11 Ways to Retire Sooner Than You Think You Can

Want to be financially independent and retire early? There are steps you can take now to start your post-work life sooner than you think may be possible.

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Updated July 18, 2024
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You may think it’s a just dream to be able to retire now instead of working a few more decades, but it might not be the case. 

There is a growing trend of people who are working to reach FIRE – that is, being financially independent to retire early. And achieving FIRE may be closer within your grasp than you think.

So where can you start if you want to be one of those people who have retired early with financial independence? Here are some ideas to get you started on a potential FIRE path.

Eliminate your late tax debt

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Make a budget for now

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Saving money for retirement should begin now (if you haven’t already started yet). Take a good look at your current budgeting plans, focusing on possible expenses that could be cut.

You may also want to look at how much you're saving and investing and where you’re putting that money. Perhaps a rebalance or redistribution of investments may be a good idea. Each one of these different pieces could have a role to play in creating financial independence.

Make a budget for later

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You also want to consider creating a budget for what you expect to need every month once you’re retired. Think about what your living situation may be and if you plan to downsize or move to a retirement community. 

Do you want to set aside special savings for travel or to pursue interests you may not have time for now? And remember to factor in everyday expenses like groceries or utility bills. 

In general, when you retire you should have 25 to 30 times your expected expenses per year saved up, but you may want to go higher if you plan to retire early.

Assess your investments

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Now is a good time to invest in your investments. If you don’t have a 401(k) plan, check with your employer to see if they provide one and how you can enroll in it.

Do some research on the different types of stocks and funds you may want to invest in. You might want to consider more aggressive investments if you still have several more years before you retire.

But if you want to retire soon, consider more conservative funds so you can more easily weather any dramatic changes in the market.

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Maximize your contributions

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Regardless of whether you’re planning your early retirement five years or 20 years from now, you should try to max out your retirement account contributions while you can.

If your employer offers a 401(k) contribution match, take advantage of it. You may even want to increase the contributions from your paycheck beyond the employer match so you’re saving more. 

The longer you have your money invested, the greater the chance it will increase in value.

Cut expenses

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Saving money now can be an important part of your plan to retire early. When you sit down with your current budget, think about how you might be able to get some extra cash to stash away. 

This could include forgoing big expenses such as a vacation you take every year, or smaller expenses like eating out every week. 

And remember, any changes you make now to limit your expenses might help you build good spending habits, which could be useful when you’re retired.

Pay off debt

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One expense you should try not to carry into your retirement years is money you may owe, so think about how to pay off debt as you plan for your future. 

Think about paying down your mortgage now or paying off your car, for instance, which could save you money both in the short term and long term, depending on your interest rates for those loans.

Make more money

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If you’re worried about hitting your retirement goals with your current income, there are plenty of ways to think about how to make money. Maybe it’s time for you to get a different position or move to a company that might offer a higher salary, better retirement fund benefits, or possibly even a pension.

Or perhaps you have a hobby or something you love to do and have been thinking about turning it into a side hustle. This not only may help you earn some money now but could also become a good way for you to earn some extra income when you retire from your primary job.

Maximize your savings

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In addition to your investments, a good savings account can also help you pull together the funds you may need to retire. 

Look into some of savings accounts for your financial plans, including high-yield savings accounts. These could help you earn a higher interest rate on the money you save, giving you a better chunk of cash to help with your retirement plans.

Consider long-term care insurance

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A big issue for your retirement funds may be medical bills. In fact, the median cost for assisted living in the United States is about $51,600 per year. It could quickly cut into your retirement savings if you’re not prepared. 

Instead, look into ways you can mitigate this spending by investing in long-term care insurance, which could cover things such as assisted living, nursing homes, or in-home care.

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Consider cost of living

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Where you retire could also be a factor in when you retire. Living near a beach or in a big city may sound like a good place to be when you retire, but the price tag may not be so hot. 

If you’re going to be living on a fixed income, the cost of living in a particular area could make a big difference in how much you set aside in your estimated budget for your retirement years.

Set your retirement age

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At what age can I retire? If you want to retire early, sacrificing a night out every week might give you more savings. Or maybe you could take on an extra job now and put all of those earnings into retirement funds. 

If neither of those ideas is appealing now, you’ll still need to figure out how to have enough money saved for retirement at the age you choose.

When you do all the calculations to set your retirement goal, you will need to decide what is the right balance for you. Having a financial goal as well as a time frame for when you think you can realistically achieve both will be important as you start this FIRE journey.

Bottom line

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Choosing the FIRE path — financial independence so you can retire early — may be achievable if you plan for it. Take time to do some research on what kind of life you would like to have in your retirement years. 

Then take a hard look at your budget and start doing the calculations not only for your current financial situation but also for potential expenses you may have during retirement. You may be surprised to see retirement might not be as far off as you thought.

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Jenny Cohen

Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.