It's a long-held dream of the everyday Australian to retire early and enjoy increased freedom after a hard-working career.
If you've recognised the signs that you're ready to retire early, here is a great place to start.
The good news? Financial independence is within reach, and the numbers really aren't complex.
With that in mind, here are a few simple steps to retire early in 2020 and live off your ASX dividend income.
How much do I need to retire early?
Working out this number is the first step you need to take, before you can seriously contemplate quitting the day job for the freedom of early retirement.
The golden number will change depending on your individual circumstances, such as future travel plans or mortgage payments.
A general rule of thumb is to estimate your retirement expenses as two-thirds of your current salary, but this will vary for everyone.
It's a good idea to track your expenses, which will make it easier to determine your estimated spending once you retire early.
Organise your portfolio before you retire early
Once you've worked out your spending needs, you should ensure that your ASX portfolio is well-organised before quitting your job.
While high-growth ASX shares like Afterpay Touch Group Ltd (ASX: APT) can be great for growing your portfolio, they may not have a place, post-retirement.
If, for example, you know you will need $50,000 per year to spend, you need to make sure that your ASX dividends are yielding that amount.
For instance, a $1 million ASX dividend portfolio split between BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB) and Qantas Airways Ltd (ASX: QAN) would yield $52,500 per year at present.
Give yourself a safety net
While your portfolio should cover your expenses, it's a good idea to be conservative once you retire early.
A cash buffer with 2–3 years of spending needs or some freelance work can reduce the burden on your ASX dividend portfolio.
Importantly, a touch of conservatism will make you less stressed and allow you to enjoy your time more wisely.
Foolish takeaway
The reality is that with the right portfolio, you can retire early with a strong ASX dividend income to support your lifestyle.
With a few blue-chip income stocks and some forward planning, you too can live the FIRE dream in 2020 and beyond.
