5 Easy Ways to Retire in 10 Years’ Time
Imagine having a lot more time to do the things you want to do, whether they are traveling, exercise, hobbies or simply spending more time with your partner and family.
An early retirement would allow you to do all this and more. But could you afford to retire early?
For many, retiring before the age of 70 seems like an impossible dream.
More people than ever before are working past the age of 65, with around 10 percent of all people aged over 65 employed in the UK in January 2018, doubling from around 5 percent in January 1998.¹
However, some people manage to retire in their 50s, 40s or even their 30s.
How do they do it? And, more importantly, could you do it, too?
Would it even be possible to retire 10 years from now?
Here are some ways to make this dream possible.
Save a High Proportion of Your Income
People who have succeeded in retiring early have been able to afford to do so because they’ve lived very frugally and saved at least 50 percent of their income.
Some people advise investing the money you save in index funds with low fees. These can pay you interest of around 10 percent a year on average. So, if you invested $10,000, you’d receive $1,000 in interest alone in one year.
If you continue saving at least half of your income and receiving such a high rate of interest on your savings, the effect of compound interest may mean that you can retire in ten years or less.
However, it’s important to remember that the returns on index funds are not guaranteed and you could lose money. It may therefore be wiser to place a portion of your savings in index funds and the rest in safer investments with lower returns.
Slash Your Housing Costs
For most people, their mortgage or rent is their largest monthly expense.
What if you could cut this expense in half or reduce it to almost nothing?
There are several ways of doing this:
· Moving out of the house you’re buying, and renting it out at a price that more than covers the mortgage, while you move to a smaller home with a low rent.
· Moving in with your parents — of course, this may not be feasible if you work miles away from your parents’ home or if you have several children.
· Moving to a lower-cost city or area — house prices and rents vary enormously across the country and even within cities, so, if you can move to a lower-cost area, you’ll save some money each month on your housing costs.
· If you’re renting, you could save money by renting a smaller home. If you could find a smaller home in a lower-cost area, you’d save even more.
If your current rent or mortgage is $1,000 a month, you could save most or all of this if you moved in with your parents. That would boost your retirement fund by a massive $12,000 per year!
Even if you managed to reduce these housing costs by just 20 percent, you’d be able to put an extra $2,400 toward your retirement each year.
Reduce Your Car Costs and Make Money from Your Car
We live in a society where a two-car family is the norm, but do you really need two cars — or even one car?
Depending on where you live, you could sell one or more of your cars and walk, bike or take public transportation. If you still have one car, you could carpool.
Think of how much money you’d save if you gave up just one car. You’d save money on:
· Gas
· Servicing
· Repairs
· Routine maintenance
· Insurance
· Car loan repayments
· Taxes, registration fees, parking costs, and other costs
According to the website, Nerdwallet, the total costs of driving a car 15,000 miles a year add up to $878 per month in the US.² So, if you sold one car, you’d save a staggering $10,536 over a year! You could use this money to boost your retirement savings.
Make Money from Your Car
If you keep a car, why not make money from it by carrying advertising messages? Several websites, such as Wrapify and Carvertise, allow you to earn $200 per month or more by displaying ads on the outside of your car.
If you don’t fancy driving round with ads emblazoned all over your car but you enjoy meeting people, why not become a rideshare driver in your spare time? You don’t have to work more than you want to, and you could make extra money from trips you’ve already planned by offering to take one or more passengers with you.
To maximize your rideshare income, install the Vugo app which plays ads, videos and games while you’re driving. You could bank around $200 a month from this app alone.
If you don’t use your car a lot, why not rent it out during the times when it would just be sitting on your driveway? Check out Turo and HyreCar for details.
All these ways of making money from your car will help you to cover your car-related expenses and they may also generate extra income which you can save.
Generate Passive Income
Passive income is income that is earned with little or no effort. You need to make some effort in the beginning, but, over time, you’ll have less to do, but you’ll still see the cash rolling in.
If you’re planning to retire early, the advantages of passive income are two-fold. You can boost your retirement fund with the extra money you earn now, and, once you’re retired, passive income will continue to bring in money on a regular basis.
Here are some ideas for generating passive income:
· Start a blog and monetize it through affiliate programs, advertising, sponsorship, and other methods.
· If you don’t want the initial hard work of starting a blog, buy an established one from a marketplace such as Flippa.
· Start investing with robo-investing. You don’t need to know anything about investing because robots do the work for you! It’s also good if you don’t have much to invest initially because you can usually start with just $1. Check out Betterment and Acorns.
· Loan money to others through peer-to-peer lending. Potential returns are 10 percent or more but remember to diversify — it’s better to lend small amounts to a larger number of people than large amounts to fewer people. This minimizes the risk of defaulting.
· Buy one or more rental properties or, if you don’t want to become a landlord, consider buying stock in a real estate investment trust (REIT). This allows you to invest in real estate and reap the rewards, without ever becoming a landlord.
· Become an occasional landlord by renting out a spare room in your home through Airbnb.
· Write books, eBooks, and/or songs or make videos that will earn you royalties for years to come.
It’s a good idea to have more than source of passive income. Try out several sources initially to find out which ones deliver the best results. Then, focus on those sources.
If you set some goals and are diligent, it’s definitely possible to retire in 10 years’ time. Even if you don’t manage this, if you continue with your current lifestyle and look into other ways to increase your income while reducing your expenses, you could retire within 15 or 20 years.
References
² https://www.nerdwallet.com/blog/loans/total-cost-owning-car/
