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Editor’s note: This story originally appeared on NewRetirement.
Most people struggle and worry about being able to retire in their mid- to late 60s. At that point, you are expected to have hundreds of thousands (maybe even millions) of dollars in your retirement accounts, get additional money from Social Security, and also get some government assistance with health insurance. Even then, retiring securely can feel impossibly hard. What you really want is total financial independence — forever.
Maybe you are already retired and have a dreadful feeling that you simply don’t have enough.
Many people have been there, done that, and retired. Some even have a passion to teach others how they did it via their writings in books, blogs, and online courses.
I read through hundreds of articles from dozens of financial independence blogs to discover 15 of the top lessons from regular people who have achieved total financial independence.
1. Spend Less on Highest Cost Items
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If you save 50% on an item, that sounds pretty impressive. But if that item was a bottle of $1 shampoo, you really only kept 50 cents in your pocket.
J.D. Roth from Get Rich Slowly explains that if you want to retire early, you’ve got to focus on your high-cost items. Namely, your:
The average person will spend over $2,000 a month on these categories alone. If you want to retire or retire early, the solution is simple: Spend less. And, you can do it easily by focusing all your efforts on reducing the big dogs — home, car, and food expenses.
2. Know Your Target Savings Rate
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There is no formula that is going to work for everyone.
However, if you want a simple formula, here it is. So, when do you want to retire? In five, 15, 25 years? The math behind how much you need to save to achieve these targets is shockingly simple according to the financial independence blog, Mr. Money Mustache (MMM). MMM is an engineer who retired when he was only 30.
Even though the math is supposedly simple, MMM made it even simpler by putting together a target savings rate table.
If you currently have zero and want to retire in:
- Five years, you’ll need to save 80% of your income
- 15 years, save 55% of your income
- 25 years, put away 35% of your income
Most of you have already been working for a few decades, so these numbers might not mean as much as they do for those that are just starting out (especially if you haven’t been putting 80% of your income away all your life). So, what numbers are relevant for you?
If you …….
Source: https://www.moneytalksnews.com/slideshows/15-important-lessons-from-financial-independence-blogs/
