Dreaming of retiring early and living life on your own terms? You’re not alone. The idea of early retirement is alluring, promising freedom, flexibility, and the opportunity to pursue passions without the constraints of a traditional work schedule. But how do you turn this dream into a tangible reality?
In this blog, we’ll explore 3 effective strategies to help you achieve early retirement. Whether you’re just starting to consider your options or already on the path to financial independence, these insights will provide valuable guidance to help you reach your goals faster. Let’s dive in!
1. Contribute more
Add more than than the legal minimum requirement towards your workplace pension. If you are currently enrolled onto your workplace pension, the legal requirements is 5% from yourself, and 3% from your employer. If you decide to increase your contribution, your employer may even match this, meaning there’s more money being saved towards your retirement fund.
“Retirement is not about age, it’s about financial freedom. The sooner you start planning and investing in your future, the closer you get to living life on your terms.”
Louise Gilman, Founder of LSG Financial
2. The power of fund switches
Consider switching, where your pension is currently being invested, if you have that option. This is because your personal pension may currently be invested in a default medium-risk fund. However, depending on your appetite to risk you may want to change this accordingly.
Exploring the option to switch where your pension is invested can be a pivotal step in your journey towards early retirement. Many individuals find themselves with their pension funds allocated to default medium-risk funds, which might not align with their unique financial goals and risk tolerance. By taking control and considering a switch, you open the door to a world of possibilities tailored to your goals and aspirations.
Whether you’re seeking higher returns to accelerate your retirement timeline or aiming for a more conservative approach to safeguard your nest egg, adjusting your pension investments can be a strategic move towards achieving financial independence.
By understanding your appetite for risk and exploring alternative investment options, you can optimise your pension portfolio to better suit your vision of early retirement.
3. Break free of debt
One of the main reasons preventing people from retiring early is the level of borrowing they may owe, this may also include your mortgage repayments or any car loans, so by prioritising paying off your debts, you may be able to reduce your overheads, allowing you to retire that little bit earlier.
Conclusion
So with all this in mind you might be asking “How much should I be saving?” The simple way to answer this question is by taking your age when you first started saving into a pension and halve it. That’s the percentage of what you should save. So if you start at 18 , you will need to save 9% and if you start at 40, you will need to save 20%.
In short, considering a change in where your pension money goes can make a big difference in your mission for an early retirement. It’s like customising your financial plan to fit your goals and comfort level. By doing this, you’re taking a proactive step towards making your retirement dreams a reality.
So, don’t hesitate to explore your options and make adjustments as needed. Your future self will definitely appreciate the effort you put in now.
