The 5 most common lifestyle changes – #3 Take an early retirement

The 3rd type of lifestyle change I want to share with you is taking an early retirement. There is currently a significantly growing trend in the world around early retirement. It’s known as FIRE, and I wrote an earlier article on this trend.

FIRE stands for:

  • F inancially
  • I ndependent
  • R etire
  • E arly

In fact, taking a traditional retirement at what society considers retirement age (mid 60’s) is also a lifestyle change, but as this is what is ‘expected’ today, it’s not necessarily considered as a big change,…….it’s considered normal…..🤔. That’s why I put the emphasis on early retirement in the title of this article.

The reality is that the transition to retirement requires significant preparation for it to be a successful transition also. So I’d suggest to my readers, that you ignore the word “Early” in the title of this article and just read “Retirement”.

Taking early retirement, or building a plan to achieve FIRE means one very important thing. Having enough money to live on completely independently of any income derived from working traditionally (with a 9-5 job). These accumulated savings can be consumed over time (but you have to take a big bet on how long you are going to be around to spend it). Ideally, your savings should be invested to generate passive income sources that can pay for your lifestyle once retired. If your invested savings can generate enough income so that you don’t draw down on your savings then you are 100% financially independent.

‘There a many investment options to do this:

  • Rental properties providing rental incomes
  • Shares providing growth and dividend incomes
  • Financial Investment / Index Funds
  • Peer to Peer Lending / Crowd Funding
  • Traditional interest-bearing bank accounts
  • etc

My list is far from being exhaustive and each investment type has its advantages and drawbacks. I strongly suggest that you contact an adequately qualified finance professional to advise you on the best choices for you before you make any big investment decisions. The one advice that is unavoidable however is to make sure you are diversified in your investments. Don’t put all your eggs in one basket! It’s a simple but very effective strategy to limit your investment risk.

Let’s follow Vincent and Julie through the 3rd demonstration video as they work through their lifestyle change where they build a plan to achieve early retirement. They use the financial simulation application, EFIYLM to support their reflections and to prepare their project.

A lifestyle change to take an early retirement

Having a plan to achieve early retirement requires patience, as you will need to accumulate the necessary wealth in order to be financially independent. In certain extreme cases, some people can achieve financial independent status in just 5 years, and for others, it can take decades. It all depends on your willingness and drive to be completely financially independent. My personal preference is the SLOWFI approach. That is to have a plan to be financially independent, well before the traditional retirement age, but to make the most out of life on the way and to not limit too much the quality of life along the way. It’s tempting to be able to no longer have that obligation to get out of bed and go to the office every day as soon as possible, but it’s also highly liberating to know that you have a plan to get there in your own time and that you are the master of your own destiny.

As for all big life changes, solid preparation is the key. The financial preparation is important, but preparing mentally in order to build confidence in your project is for me even more important. If you have confidence in what you are doing and where you are going, you are much more likely to get to where you want to go, and create what you want to create, and ultimately ensure a successful lifestyle change.

Are you considering taking early retirement? Where are you in your journey it achieve it? I’d love to get your feedback and experiences. Feel free to leave your comments below ⬇.

Photo Credit: Photo by Bryan Minear on Unsplash

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The 5 most common lifestyle changes – #3 Take an early retirement

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