Hayes - You Can Retire Early!

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Dedication

I would like to dedicate this book to my wife Kim and my two children, Finn and Avery. They mean so much to me and are the reason I started my journey toward financial independence.

I would like to acknowledge the following people for their insights and support in writing this book. I would like to thank my assistant Laurie Blank, who has worked numerous hours to help make this book possible. I would also like to thank Danny Fortes for his insights on the direction of this book.

I have the privilege to know personally three published authors who have had a great influence on me. I want to thank Steve Economides for all of his wisdom on what making a good book really means. I would like to thank Barry Asmus for his encouragement and insights over several cups of coffee. Also, I want to share my gratitude to Jeff Rose who connected me with this opportunity to write this book.

I would not be where I am today without the support and wisdom of those around me.

It is possible for nearly anyone to retire long before the age of sixty-five, and in this book Ill show you the steps you need to take to plan your own path to early retirement. Having the money to retire early means you wont have to wait until youre sixty-five or even older to start living your life the way you want to live it. When you have the money to retire at fifty, forty, or even thirty years of age, your outlook on life will be different. Youll be able to stop working on someone elses terms and finally live life the way you want to.

People who have succeeded at retiring early make their decisions about life based on what seems right to them rather than what everyone else is doing. They make choices that allow them freedom; this means they are conscious of every financial decision they make and its impact on their retirement plans.

Different people have different concepts about what it means to retire early. For some, early retirement means being able to retire at age sixty. For others, their early retirement dream means to be able to retire at age thirty-five.

According to the Social Security Administration, full retirement age (FRA) is anywhere between age sixty-five and sixty-seven, depending on the year you were born. This is the time when you can start collecting full Social Security benefits. If you choose to retire and start drawing on your Social Security benefits before your FRA, youll be penalized with smaller benefit checks.

However, by following the guidelines in this book, you can retire as early as you want without needing Social Security benefits. As I discuss how to formulate your early retirement plan (ERP), Im going to help you plan as if you are not going to receive Social Security retirement benefits. In this way any Social Security retirement benefits you receive later on will be an addition to your income instead of something youll depend on.

Regardless of what your target early retirement age is, there are many benefits to having the financial means to be able to retire early. People who are able to retire early have the freedom to travel, to spend time with family, to devote themselves to hobbies, to start their own business, or even to go back to school.

When youve planned your finances in a way that gives you the freedom to be able to quit your job, you can spend your time doing things you want to do and stop being stuck in a job that gives you nothing more than a biweekly paycheck.

What does early retirement really look like? The answer varies from person to person, but most agree that they want to retire early to allow themselves more time to do the things they really want to do.

Believe it or not, making a plan for early retirement is much simpler than it sounds. All you need is enough income-producing assets to provide for your living expenses for the rest of your life. Now lets look at how to achieve that goal.

Is it really that farfetched to retire at fifty or even forty? Over the years, I have met people who have retired even earlier than that. You might think that retiring early means you must have a large income, but in fact its possible, as well see, to do this with many levels of earnings. The key is to have a plan.

HOW MUCH DO I NEED TO RETIRE?

How much money you need in your nest egg in order to retire depends on two issues:

What do you want to do in retirement?

What do you anticipate your basic costs to be in retirement?

However, creating the plan isnt the hardest part of reaching early retirement. The most challenging task throughout your journey to retire early will be sticking to that blueprint.

You might think that only big purchases can derail you from your plan for early retirement, but the fact is that even small, everyday purchases can lead you off track. You may purchase a used car rather than a new one in order to save money, but if you are eating out three times a week rather than cooking at home, youre negating all the savings you made by forgoing that new-car purchase. That is the reason you need a strong why . Why do you want to retire early? Your why will be what motivates you through the tough times. It will give you the strength to say no to distractions that may hinder your ability to stay on track.

Early retirement looks different to everyone, but there are some common themes when people start dreaming about leaving their jobs. These can form the start of your search for your why .

Travel is a big one. Many people hope to spend more time traveling when they retire. Think about your travel aspirations: you might see yourself having coffee in a Paris caf or hula dancing at a luau in Hawaii. Or, you might imagine something a bit more adventurous, such as exploring Machu Picchu in Peru or hiking the Appalachian Trail.

Maybe you want to do more than just visit a foreign country; instead your dream might be to live in a foreign country. The cost of living can be a lot less than in the States, especially as regards important considerations such as healthcare. For instance, did you know that you can live comfortably in Thailand on less than $2,000 per month?

DONT UNDERESTIMATE

When assessing your postretirement costs, its important to remember that many people substantially underestimate their cost of living after retirement. A good general rule is to add 10 percent to each budget category; this will account for underestimation of costs as well as inflation.