9 Things You Should Stop Buying If You Want to Retire Early, Financial Experts Say
These purchases could prevent you from reaching your retirement goals.
Most of us dream about retiring—and in many cases, we want to do it as soon as possible. But if you're hoping to stop working on the earlier side, you need to be making certain adjustments in your life now. Talking to financial experts, we got insight on the problematic purchasing habits that could end up keeping you from reaching your retirement goals. Read on to discover nine things you should stop buying if you want to retire early.
Unnecessary subscription services
With so many different streaming services, retail memberships, and food boxes available these days, a lot of us allow companies to take a little bit of money out of our accounts every month without a second thought. But if you're planning to retire early, you need to go ahead and analyze all the subscription services you're signed up for—then only keep the ones that are absolutely necessary, says Andy Kalmon, CEO of financial lending company Benny.
"All those small monthly fees for unnecessary subscriptions services add up to a large sum that could have been directed into your IRA [individual retirement account] instead," Kalmon cautions.
Being selective with your non-work related activities before you retire is also important for you goals—especially if they're costing you a lot of money, according to Robert Farrington, money expert and founder of The College Investor.
"Enjoying hobbies is an essential part of a fulfilling life, and I would never discourage anyone to not explore activities related to their personal interests," he says. "However, when your hobbies become excessively expensive, they can significantly hinder your journey toward early retirement."
Examples of expensive hobbies to watch out for include sports like snowboarding, golfing, and sailing, Farrington notes.
"Every dollar spent on an expensive hobby is a dollar that could have been invested to grow and provide for your future, so the opportunity cost of these indulgences can be quite pricey over time," he shares.
Eating out is often a large part of people's lives, so no one is suggesting you need to stop doing so entirely. But Enoch Omololu, MSc, financial educator and founder of the online financial resource Savvy New Canadians, says eating out in person and being more selective with your restaurant choices instead of ordering food delivery can make all the difference if you're someone who wants to retire early.
According to Omololu, recent research has found that the average Gen Z individual spends almost $1,000 annually on food delivery.
"If that was redirected into a high-interest savings or investment account for retirement, they could reach their financial goals faster," he notes. "By deleting your food delivery apps, you can also avoid the temptation of impulse ordering."
Playing the Powerball can be a fun pastime, sure. But if you want to be realistic about your future goals, Omololu says you should stop trying your luck and buying lottery tickets.
"It's no secret that the odds are against you, and it can be a lot of money wasted if you fall down the rabbit hole," he explains. "If you have a habit of buying lottery tickets, try to redirect the amount you spend each month into your savings to make a conscious effort to put tangible funds toward your retirement."
While you don't have to give up traveling altogether, save those more expensive trips for after your early retirement.
"Exotic getaways in lavish resorts and far-flung destinations are a dream for many, but they come at a high cost," Farrington cautions, adding that these types of luxurious vacations can have a "lasting impact on your future financial stability."
In order to still get your travel fix without jeopardizing your future retirement goal, Farrington recommends seeking out more budget-friendly locations.
"There are so many places in the United States, for example, that are worth exploring, and sometimes even going to another state will provide a whole new cultural experience and adventure," he shares.
Impulse purchases can pile up and throw a wrench into your post-employment plans. According to a 2023 SlickDeals survey, the average U.S. consumer spends around $151 every single month on their impulsive shopping behavior.
"Most of these purchases are for items you don't need, resulting in a waste of money especially since it could be used strategically to create passive income streams instead to help you retire early," money-saving expert Andrea Woroch tells Best Life.
In order to avoid these kind of buys, Woroch says it's important to identify your specific spending triggers and develop ways to bypass them in the future.
"For instance, if you can't resist a sale, turn off push notifications in apps that alert you to the newest sale and unsubscribe from store newsletters," she recommends. "Instead, only look for coupons when you need them."
You also need to let go of luxury cars if you're dreaming of retiring early, according to Kalmon.
"The high price tag on these vehicles will keep you in debt longer," he warns.
As Woroch further explains, data from Kelley Blue Book indicates that the average price of a brand new, luxury vehicle was $63,977 as of June 2023. The average sale price of a new, non-luxury vehicle, on the other hand, was only $45,291.
"That's a difference of nearly $19,000—money that could be invested to generate income," she says.
You can save even more by capitalizing on cars that are not new, as Carfax data indicates that the average price of a used, non-luxury vehicle was just around $20,000, according to Woroch.
"Owning a car may not be something you can avoid, but how much you pay for one is in your total control," she points out. "Just imagine how far that extra money could go in helping you retire early."
If your luxury spending is more directed toward clothing than cars, that's still a habit you need to stop now.
"Fashion can be a form of self-expression, but designer apparel comes with a high price tag," Farrington says.
It's not only that it's more expensive outright—designer apparel and accessories can also lose their value over time, according to Farrington.
"So the pursuit of such items can lead to lifestyle inflation, resulting in frivolous spending," he warns. "Unlike investments that can appreciate, luxury items tend to depreciate, leaving you with less to contribute to your retirement fund."
You don't need to live in a tiny home right now just to meet your early retirement goals later on. But spending your money on a space that is oversized for your needs is not the right way to go either, according to Kalmon.
"Downsizing is a major goal for most retirees as a cost-saving measure, so purchasing a house that is too large or expensive will delay your early retirement plan," he says.
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Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.