Six Steps to an Early Retirement:
Exiting the Rat Race Without a Financial Advisor

Early in life, long before work, marriage and parenthood started to take its toll I knew a buddy whose ambition was to spend his last buck on the day he died. I never forgot that but we never had children at the time so it would appear a bit mean today!

But it always fascinated me about learning to manage my finances without the aid of a financial advisor using my own nous to figure things out. Passing fifty and having had a successful career in digital marketing, any doubts about that contact King Kong, I wanted to retire.

I’d remarried and had another child so exiting the rat race meant factoring in some hitherto parameters unthought of.

But most was clear and has proved to be a solid grounding:

First you need to decide the age to retire and figure out exactly what lifestyle you are aiming for in retirement considering macro matters like expensive hobbies, travel and living arrangements.

Calculating housing, healthcare and leisure costs can be a bit arbitrary and you should always err on the side of caution and key in plenty as a contingency. My problem was healthcare vis-a-vis insurance due to where I live.

Next, you need to be honest with yourself about the state of your finances, income sources, savings and assets. Will these grow and if so how. To what degree will these be influenced by economic downturns (forget upturns) that may have a detrimental effect on your retirement pot?

Calculate how much you will require each year and how these funds can be withdrawn based on your investments. Having cash in the bank may not grow much but it’s liquid. As in business, you can do without a cash flow problem!

Create a savings plan and an investment plan in the years leading up to your retirement. Importantly spread your risk over several assets. Those who invest in the latest “good thing” invariably don’t wind up in clover – they smell more like dead roses.

Finally, be prepared to monitor and adjust as circumstances change and needs arise, always considering tax implications, depreciating assets and need for repairs and above all the greatest bugbear of all – health.

I say the greatest bugbear. I’m in a fine fettle but early on in retirement, we had an unexpected addition to the family. Another daughter.

That’s when the contingency fund proved vital!