1.Start your own business
This is the option that is most suitable for people who want to shift their careers from being full time employees to being entrepreneurs. Entrepreneurship brings with it the freedom of being your own boss and running your activities according to your own schedules. Though you will still be working and not fully retired from active labor, the liberty to plan your time and the flexibility to schedule your own calendar is a motivation to many who want to retire early.
Transitioning into entrepreneurship is however not a walk in the path. You will need to go through the processes of writing a business plan and doing market research before you can finally settle on a feasible business model that will be profitable; and able to help you meet your expenses after your early retirement. Raising capital to start the business will be the next hurdle you will need to overcome. You can choose to use your savings as the initial capital, or borrow from your friends and family with a promise to refund them later.
However, sooner or later your business will start growing faster as more customers get to know about your products or services. At this point you will need to look for a business line of credit that will offer you the lowest interest rates in order to keep your cost of capital in check. Having ensured that you are working with a scalable business model, and you have enough capital to fund the growth of your business; you can then jump ship and join the growing numbers of entrepreneurs across the country.
2. Create a separate retirement personal savings plan
Besides relying on pensions for a source of regular income when you retire, you can create your own personal savings scheme meant to accumulate funds to be used to take care of your bills when you finally transition from employment. This is a great way to save and earn interest income on your fixed deposit account; although it will require a lot of discipline to ensure that you stick with your monthly contributions to your retirement fund. You will also need to restrain yourself from drawing from the retirement fund when other needs arise.
The flip side of having a personal savings plan for retirement is that the money will not be enough to meet all your needs for the unforeseeable future in early retirement. The interest earned on your fixed deposit savings account will also not be large enough to match the rising cost of living due to inflation. This option is therefore good for the risk averse individuals who would rather not take too much risk in entrepreneurship or other investment options.¬†
3. Invest in real estate
Real estate is the by far the most easy to deal with as a source income in retirement. This is due to the fact that all you need is to develop or purchase a property and then rent it out to a tenant who will be paying you rent on a monthly basis. With an assured source of monthly income you can then retire early knowing that you are secured financially. For those who might not be able to afford to build or purchase their own properties for renting out; using mortgage to buy the property can be a suitable solution. However, you will need to ensure that the rent you shall be collecting from the house exceeds your monthly mortgage repayment, for your investment in real estate to make economic sense.
In addition to the above three strategies of saving and generating income to help you retire early, there are a myriad other ways to achieve the same goal. These include investing in the capital markets through mutual funds and unit trusts, investing in equities and bonds as well as allocating a portion of your retirement portfolio to online trading of forex in order to grow your wealth. The option you choose will be mostly determined by your risk appetite. Nevertheless, you should ensure that the income generated is able to cover all your monthly expenses during your retirement, and have a surplus for saving and re-investing.
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