I love my job, but I’ve never been the sort of person who wanted to work forever. I enjoy spending time with friends and family and I have hobbies that I never seem to have much time to do. I hope that retirement will give me the time I need to prioritize these activities.
Right now, I’d like to retire in my 50s. It’s an ambitious goal, but I’ve still got a few decades to save and I have a plan I think will help me pull it off.
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What I’m doing to retire early
I knew that saving for retirement would take a long time, so I started early. I opened my first retirement account at 20. I wasn’t able to contribute routinely at that age, but I set aside funds when I could. As I got a little more established in my career, I made regular monthly contributions a habit and I made a point to claim my 401(k) match every year I had access to one.
I do my best to keep my expenses low, which leaves me with extra cash I can set aside for retirement. This isn’t as easy these days as a mother of two young kids, but I do my best. I try to set aside at least 15% of my income each year.
I hope the above strategies will give me the money I need to cover my retirement costs for the rest of my life. But that’s only part of the challenge of retiring early. When you’re under 59 1/2, the government charges a 10% penalty on most retirement account withdrawals.
I plan to get around this by keeping some money in a taxable brokerage account that I can access penalty-free when I’m ready to retire. My husband is also more than eight years older than me, so by the time I’m in my 50s, we will be able to use some of his retirement savings as well.
Nothing’s written in stone
This is my plan for now, but I’ve still got at least two decades to go before I can think about retiring. A lot can change between now and then. I may have to remain in the workforce a little longer if my investments don’t do as well as I’d hoped. Or I might realize I need more savings than I’d previously thought.
So while I like the idea of retiring in my 50s, I’m not locking in anything just yet. My priorities right now are to continue saving as much as I can without compromising my quality of life too much in the present.
Every year, I review my retirement plan to see if I want to make any changes. This might involve increasing or decreasing contributions or adjusting my investment strategy. By making small changes now, it’s easier to stay on track than it would be if I waited until my 50s to alter my plan.
I realize that early retirement isn’t feasible — or even desirable — for everyone and that’s OK. You’re free to come up with your own retirement plan that fits your budget and desired timeline. Give this some thought and try to be as detailed as you can when thinking about what your annual retirement expenses might be like.
But also stay flexible. Be prepared to adjust or even completely redo your retirement plan as necessary as you get closer to your chosen retirement date.
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