How to Use an Anti-Financial Plan for Early Retirement
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With the financial independence, retire early (FIRE) movement on the rise, Americans are targeting early retirement. I will explain the FIRE movement, the steps you can take for early retirement, and how an anti-financial plan helps you achieve your goals.
Many of us want to join the FIRE movement with a dream of retiring in our early 40s or 50s. While the idea of early retirement sounds fantastic, it comes with a lot of planning and proper execution. Can you retire before 60? Let's find out.
What Is an anti-financial plan?
What is an anti-financial plan? The main idea is to have an investment plan that is different from conventional retirement plans.
In a 401(k), you can withdraw a limited amount of funds. People find it difficult to access them. Therefore, the other option is to invest in assets that yield higher returns and provide easy accessibility to your money.
This is why it is called the anti-financial plan; it helps people retire early. With the rise of the FIRE movement, many people are swaying towards the movement to achieve their goals.
The definition of the FIRE movement
The movement focuses on accelerating the retirement age. The main objective is to retire as early as you can, with enough sources of income to live a good lifestyle.
A vast majority of people have the objective of gaining financial independence to escape the rat race. Also, people who are not happy with their jobs tend to find the FIRE movement appealing.
The idea of the movement is that people live a frugal lifestyle and save a bare minimum of at least 50% to 75% of their income. In addition, they get rid of the debt they have.
Steps you need to take for early retirement
If you intend to save up for early retirement, you need a proper plan to achieve it. Here is a step-by-step process to achieve your goal most sustainably.
Keep saving as your priority
Save money from your early days. This is a habit that you need to incorporate from the very beginning. Without having a saving plan, you won't be able to achieve your dream of early retirement.
While the idea of saving up to 70% of your income as per the FIRE movement might seem unrealistic, you can start with a small proportion and gradually increase it.
Surely, you can save a minimum of 10% to 15% of your income by reducing your expenses. This leads us to the second step.
Cut down your expenses
Part of the FIRE movement involves reducing your expenses.
A frugal lifestyle helps you save the money you need for early retirement by eliminating unnecessary expenses. Here are some expenses you can eliminate to reach your retirement goals.
Home: Look for a roommate to share your household expenses and rent. Move to a smaller apartment to save on the maintenance cost.
Grocery: Use coupons and shop at your neighborhood market to save money on groceries.
Food: Avoid eating out and instead prepare meals at home.
Automobile: Avoid purchasing the most recent model, as they are typically more expensive than earlier ones.
Electricity: Eliminate water and LED bulb waste.
Increase your source of income
With a low income, there is a high chance you might not be able to cover your expenses, let alone save from it.
Therefore, you need to increase your income level to increase your savings. You can opt for a higher degree that can lead you to a better salary. However, there is a chance of getting stuck in a student loan with a high-interest rate.
The best way to do it is by choosing a side hustle. If you want to retire early, you need to do the hard work in your early days. Since you have the time and energy for a side hustle, you can easily increase your income.
Master a particular skill and provide your services for it. Or, if you don't want to get into too much hassle, go for Uber or food deliveries. Those side jobs can make you additional money on the side.
If you ask a millennial, their top goal would be to retire early as possible. While the idea sounds good, it requires proper planning, good execution, and a lot of hard work. Only then can you achieve your goal of early retirement.
The best way to achieve this goal is by reducing your expenses and increasing your income. With the extra money, you can save up and invest it for your retirement, financial independence, or any other objective.
Lyle Solomon has considerable litigation experience as well as substantial hands-on knowledge and expertise in legal analysis and writing. Since 2003, he has been a member of the State Bar of California. In 1998, he graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, and now serves as a principal attorney for the Oak View Law Group in California. He has contributed to publications such as Entrepreneur, All Business, US Chamber, Finance Magnates, Next Avenue, and many more.