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Ten Tips for Early Retirement

More than ever before, Americans are contemplating the idea of early retirement. Facing long work hours, limited financial mobility, and creeping burnout, many Americans are reconsidering the long-cherished custom of grinding it out until their mid-60s.

We’re not suggesting you don’t love your job, but we’re also guessing that there are significant portions of the day when you dream of being on a tropical beach somewhere, or high up in a mountain range, or maybe just sleeping late once in a while. Retirement beckons. Realistically speaking though, it beckons from a far off future. 

But what if that future didn’t have to be so far away. What if your golden years could begin while your joints are still fully functional? You get what we’re saying. What if you could retire early?

Sure…it sounds sweet. But is it possible? 

Well yes, it’s possible. But it isn’t easy, and it could take some seriously frugal living and meticulous planning to earn yourself a post-professional lifestyle sooner than later. But it can be done. Read on for a look at the strategies that could help deliver you to that sandy shore, scenic overlook, or late morning wake up while you’re young enough to really enjoy it. 

The FIRE Movement

Before we get into the tips, let’s take a quick look at the FIRE movement. In many ways, the philosophies embodied by this movement have become an inspiration to many working adults who are planning for early retirement. FIRE stands for Financial Independence, Retire Early, and was coined in a 1992 bestseller called Your Money or Your life by Vicki Robin and Joe Dominguez. At its core, this movement advocates for a lifestyle concentrated around saving, restraint, and detailed financial planning. In order to achieve your dream of early retirement, say adherents to the FIRE movement, you must save 70% of your income every year until you depart the workforce. 

The objective is to save and invest sufficiently to assure that you can retire early and live on periodic withdrawals. According to Vox, a “Harris Poll found in 2018 that Google searches for “Financial Independence Retire Early” rose 96 percent in five years.” Vox says this is a concept that has increasingly taken hold among Millennials, and reflects shifting philosophies on work-life balance. FIRE tilts the scales in favor of life. But for most, this requires the lofty goal of accumulating roughly $1 million in savings. For millennials struggling with heavy student loan debts, rising mortgage prices, and underpaying jobs, this may seem like a pipe dream.

But with the right lifestyle changes, you can at the very least begin planning for a more comfortable retirement at an earlier age. We can’t promise you’ll save a cool million and hand in your letter of resignation before you turn 50. But with some savvy saving, a lot of restraint and a look at our 10 tips below, you might be able to ditch the alarm clock and commute a few years ahead of your current schedule…

1. Do The Math

The most important preliminary step that you can take is to crunch the numbers. Those numbers include your current income and expenses as well as the income you anticipate drawing after retirement and both the expenses and ambitions you’ll need to pay for in retirement. Most experts recommend enlisting the services of a financial advisor as you look to the future. A seasoned professional can help you turn these numbers into an actionable plan. But if you are looking for a sense of the budget you’ll need to keep in order to make this dream a reality, there are online calculators that can help you get some ballpark figures. According to New Retirement, you can determine your retirement outlook by using a tool “like the NewRetirement Planner, that will enable you to build a detailed plan with what you have and your assumptions now, but where you can also try out different scenarios. You’ll also want to be able to make changes over time. The NewRetirement Planner is the most comprehensive online platform. It is easy to create a retirement plan showing all aspects of your current and future income, expenses, debts, and assets and see how much you need to retire at a specific age.” 

2. Start Early 

Whatever your age or financial situation, the sooner you start, the more effectively your money can work for you. Ideally, one might begin saving toward this goal in their 20s. According to CCNMoney, if you were to put aside roughly $3000 a year in a tax-deferred retirement account from the age of 25 to 35, that money would grow to a value of roughly $338,000 by the time you’re 65, assuming an average 7% annual return on your investment. You wouldn’t need to contribute another dollar after the age of 35 to accomplish this. By contrast, if you start saving at the age of 35, assuming the same 7% interest rate, 30 years of saving would ultimately turn your $90,000 investment into a $303,000 retirement fund. The difference in starting just a decade earlier can be quite profound. The sooner you can begin squirreling away acorns for the future, the better your money will work for you. 

3. Contribute to Your Retirement Account Through Work

One of the best ways to begin saving early is through a retirement account provided by your employer. If you do have access to this benefit, take advantage by increasing the amount you contribute to this fund over time. Many employers provide matching contributions, though typically with a cap. Do your best to maximize these matching contributions. According to retirement advisor John Hancock, “Once you’ve reached your employer match, try to increase your contribution by 1% every 6-12 months. Some plans offer the election for this to be done automatically to avoid having to remember on your own. Check with your HR department to find out if your company matches any contributions and whether you can set up automatic increases to your contribution amount.” John Hancock advises that if you don’t have access to a retirement plan through your employer, you should speak with a qualified financial advisor about setting up an IRA, ROTH IRA, or SEP.  The best account for your plans will depend upon your savings goals, your income, and your long-term expenses. A financial advisor may be able to help you determine the right account for you. But rest assured that every financial advisor will tell you the same thing—Never Withdraw From Your Retirement Account.

