Many people dream of an early retirement, ending their employment with a company and taking off to do their own things in their own time. While the amount of money in your retirement savings accounts is a good indicator of your preparedness for retirement, your financial habits are a much more important factor in whether you are ready to retire early. The people that tend to retire early successfully have a number of financial habits in common. Here are some of the habits that may indicate that you are ready for an early retirement.
Your Time Has More Value Than Acquiring More Things
One of this signs that you may be ready for an early retirement is that you value your time more than you value the acquisition of more possessions. Most of the people that are on track for an early retirement save a larger portion of their income in their retirement accounts because they do not acquire as many purchases as their neighbors and co-workers. Valuing early financial independence over the instant gratification of another purchase helps them reach their retirement savings goals earlier in life and lowers what their expenses will be during their retirement years.
You Regularly Save 30 Percent Or More Of Your Income
If you are able to save 30 percent of your income, or more, in your savings and retirement accounts, you are on the right path for an early retirement. Your savings rate is the most important numerical factor in whether you can retire early because it shows that your expenses are low enough relative to your income that you will be able to retire comfortably without a steady paycheck. With nearly a quarter of Americans living paycheck to paycheck, being able to save at least 30 percent of your income puts you well above the curve.
You Keep Track Of All Your Financial Details
During retirement, it is more important than ever to keep track of all of your financial details to ensure that your money will last throughout the rest of your lifetime. The most important financial details to keep track of are your monthly expenses, your overall net worth, and the returns you are getting from your investment portfolio. Knowing these details will give you a good picture of your financial health and can alert you any potential issues well before they become significant financial problems.