It is a dream for many, if not most of us – to be able to retire earlier than the standard age of 65. And it seems that millennials in particular are keen to try and achieve this, with a recent MSN poll suggesting that in the US at least, over two thirds are planning to quit work early. This is all well and good – but how straightforward is it in reality?

Well, here are Holborn Assets we’re suggesting five things that we believe you’ll need to do if you want to achieve your dream of retiring early.

  1. Start saving early, and save as much as you can afford

This of course is the golden rule of making sure that you have enough savings to live on when you do retire. A big part of this is identifying how much you’ll need when you retire early – and then working out what percentage of your income you’ll need to set aside here and now to achieve that level of income. As a rough guide, you’ll probably need around half your current income after tax, assuming that you don’t have a mortgage to pay off and the kids have left home. Clearly, the later you start, the less time you have to save – so start as early as you can. In order to save enough to retire early, you’re probably going to need to be putting aside at least 15 per cent of your income after tax.

  1. Work out exactly what income you will get if you retired early

Your income as an early retiree will be considerably more complicated than it was as a full-time worker – probably coming from a number of sources – so you’ll need to do some thorough research to identify what you can expect to receive in total.

So, it’s well worth having a good chat with your employer about just how much you could expect to get from your company pension if you retired early. You’ll also need to contact any other pension providers you might have and get an accurate illustration of how much you’ll receive from them too. Add it all together – and then take into account all of your projected expenses once you do retire. The Money Advice Service has a great online budget planning tool that might be useful for this.

  1. Cut your spending

By living on less in your younger years, you’ll have more to spend in later life – and a big part of achieving this is simply to cut back on your spending. Of course, thoroughly reviewing your outgoings is key to this, but if you have a partner, you also might want to consider what Nick Vail, a financial adviser with Integrity Wealth Advisors, calls the ‘starve and stack method‘. Essentially, instead of struggling to save on dual incomes, you’ll try to live only off of one income and save 100 per cent of the other person’s wage. It’s a pretty brutal method of cutting costs and putting money away to save – but it could be a great way to kick start your saving for your early retirement.

  1. Invest in property

This is all about finding a source of passive income – that regular drip-drip of money coming in that requires little to no effort on your part to maintain. Buying property is a great investment in this sense – you can build up a portfolio of property investments that can give you a nice regular income over time, that can go straight into your pension pot – and that may also grow in value in the long run.

  1. Do it gradually

Making the transition into early retirement a gradual one makes sense on a number of levels. Firstly, it’s a more reversible decision – many people who think they want to retire early actually find that a life of endless cruises in their mid-fifties wasn’t quite what they were looking for. So, by working part-time, you can have a lower tax bill while still enjoying a regular income. Taking a sabbatical is also a great way of testing the water before you make the big move.

Planning, discipline and a clear vision of what you really want from life are all essential to being able to retire early – so if you need any advice on your financial future, then get in touch with us at Holborn Assets today.