7 Sure Ways to Retire by 40

Nailing down a savings goal is difficult enough under normal circumstances. But it’s considerably more so if you want to retire early. Guess what, retiring by age 40 is possible, but it requires careful financial planning and aggressive saving to do it.

Oh Yes, it is possible to amass enough cash to quit work and follow your dreams in mid-life.

To retire by 40, you need to be prepared to make sacrifices today that will allow you to provide for your future. The best part - you do not need a six-figure salary to get there. All you need is a mixture of extreme saving, frugal living, and smart investment.
Few years down the line, you want to be able to put up your feet, relaxing at the beach while sipping on pina-colada.

Here are 7 sure ways to help you get there:

1. Set a Savings Goal

Get specific about your retirement dreams and start putting them in motion-whether that means setting up part-time work or buying your first property before you take the full plunge.

Once you have an idea of your long-term retirement goal, look at how much you already have saved and how long you have until you turn 40. This gives you a framework for how much you’ll need to save each year and each month to get there. You can’t control all the risks associated with early retirement, but what you can control is having a plan.

2. Estimate Your Savings Growth

Start by running the numbers to find out how much money you’d need to save each month to retire early, and then decide if that’s feasible.

Trust me, it comes down to your budgeting ability. If you plan to make big purchases like new cars and vacation homes, factor those in, along with things like annual vacations or other known expenses.

Once you’ve thought it through and come up with a ballpark budget for how much money you expect to spend in retirement, you can dig into the other side of the equation, i.e how much you’ll need to save to make it happen.

The earlier you want to retire, the more you’re going to need to save.

3. Save up to 50 Percent of Your Salary

Invest aggressively and economically

If you’ve set a goal to retire by 40, on the other hand, you’re going to have to save far more aggressively. But that doesn’t mean you can’t do it.
As a rule of thumb, you should multiply your annual desired retirement income by the number of years you think you’ll live. Here’s an example:

Let’s say you’re 25 years old, making N10m a year, you’re just beginning to save, and you want to accumulate N100 million. If you save half of your income each month (N416k), you could have about N75m when you retire at 40. Is it achievable? Yes, it is.

4. Consider Ways to Save More

When it comes to retirement, it’s never too soon to start planning and saving.

Retiring on N416k a month might work if you have other sources of income. But you’ll probably need to aim higher if you want to have enough money to live on once you retire. If you need to save more, you’ve got two basic options:

• Trim your expenses as much as possible.
• Work on increasing your income and investing the extra money

5. Avoid expenses that creep on your Lifestyle

Most people let their lifestyles and spending be defined by their income. Essential to keeping your expenses down, and by extension, your savings rate up is keeping your lifestyle in check. If you want to retire early, you need to be living well below your means and investing every bonus that comes your way.

To earn financial freedom, you need three things: no debt, passive income, and diverse investments. These three things form the basis for how you’ll support yourself until the end of your life — even if you retire at 40. Here’s how:

• No debt means you don’t owe anyone money and that you own your assets outright.
• Passive income ensures you still have money coming in, even without a paycheck.
• Diverse investments grow your wealth via compound interest and appreciation.

6. Choose the Right Savings Vehicles

If you’re saving on a shorter time frame, you need to be especially strategic about where you put your money. Spreading your money across different assets and asset classes allows you to take smaller bets on a lot of different types of returns and diversification is your strongest line of defense against market volatility.

As you mold your portfolio, choose to invest in various asset classes such as Stocks, Treasury Bills, Bonds, Eurobonds, Agriculture, Wealth Cash available on Wealth.ng as you don’t want all your assets producing the same level of returns.

7. Have a Contingency Plan

Knowing fully well that you don’t want to worry about not having guaranteed income in retirement, you should create a strategy for retirement and make contributions to your retirement plan a top priority. Take advantage of Investment opportunities whenever the window opens including Additional Retirement Savings plans to boost your retirement savings.

The earlier you start to save or invest, the less you will need to put aside each month to reach your retirement goals. Make your goals achievable so that you stick with them.

Time to re-assess Your Spending and Goals

After a few weeks of keeping a money tracker, you’ll likely begin to notice patterns in your cash flow. Now’s the time to start organizing your financial life by asking yourself some thoughtful questions:
“Are you happy with the way you spend? Does it reflect your priorities? What changes do you need to make to save more to meet your goals? At this rate, will you reach your retirement goal by the time you clock 40” Small spending tweaks could amp up your savings big time.

The bottom line when it comes to retiring by 40 is that you have to be proactive and really good at deferred gratification. So run the numbers and take advantage of every opportunity to save (and earn). The sooner you start planning, the better your odds of retiring early with the money you’ll need to enjoy it. All the best!