How To Retire As Soon As Possible: Make Early Retirement A Reality

Imagine this prospect: working 40 to 50 hours per week for the next 40 to 50 years.

After that, once you are tired and almost worn out, you get the chance to retire and enjoy your "golden years". Sound enticing? I didn't think so.

The good news is that if you're just out of college or in your early 30's your chances of retiring well before 65 are quite good -- if you make the right moves. And even if you're a bit older (FYI, I'm waaaaay older), there are a handful of actions that will make your retirement come sooner rather than later.

So without further ado, let me offer five steps to speed up your retirement date...

1. Maximize Your Career

There's no question that your career is your biggest financial asset.

If you don't believe me, do this:​

If you start out making $50k per year and earn 3% average pay increases, you'll make $4.6 million over a 45-year career. How many other $4.6 million assets do you have? That's what I thought.

The even better news is that if you invest a bit of time and effort into your career, you can make it worth dramatically more than $4.6 million. Interested in that? That's what I thought.

The short answer is that there are seven proven steps to grow your career. You work on them a bit at a time, making some small progress every day, and as a result you earn higher than average raises. Why? Because you're a peak performer and peak performers earn more.

And it doesn't take much. Just an extra 1% -- getting 4% raises instead of 3% -- earns you almost $1.4 million more. Just imagine what 5% or higher raises would do for your finances!​

2. Keep Expenses As Low As Possible

Now that your income is rockin', it's time to make sure the money is going toward your goal of retiring and not down the drain on one thing or another. To do this, you need a budget. Yep, I'm sorry to say, you need a way to predict and track expenses so you can make sure spending does not get out of control.

Unfortunately having a budget is the only way to do this. A budget will also help you identify areas where you might be able to spend less, making the difference between what you make and what you spend as high as possible -- which is exactly what you want.I'd shoot for saving at least 30% of your gross income as a starting point.

Then as your income rises and you find new places to cut spending, your savings rate should increase. You'll want to be sure to put those increases in the bank. Doing so will enable your retirement to be upon you before you know it.​

We recommend using Personal Capital to help you budget for free - sync up your accounts online and keep accurate track of all your spending.​

3. Invest Early And Often

Next you want to get that excess cash working. The sooner it begins to earn money itself, the sooner you're on a tropical beach. So you need to develop and implement an investing plan. If you have a 10 year or longer time horizon, I suggest low cost index funds based on US stocks.

You can find them at Vanguard or Fidelity. That's the Cliff Notes version. For a complete plan, read "The Bogleheads Guide to Investing" or "The Simple Path to Wealth." These will help you get more specific and create a plan specifically for you.

Remember that the key is to invest as much as you can as soon and as often as you can. You want to get a big stockpile of cash working to help you climb the retirement mountain faster.​

Check out these free apps to get started investing for free.​

4. Create A Side Business

There are two main ways to retire:​

The first takes several decades for most people to achieve, while the latter is do-able for many people in 10 to 20 years.

Consider these two options assuming you need $40k/year in retirement -- which do you think will take longer to pull off:

This is the simple reason I recommend developing a side business -- it will help you reach your retirement income MUCH sooner. In addition, it will give you extra money to save/invest while you are working towards retirement, so you'll reach your saving goal sooner too.

The side business can be anything: blogging, pet sitting, freelance writing, crafting, product sales, renting out your home, etc. You just need to find something you like to do that also earns a bit of money. An alternative to developing a side business is to simply down-shift when you "retire".

Some wouldn't call this retirement, but you could take a part-time job, perhaps in a field you enjoy, that allows you to retire sooner rather than later.

I had several side businesses on the way to retirement. Freelance writing helped me pay off my house. Then blogging helped me save a ton.

Finally my real estate properties gave me more than enough to retire at 52. (I know, some would call these "investments" rather than "businesses". That's fine. The point is, you need to develop extra sources of income to help you retire faster.)

​5. Set A Date

I believe that specific, stated goals help people focus and accomplish more than merely having a general idea of what they'd like to accomplish. That's why I think you need to set a retirement date. If you don't, it's likely you won't retire as quickly as possible.

Other things will get in the way and slow you down. Having a retirement date, even if you don't hit it, will give you something to shoot for and, as a result, keep you focused on your ultimate goal of getting to retirement as soon as possible.

If you want some help in setting a reasonable retirement date, I'd suggest the following:​

If you want more detail, set up a spreadsheet for the next 10 to 20 years, mapping out expenses and income to get an even better estimate of when you can retire. Then set the date and get going -- you're now on the clock. 🙂

That's All Folks

Really, it's that simple. Sure there are other tasks we could add to the list, but these five steps will get you 80% of the way home.

And even if you don't want to push hard to retire as soon as possible, incorporating these steps into your lifestyle will make you wealthier, so why not put them into practice?​

Have you ever thought about retiring early? Would you start a side business to speed up your chances of retirement or do you already have a side hustle/business?​