Want to retire early? Who doesn't?! Check out this guide to get all the strategies, tips, and resources you need to design a lifestyle free from the rat race.

How to Retire Early: 7 Steps to Designing Your Lifestyle

Over the last three decades, the average retirement age in the U.S. has increased substantially. It used to be 62 about 30 years ago. As of 2022, it sits at 65.

If you’re OK with the idea of retiring at 65, this might not worry you too much. You can create a retirement plan for yourself that includes an investment portfolio and continue working for the foreseeable future.

But if you dream about trying to retire early, you’ll need to start getting your personal finances in order ASAP. If you don’t practice good money management skills, you won’t be able to achieve true financial independence and retire from working for good.

So, which side of the fence do you fall on? If retiring early sounds great to you, we’ve put together a list of steps that you’ll want to take to accomplish your goal.

Check out these seven steps below and begin taking them as soon as possible so that you can retire early and enjoy your life way more than you would otherwise.

1. Begin by Thinking About What You Want to Do When You Retire

Before you start formulating a plan that will allow you to retire early, you should give some thought to what you would like to do once you retire. Do you want to:

  • Buy a house by the beach and live in luxury?
  • Travel all around the world?
  • Spend the bulk of your time volunteering?
  • Live with your kids?

The goals that you have for retirement will shed some light on what you’ll need to do to prepare to retire early. They’ll help determine everything from how much money you’ll need to live on once you retire to when you can actually retire from working.

The last thing that you want to do is retire early and then find that you don’t have enough money to last you for the rest of your life. It’s why you should kick things off by jotting down a list of retirement goals. It’ll make it so much easier for you to plan how you’re going to go about trying to retire early.

2. Save a Good Portion of All the Money You Make

If you’re going to get the opportunity to retire early, it’ll be extremely important for you to start saving as much money as you can. You should set aside a good portion of each of your paychecks so that you’re able to build up your savings account in a serious way.

How much money should you try to save? It’s all going to depend on what you want to do once you retire. But it’s not uncommon for those who retire early to save as much as 50% of each paycheck they receive.

As you might imagine, this is going to make it almost impossible for you to “keep up with the Joneses,” so to speak. You aren’t going to be able to buy a big house or a fancy car in most cases when you’re dedicating so much of your money to savings.

Still, you aren’t going to be able to get around saving the majority of your paychecks if retiring early is what you want to do. You’re going to need to have as much money stashed away as you can so that you have plenty of money to spare in retirement.

3. Start Investing Your Money as Soon as Possible

While saving up a lot of your money and sticking it into your savings account will be important, you don’t want to put all your money in the bank. Instead, you want to use the money that you’re able to save to make more money in some way.

The best way to use your savings to make more money is by investing it. More often than not, this will mean investing your money in the stock market so that it’s able to grow over time.

It would be worth sitting down with a financial planner to see what they have to say about you investing your money. They’ll be able to help you figure out how to invest your money based on your retirement goals.

Don’t just rely on your financial planner to tell you what to do, though. You should also take it upon yourself to learn how to invest money in the stock market.

Visit kjtradingsystems.com to get some useful trading tips and tricks that can benefit you in a big way when you want to retire early. It should help put you on the right path and increase your chances of being able to retire sooner than everyone else that is your same age.

4. Avoid Racking Up a Bunch of Debt

The average American is walking around with almost $100,000 worth of debt right now. This debt includes everything from credit card debt and personal loan debt to auto loan debt and student loan debt.

If you’ve already taken on some debt in your life, it isn’t the end of the world. You can still retire early in spite of it, but you will need to get to work on paying down your debt as soon as you can.

The debt snowball and debt avalanche methods have both worked wonders for those dealing with large amounts of debt. You might want to think about putting one of them to good use to stop debt from running your financial independence.

But either way, you will want to remove debt from your life fast since every single debt payment you make each month will rob you of the chance to pad your savings account. You will be surprised to see how quickly you’ll be able to add to your savings by removing debt from your life.

