and businesses are well-managed.

Here are some essential points to consider:

• Dividend-paying stocks, real estate investments, or other income-generating assets can provide passive income before and during retirement. 
• Trading on Binomo may help generate additional income.
• Also, owning rental properties can be a lucrative way to generate income month-to-month. 
• Starting an online business, like e-commerce or content creation, can be a viable option.
• Consider your eligibility for earnings from interest on savings accounts, bonds, or royalties from intellectual property.

Obviously, the more sources of income you can establish, the stronger your financial foundation becomes. But what some retirees will tell you is that you should choose income streams that resonate with your passions, as they provide not just financial rewards but also personal fulfillment.

Lesson 3: lifestyle choices 

Engaging in regular physical activity, eating a balanced diet, and prioritizing mental well-being contribute to a fulfilling retired life. While the temptation to lead a sedentary lifestyle might be there, it’s crucial to resist this urge and explore various activities in a sustainable way. 

Retirees should also approach their social life with care. Leaving behind the social interactions that often come with the workplace can lead to feelings of isolation. Instead of trying to build an extensive social network right away, start by reconnecting with old friends and colleagues or attending local events and gatherings. This allows for meaningful connections to develop naturally over time.

It’s also worth talking about being prudent with major life decisions. For instance, relocating to a new city or buying a second home might seem appealing. But you should always take the time to evaluate the practicality and long-term implications of such decisions. Renting a property in the desired location or spending extended periods there before making a permanent move can help you avoid costly mistakes.

What to do after early retirement

After retirement, many people find themselves facing an issue: feeling lost and unsure of what to do next. This period of adjustment is entirely normal and can be framed as an opportunity for self-discovery and personal growth.

One exciting option to make the most of your newfound freedom is travel. You can break away from routine and immerse yourself in diverse landscapes and lifestyles. If you’re looking for a sense of adventure and wonder, that’s the way to go.

Some retirees choose to continue working in retirement but without the pressure and demands of a full-time job. This could be consulting, freelancing, or starting a small business. If you have investments to manage, early retirement offers the perfect opportunity to take a more hands-on approach to your finances. There are no more excuses not to read up on new assets or stay updated with market trends.

The truth is you’ll have a lot of opportunities to fill your time — finally, spend more time with friends and family, write, become a mentor, etc. Just make sure not to fall back into the same high-stress patterns from the pre-retirement working life.

Frugal living tips

Here is how to stretch your savings while allowing yourself to enjoy a comfortable lifestyle:

• Downsize if necessary
• Maintain good health
• Declutter your possessions and only purchase items that add real value to your life
• Cook at home
• Avoid impulse buying
• Be a savvy shopper by comparing prices or buying in bulk
• Explore free or low-cost entertainment options
• Reevaluate subscriptions and memberships

Frugal living and adopting these money-saving tips are not just about financial necessity; they’re also about being a conscientious and mindful consumer. Even if you have substantial financial resources and can afford certain luxuries, you want to be thoughtful in your everyday choices.

When to start taking steps toward financial independence and early retirement

It’s never too early to start.

In fact, the earlier you begin the planning process, the better positioned you’ll be to achieve your retirement goals. Even for young individuals who have just started their careers or are in the beginning of their active trading journey on Binomo, cultivating good financial habits and saving diligently can make a difference in the long run. After all, a sense of financial discipline and responsibility never goes out of style. 

Sources: 

Guide to Early Retirement: How to Retire Early, NerdWallet

Financial Wellbeing Index, Aegon

What Is the Average Retirement Age? Ramsey Solutions