The retirement bug bites every worker eventually—some much sooner than others. Unfortunately, as soon as you’re ready to close up shop, cash in your 401(k), and start a laid-back life on the links, the reality bug also bites. Turns out you’ll have to keep punching the clock for at least another eternity until you can safely call it a career.
But what if you didn’t have to work until your grave? What if all that stood between you and a 10:30 tee time today, every day, was a small shift in your money-saving philosophy? If you use these four simple tips from Wes Moss, C.F.P., chief investment strategist at Capital Investment Advisors, you can shave five to 10 years off your working life.
Spartan Money Secret #1: Wipe Out Your Mortgage Sooner
While doing research for his book, You Can Retire Sooner Than You Think, Moss discovered the happiest retirees had either completely paid off their mortgage or were within 5 years of their last payment. By eliminating your home loans, you carve out more comfort and security for your retirement years, he says.
If you’re a relatively frugal spender, Moss recommends adding up to $300 to your monthly payment. “This won’t break the bank, and it will cut anywhere from six to nine years off a 30-year mortgage,” he says. Use an online mortgage calculator to figure out the exact amount that makes sense for you.
If that extra $300 makes you queasy, try Moss’s mindtrick: Chop your monthly payment in half and send in a check for that amount every two weeks. For example, if you usually pony up $3,000 a month, turn it into two $1,500 payments. The way the calendar falls, you’ll actually end up adding $3,000 to your yearly payment without feeling the blow, Moss says.
Spartan Money Secret #2: Determine What Moves You
In his book, Moss uncovered data on how retirees spend their time. He found unhappy retirees have an average of 1.9 core pursuits—that is, “hobbies on steroids,” Moss says—while their happier counterparts have 3.6.
“It’s important to have a constant reminder for why exactly you’re paying an extra $300 a month toward your mortgage, or contributing a higher percentage to your 401(k) every year,” says Moss. “The sooner you know what the hell the money is actually for, the sooner you’ll be a better saver.”
So what counts as a core pursuit? Anything that fires you up: racing, traveling, volunteering, you name it. “It doesn’t matter what your core pursuits are,” says Moss. “It just matters that you have several of them.”
Spartan Money Secret #3: Follow a Guilt-Free Budget
Nitpicky budgeters will skip a trip to Starbucks if there’s a cheaper cup of Joe at the gas station down the street. But you’ll drive yourself crazy if you obsess over every last dime, says Moss. Instead, stick to a big-picture budget by following the simple, guilt-free “Taxes, Savings, and Life” rule.
You can expect about 30 percent of your annual income to go toward taxes, Moss says. And you should put 20 percent of your income into savings, he says. “It takes most folks a while to get to the point where they can save 20 percent, but that’s your target. As long as you get there by your mid-30s, you’ll be fine. Most retirement planning is predicated on saving 10 percent, so if you can do 20, you can retire early.”
The other half of your income goes toward life expenses. “And it doesn’t matter what you’re spending it on,” says Moss. “If you want to spend it on lattes, go ahead. Ten days in Lake Como? Sure. Ten Spartan Races a year? Go for it. You’ve already saved what you need, so now there’s no guilt in how you’re spending the rest of your money.”
Spartan Money Secret #4: Create Multiple Income Streams
Let’s say you need $10,000 a month to live comfortably in retirement. Would you rather receive one big check for $10,000, or 10 checks for $1,000? Choose the latter, because you never know what might happen to that main source of income, says Moss.
“The more different ways you collect income in early retirement, the happier you tend to be,” he says. “And it’s not necessarily a function of the amount, but a function of the safety and stability of getting income in a lot of ways.”
Your main stream of income will be your savings, followed by investments and Social Security. (Relax—it’s not going anywhere, Moss says.) But you should also branch out into easy part-time work: Maybe you’re a handyman, so you pick up a couple hours every week at Home Depot. Or maybe you’re in HR and you spend a night or two polishing up college students’ resumes.
Whatever your side hustle, it could pay dividends down the line. “Say you want to retire early at 55, but you can’t quite afford it because you don’t want to tap into your assets too early,” says Moss. “So what you do is have a hobby income that delays you from taking money from your nest egg.”
Just make sure you start diversifying early—as in now. “You’re not going to want to snatch up a rental property and start leasing it for part-time income when you’re 65,” he says.