How To Retire From Teaching Early

If you want to retire early from teaching then you need to come up with a plan for your retirement and how to navigate the waters of retirement.

In the U.S and many other countries, we spend about ⅓ of our lives working which is crazy to think about so retirement seems so far away but it doesn’t have to be.

With the right mindset and plan you can achieve early retirement to live the life of your dreams (yes, even as a teacher)!

Let’s see how to retire from teaching early…

Financial Freedom And Early Retirement

Obviously winning the lottery or getting a large unexpected windfall would be enough to retire early.

Unfortunately, the majority of us are not going to be that lucky. The reality is retiring takes a lot of hard work, and retiring early, takes even more work. 

But there is a lot more to it than just working hard. It takes discipline, sacrifice, dedication, and a whole lot of willpower.

If you’re serious about retiring early, here are five essential steps to take: 

• Create the right mindset
• Define what kind of lifestyle you want in retirement
• Determine your retirement budget and how much you’ll need to save
• Make your money work for you
• Reduce expenses and increase income

Unfortunately, it’s no secret that teachers are underpaid, and hopefully, this changes in the future but for now you will have to work hard to retire early.

If your goal is to retire early then you have to find a plan that works for you. If your salary is not enough to get there then you might have to take on some side hustles or find other means of income.

Let’s first get into the basics of retiring early…

The F.I.R.E Movement

It’s no surprise that an uprising of Millenials determined to retire early is growing and gaining attention.

The F.I.R.E (Financial Independence, Retire Early) movement is making people rethink the standard retirement age. 

The basic premise behind F.I.R.E is to spend less than you earn and put the difference towards investments.

There is now a sizeable supportive community motivating others on their journey to financial freedom.  

After carefully studying people that have successfully retired early, I’ve noticed that a lot of them go down similar paths.

Here are five key steps to follow if you want to retire early from teaching…

Create The Right Mindset

Having the right mindset is a crucial part of retiring early. You’ll need to block out the toxic consumeristic behavior of society.

If you are mentally weak, you’ll be more prone to debt traps, overspending, and overconsuming. 

You can’t be insecure about driving an old vehicle, wearing off-brand clothes, or buying used.

With the right mindset, you’ll understand that money is the means to freedom. Don’t feel bad about accumulating it. 

If you choose not to waste your money on entertainment and frivolous things, you’re going to stick out like a sore thumb.

Society, friends, and even family will call you “cheap” or say, “all you care about is money.”

Unfortunately, this is due to the mass brainwashing of consumerism and society’s pressure to keep up with the Joneses. 

Frugality is a significant part of retiring early.

With the right mindset, you will not feel the need to impress or keep up with others. You’ll be able to enjoy your life and entertain yourself without dishing out your hard-earned cash. 

Ironically, people are judged for saving money instead of spending it. Don’t ever let that bring you down or stop you from reaching your financial goals.

Once you’ve created the right mindset, you’ll realize true happiness has nothing to do with money. 

You don’t need money to be happy, it’s merely just a tool. It’s a necessary tool for survival. It’s a tool that can free you from the shackles of wage slavedom. 

Define What Kind Of Lifestyle You Want in Retirement

What does your retired life look like? How will you spend your time? The more lavish the lifestyle, the more money you’ll need to retire early.

You’ll want to make sure that you’re comfortable. Retirement should not be spent stressing out over a lack of funds. 

A world of opportunity opens up when you don’t have to work. You can enjoy retirement in your hometown, in another country, or right next to the beach.

Exploring and traveling the world is a great way to spend retirement, though it can be quite expensive. 

Identify what lifestyle costs are necessary and which ones aren’t. The lower your monthly expenses, the easier it will be to quit your job.

Although, you’ll need to be realistic and compare your current way of living to the one you have in mind. 

It’s not uncommon for people to start a business or even work a part-time job.

Everyone’s ideal lifestyle is different, establish what kind will fit you best.

Determine Your Retirement Expenses And How Much You’ll Need to Save

Once you figure out the lifestyle you want, it’s time to determine how much it will cost.

It will be easier to make a retirement budget if you already keep track of your current expenses.

If not, then it’s time to make a budget. Use your current budget to help estimate what your costs will be like in retirement. 

Using your annual expenses, you can multiply them by 25 to get a rough estimate of how much you’ll need.

This is known as the 25 times rule of retirement. 

