It may be easier than you think to retire early. The answer is simple really: spend less and funnel the savings into your retirement and investment accounts. Many folks use a wide variety of convenience services that, if reduced or eliminated, would greatly decrease current expenses.
If you continue living this frugal lifestyle in retirement you will be able to get by with a smaller nest egg. Depending on your retirement assumptions, you can reduce the size of your nest egg by $25,000 or more for every $1,000 you can shave from your annual expenses. Here are eight ways to cut current and retirement costs.
Housing. A major expense in retirement will be housing. Consider downsizing or moving to a lower housing cost area of the U.S. or even overseas. If you can reduce your housing costs by $500 per month you will save $6,000 a year.
Transportation. Consider reducing the number of cars your family owns or going carless and relying on family, friends, or public transportation. Eliminating a vehicle will also allow you to avoid maintenance and insurance costs.
Groceries. Becoming a frugal grocery shopper can significantly reduce your food costs. Growing your own vegetables, clipping coupons, and shopping at sales could help you take a big bite out of your food budget. Trimming just $100 from your monthly food budget would allow you to save an extra $1,200 for retirement each year.
Cable TV. Consider dropping your cable service. Instead watch free HDTV over the air or Internet TV.
Trash collection. If you need to pay out-of-pocket for trash collection, consider dropping your trash collection service and hauling your trash to the dump yourself.
House cleaning. While a professional cleaner makes it easy to keep your home neat and tidy, it’s certainly cheaper to keep your home clean yourself. Dropping your professional house cleaner will allow you to save big bucks every month.
Entertainment. Rather than shopping at bookstores or video stores for the latest books or movies become a regular at the local library. The library can offer a virtually unlimited amount of entertainment at no cost to you. Some libraries even offer free exercise classes.
Health care. It's likely that one of your biggest expenses is health care. Shop around for lower cost health insurance, ask for discounts on uncovered services, and try to find the most economical health care services that meet your needs.
Just by making some small changes to your lifestyle you could reduce your annual expenses by thousands of dollar each year. Those with a frugal lifestyle will be able to retire with a smaller nest egg and perhaps even retire sooner.
Brian Jaeger is the author of 2million's Personal Finance Blog. For the past 5 years Brian has chronicled his journey to reach his financial freedom goal of a $2 million net worth.