I believe that the younger Americans in their 20s and 30s are more focused on quality of life versus previous generations. As such, these individuals value experiences, value their time, and value the possibility of early retirement. With market crashes, high unemployment, bankrupt social security, underfunded pension plans, and more ugly economic factors, the possibility of traditional retirement has been compromised greatly for many Americans. If traditional retirement is far from a sure thing, is early retirement even remotely possible?
Photo by epicture’s via Flickr
Early retirement is possible for people today even despite a terrible economy. The factors that make it possible, however, are not the things that people depend on for traditional retirement like social security and a pension. The factors that can make early retirement a real possibility for you are all driven by you in areas such as frugal living, a non-materialistic lifestyle and hard work.
When most people think of retirement, they think of goofy senior living communities, sitting on the beach and playing golf. Well, the retirement vision for most young people today is very different. It is a time of “working” out of interest and passion rather than necessity. It is a time of travel. It is a time of spending time with friends and family. It is about financial freedom versus having millions. Golf and beach are optional.
Such an early retirement can be had by resorting to extreme frugal living. Or a form of early retirement can be found by escaping the traditional “nine to five” job and becoming a freelancer or independent contractor. Such a move can result in increased flexibility and mobility, two of the traits many are searching for when pursuing an early retirement.
Your greatest chance at being able to move towards a form of early retirement is to get extreme at an early age. Unfortunately, young people these days take the first few years or even decade of their life to climb out of the debt hole from student loans and irresponsible behavior. Such a time period puts off your accumulation of funds that are needed for an early retirement. So, your first priority is to not accumulate debt. By having zero debt, you can get extreme and put money towards your savings account rather than your lender.
When you’re young, the steps you take then will have the largest impact on your future versus any other time period of your life. This is due to the amazing power of compound interest. If you can start extreme saving early on in your 20s, you will be amazed at what kind of funds you will have accumulated in your 30s. This available capital will become a huge asset and allow you greater flexibility in choosing your path whether it is early retirement, starting a business, taking some time off, etc.
If you’re debt free, consider the path of extreme frugality and extreme saving. The strict financial habits you embrace at an early age will set you up for a myriad of options down the road.
Early retirement is not the traditional retirement that the baby boomers are striving for. It is a lifestyle that offers flexibility and a variety of ways to spend your time rather than working until you’re 65 at your typical “nine-to-fiver”. You must realize early, however, that to give yourself the option of such a lifestyle, you need to be both frugal and you must save much more than the average person. By starting young, you can make significant strides and provide yourself the option of early retirement regardless of whether it is something you will actually do at that time. Wouldn’t you rather at least have the option?