Ways to F.I.R.E. (Financially Independent & Retire Early)


How many times have you met coworkers who have mentioned over lunch that they are tired of their jobs and want to save up enough money to leave and travel the world or do something they really enjoy?

People have been gravitating towards the idea of being financially independent and retiring early; ideally before the age of 50, but many people are planning to retire before the age of 35 as well.

So how do you do so? You need to have enough money collected by then to sustain your needs and wants till you pass away.

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We have provided a step-by-step plan for you to put you on your path towards early retirement.

Step 1: Finish Gathering Your Emergency Fund & Get Out of Debt

Millions of younger employees are unable to save for retirement due to debt. That is why you must concentrate and repay all your debts as soon as you can. Cut up your credit cards and go after your debt with all of your might.

It's time to start building an emergency fund after you've paid off your debts and before you start saving for retirement. Typically, an emergency fund should cover you for 6 months worth of expenses. You won't have to worry about a faulty air conditioner or a surprise medical bill derailing your investment strategy if you have enough money in your savings account.

Step 2: Investing in Retirement Products & Topping-Up Your CPF

Start saving up for your retirement by purchasing retirement products that will provide you with payouts later on in your life.

Singapore has made it mandatory for all Singaporeans & PRs to contribute a portion of their monthly income towards their CPF funds. These CPF funds have a guaranteed annual return rate of up to 5% before age 55, and up to 6% after age 55. By topping up additional monies into your CPF, you will be forced to save your money for retirement, as these funds cannot be withdrawn before age 55. By topping up, you will also be growing your money which will, later on, be used to provide you with monthly payouts from age 65 through the CPF Life Scheme.

Step 3: Save for Your Childrens' Education & Pay Off Your Mortgage Early

Do you have children? If that's the case, it's time to start preparing for their college education. This is important because it will help them get a head start on paying for college (and put them on a path toward graduating debt-free).

While you're at it, get serious about paying off your mortgage early. This is a big goal that will propel you closer to early retirement! Consider this: If you didn't have a mortgage payment, how much more money will you save for retirement? What would you do if you were debt-free and owned your own home?

Step 4: Make Saving & Investing A Top Priority

You must save and save if you want to retire early. That's why members of the F.I.R.E. campaign are willing to risk a large portion of their income to save for retirement.

Perhaps a 50 per cent savings seems excessive right now. (For most of us, that's a lot.) And that's fine! However, we must all begin somewhere. That's why, after you've paid off all of your consumer debt and built up 3–6 months' worth of expenditures in a fully-funded emergency fund, we suggest putting 20% of your income into retirement savings, and 30% of your income into investing.

The key is to make it a habit to save and spend money on a monthly basis. Time and compound interest would work for you rather than against you if you do this.

Apex EP is an authorised group of Financial Adviser representatives from Professional Investment Advisory Services Pte Ltd.