The 25 times rule is based on withdrawing 4% each retirement year. When retiring early, you should consider giving yourself a larger cushion than what the 25 times rule provides. 

Where you live during retirement will be a huge factor in how much money you’ll need to save.

You may have more than enough to retire in one state but not nearly enough in another. 

States with a high cost of living like California and Hawaii will take a lot more savings.

While other states have a much lower cost of living, the standard of living may also be lower.

Make Your Money Work for You

Your money needs to be putting in overtime If you want to retire early. Make your money work for you instead of against you.

This can be done by investing in low-cost index funds, high dividend stocks, real estate, and other investments. 

Take advantage of 401k matches, max out your Roth IRA, and open a traditional brokerage account.

Remember, you won’t have access to funds saved in retirement products like 401ks and IRAs until you’re 59 ½.

One exception is a Roth IRA; it allows you to withdraw contributions earlier but not any earnings. 

If you plan on retiring well before the age of 60, take full advantage of a traditional brokerage account. You will be taxed on any realized gains and earned dividends, but you can withdraw funds at any time.

It is also wise to seek out a reputable financial planner if you need help planning your retirement.

Just be wary of financial planners that try to sell you unnecessary insurance products or poor-performing mutual funds with high expense ratios. 

Real estate is one of the best ways to make passive income. Most of the early retirees are folks who have successfully invested in real estate.

Owning rental properties can supply you with a lifetime of passive income. 

Flipping homes can also generate a massive amount of income that will help grow other investments. However, you should be careful as it can end up bankrupting you if you get in over your head. 

Passive income streams, high yield investments, and low living expenses will make your dreams of early retirement a reality. 

Reduce Expenses And Increase Income

If you want to retire early, you’re going to have to drastically reduce your cost of living.

Turn getting drinks and going out into a luxury instead of an everyday expenditure. Cut expenses down to the bone wherever you can. 

The internet is chockful of bright ideas that can help you trim everyday costs. You can even go on a spending freeze to help jump-start your investing and savings. 

Two significant factors of success will be your discipline and ability to stay consistent. People think $5 or $10 bucks isn’t much and doesn’t add up, but it absolutely does. 

Reducing your expenses is more important than making more money. Here’s why:

• Earning more income is not directly related to being financially independent or wealthy. There are people making $100k+ a year, that are still living paycheck to paycheck.
• If you focus purely on making more instead of cutting expenses, you’ll be prone to lifestyle creep. Instead of taking advantage of extra income, you’ll end up spending more. 

Extra income can go a lot further once you’ve developed frugal habits. After you’ve trained yourself to save more than you spend, start building better income streams. 

Work additional jobs, start a business, or do a side hustle. You need to keep money flowing into your investments and compound your wealth.

Early retirement comes to those willing to put in the extra effort.

The Effect On Your Pension

One big thing to consider before retiring early as a teacher is the effect it can have on your pension.

Every pension plan is different depending on the state/country you reside in and also the pension provider so it’s best to reach out to the provider to get some more information.

You will want to ask them what are the impacts on your pension if you retire early.

Usually, if you take your pension before your normal pension age (NPA) you will get reduced benefits.

In short, it all depends, so it’s best to reach out to the pension provider and get all the information you can before jumping into early retirement.

Is Early Retirement Right for You?

I don’t know anyone that doesn’t want to be financially free. But I do know people who enjoy working and aren’t in any hurry to retire.

There’s nothing wrong with that, we all must live our lives the way that we see fit. 

Not everybody is willing to do what it takes to gain financial independence, especially at a young age. 

Retiring early simply isn’t a priority for everyone. However, retiring eventually should be. 

The earlier you retire, the longer you’ll need to spread out your distributions. Having a large sum of money at a young age takes some serious self-control not to overspend.

It’s easy to retire. The hard part is staying retired. So, make sure that this is the right decision for you.

Conclusion

Now you know how to retire from teaching early with these tips!

However, you need to decide if early retirement is for you. Everyone wants more free time but maybe retirement is not the option, for now at least.

Maybe a new job can make you happier, or a career change. It all depends but it’s just something to think about.

There is a lot of planning that goes into retiring early so make sure you are prepared to make this big step!

If you like this post then I recommend reading my posts on How To Manage Your Money Like The Rich and 15 Best Early Retirement Blogs To Read Right Now.

Are you a teacher who wants to retire early? How do you feel about early retirement? Let me know in the comments below!