How would you feel to have the freedom to retire early? To have the ability to live life on your terms while you still have the energy and time to do so? This is a nice thought but what are you doing to get here? Are you planning to retire early?
If you’re following a traditional retirement strategy, you don’t have much of a chance to retire early. The typical investor uses his savings to buy stocks and bonds in a 401(k) or IRA. The problem with this strategy is it limits when you can take out your money. If you want to take money out of a retirement account before you turn 59 ½, you’ll owe an extra 10 percent penalty to the government. This is on top of income tax, totally crippling your return. When you invest in a traditional retirement plan, you retire on the government’s schedule, not your own.
After the horrible market stretch of the last few years, the average investor can’t even consider retiring early. Right now the question is “will I be able to retire at all?” Retirement accounts are based on risky investments in stocks and bonds. There is no guarantee that these assets will get you to where you want to be in retirement.
It doesn’t have to be this way. You don’t have to lock up your savings in accounts that won’t let you retire early and might not let you retire at all. You just need to change your mindset and start looking for investments that actually let you start planning to retire early.
Planning to retire early consists of a completely different strategy than the norm. The key to this strategy is investing for income, not for savings. This means finding investments that start earning you extra money right away instead of postponing your earnings to some point in the future. This money comes from residual income investments. These are assets that start giving you income right away with minimal effort on your part. Because of this, they are also called passive income assets.
When you invest for residual income, you put your money in things like rental properties, automated businesses, and royalties. These investments start paying out money as soon as you set them up. You use your investments to earn extra money that you can use today. Once you get your first source of residual income up and running, you can use your extra income to build another investment and keep building your earnings. This is the right path when considering planning to retire early.
Residual income is the key to retiring early. Once passive income comes in, you can spend it whenever you want. There are no intrusive government restrictions. If you build your passive income right, it’ll start catching up to… and eventually exceeding… your work income quickly. This extra income means you can cut back your hours within a few years instead of some faraway date in the future. Once you have enough residual income, you can stop working completely and just sit back and let your money do the work for you.
Planning to retire early consists of investing in your income with the ultimate reward of retiring on your schedule. This is the power of adopting the right investment mindset. Next time someone asks you about your retirement plan, you can tell them with a straight face that you are planning to retire early.