Retired at 50? Follow these five steps: “Always have a plan B, C and D” | MyGuide

“It doesn’t really matter whether you want to retire early. Arranging your finances and improving your situation is always a good thing,” says Sébastien Aguilar, founder of FIRE Belgium. Perhaps we should no longer explain that four-letter word, but still: FIRE stands for Financial Independence, Retire Early. Aguilar shares his handful of top steps to achieving financial independence at age 50. In general, he says: “The sooner you start, the better. But better late than never.”

How much do you need to save for a decent pension? With this reserve you will not lack anything later in life.

“To increase your savings, you need to increase your income and decrease your expenses. Doing both ensures that you can set aside more money to invest. Finding ways to increase your income is essential if you want to achieve financial independence. Deliver more value and solve tough problems that people are willing to pay for. Develop your competencies. If necessary, change employers or even industries. Be more visible and communicate better about the value you create. Think of side activities or entrepreneurship.”

“Reducing costs is the key to saving more money so you can invest it. Discover ways to reduce all the big expenses: accommodation, transportation, food, and so on. Be creative, don’t follow the crowd and be willing to be different. And remember that happiness doesn’t have to cost much.”

“Investing is essential to growing your wealth and sustaining your life during retirement. You need to build your investment portfolio, which I also call a “freedom fund.” But investing wisely is even more important, because big investment losses can hurt a lot.”

“First of all, I recommend the fair. Selecting and trading stocks, as we see in movies, is usually a safe way to lose money. Investing with banks makes them richer than you. It has been proven that the easiest and most effective way to invest for the long term is to use low-cost global index funds.”

“Secondly, there is investing in real estate. That is a combination of entrepreneurship and investing. If you have the skills and the money, it can be a great way to build wealth. It’s more work than investing, but if done right it can lead to higher profits.”

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“If you want to retire early, it is important to have a solid plan. What lifestyle do you want to have? What will make you happy? If your dream retirement involves traveling the world on cruise ships, your plan and expenses will be very different from a more modest life with cheaper activities. Remember that a pension does not solve all your problems, but only gives you more tools – money and time – to deal with them.”

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“Estimate how much your lifestyle will cost you and calculate how much money you need to finance everything. Lower expenses in retirement mean you also need a smaller ‘freedom fund’ and may be able to retire earlier. Also take your pension term into account. If you retire at age 50, this means that you will spend more after retirement than if you did not stop working until age 67. Ideally, you want to live off the profits of your freedom fund so that it doesn’t lose too much value over time. This gives you the best chance of having enough money for the long term.”

“You can use the 4 percent rule of thumb to get an idea of ​​how much money you need to fund your retirement. Suppose you need 25,000 euros per year to cover your expenses. The 4 percent rule of thumb tells us that to withdraw $25,000 from your investments each year, you need a freedom fund of 25,000/4 percent, or 25,000 x 25 = $625,000. Just keep in mind that the 4 percent rule of thumb needs to be adjusted for many individual factors, including retirement duration, investment costs, taxes, market performance, and so on. Most people use something more conservative.”

Aguilar worked out an example with a young Belgian who starts at the age of 22: “If he saves 200 euros per month and invests it in the stock market, with an expected average return after inflation of 6 percent per year, in 49 years he will have reached 625,000 euros. That won’t be enough to retire early. If he invests 500 euros per month, it will last 34 years. If he invests 750 euros per month, it will last 29 years. In order to retire at the age of 50, he will have to invest more than 750 euros per month.”

“However, in this example, someone starts with no savings and a fixed monthly savings amount, which is very unlikely. This calculation does not include government pensions, taxes and levies. Depending on all this, the numbers can be very different. The amounts a person can save and invest therefore play an essential role in building financial freedom, hence the great emphasis on earning and saving more money.” Check here how much pension you will receive.

“Planning for early retirement should be done with caution. Make sure you consider different scenarios: What if my family changes, such as divorce or more children? What insurance do I need for unexpected events? Can I handle a long period of low investment returns or a market crash? What if my happy life at 50 doesn’t make me happy?”

“In general, it is important to identify those risks and prepare for them: build extra safety into your plan, take out specific insurance, test different activities in advance, and so on. I always recommend that people have a plan B, C and D. In fact, having options and being flexible is the ultimate freedom. Conclusion: Don’t follow the crowd, be brave and creative, define your own happiness and your own path to freedom.”

Don’t forget to keep in mind how long your notice period lasts: you can calculate it quickly and easily using the box below.

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