Many of us dream of not having to go to work anymore and having enough cash in the bank to avoid any worries, but that goal often takes time to attain, and doing it by the age of 40 might seem an impossible and unrealistic idea.
If you are fortunate enough to inherit some cash that would definitely help, and taking some tips from sites like mywealthandinvestment might help point you in the right direction too, but what are your chances of early retirement without any inherited wealth?
Making lifestyle choices
The question of whether you can retire at such an early age is largely dependent on your financial outlook and what sort of lifestyle you are comfortable with.
If you want to enjoy regular expensive holidays and enjoy the finer things in life such as luxury hotels and restaurants you will need to have a large pot of cash if you are going to make that lifestyle through such a long retirement period if you stop working at 40.
However, if you have more modest ambitions and actually enjoy life’s simpler pleasures such as walking, sightseeing, and spending quality time with loved ones, then there is always the chance that you can make your money last a whole lot longer.
Financial prudence is key
Some might argue that there can be a fine line between being seen as miserly and being financially savvy.
For instance, abstaining from buying a coffee on your way to work might seem like a small gesture but if you add up all those small purchases and put the money away instead of spending it, that can really boost your retirement pot.
You will need to think about all of your expenditure and work out how to live well for less, with some people suggesting that they are on the way to retiring in their 40s by managing to save more than half of the money they earn towards putting their feet up.
Putting your money to work
The other essential ingredient attached to early retirement is the need to achieve a good rate of return on your savings.
Just putting your money in the bank won’t get you where you want to be and, in fact, you will end up with less cash in real terms when you consider the rate of inflation and the low rate of interest your money will attract.
Your early retirement strategy has to involve an element of financial speculation and that means investing in stocks, bonds, or other financial products that have the potential to deliver excellent returns.
There is a risk attached to this strategy, of course, but it is generally agreed that you will need to speculate to accumulate in order to grow your retirement pot.
Your dream of retiring at 40 without inherited wealth is not an impossible life goal but you will have to be clever with your money in order to accumulate enough cash to enjoy your time in the sun.