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How to retire early so you can work, travel, and relax on your own schedule

Retiring early takes time and incredible discipline. If you’re planning to retire early, you should aim to have at least 25 to 30 times your estimated annual expenses saved or invested, though that number may be lower or higher depending on the lifestyle you envision. To achieve your target number, live below your means, increase your income, and max out your retirement accounts. You should also aim to pay off all debt before retiring early, which may include your mortgages. And don’t forget to make a backup plan. The road to retiring early isn’t easy. It takes time and incredible discipline to earn, save, and invest as much as you possibly can. That said, early retirement comes in various shapes and sizes and what it looks like to you will determine exactly what you need to do to get there. In general, here are the steps you can take:

How to retire early

1.Define early retirement

Retiring early doesn’t have to mean never earning a paycheck again unless you want it to. Many early retirees define it as not having to work to live i.e. financial independence but maybe you want to leave your corporate job for something more creative where you can make your own hours. Or perhaps you’d like to focus only on non-income producing hobbies, or work in spurts and travel in between. The first step on the path to early retirement is figuring out exactly what that phrase means to you. Establishing your ideal day-to-day will make it easier to plan for but just so you know, it will probably evolve over time.

2.Establish your target number

After outlining your version of early retirement, it’s time to establish how much money you need to make it a reality.

3.Live below your means

It’s very difficult to build substantial, long-term wealth if you spend more than you earn. When you’re working toward early retirement, it’s imperative to live below your means as it’s the only way to save and invest aggressively. Focusing on reducing your biggest expenses, which are probably housing, transportation, and food, can go a long way in the effort to increase your savings rate.

4.Leverage your income

It’s crucial to keep your spending in check, but you can only cut costs to a certain degree, says certified financial planner Eric Roberge. You can make an even bigger difference by increasing your income.

5.Max out your retirement accounts

There’s at least one common strategy present in nearly every story about financial independence and early retirement: early and frequent savings. Oftentimes the best way optimize your savings is through retirement accounts.

6.Invest the money that’s left over

If you’re maxing out your retirement accounts, move on to a brokerage account. This is money you can invest directly in the stock market and cash out when you need it.


7.If you have a mortgage, consider paying it off

In preparing for early retirement, eliminating consumer debt with high interest rates is a no-brainer, but paying off a mortgage with good terms isn’t so cut-and-dry. For some, the peace of mind of being liability-free is worth it, while others may argue that the money saved in interest payments would pale in comparison to potential investment returns.

8.Make a backup plan

No matter how foolproof your plan may seem, consider what could go wrong. You may find you hate the unstructured days of early retirement would you go back to work? Or the economy could tank, taking your net worth with it would you have room to cut expenses? Running through potential worst-case scenarios is essential when your livelihood is on the line. 

9.Put Plan A into action but enjoy the present too

Time and discipline are all you need to execute your plan from here on out. Keep saving and investing, but don’t forget to live in the present while you can.

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