Retire at 55 – Tip #1 – Start NOW

By Mikael | 3,458 views

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If you read my post yesterday you will know that I will be writing a small series of things that you can do and things that you should be aware of in order to increase your chances of being able to retire early.

There are a lot of points that I am going to share with you but I have found that the best and easiest solution is to put everything into small pieces as it increases the chances of you actually doing some of them.

Now before I start let me just say that I do not have the solutions to everything and that the ideas I am going to share with you are MY views and ideas and if you disagree I will only welcome it. Please let me know why you think differently in the comments below.

Age Is Important

It is probably obvious but if you want to retire at the age of 55, then one important criterion is that you start preparing for it before you have your 55th birthday. And I would also suggest that you start a lot sooner than that.

The strange thing is that the more time people have to actually accomplish to be able to retire at 55, the less effort and focus they’ll put into it. Young people will say that there will be plenty of time so they have no need to start thinking about retirement now.

And the closer you get to the age of 55 the harder it is going to become to actually achieve your goal of retirement.

Just as an example let us say that in order to be able to retire and live the life you want to live as a retiree, you will need 1,000,000 dollars.

If you start planning and preparing at the age of 50, you will need to save $200,000 every year for five years. For most people that is definitely not a possibility.

But had you started at the age of 20, you would have 35 years to come up with that million and you would only have to save +$28K per year. Now it is still a lot of money but it will be a lot easier to do it than it would be to come up with the $200K.

And in the example above I am not even including interests so you will actually hav eto save a lot less than 28K. Compounding interests are one of the most amazing concepts and something that can make you very rich if you know how it works. Unfortunately compounding interests require one thing that you will only have if you start NOW and that is TIME.

So start doing something “NOW” as in TODAY. Don’t wait for tomorrow to come.

Let me finish off with this example I found at Economonkey.

It shows the difference between someone (Tim) starting to put money aside at the age of 20 compared to someone that starts at the age of 30. It is not that big of a difference, right? WRONG!

They are paid the same yearly interest on their savings and Tim saves for just 10 years (at which time he stops). When Tim stops we find the other guy (Bob) starting to do what Tim has done for the last 10 years. But because of compound interests (or lack thereof) Bob will spend 19 years paying in the same yearly amount and STILL have less money in savings than Tim.

If shows how big the difference is between those who start early and those who do not. I might be a “money nerd” but I think this picture is really scary and if you haven’t started planning and DOING, then you should find it scary too!

To Your Success,
Mikael

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