5 steps to early retirement

Want to stop working before you're too old to enjoy the free time? These five personal-finance tips will help you reach your early-retirement goals.

By Bryan Borzykowski

For most working stiffs, the only thing that gets us through our days is dreaming of the sweet beachfront condo we'll one day own in some hot U.S. town. But maybe you don't have to wait until you're 65 to get your sunbathing on. With some careful planning and some serious saving you may be able to retire early. Here are five ways to say sayonara to your working life before you go gray.

1. Save and then save some more
The only way you'll stop working early is if you have enough money to get you through those years of rest and relaxation. That means aggressively putting money in an account that you won't touch until the day you say, "I quit." Cover your living expenses, but anything beyond that goes into an account. That means virtually no eating out or excessive shopping -- and cut out that weekly movie.

2. Invest in equities
Not only do you need to save, but your money has to grow, too. That can be tricky these days, but there's still no other way to make big returns than with the stock market. You don't have to buy risky tech stocks, but you do have to put most, if not all, of your assets in equities. Consider putting money into dividend-paying companies and then reinvesting those payouts into more stock.

3. Use your RRSP
The main benefit of an RRSP is that you can get a big cheque when you put money into it. Some people use that cash to fund an RESP, or even a vacation. Want to retire early? Put that cash back into your retirement account. Again, the more savings you have, and the more stock you buy, the better off you'll be.

4. Be cheap
Cutting out restaurant visits is only one part of this -- you also need to spend less on the stuff you buy. A new car? Forget it. Designer clothes? I don't think so. If you really need a vacation, get a hotel in your city, or buy a tent and find a cheap campsite. Shop at the lowest-priced grocery store and check sites like Groupon or Craigslist to see if you can get discounts on stuff you need.

5. Create the perfect plan
The hardest part about saving, investing and spending in the way you'll need to in order to retire early is actually doing it. No one wants to live ultra-frugally, but you have to keep your eye on the prize. Create a plan and check it over and over again. Make sure you're sticking to your budget and that your investments are performing the way you want them to, and don't slip up. No one said retiring early would be easy, but it can be done. Stay focused and think of how great life will be after you stop working. Those fancy drinks on the beach will make all those years of sipping cheap wine worth it.

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