For most individuals who are working, the goal is to someday be in a position to no longer have to work for their income.  Most people would like to retire early if they possibly can.  However, if they actually sit down and calculate out what it would take to retire early, they will see that their goals are either too lofty, or their savings are not nearly enough.  In order to retire early, you have to have a plan and make sure you follow it carefully.

Those who are financially savvy know what it takes to live within your means.  Even people who do not do it will tell you that living within your means is just spending less than you earn.  That way at the end of each month there is money left over.  However, if you want to retire early, living within your means includes more than that.  Your means is not your take home pay.  But rather, your means is what you have left over after you save and invest.  By gauging your income on the amount you have after you have paid yourself, you will have a much clearer picture of what you can spend.

Early Retirement

How does that actually measure up?  We are all taught to start young and save as much as possible.  However, some people feel that saving 10% of their income is enough.  Others will feel that they need to save 20%.  Unfortunately, most people just arbitrarily throw out a number and they hope that it will work for them in the long run.  Really, the math is quite simple if you want to determine when you will really be able to retire. has a great table that shows savings rates and the time it will take to will allow you to retire on your current income.  Let it suffice to say that if you are 30 years old and starting from nothing, you will need to save 30% of your income to retire by age 60 (see Mr. Money Mustache’s page for assumptions).

Many people want to retire early, but if you actually look at how much you need to save in order to do so, the numbers are probably quite a bit higher than you expect.  Most people do very little financial planning throughout their lives, in fact the average is less than an hour per year.  This is great if you have an excellent financial plan in place.  But if you want to retire early, you will have to adjust your means down to accommodate your after savings income.

You can retire early.  It will take planning and sacrifice to get there.  Of course retirement means different things to different people.  Some may quit working full time and just do what they love instead.  Social security, inheritances, and pensions will make it easier to retire early.  If you want to retire by a certain age, do the math and figure out what you need to save out of every paycheck.  Make your goal in 2015 to get to that savings level so you can eventually do what you love.

What kind of plan do you have in place in order to retire early?

Comments (3)

Sean Bryant

Sean is a graduate of the University of Iowa where he received a Bachelor's of Arts degree in economics. After beginning his career in banking, he found his love for marketing. Before arriving at ATBS in 2014 he spent time working for two different technology startups as well as his own freelance marketing company.

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The sad truth is not all of us will be able to retire at all. I raised my family on a single income in a double income society. This means I fed and clothed my family but never had any money left over as a truck driver to invest in any retirement plan. I never took vacations, I rarely ever drank, I have never smoked so it is not like I had bad habits to waste my money. My money all went home to the family and there is no money saved and no fancy house or vehicles. We lived just above the poverty line it seems. The unfortunate truth is that I will be working until the day I die.

December 04, 2014 14:40:11 PM

My philosophy is to not get put into a position of having to do something that I don't like doing. I am in my mid fifties. Some of my HS friends have started to retire, and I admit to a bit of jealousy. That said, we have managed to put some money away. We could probably retire at 62. I don't think that we will. Right now, we both enjoy what we're doing. As long as I enjoy what I am doing I will keep plugging. I don't want to have to do anything.

December 01, 2014 5:42:20 AM

Sean I agree to put away but not at the sake of not enjoying every day that we have. When I worked at the courthouse one of the ladies I worked with saved every penny she had and did not do vacations. Her and her husband were looking forward to retirement, buying a lot by a lake, and spending their time fishing and enjoying retirement. A month after she retired from the county she was diagnosed with brain cancer and did not live another month, she never saw her dream of living next to that lake. I always keep that in mind that we have to enjoy each day and save for our future. Both are very important. I really enjoy your articles on finances.

November 28, 2014 14:16:01 PM