You’ll also come to appreciate the fact that not having any debt will give you your financial independence back. You’ll be able to make smarter financial decisions without having to worry about how you’re going to keep the companies that have lent you money happy.

5. Make Sacrifices Now So That You Can Enjoy Life Later

Unless you’re making $1 million each year at work, you’re probably not going to be able to enjoy a lavish lifestyle while simultaneously planning to retire early. You’ll need to get used to the idea of making sacrifices now so that you’re able to retire early down the line.

What kinds of sacrifices are we talking about? Well, as we alluded to earlier, it’ll all start with buying a modest home and driving a modest car. You don’t want to break the bank on your house or car payments and struggle to save up enough money so that you can retire ahead of schedule later on.

At the same time, you’re also going to have to be ready to make other sacrifices, too. You might not be able to travel as much as you would like and take crazy family vacations. You might also not be able to change your wardrobe every other season and wear designer duds all over town.

Some other things that you may not be able to do include:

  • Upgrading your cell phone every year
  • Buying every new video game that hits the market
  • Welcoming a bunch of pets into your home
  • Investing in cosmetic surgeries
  • Making costly home improvements

From the outside looking in, it might not appear as though you’re living a great life to other people when you’re working hard so that you can retire early. You’ll need to work on staying motivated by reminding yourself why you’re making so many sacrifices in life early and often.

6. Get on the Same Page With Your Fellow Family Members

Of all the different tips that we’re sharing here on how to retire early, this one might be the most difficult one to follow. It isn’t always going to be easy for family members to get themselves on the same page when it comes to retiring early.

Oftentimes, spouses will agree that it would be great to retire early. But they aren’t always willing to make sacrifices to ensure that this can happen.

If you have a desire to retire early, you should sit down with the family members who live in your home and speak with them about it. You should see if this is something that interests them, and you should also ask them if they’re ready to do what it will take to retire early.

If you’re fully committed to driving around in a 15-year-old car and living in a slightly smaller home than you would like to retire early, that’s great. But if your spouse is always wanting to buy new cars and move to bigger homes, it’s inevitably going to cause some conflict between the two of you. It could even put your marriage in jeopardy.

It’ll be important for you, your spouse, and even your kids to all be committed to your retirement goals from the very beginning. If you can’t all get on the same page, you might want to table the early retirement talk for now and revisit it at a later date to see where everyone stands.

7. Prepare to Have Other People Question Your Lifestyle

There is a reason why the retirement age is going up all the time in this country and not down. Most people don’t have the desire or the willpower to retire early. The so-called YOLO lifestyle has made it difficult for them to save the money that it takes to retire before turning 65.

If you want to retire early, you will need to reject this lifestyle and stop spending money on everything that you want. You will also need to be ready to have other people look at your sideways when they hear that you aren’t embracing this lifestyle like they are.

There will be people who will tell you that you’re making the wrong move by trying to retire early. They’ll claim that you should try to enjoy life more as opposed to always sacrificing for the sake of saving money.

There will be times when you’ll want to listen to them and give in to your urges to buy certain things. But you should try not to do this since it’s going to put you into the same boat as them and prevent you from retiring early.

Once you get used to people questioning the way you’re living, it’ll get to be easier to save your money rather than spending it on stupid things. You’ll also eventually find that many of the people who questioned you will be jealous of you for doing such a good job of planning ahead.

You should look forward to that day and remind yourself that it’s coming as often as you can. It should provide you with the little bit of extra motivation that you’ll need to continue to save your money so that you can retire early one day.

Each of These Steps Will Put You in a Position to Retire Early

If you think that you might want to retire early, you won’t be able to decide this on a whim. You’re going to need to do some careful planning to put yourself in the right position to retire sooner than anticipated.

Take each of the steps found here to inch your way closer to retiring early. They’ll point you in the right direction and ensure that you don’t get distracted by shiny things that could slow down your progress.

Look for more tips that will help you get your personal finances in order by reading through our other blog articles.

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