Early retirement: living the dream

When you visualise your retirement, what do you see? If you’re like thousands of other Aussies, chances are you think about getting stuck into a hobby, spending more time with your family, seeing the world, or exploring the great outdoors right here in our own backyard. Whatever your image of the ideal retirement, it gives you something to work towards; a goal to keep you on track.

You may or may not be surprised to learn that many people have shifted their goal posts, so to speak. Early retirement is now one of the top ambitions amongst those getting ready to give up work. A global survey of pre-retirees by HSBC revealed that nearly three quarters (74%) of Aussies aged 45 and over would like to retire within five years, but 43% say they won’t be able to do so.i The ABS’s stats are a bit more conservative – 30% of people (all ages) want to retire before 65, the official retirement age right now.ii

Perhaps you’re one of those who’ve dreamed of retiring while you’ve still got the energy and drive to enjoy your time off. But have you thought about how you will afford it?

Who can afford to retire early?

It’s tempting to assume that those who do retire early were simply lucky; perhaps they were born into wealthy families and always had ‘options’. But the truth is usually much different. Early retirees are:

    • Disciplined savers. The choice to save, not spend, is one that has to be made over and over again throughout one’s lifetime. All that saved money, plus the compounding interest, means that significant wealth can be built before the ‘traditional’ retirement age.


    • Goal-setters. Humans are hard-wired to focus on anything we can see (or visualise strongly). But the same mechanism that makes you reach for a chocolate bar at the checkout, or lets a salesman upsell you on a shinier newer car, can actually work in your favour. Having a formally written goal, or a visual representation of your goal such as a picture, can help keep you on track.


    • Contrarian investors – with a sensible edge. It’s important to not allow your investment decisions to be driven by trends and the latest ‘hot tips’. But that doesn’t necessarily mean swinging wildly in the other direction in terms of where you choose to park your money. Make sure you get to know your own risk appetite and ensure that any investment you choose is right for your life stage and individual circumstances.


    • Debt-free. Paying off debt should be a top priority. It’s not exactly fun, but diverting a few dollars whenever you can to your mortgage or credit card means you’re saving on interest in the long run. To really enjoy that early retirement, you’ll want to be debt free and able to budget predictably each month.


  • Those with diverse income. Conventional wisdom says that the best way to avert investment risk is to diversify your portfolio. The same goes for income in retirement. Don’t rely on just one income stream; start early and work towards multiple streams, such as a diverse share portfolio, cash-positive property and fixed income products.


Getting started

One thing all early retirees have in common? They start planning and working towards their retirement early in life. In other words, if you’re keen on enjoying a long and comfortable retirement, there’s no time like the present to get started on a plan. Start now by developing your picture of an ideal retirement – and we can help you achieve it.