Disclaimer: I am not a financial counselor and any advice I give is intended to be informational only. Do your due diligence before making any financial investments. I highly recommend seeking the advice of a certified financial planner, investment advisor, or accountant.
We all dream of retiring early and having enough money to live on so that we never have to worry about a thing.
That’s the dream.
But for many of us, that dream won’t become a reality – unless we work for it.
We’ve got to set ourselves up for success early in life so that we can enjoy retirement before we’re too old to.
So don’t wait another day. Start doing what you have to do to make sure retirement is an option for five-years-into-the-future you.
But before you do that, make sure you know exactly how much you’ll need to retire and whether you want to fully retire or just work part-time in your early retirement.
How to Make Enough Money to Retire in the Next Five Years
1. Increase Your Income
The number one thing you can do – and this may sound obvious – is increase your income. Obviously, if you want to retire in the next five years, you’ll have to make (and save) enough to live comfortably in retirement.
I’d recommend getting a side hustle that could potentially turn into a full-time business.
But since we’re in the middle of a pandemic, you should probably choose something that would work well in this economic climate.
So figure out what it is you want to do to start bringing in extra money.
Whatever it is, get started right now. The earlier the better.
2. Make Smart Investments
The stock market can be a pretty confusing place for someone who’s never invested in it before, but do yourself a favor and learn about the different types of investments there are out there. Think about what kind of risks you’re willing to take with your money and make your decision based on that. If you don’t mind risk, investing in stocks (or even day trading) could be the right move for you.
If you invest in a high-yield, low-risk investment vehicle, you should have no problem putting enough money away for retirement.
Before you make any financial moves, however, I strongly recommend talking to someone that can help you manage your finances and make the right financial moves. A money manager or investment advisor would be a good place to start.
3. Create a Few Passive Income Streams
Passive income, according to Investopedia, is “earnings from a rental property, limited partnership, or other business in which a person is not actively involved.”
When it comes to passive income, there are tons of options available to you, including the following:
- Dividend stocks
- eBook royalties
- Rental property
- Vending machines
- High yield savings accounts
- Selling digital files on Etsy
- Online courses
- REITs (Real Estate Investment Trusts)
- Storage unit rentals
- Starting a YouTube channel
- Creating and selling apps
However, some of them may require an upfront investment. You know what they say. It takes money to make money. So use your side hustle to start a passive income stream. Add a little money to it based on what you can reasonably afford.
I have a few passive income streams set up myself, like my Etsy shop and I write ebooks under my own name and a pen name.
4. Enter Competitions and Giveaways & Submit Work to Publishers
While entering contests anyone can enter could net you a few hundred (or thousands) of dollars if you’re lucky, entering contests based on skills like writing or art can be much more lucrative, especially if you’re really good at what you do.
Consider entering contests to supplement your income. If you win, you’ll have a big chunk of money to pad your retirement account making it easier to retire in the next five years.
Just because it’s not regular, steady income doesn’t mean it can’t help you get to retirement faster.
If you’re a writer (like me), try sites like Submittable and Vocal to start winning prizes from your writing. Vocal is more about stories, while Submittable covers a spectrum of different types of contests you can win (like scholarships and fellowships). You can also submit to magazine publishers on Submittable and easily track all of your submissions in one place.
5. Give Your Skill Set a Makeover
If you’re finding it difficult to make extra money, it might mean your skillset could use a makeover. You have the option of enhancing the skills you already have or learning all new skills for a whole new career. It’s all up to you.
You can take this as an opportunity to start learning what you need to learn to do what you really want to do or an opportunity to strengthen the skills you already have. So many programs are being offered online at discounted rates and even for free thanks to the pandemic.
Staying Comfortable in Retirement
Get Out of Debt
The last thing you want in retirement is to be saddled by mountains of debt. That’s why it’d be smart to pay off all of your debt before you quit the rat race for good.
Write out a list of all of your debts and come up with a plan to eliminate all of it in the next five years. If you don’t already know The Bugetnista, go check out her website. She’s helped over 800,000 women worldwide save $100 million and pay off $75 million in debt. She’s also helped her followers buy homes and change the way they think about finances to make it easier for them to reach their financial goals.
I have faith that you can follow suit and do the same.
Cut Down Your Expenses
Putting yourself on a budget while you try to reach your goal of retiring in the next five years is highly recommended. There are tons of ways to cut down on what you spend in a month. If you don’t already have a budget, create one and try like hell to stick to it (that is, if you really want to make retiring in the next five years a reality).
If you do have a budget, comb it over and look for unnecessary monthly expenses. For example, do you spend too much money on entertainment, like Netflix, Hulu, HBO Max, and Showtime? If you have all four (or you have more than that), it’s probably time to cut a few of them out, especially ones you don’t even really watch that often.
If you’ve been running around like a wild child sans budgeting, make a list of all of the things you spend money on every month. Then, go over the list and vow to cut out what you can do without.
The Race to Retirement
No one wants to work until they’re 65 and you shouldn’t have to. Life was meant to be enjoyed and the longer you work, the harder it is to find time to enjoy doing the things you love doing. So make a plan to get out of debt and start saving what you need to retire within five years.