Is An Early Retirement Possible Or A Pipe Dream?

The Story

The traditional career path usually goes: study, find a steady job, and retire at age 65. However, most people in the workforce are looking for a lifestyle that is calmer than their parents - and their parents before them - have experienced. Today, employees are leaving behind the hustle of the 9-5 and retiring early to travel or live by the sea.

It's how the FIRE movement was born. FIRE (Financially Independence, Retire Early) was an idea that was established online in the 2010s. The "philosophy" gained prominence with an online community, where millennials discussed their disdain on waiting 40 - 45 years to retire - wasting their best years working towards someone else's dream (and contributing to someone else's profits).

Since then, there have been camps, conferences, and podcasts on how to join this movement.

Can you retire early in South Africa?

There have been critics. Some have criticised the strategies used and in a country that is experiencing a high cost of living and debt; the question is if South Africans can retire early? You can if you have all your ducks in a row.

Work out your retirement plan

Unfortunately, it's not as simple as calling it quits whenever you are ready. Proper planning needs to be put in place if you're looking to be comfortable during your early retirement.

You need to start with the end in mind. This means working out the desired age you'd like to leave the workforce. Once you've established this, evaluate how much you have currently saved and how much is needed to live comfortably. Now is the time to take a look at your finances. Daunting task? Probably, but becoming familiar with your financial situation is important. 

Work out your expenses

Financial advisors will tell you that it's good practice to always take a look at your monthly statements, and evaluate where you may be overspending. This is an important step for retirement as well. To properly determine how much is needed for early retirement, you need to cut down on all those "unnecessary" expenses.

Priority is paying any debt or credit you owe (store accounts, loans, etc.). The next step may be a little brutal - it's looking at where you're spending the most cash. For some, it's entertainment. This includes dining out, movies, concerts, etc. We're not saying you should starve yourself from these delights, but do curb your spending habits. Instead of eating out once a week - try once or twice a month or try and substitute these pastimes with a less cheap activity or something free.

When you cut down on these expenses, you'll have more clarity on how much you may need for your early retirement.

Becoming financially savvy

In South Africa, a single stream of income is no longer viable. This is an unfortunate reality, even more so during the recent pandemic crisis. Many South Africans who have relied on their salary, have had to develop side hustles to bring in a little extra cash flow for the month.

Not sure what your side hustle is? Investing in property could be a great start. With plenty of research and training, you could become successful and possibly turn your side hustle into something full-time.

Here’s how you can retire smartly

If you are considering a home by the sea, it's time to be smart about your money. Sit down and map out where you want to be and the life you'd like to provide for your family.

To discover a life of financial freedom, join our FREE webinars to find out how you can get started on your new journey.

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