Spending more time with your family. Picking up a brand new hobby. Exploring exotic destinations for longer than your scant weeks of annual leave would allow. However you paint it, retirement is a beautiful goal to work towards. And starting early means you’ve got more time and energy to enjoy it.
Early retirement has become a popular financial goal for Aussies from a wide variety of different backgrounds and circumstances. A 2016 global survey found that out of 17 countries surveyed, Australia has the one of the highest proportion of people wanting to retire early. In fact, 75% of Aussies aged 45+ wanted to retire within the next five years – as much as fifteen years before pension age.i
Unfortunately, most cannot afford it. There’s a big disconnect between those who want to retire early, and those whose finances will allow them to stop work.
Those who successfully retire early aren’t just lucky, or from wealthy backgrounds. A US-based study found that early retirees fostered habits and abilities that allowed them to build their wealth sustainably over time.ii
The first is the mindset and discipline necessary for saving. Consistently choosing to save rather than spend – plus compound interest – means real wealth is built over decades.
Speaking of decades, early retirees are more likely to have set long-term goals and focused on them. There’s a psychological reason that this is difficult for many people. Our brains are hardwired for instant gratification and it doesn’t just affect our propensity to snack or hit the sales. Anything we can see, or at least visualise strongly, is much more attractive than anything that’s too far in the future to picture.
Of course, good habits in both these areas are less effective if they’re not shared by your spouse. A spender can undo much of the good work of a saver, even if their finances are not completely intertwined.
Then, there’s the advice factor. That study also found that those who retired early were more than twice as likely to have worked with a financial professional.
Do you want to retire with time to enjoy your golden years? There are plenty of ways you can start building towards an early retirement.
Want more help on making your early retirement dream a reality?
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