A Heavy Metal Guide to Escaping the Rat Race
So you want to retire early? Hell yeah, you do! Imagine stepping away from the daily grind, flipping the corporate world the ultimate bird, and spending your days doing exactly what you want. Early retirement doesn’t have to be just a dream! C’mon, Man, it can be a badass reality if you’re ready to commit. Let’s crank up the volume on what it takes. LFG!
Define Your Rockstar Retirement
The very first thing you need to do is think of your “Why” I get asked so many times about tips or advice on becoming financially independent, or retiring early. The first thing I mention to them is that before they can even think about waving goodbye to the paycheck, they’ve got to envision what their ideal retirement will look like. Do they want to travel the globe, start a passion project, start a band, write music, or maybe even open that dive bar you’ve been dreaming of? This is important. Knowing what you want is key because it shapes your entire financial strategy. Big dreams mean bigger budgets, so get clear and specific right from the start. Like this dude named Harry Fosdick said, “Don’t simply retire from something; have something to retire to.”
Build Your Rehearsal Retirement Budget
Create a rehearsal retirement budget, and keep it brutally realistic. I did this! Check the list of how I categorized my budget. Picture retiring today—what would your monthly expenses look like? Consider housing, food, travel, insurance, and entertainment.(Again, see illustration) And let’s keep it real: I don’t think personal debt belongs in retirement. I highly suggest crushing that mortgage and killing your credit cards. This will set yourself up to rock without those financial burdens.
Assess Your Current Financial Status
This is kinda like tuning your guitar before hitting the stage. Haha. You’ve gotta know where you stand right now. What’s your current debt level? Your savings? Your Investment situation? How much do you earn? The clearer you see your present financial situation, the better you’ll be able to prepare your path to early retirement. It’s a long tour, haha, know your starting point!
Set Up a Gap Account
We know you can’t just flick a switch, retire and start yanking money from your 401(k) or Roth IRA. It doesn’t work like that. You’ll get slapped with penalties if you are younger than 59½. So to cover the gap years between your early retirement and penalty-free withdrawals, what you can do is open a taxable brokerage account if you don’t already have one. See, unlike traditional retirement accounts, brokerage accounts have no withdrawal restrictions and no limits on contributions. They might not have the tax perks of those retirement-specific accounts, but their flexibility makes them a great option in the meantime! As far as what to actually invest in within this brokerage account, It can be a good idea to focus on lower fee ETFs and something like S&P 500 index funds. For a list of some or these, check out Morningstar’s top rated ones over here.
Crank It Up with Real Estate Investing
In addition to investing in the market, one thing that I did was also invest in Real Estate. Real estate can be kinda like a higher wattage power amp for your ultimate guitar rig! I do think that by investing in it can accelerate your path financial independence. By having rental properties, it can provide steady income that you can use during those gap years. Here’s the metal truth: Debt equals risk, and nothing tanks retirement plans faster than heavy leverage gone wrong. Be very careful not to over leverage yourself when investing in real estate. Obviously, paying cash for your investment properties would reduce your risk and boost your profits, but It’s totally fine to go slow and steady to use debt wisely, and ensure you analyze cash flow appropriately so that you can ensure you are covering the rental mortgage, paying maintenance and repairs, and building a cash reserve as well as enough to cover any vacancies. If you’d like to learn more about investing in real estate check out my article over here.
Commit to Hardcore Lifestyle Changes
If you are committed and really want early retirement, it’s time to get serious and brutal about your expenses. This is where dreams meet reality, and some of those sacrifices become your best friend. You may need to slash your expenses ruthlessly. I’m talking about delaying some vacations, not dining out, cutting those subscriptions, and especially those impulsive buys! These have got to go. The few hundred bucks you save monthly by cutting back on groceries could mean thousands more in your retirement account over time.
Every little bit helps. Imagine saving just , like, $15 each month from each of these categories like entertainment, clothing, and streaming services. This can add up to nearly $1,100 per year! Push it to $30 per category, and you’re doubling your savings. Tightening your budget now means living your dreams sooner.
Do The Hustle
If you continue to be committed to the journey, and you wanna payoff your debt sooner, in order to retire earlier. Or, if you wanna keep some of these things in your budget, think about getting a side hustle or gig job. You can drive for Uber or Lyft. You can deliver for Walmart Spark or Amazon Flex. You can Sell products on Amazon or Walmart (like what I did and still do today!) Do you shred on that axe, give guitar lessons! There are tons of ways to make additional money to contribute to your retirement dream. Go make it happen!
Put The Pieces All Together
Here’s where it all comes together. Now that you’ve crushed your debt, and you are living lean, you have your brokerage account rockin’, and maybe even bringing in more coin with a side hustle, soon you’ll be maxing out those tax advantaged retirement accounts like a 401(k) or IRA, and overall contributing 50%, 60%, or even 70% of your income to your investment accounts. If you can continue to do this as long as you can to meet you goals, you’ll be ready to take that final bow and leave the corporate America stage.
Play Smart When You Pull the Retirement Trigger
Okay, let’s say you’ve got your shit together and you ready to step out of your 9 to 5, make sure you do it wisely. Some things to keep in mind are:
- Location: Where do you want to live? Do you want to move somewhere with lower taxes or living expenses? I’m working through this right now! I’m determining where I’ll spend my winters someplace warm, and I’ll right-size my home in Minnesota.
- Income Streams: Will you completely stop working? Maybe you consult with your old gig, or maybe pick up a part-time gig or that side hustle? Decide how you’ll manage, access, and withdraw your different financial resources.
- Healthcare: This was a lot easier than I thought it would be. When you retire early it means you are paying the bill for private insurance until Medicare kicks in at 65. It’s important to factor this expense into your budget.
- Social Security: Lastly, I’d consider treating this as gravy on the top. Plan like it’s not even there.
Check-In Regularly
I feel early retirement planning isn’t just a one-time gig; it’s an ongoing tour! Check in with your investment professional or financial advisor. If you don’t have one, find one you trust and someone who gets your vibe and can help navigate the complexities along with your goals and values. Regular check-ins will keep your strategy sharp, make adjustments as needed, and ensure you’re on track. I do this with my “money guy” I check in every couple months, and keep an eye on where we are going, what changes are happening and that we stay on track! Kinda like our tour manager on the road lol!
For real! Early retirement is not easy. it does require discipline, some sacrifice, and relentless determination. But picture it clearly: freedom from the 9 to 5 grind with unlimited opportunities to chase your own dreams and passions with zero financial anxiety. This kind of life doesn’t come easy, but it’s absolutely worth the effort.
So crank up your savings, dial down your expenses, and prepare to rock your retirement early. Your future self will hold those horns up high \m/ \m/ to thank you. LFG!
Great article! Sound advice to step into early retirement.