4. Start a Health Savings Account (HSA)

For many retirees, healthcare costs can be unpredictable and potentially draining. A Health Savings Account can help you prepare for these costs before you’re living on a fixed income. With an HSA, you can divert funds tax-free into your account in order to prepare for future healthcare needs. According to, this balance rolls over annually, which means you can build robust financial reserves for unforeseen healthcare expenses that go beyond Medicare coverage. You can visit for more information and for step by step instructions on how to set up an HSA

5. Invest Regularly

In addition to contributing to your retirement fund through work and building a Health Savings Account, you’ll also want to diversify your investments. How you do so will depend on how much discretionary income you have at your fingertips. There are many different financial products available for investment—some with high risks and high yields; others with stable long-term prospects but with more modest returns. Financial products include stocks, bonds, mutual funds, exchange traded funds, and more. Your financial advisor can help you build a stock portfolio that matches your resources and your ambitions. 

6. Eliminate Your Debts

Another tip that most financial advisors will offer regardless of your financial outlook is to eliminate your debts, particularly before you begin investing your discretionary income elsewhere. This may be easier said than done for a lot of earners. Indeeds, in spite of our growing ambition for early retirement, many Americans are drowning in debt. According to New Retirement, a survey from the Boston College Center for Retirement Research shows that  “8 in 10 middle-income Boomers currently have some debt. Three in 10 devote more than 40% of their monthly income to debt and a quarter have a mortgage with more than 20 years remaining on it. More than half say they intend to enter retirement debt free, but only one-quarter of retired Boomers actually are debt free.” Millennial earners still have time to get ahead of this fate, but if you intend to retire early, you must be aggressive about cutting out debt. Pay off your credit card bills in their entirety every month. And if you’re still carrying student loan debt, do your best to pay more than the minimum monthly installment amount. Chop away at this burden faster. And if possible, take steps to pay off your mortgage early as well. Speak to your bank or lender to ensure that there aren’t penalties for monthly overpayment, and make arrangements to pay this biggest debt down before you no longer draw a work income. 

7. Live Below Your Means

If paying your debts down aggressively sounds difficult, look within your own budget for ways to offset the cost. The central tenet of the FIRE philosophy is to save by tightening your spending dramatically in every area of your life. This could mean living in a smaller home, buying new clothes less frequently, waiting longer to upgrade your cell phone, driving a well-maintained but older car, and being extremely selective about purchasing anything that isn’t a basic living requirement. This also means sacrificing luxuries like annual vacations, lavish dinners out, expensive event tickets and more. The FIRE movement advocates for delayed gratification—pinching pennies now so that you can purchase your financial freedom sooner. 

RELATED: What Do Americans Spend the Most Money On?

8. Improve Your Career Worth

Once you figure out how much money you’ll need, you may also realize that you need to start making more of it right now. Your biggest asset is you. That’s not some motivational speech pablum. If you want to make more money, you have to make yourself more valuable. According to Todd Kunsman, founder of Invested Wallet, “When you learn new skills or take on new tasks, you build more skills that can be used to either get a raise or find a job that pays more…And when you make more money, use that to your savings advantage by investing more in your retirement accounts.” Whether you get a new professional certification, attend a computer coding bootcamp, take a few well-selected online courses, or participate in a professional leadership development program directly through your employer, find ways to make yourself more valuable, then seek opportunities to earn more based on this value. 

9. Create Passive Income

Of course, no matter how valuable your skill sets, there are only so many hours in the day. The best way to lift the cap off of your earning potential is to create assets that earn for you. Passive income is the kind that generates money without the commitment of additional labor. This may refer to your investment accounts, but there are other ways you can build passive income for yourself. Rental properties, for instance, represent a great pathway to building wealth outside of your work responsibilities. And if you have creative abilities, producing art, literature, or multimedia content with the capacity to generate online traffic, advertising and backlink revenue could also become great sources of passive income.

10. Get a Side Hustle

Not all side income can be passive. Another great way to move closer to your goal of early retirement is to diversify your income with a decent side hustle. If you have a craft, hobby, or skill set outside of your everyday work, you could consider turning this into a modest source of side income. Every dollar that you earn in this little side hustle could be invested into your approaching retirement. The growing gig economy makes it especially easy to do something like Uber driving and GrubHub delivery. If you’re fortunate, you may find a side hustle that ignites your interest and passion. If you become truly passionate about it, it could even become a modest stream of income in retirement, the kind that brings you joy and financial comfort in equal measure.


Not sure if a side hustle is the right move for you? Let us convince you! Check out these 10 Reasons to Get Yourself a Side Hustle.