Your early retirement plan
We get it! You’d rather pluck your own eyelashes than spend another minute in that beige cubicle, but retirement’s decades away. Well, not so much, with this 5-step early retirement plan and our Magic Money Calculator to crunch your magic retirement number.
An early retirement plan in 5 steps
There’s a whole community called FIRE. Like Trekkies and Furries, these are like-minded individuals with common, shall we say, interests. The FIRE community seeks Financial Independence and to Retire Early.
That’s a fetish we can get into. In fact, we learned recording tomorrow’s Queer Money™ that we’re FIREs and didn’t know it. All along, we thought we were just flaming!
Are we jaunting off to Palm Springs for a life of leisure in leisure suits? Not quite. Our goal is to be geoliberated and boss-liberated. According to today’s ever-changing definition of everything, that meets the standard for today’s definition of retirement.
So, we happily admit that we’re on FIRE – just not down there. 😉 You, too, can be a flamer on FIRE with the five steps below and this Magic Money Calculator.
1. Know more
First, you need to know what retirement means to you. Yours could be a traditional retirement wearing black knee-high socks and sandals while playing Bridge in Boca. Yours could be the definition of many of today’s older retirees, who work part-time for a job or organization they actually like, or those who volunteer for the people and causes important to them. Or, you could simply want to never sit in rush hour traffic again and any means that makes this possible is retirement.
Once you know what your definition of retirement is, put a price tag on it. Know what your living expenses will be. Know how you’ll cover important things, like healthcare and other insurance. Know what it’ll cost you week-to-week, month-to-month and year-to-year.
Oh, also know that the sooner you download this super-helpful guide included with the Magic Money Calculator and start your 5-step early retirement plan the sooner and more likely you’ll catch on FIRE.
2. Earn more
Right now, you’re saying, “No shit, Sherly Locks! If I could master this, I wouldn’t need your stupid 5-step plan for early retirement.”
Hear us out. We want you to think of a new way to earn money.
Stop looking only to “earned income” as your income source. In most cases, that kind of income will never get you the life you truly want, especially a life of early retirement. Consider other viable sources of income, like:
- Income from your own business(s)
- Real estate income
- Investment income
Nearly every member of the FIRE community has multiple streams of income and the above streams are the most common. To start your own business, see why we think every boy or girl needs a blog. Then, start one.
Then, consider how you might want to get involved in real estate. This isn’t your home. It’s real estate that earns you income. Determine if you’d like to rent your own real estate investment properties as a landlord, fix up and sell properties as a flipper, or buy REITs or crowdfund real estate as an investor.
These are all viable and possible ways to increase your income. You just need to figure which one(s) are for you.
3. Invest more
Since the stock market was invented, it’s returned an annual average of 11.69% to investors. Since Bill Clinton swore an oath, the stock market has returned an average of over 9.00% a year to investors. Sure, some years sucked, but we’re talking averages.
It’s for these reasons that your next early retirement plan step is to invest early, regularly and often. You can’t retire early if you don’t invest in the stock market. If you currently have a W-2, max out your company-sponsored retirement plan. Then, invest in either a Traditional or a Roth Individual Retirement Account (IRA) and then invest in a taxable brokerage account.
This article isn’t about investing per se, but it’s important that we caution you. This step in the early retirement plan does not suggest radical or greedy investing. If you’re looking for one stock to make millions or are banking on cryptocurrency, you’re FIREing wrong.
Invest in a balanced portfolio that includes a combination of Exchange Traded Funds (ETFs), bonds, cash and maybe some of those REITs or that crowdfunded real estate we suggested above. If you need help getting started with investing, get our 10 super-simple steps and Super-Simple Investing Guide.
The key to every successful FIRE guy, gal or duo is investing came first. That’s right, even before Sunday Funday.
4. Save more
This step in the early retirement plan was probably obvious from above, but this is more than stashing cash under your mattress (figuratively, not literally). Yes, stash cash in retirement and savings accounts. Also, save on your costs of living.
If early retirement is your goal, maybe those brown Salvatore Ferragamo Tramezza Special Edition Medallion-Toe Oxford shoes aren’t that important. If you’re really, truly and honestly going to retire early, reliving your own version of Party Monster will get you nowhere – which was pretty much implied in the movie.
Calculate if the lifestyle you’re currently living will get you to the lifestyle you want. It’s not about not being fabulous, it’s about fabulously living how you want. Every single person on FIRE doesn’t spend any more money on anything that doesn’t or won’t let them retire early.
Find out what successful people do and then do that. Here’s a little secret; they do this, too!
5. Borrow less
Successful FIREy retirees are debt free – at least, free of credit card debt. They may use mortgage debt to help acquire rentals and flips, but they do so only when the property will make them, not lose them, money.
As for student loan and credit card debt, they pay that shit off as fast as possible if they ever acquired it at all. This early retirement plan will fail if you’re paying 18% – 23% in interest charges back to a bank. If you’re waiting for student loan forgiveness to be forgiven for having so much student loan debt, extend this early retirement plan ten more years.
The good news is that a large percentage of people who are now on FIRE got on that path because they had too much debt and decided there was a better way.
There is a better way with this 5-step retirement plan. Live the life of your dreams. It’s possible.