The retirement age for most countries around the world is between 62 and 67 years old, although some people hope to retire much earlier. Of course, not everyone has the privilege to retire at the age of 50, but there are ways to make that possible, even if it’s just to stop working at their corporate 9 to 5 jobs.
This is because no one should have to work full-time until they no longer can, which could either mean their backs are giving out or their mental acuity is not as sharp as it used to be. When people start hitting the ripe age of 50 and above, they should already be leading a more comfortable life and not worrying about how to put food on the table next week.
That’s why it’s never too early to start planning for your retirement. Most companies today include pensions and 401(k)s in their employee benefits. Still, you should have alternative options to building your retirement fund aside from those so you can achieve your retirement fund goal faster. Luckily, here are three ways for you to do just that:
Consider Downsizing Your Assets
When you were younger and had your first taste of financial freedom, you may have become overly excited about the possibilities of what you could buy because you have the means to afford it. You might have taken out loans to buy a new house and a car so you can start building your adult life.
But as you grow older, your priorities will also change. If it was still a decade ago, those assets might have brought you a sense of pride and accomplishment; now, all they do is weigh you down. For example, because you’re tied to your house, you can’t just relocate or travel the world whenever you want to.
However, you must remember that nothing on this earth is permanent. No rule says that you can’t get a smaller and cheaper house than the one you’re living in now. Or that you can’t sell your car because you’d much rather use public transportation to get to where you need to go and reduce your carbon footprint at the same time.
There’s nothing wrong with downsizing, especially if it means saving you more money in the process. So look into what methods you can use to sell a house quickly and put the money you’ll get towards more affordable housing. You don’t need an extravagant house to live a comfortable retirement life, but you will need the money.
Diversify Your Income Streams
One of the biggest hacks in personal finance is to have two or more income streams. In this day and age, it’s becoming impossible to live a comfortable life on a single source of income alone. This is especially true considering that the prices of commodities are only getting higher and more expensive as time goes on.
Imagine if you only have one source of income, which is your full-time job. What happens if your company suddenly shuts down without giving you so much as a month’s notice so you could look for another one? That means you won’t have an income for an entire month or two, depending on how long it will take you to find another job.
This will be even more devastating if you don’t have an emergency fund put aside to cover your day-to-day expenses while you are in between jobs. So, if you don’t want to deal with these kinds of risks, considering diversifying your income streams. This way, you’ll always have another stream to fall back on, even if one source dries up.
And don’t think that your only option is to get another full-time job because it would be impossible (and illegal) to work two full-time jobs simultaneously. However, you can do some part-time or freelance work for alternative sources of income for your retirement fund. Or you can also make investments.
Create Short- and Long-term Investments
If you prefer a more passive way to earn money, you can look into investment opportunities. For instance, you can trade in the foreign exchange market or buy dividends at the stock market. But you can also establish your own business, which is a great way to leave the corporate world as well.
The point of making both short and long-term investments is so that you can have other sources of income aside from your full-time job. Besides, you can’t be working a 9 to 5 job until you retire, especially not if you don’t have the opportunity to increase your earning potential.
With investing, there will always be risks and rewards. If you play it safe, you’ll get guaranteed returns in small amounts. And then there’s the option to go with investments that have high risks but high rewards. So really, it’s all a matter of how much you’re willing to risk in exchange for a chance at success.
You don’t need a substantial amount of wealth to live a comfortable life during your retirement, especially if you’re industrious and frugal with your money. But it won’t hurt to have the luxury of living at the moment without worrying about the future, so do your best to build your retirement fund early.