Dramatically Reduce What You Spend on Housing
Your biggest expense? Your household, most likely. This is why if you can reduce what you spend on housing, you’ll see a huge improvement to your retirement savings. This move alone can help shift your early retirement form the ‘if’ category to the ‘definitely happening’.
For a typical retirement savings plan, you should aim to reduce your housing costs down to just 30% of your income. But for early retirement, your aim should be as low as 15% or 20%.
This is often impossible without relocating to a more affordable city, so keep that in mind if you want to reach your goals sooner. You should also think about refinancing your mortgage, getting a reverse mortgage if you don’t plan on moving.
Finally, you can think about downsizing…
Go Smaller — Even Tiny!
How big a house do you need? Four bedrooms? Three baths? Huge garage to accommodate three cars? Hold on, you may have instead asked yourself how big a house you WANT.
Those are two very different questions.
You have to start focusing on how much you need, not how much you want. Not everyone can live in a big mansion during retirement. And downsizing will help you towards achieving an early retirement more than you might think, boosting your savings while also reducing long term housing costs.