How to retire early

It’s the dream of every worker—build a plan to retire early. But retiring early always means finding the discipline to start saving early. And that’s what trips people up.

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Financial planners advise saving as much as 15 percent of your annual earnings each year for retirement. But most people don’t do that. And worse yet, when they hear that figure from a planner, and realize that they can’t get anywhere close to that percentage, they panic and decide not to save at all.

Financial planners agree that the best method for saving for retirement and getting out early is contributing the maximum amount to your company 401(k). The company match is actually free money, and can be tax deferred until you need to use it.


  1. Complete a financial plan with a financial planner. Look at how to get from Point A (today) to Point B (your expected demise). Once you have that, you may find out that you can retire early or begin to work part-time now—moving from 80 percent of your usual time to 50 percent to 20 percent—and transition to retirement.
  2. Move to a different area and save on home costs and taxes. You could sell your home in Northern Virginia—many priced at the top of the market in the country—and move to a house in another state (like Texas), take the proceeds of the sale of your house in Virginia, buy your new house outright with no mortgage and put any remaining cash into retirement savings.
  3. Start saving early for retirement. This seems like a no-brainer, but be sure that you are taking the maximum on your company’s 401(k)—making sure that it’s distributed properly—and have an IRA working for you. Start by saving 1 percent of your salary to your IRA, then add another 1 percent, and have it all withdrawn automatically from your paycheck. Delay the gratification of a new purchase and instead pay down a liability.
  4. Make your money work for you. Get to the point where your investments are paying for your living. Some retirees spend too much in the early years and get into trouble. Others hang on to what they have and don’t know that they could do other things in their life now, like taking a trip to see their grandchildren or supporting a charity. Figure out how to safely spend in retirement based on what your investments are doing for you and live a life according to your design without having to show up to an office every day.
  5. Manage debt. Unforeseen debt can happen, but the less debt you accumulate and the sooner you pay it down, the more you can add to savings. Paying off the mortgage is a huge advantage. Also set money aside for “one-offs” from other events that you may not have budgeted for but come up anyway, such as a new roof, a trip or a car.


  1. If you leave a company and don’t roll over your 401(k) to another IRA, don’t take that money out of the company’s plan if that’s allowed. Even if you need the money for expenses, it’s important to keep that tax deferral going; income tax is assessed when you withdraw.
  2. Understand the balance between spending and saving. Retirement is a non-linear event. You start with a go-go attitude, work into a slow-go attitude, then settle into a no-go attitude. There will be times when you will spend more, such as when you want to celebrate being retired.
  3. Don’t invest in any high-risk venture, startup company or individual stock during retirement. Make sure your portfolio is diversified so that one investment gone bad doesn’t bring down your whole retirement process. Avoid making life-altering mistakes like those when you think you understand the market. Market volatility is hard to manage. In fact, financial advisers say that there is a downturn in the market coming, so try to avoid getting nailed by that.

(January 2018)