I’m the first to admit that I’ve gotten off to a rocky and late start with retirement planning. The only thing in my corner, so to speak, is a pension plan that I have automatically contributed to for the past 13 years. However, the more I think about working for another 24 years, the more I think, can I retire before 65?

The answer is yes, with some changes to my current, and possibly future, lifestyle.

My best bet is to continue saving, obviously. A standard 10 – 15% contribution on top of my pension really isn’t enough if I want to retire 10-years earlier than planned. Tweaks I’d need to make to reach an earlier goal:

  1. Bump up investment contributions to a minimum of 20 – 30%. This isn’t impossible, but I have to tweak my spending (see below) to accomplish this.
  2. At 14-years out, if my goal of retiring is at 55, I need to diversify my investments between higher, more risky yields, and slower, yet safer investments.
  3. Pay off all debts – that’s the only way I’m going to be able to come close to saving 30% of my income.
  4. Increase my income each year. I’ve regularly increased income the past couple of years, but I can’t get complacent and think my current income is just fine – that just won’t do.

Now comes the harder part – tweak my spending. Reducing my expenses by 15% – 20% would give me some wiggle room for saving a larger portion of my current income.

  1. My largest expense is rent. If I could reduce that by 50%, I’d be very close to saving 20% of my income. However, this would take some planning and a major lifestyle change.
  2. Prepare for a rent-free retirement. This means having a plan to purchase a place or having an alternative, like living in an RV or very tiny house. The tricky part with this one is if I take on a mortgage, I would be hard-pressed to pay it off in less than 12 years while still saving 20-30% of my income. (*My late start has also thwarted my efforts of purchasing a home. The later the purchase, the less time I have to pay it off before retirement!)
  3. Move to a very inexpensive area during retirement. This could kill two birds with one stone –  I could potentially purchase a much cheaper home with cash from retirement savings, then live for 30 – 50% less than my current living expenses. I’ve rolled around some ideas on location from less expensive areas in the U.S. to locations overseas and in Mexico. I have plenty of time to pinpoint a perfect spot – though weather definitely plays a large part with this decision.

All of this sounds like a good plan. However, breaking down the parts bit by bit, I’d have to make lifestyle changes right away – like moving to a less expensive place and paying off debt. One of which I’m working on (debt repayment) and the other I’ve bounced around ideas to Mr. LH.

As the New Year approaches, I’ll be mapping out a more specific plan for each of these ideas.

When do you plan to retire? Have you mapped out your plan?