Today Josh Wardini brings you his best tips for retiring early, especially considering how much money you need to retire.

Do you enjoy going to work every day and giving one-third of your life to someone else? Probably not. Even if you love what you do, you probably wouldn’t want to continue doing it well into old age. Therefore, you are probably one of the many people who dream of retiring early and enjoying the rest of their life without a worry on their mind.

While that’s possible, it’s not an easy thing to accomplish. In order to have an early retirement and have enough money to live your life to the fullest, there are some important boxes that need to be checked. To help you out determine them, let’s take a closer look at an infographic on retiring early created by and list some of the best tips that we could find in it.

Write Down Your Retirement Plan

Saving for retirement is not something you should do spontaneously. Instead, it is an endeavor that you should do systematically and know the exact status of your retirement plan at every moment. To do that, you should write down everything about your retirement plan and create a strategy that you intend to follow. Consider how much money you can comfortably reserve for it and if that would be enough to achieve your final goal. If you do not know where to start, a good idea is to sit down with a professional who will explain all the finesses to you and write down a plan for you.

Determine Your Standard of Living

One of the most important things that you should consider before retiring is what standard of living you want to have. The idea of retiring early is not to be forced to live frugally for the rest of your life. Instead, it’s about having more time to enjoy it to the fullest. Therefore, you should determine what annual income you would be comfortable with and then multiply it by 25 or 30. We use this equation because the average retirement age in the USA is around 60, whereas the average life expectancy is around 85.

Consider Inflation

Inflation is a part of the equation that many people forget about when planning how to retire early. When calculating how much money you need to save for early retirement, you need to consider that inflation will take away around 4% of your retirement fund’s value per year. Twenty years from now, you will be able to afford significantly less with the amount of money you have today. Therefore, when you come up with the number you’re comfortable with, enlarge it by 4% per year to eliminate inflation from the equation.

Start Saving Early

Do not make the mistake that around 50% of Americans make — they start saving for retirement at age 36 or older. The later you start saving for retirement, the more you will have to sacrifice your daily comfort. Instead, if possible, start saving up around the age of 25 or at least before you turn 30. This way, you can save smaller amounts more often and not feel an impact on your budget. Whenever possible, save more aggressively to maximize the interest on your funds even more.

Work on Passive Income

Instead of just investing in your 401(k), (pension, for UK readers) which is definitely important, you should work on other sources of passive income. Anything that you earn this way, you should direct to a retirement fund. This way, you will increase your interest, without increasing the load on your daily budget. Some good passive income ideas that you can consider include index funds, lending club, affiliate blogs, renting a real estate, and so on.

Try Geographic Arbitrage

Geographic arbitrage is a trick that many people who retire early use. It’s a way to enjoy a high standard of living without spending a lot of money. It involves choosing a country with a low cost of living and moving there in order to spend less money on your daily expenses. However, in order to make this possible and viable, you first need to be able to work remotely and earn a wage that will allow you to save a lot.

For example, if you are a web engineer living in the United States and you’re earning six figures annually, you could consider moving to a country in Central Asia or South America. This way, you would only spend around $10,000 a year, and you could save upwards of $90,000 every year.

Try to Reduce Temptation

The goal of most people who aim to retire early is to save at least 40% of their income. In order to do that, you must cut down your expenses significantly. However, that’s not easy in the age of consumerism, in which we are all living today. We are constantly bombarded with commercials convincing us that we need to buy things that we do not need. Therefore, in order to save, you need to be able to avoid temptation.

A good way to do this is to stop window shopping and visiting online stores. When you go to a shopping mall or visit Amazon, it’s easy to justify spending money on something inexpensive and telling yourself that you need it. However, these numerous small purchases amount to a lot at the end of the month or at the end of the year. For example, if you like reading, stop buying books; instead, join a local library and start borrowing them.

Invest Your Hard-Earned Money

Money begets money, remember that. When you earn money, don’t let it stagnate, try to find a way in which you can invest it. Only a small fraction of people who retire early actually do it thanks to some lucky circumstance, such as winning the lottery, or joining a startup that ends up successful. Instead, most of them strive to earn a lot, save a lot, and invest intelligently. As a matter of fact, if you have larger amounts of liquid funds, investing in promising startups is a good idea to increase your wealth quickly.

Check out this infographic, and please share your best tips for retiring early in the comments below.

best tips for retiring early