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How Can I Retire Early?

It’s a common question: How can I retire early? In 2018, more than half of all American retirees retired sooner than they’d planned. That means they retired with fewer benefits than they’d hoped. 

And as years progress, the full-benefit retirement age continues to rise—meaning that the desire to retire early is becoming more real than ever.

As you start to think about at what age you can retire, there are some tactics worth exploring, especially if you’d like to retire early without taking a financial hit. 

How to Retire Early

Early retirement means different things to different people. For you, it might mean never again having to go to work. Or, it might mean not living paycheck-to-paycheck, leaving your full-time job, or earning a little money here-and-there just to stay engaged. Maybe you want to start a business, make your own hours, or just get more creative about how you spend your days.

No matter how you define retirement for yourself, there are things you can do to move your retirement age forward. Here’s what a financial advisor might suggest you start doing now:

Spend less than you earn

Also known as ‘living below your means,’ this concept must come with the understanding that you can’t put off saving for retirement. Avoid loans whenever possible, keep a ledger that results in a positive number…and invest the difference in your retirement. You’re never too young to start.  

Work with your financial planner to reduce unnecessary spending now, so you can invest more in your future.

Eliminate debt

Pay off or refinance your mortgage. Carry zero credit card balances. Avoid interest and lower interest rates whenever possible. 

Remember, the money you’re paying in interest could be earning interest for you in a retirement savings plan, so you can retire early.

Increase your income

It’s always a good idea to have multiple streams of income. No one knows what tomorrow will bring, and losing your only source of revenue could cripple your retirement plans.

Opportunities for side hustles abound, like Instacart, Uber, Grubhub…all of which can be done in your spare time, without having to commit to a schedule. 

You can also generate cash flow in the form of passive income.

Passive income is an outstanding strategy for early retirement, not only because it boosts your cash flow diversity, but because it requires minimal time investment once it’s rolling.

Some examples of passive income include…

  • real estate
  • high-yield investments like dividend stocks and CDs
  • app development
  • lending platforms (a.k.a. P2P or Peer-to-Peer lending)
  • land, garage, storage space or parking space rental
  • Airbnb (room or second home rental)
  • car rental
  • affiliate marketing
  • product royalties
  • publish a book
  • create and sell an online training course
  • eCommerce
  • business outsourcing
  • vending machines
  • angel investment

Maximize your savings

Early, aggressive investment is imperative to accumulating sufficient funds for forty years’ worth of retirement savings. And along with that aggressive plan must come volume. More cash invested now means more dividends to cover that long retirement stretch



If your employer is matching funds, then contribute the maximum, remembering that $19K may be contributed pre-tax to a 401K, and up to $6K in IRA contributions are tax-deductible. 

If you have money left over after you max out your 401K, then consult with your financial advisor for the best plan for making the most of those extra savings, with stock, annuity or index fund investments. 

Save a little extra, outside your retirement plan

If you anticipate withdrawing money from your 401K before the age of 59.5, you will pay penalties. If you want to retire at age 55, for example, be sure to reserve funds you can access without fees (including a Roth IRA) to cover your first 4.5 years of retirement.

Plan for health and dental insurance

Medicare does not take effect until the age of 65. So if you retire early, how will your healthcare needs be covered? If your spouse will not retire early, perhaps their plan will cover you. Apart from that, you’ll need to research Cobra options, The Affordable Care Act, dental insurance for seniors, faith-based plans like Medi-Share and other free-market insurance plans.

Opening an HSA (Health Savings Account) now can be of great benefit, to help cover costs between early retirement and Medicare coverage. Contributions through your employer are pre-tax, and medical expenses are paid tax-free. Many employers match contributions, and when the HSA is maxed out, you can choose to invest the excess (with tax-free gains). That’s a triple tax advantage that enhances healthcare coverage and boosts your retirement savings.

Finding the Balance to Retire Early

If early retirement is your goal, it’s important to gauge just how important it is. 

Are you willing to tighten your budget and make sacrifices now? Would you rather distribute your earnings throughout your life? Or reward yourself after the hard work is finished?

This is an entirely personal decision, and every retirement vision is different. No matter at what age you expect to retire, you will have earned it, and you’ll deserve the retirement of your dreams. At The Senior Life, we are committed to helping you achieve that.

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