In order to succeed, you sometimes just have to go against the grain. What the norm dictates is that you first need to go to school and college, then get a job, and work relentlessly till you’re in your 60s. But what if that kind of life is not for everyone? Since no one is the same, expectations in life and the way we see opportunities vary from one person to another. After all, opportunities only exist for those people who know how to take advantage of them.
If you think that working till you’re in your 60s is too far off your original plans in life, then you might want to consider retiring sooner. You no longer have to reach your late 50s or early 60s to leave your working life behind. Lots of people “quit” their jobs to settle into a lifestyle that will allow them to live more comfortably when they retire, all in the hope to live the life they’ve always dreamed of.
See Also: 5 Reasons Not to Retire Early
Although possible, some financial advisors say that it is difficult for the average American to do retire early. Meanwhile, Jacob Lund Fisker, author of Early Retirement Extreme, suggests that living a simple life when you’re young will help you gain the financial independence you crave for in no more than ten years’ time.
The idea that early retirement can provide people with “the freedom to pursue interests other than working for a living” is reinforced in Jacob’s framework, which explains how even the smallest financial choices can help you prepare for the life you have always wanted. What it essentially says is that limiting your spending habits and embracing frugality can help you save as much money as you will need for the life ahead.
In fact, the three main concepts of the framework are as follows:
1. Cut Down on Spending
Jacob suggests that limiting consumer spending and refusing to buy things you do not need will allow you to live the life of luxury that waits ahead. The pioneer of the movement himself manages to live on only $7,000 per year, which is quite impressive to say the least; he doesn’t eat out, he lives in an inexpensive house, and borrows books and movies from the local library.
However, the Early Retirement Extreme lifestyle and beliefs on spending have generated much dispute over the years, with many people claiming it’s an unorthodox way of making capital and, above all, that it’s catastrophic to society. The reason for such statements is rather simple. Since ERE supporters are cutting down on their spending, they are limiting their expenditures and as such do not contribute financially back to society. As such, policymakers are concerned about the fact the economy would collapse if everyone chose to do the same.
2. Save More Money
Apart from cutting down on spending, you should also be able to save more money. This will accelerate the time that you will need to retire and will double the amount of money you have made by time you reach 40. By requiring less money to sustain their simple lifestyle and making the choice to invest in their future, ERE followers are not only spending less but also saving as much money as possible.
3. Turn Your Savings Into Passive Income
As opposed to other people who expect to retire in their 60s, ERE supporters choose to quit their regular 9-to-5 office jobs to explore other interests such as creative arts, blogging, writing, and freelancing. The idea is to generate more passive income, which refers to the earnings that you receive on a regular basis that require little to no effort at all to maintain it. So, in an attempt to reduce the typical costs of an office job which include commuting expenses and a considerable amount of money on buying food, working from home and doing some blogging seems to be the way forward.
All of this sounds reasonable, but what if you don’t want to stop working and instead want to do what you love until you become old? What if the career you want doesn’t rely on traveling, charitable work, blogging, or working through gigs? Would doing this until leave you thinking that you have wasted your life?
According to CNBC, most people will need 70 to 80 percent of their preretirement income to be able to get by financially during their retirement anyway, so unless they don’t start saving while it’s early, things are going to get pretty tough by the time they leave employment. No matter what you choose to do, investing in the future is as vital as getting a steady income nowadays and preparing for the worst.
Even though the advice given in Jacob’s book is what someone would describe as radical and unorthodox, there are some very useful tips and pieces of information in there that could help people who aren’t exactly convinced by the ERE philosophy. In the end, when you really think about it, there’s no right or wrong decision when it comes to making the most of life. Experimenting on different strategies for your financial freedom will help you figure out what works best for you.
If you are interested in the ERE, you should check out Ben Stein’s book Yes, You Can Get a Financial Life! which focuses on the importance of saving money for an early retirement and achieving the good life by the time you turn 40. It’s an incredibly useful book that tells you what you need to do to prepare for an easy life in the future, and provides advice on when and how much you should start saving as well as when you should spend your money. Otherwise, if you want more frequent tips and advice about living more simply and cutting down your spending habits, check out Mr. Money Mustache’s blog and discover how you can build a wealthy future.
I bet you didn’t know that you could say goodbye to your working life at such a young age.
Finally, let me ask you something; I’m a little curious. If you were given the opportunity, would you retire at the age of 40? Yes or no, and why? Let me know in the comments section below!