Wouldn't it be nice to retire early? Imagine having everything you need - no stress and nothing to worry about. It is more than possible. But, it cannot be done unless you have a thinking mind. Thinking is solving problems. The problem "seems" to be not having enough money to retire early. So what is the solution?
Well, first off you do not need a million dollars to retire like some of the "gurus" out there claim. These gurus teach you how to retire while still being a consumer. A million dollars really? When most people think of retirement they think of spending money. I mean what else are you going to do with your time?? You see that is the whole problem. They are living in the box of consumerism. A set of values and beliefs if you will. When you step out of the mold of consumerism you can see that early retirement is not only possible, but obtainable much quicker than you could ever imagine.
The solution to early retirement is to stop spending money. PERIOD. The reason why savings is so important is if you don't get that handled you will never be financially independent and will always be in the "poor house". Learn how to stop spending more than what you make and the money you do spend, spend it wisely. When you do spend look for ways to save - ie bargains/used etc.. and don't buy things you don't need. This will help you to SAVE MUCH MORE. Most people go through life searching for ways to make more money. They may start a business, go back to school, or try to invent some new product. Sometimes this works and sometimes it does not. However, there is one trusted true way that works 100% of the time every time. That is saving money. It's not about making more money but rather learning how to keep more of the money you make!! Jacob Lund Fisker puts it best, "The key to success is to run your personal finances much like a business, thinking about assets and inventory and focusing on efficiency and value for money. Not just any business but a business that's flexible, agile, and adaptable".
An investment is something you put money into that gives you money back at a later date in time. For example, mutual funds is a good option in that they give you a return on your money. They may not give you a return immediately, but in the long haul they will. Furthermore, becoming wise requires you to know the difference between investments and depreciating assets. A car is not an investment. It losses money over time so it is considered a depreciating asset. A house has the potential to be an investment but at the same time it also has the opportunity for you to lose money. And when you are wise you will know the difference. For example, a couple purchases a much more expensive and larger home than they need and only make the minimum payment over a 30 year period. In the end they will end up paying up to more than half the cost of the home in interest! This does not include the added costs of insurance, property taxes, closing costs and maintenance. They have something to show for it yes, but their money could have worked much harder for them (it's almost like they paid double for the home). However on the flip side, lets say they have the capital to purchase a foreclosure home with cash (instead of down payment on other house). If the house is in good enough shape then one could start renting it out and see a return on your investment quickly. Or the couple could swallow their pride and live in the house for a few years to save more money to buy what they really want and perhaps rent out the foreclosure for extra money on the side? However, if the home is not in good shape one may end up having to invest more money into it before it could be a rental. A decision of whether or not to purchase that type of house requires some thinking and wisdom. Do you see what I am getting at? Think of life like a chess game. Consider your moves (decisions) carefully and also consider the repercussions of your moves as well. To be able to make the best move you must look at all possible outcomes and have the best knowledge available.
So how much would one need to retire? This depends upon the individual and spending habits. This also depends on how you create income. If you have rental homes, cash set aside, mutual funds, a hobby that turns into a business etc... The key is to spend very very little while creating an income stream from your savings to live off of. Keep in mind just because one retires early doesn't mean they have to start spending money. Most of the early retirees find ways to occupy their time productively without spending money. This is the key. By doing this you can turn your hobby into a business for extra income to live off of. You also have to start thinking in different ways. Stop having a consumer mindset. Retiring early requires you to have a new philosophy on life.
Nonetheless, if you can learn how to save 50% of your income you can retire in as little as 16.6 years regardless how much money you make. If you can save up to 80% of your income you can retire in as little as 5.6 years!! Here is a link to a calculator you can use to put in your own income and savings amount: Early Retirement Calculator.
Hope this helps.
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