How to retire in your 30s
Two key financial steps to get right early plus, a guide to how much you will actually need to save for an early retirement.
Attention millennials: the information below is not just about being frugal. After all, life is meant for living, right?
Instead, this blog is about having a plan to reduce your debt and build your wealth so that you can work towards retiring in your 30s.
Put it this way, if you start taking some simple steps now to get your personal finances in order, then your Instagram feed could be packed with lifestyle and leisure shots in no time.
STEP ONE - MINDSET MATTERS
You might think the first thing to do is start reining it in no more big nights out, fashion must-haves (but probably don't really need), or lattes every day.
Well actually, the first place to start when planning for retirement in your 30s is by knowing your money mindset. Why? Because if you understand your relationship with money early, you will understand the potential roadblocks to making smart financial decisions from the start.
What's more, your money mindset might be different from that of your partner's (if you have one). This can make achieving financial independence or your goal of retiring in your 30s difficult if you're not on the same page. Use our cheat-sheet to find out how you compare, and to help start the discussion about where you might disconnect on money matters.
STEP TWO - BACK TO BASICS BABY
The next step to retiring in your 30s is get the basics right. And, by that we mean understanding the return you will get on your money. For example, does it make financial sense to use extra money you have to reduce debt or purchase assets. It's about working out how you can get ahead financially (and stay that way).
Finally, if you want to retire in your 30s, the burning question is: How much do you need?
Well, to determine the income you want in retirement you should divide it by the percentage return on that money. For example, if you need $100,000pa before tax, then divided that by, say, the 2.5% return you can expect from the bank. This equals $4 million in the bank. Alternatively, if you need $100,000pa before tax, try dividing by 4% rental return on an investment property portfolio. This means $2 million worth of property if it's a long-term goal.
Remember, not everyone will take the same financial path to achieving their money goals, that's why working with an expert lending consultant, who will help tailor your financial strategy to suit your needs, is a wise move!
The key is to avoid getting bogged down in all the detail at the beginning. Just stick with a basic financial formula and start working towards your retirement dream, and then go from there.
Got debt? A student loan? A mortgage? Don't worry, you're not alone. We've helped hundreds of people just like you to pay off more than $40 million in debt. Check out our online Resource Centre for Reducing Debt to find out more.
|Tags: Millionaire mindset Early retirement Property Property Investment Success Smart Money Management Retirement Building Wealth Reducing Debt|