As a businessperson, the topic of money and long-term security crosses my mind a lot. I’m constantly figuring out how much I need to make in one month to meet a certain goal. I review in my head how much money I made last year and where it all went. I plan for what I’ll do with my money when I finally make my dream amount, too.
After discussing with my boyfriend, we both decided we’d like an early retirement strategy. Why? Well, we’d be excellent at retirement — he’d write music, I’d write books and we’d live happily ever after. To be clear, retirement doesn’t necessarily mean never working again, but working for money isn’t a necessity. Plus, the work you perform in your day-to-day life is 100 percent from your heart — not about how much it’ll knock off your debt in the next three months.
My Retirement Parameters
My current retirement plan didn’t come from formal meetings with a financial professional. Instead, I put together years’ worth of knowledge from reading personal finance books and working with my own money to accomplish lifestyle goals. Your retirement and ideal life might look different from mine, but that’s totally okay. We need to do what floats our respective boats.
That said, my major retirement goals are to:
- Own a house, so I don’t need to pay rent anymore.
- Earn enough off my investments to pay my living expenses.
That’s it. Only two retirement goals. These are really basic, but I live a basic life. If I can take care of these two items, everything else is just icing on the cake.
Saving to Meet My Early Retirement Strategy
First and foremost, my goal is to have a house to live in that’s paid off, so I can reduce my living expenses. My biggest expense at the moment is rent, and if I didn’t need to pay that, I’d be under much less stress and could take on more client work. That’s why it’s my number-one goal.
To save for the house, I funnel any extra cash left in my checking account at the end of the month into my home savings fund. It’s not the most sophisticated method of saving for a home, but it works for me. Most months, I try to put a $1,000 minimum in there. A big reason I put so much energy into increasing my income is to make it easier to grow my home-buying fund, so I can make this purchase sooner rather than later.
To save for retirement, I honestly don’t do anything special. I’ve picked out a target-date fund and buy stock in it through both my Roth IRA and my SEP IRA. I save the suggested 15 percent of my income per month toward retirement, and I max out my Roth IRA every year before I start contributing to my SEP IRA to leverage the long-term tax benefits.
If I want to truly retire early, I’ll probably need to change this up, but once the house is purchased, I’ll look into ways I can get smarter with my investments. For example, I might contribute more toward the investments that will cover my day-to-day living when I’m older and don’t have a huge down payment to save up for, or I might buy an investment property. For now, I’m a firm believer in “first things first,” so I’ll spend my time, energy and extra money achieving my primary goal and then turn my attention elsewhere.