When it comes to retirement, everyone has different goals — including when they'd like to start their golden years. For some, early retirement can seem like a distant dream. But it may be attainable.
Whether you've already developed your early retirement plan or you just realized leaving the workforce early sounds appealing, here are some signs that you might be on the path to retire early.
1. You Have Clear & Specific Retirement Goals
For many, retirement can feel like a long way off. But that doesn't mean it should sit on the back burner. The sooner you can start working toward your retirement, the more time you'll have to build up your savings. Taking the time to set specific goals for how much money you want to retire with, and when you want to retire, can help you make a plan to get there.
You might also consider the type of lifestyle you want in retirement now. If you plan to spend money on a lot of travel in retirement, for example, those additional costs might be part of your saving strategy from the start. Even if you aren't entirely sure about what you want to do in retirement, having an idea about where you might want to live and what you may want to do could help you in the future.
2. You're Monitoring Your Expenses
It might seem like an obvious step, but creating and sticking to a personal budget can be easily overlooked.
If you're someone who has a dedicated monthly budget that you track and adjust throughout the year, then you're already practicing good money management. Monitoring your spending and how much you can save could be helpful if you're considering developing an early retirement plan.
3. You're Paying Off Debts
Many people have debt. It's something that can not only cause a lot of stress and emotional turmoil, but it could also affect when you retire.
You might consider pairing your retirement saving strategy with a plan to pay down debts. Having little to no debt might help extend your retirement funds. If you're already paying down your debt with the goal of eliminating it in the future, you might be on track for earlier retirement.
4. You're Taking Care of Your Health
A lot of people focus on the financial side of retirement — for good reason — but it's also important to think about your physical health. Keeping yourself healthy may help you avoid missing work and potential health care costs.
While no one can ever make any promises about the future state of your health, doing what you can to maintain a healthy lifestyle now may lessen the risk of health problems that could throw off your early retirement plan.
5. You Pay Yourself First
Another sign that you might be on the right track for early retirement is that you're focusing on paying yourself first. This could involve putting money into your retirement accounts or other savings accounts.
If you contribute money to your retirement and savings accounts with every paycheck you get, that is a great start. For many, the more you can afford to contribute each month, the better your chances of having enough saved for early retirement. Of course, that amount will differ from person to person according to lifestyle, location and other financial factors.
6. You Have Help
When it comes to early retirement planning, you don't have to do it on your own. Building a team of professionals who can offer guidance along the way, including tax and financial experts, can help you make the decisions that could make your ideal retirement possible.
The Bottom Line
It's not always possible to retire early, but if that's your plan, these signs may be indicators that you're on the right track. If you have more questions, consider speaking with a financial representative.