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When the younger generation wants to get out and live their lives without having to wait for retirement at 60 years old, ACU PAY will introduce them to early retirement plans, procedures, and savings precautions if they want to retire early.
Early retirement or F.I.R.E which stands for Financial Independence Retire Early is to have financial independence so that they can stop working at a very young age. Early retirement requires more disciplinary financial planning, including savings and advanced investment, to be able to retire at the age of 30 or 40 which is faster than the normal retirement age which is at 55 – 60. This idea is popular among many younger generations because they can go out and live their lives as they prefer while having money, energy, and time. They don’t want to live independently in retirement because even if they have a lot of money, they don’t have the energy and time to do what they want in time.
1. Set your goal
The money target should be set for early retirement. It depends on your current financial situation, the amount expected to be used in the future and the style of life after retirement about what you would like to do, maybe consult with a financial planner for further advice.
2. Have no debt and have enough emergency fund
Debt is what keeps young people from investing in retirement. Therefore, pay off the debts first whether credit cards, home loans, and cars. Then start planning emergency funds at least three to six times the monthly expenses cost. When you have an emergency fund, no need to worry about early retirement savings plans.
3. Limit the spending, reducing the unnecessary ones
Set your own expenses, cut all unnecessary expenses and set annual expenditures such as setting personal expenditures at 20,000 baht per month or 240,000 baht per year.
4. Earn more income by doing supplementary job
Another way to help you plan your early retirement faster is by increasing your income, possibly more salary, starting a business along with a regular job, or real estate rental income.
5. Save money as much as you can
To retire early is to have a lot of money lying still in there. The saving advice is to save at least 50% of your total expenditure. For example, you get 40,000 baht in salary, and at least 20,000 baht in savings, the amount of savings depending on your goal.
6. Study about passive investment
Such as debt instruments, index funds, or real estate funds that pay good interest or dividends, to create investment portfolios equal to 25 times their annual expenditures.
7. Check progress list
So that the plan does not collapse in the middle, you should monitor the progress of your retirement savings and check how much they are missing. Then, you can use the information to adjust your savings or investments as you prefer.
Potential problems for those planning to retire early. When they know the courses, they can use them to plan more thoroughly before making an early retirement decision.
1. Be careful about the insufficient period to prepare for retirement
The sooner retirement plans are planned, the more time will be spent on saving or preparing retirement assets. However, if planning is late, there may be insufficient retirement preparation. Therefore, more money should be saved per year, but it can also affect our physical and mental health because we have to cut costs as much as possible and work harder. In addition, if the return on investment is increased more, there will be more money per year, but also have to accept higher investment risks.
2. Not enough money for expenses after early retirement
There may be miscalculations on costs, such as not calculating inflation after retirement, retirement lifestyles being different from pre-retirement, or under-estimated healthcare costs which happen when retiring and have higher health expenses than previously estimated. If an illness requires a large amount of money, it may affect the overall financial situation.
3. Uncertainty and uncontrollable of the world
Uncontrolled global conditions such as economic crisis, war or policy changes may adversely affect the financial situation after retirement, and investment or returns expected to be a source of income in the long run may be less.
4. Mental state
The decision to retire from a regular job at an early age affects the mind because once retired, it makes life quite lonely because there are no regular jobs, especially for those who enjoy socializing. Early retirement should be a retirement where we can do what we want to do and fulfill what regular work takes away from us.
However, choosing a ‘too tense’ path can be stressful for yourself and the people around you. Early retirement savings should be chosen to fit our income and expenditure goals so that early retirement plans can be kept up to date and take the rest of our post-retirement time out to do what we want without having money as an obstacle to happiness.
