How To Retire Early In 15 Practical & Easy Ways

How to Retire Early In 15 Practical & Easy Ways

If you have ever pondered about realistic and practical ways about how to retire early, build wealth and feel secured, this article is undoubtedly for you.

The idea of vacationing beyond the summer in a Caribbean island, with glowing blue waters, stunning greens, soothing winds, and of course zero worries about finance, is a dream everyone would readily embrace.

Or better still, imagine eliminating the anxiety of a daily emotional and overwhelming physical job, replaced with the bliss of living life on your own terms, with no demanding superior.

But the majority of people can only dream and make a silent wish that this becomes a reality.

This comes as no surprise, as the majority of people deeply engrained in debts are finding it hard to meet up with bills.

Thus, they sink further in the muddled waters of moonlighting multiple jobs.

As revealed by the United States Census Bureau, a total of 15.7% of Americans (9.1 million) held multiple jobs in 2018.

As sad as that reality may be, that can be changed.

There are multiple practical ways by which retiring early with a stable income can be a dream come true, even for individuals at the lowest economic status rank.

You have most likely been fed with tons of information on how to go about retiring early, with little or no success, and you may be skeptical about the approach in this article.

However, the 15 easy ways and steps outlined in this article on how to retire early are practical and work based on how much effort you put.

How to Retire Early (Easy Ways & Practical Steps)

Step #1. Figure out how much you need to retire early

The very first step lies in knowing how much you would need to retire early.

This can be a very complicated process for many, as they believe that you need a lot of money to retire early. 

As completely true as that may be, a lot of money equals no money unless you have a specific amount in mind.

As a result, it’s practical you figure out how much money you need to retire early. 

Calculating just how much you need for early retirement is an easy task thanks to retirement planning tools such as  NewRetirement Planner or other free alternatives

While retirement planning tools will help you carve out a detailed plan on your way to early retirement, it’s best to try out multiple scenarios that may lose the challenge of retiring early. 

Do well to take into account future incomes, present expenses, and most importantly, debts as you plan.

Step #2. Estimate total retirement spending

At this point, you most likely know how much you need to retire.

But as you might have figured out for yourself that retirement planning tools do not consider certain factors such as inflation and emergency expenses.

Well, at this point, you have to figure this out yourself, with the aid of famous retirement rules and hacks.

In most cases, two factors that crush the dream of most early retirement are health and taxes.

Especially for health insurance reasons, early retirement can seem like a no possibility.

Majorly those affect by health insurance issues are those who have health insurance pre-retirement.

Leaving the job translates to leaving your health insurance, which can be costly.

However, to mitigate the effect of this, it’s best you look for alternatives.

With a partner still working for married couples, you can consider holding on to your partner’s health insurance plan, as it covers both of you. 

Other alternatives include private insurance and searching for suitable plans on the Affordable Care Act marketplace (you can enroll before or beyond the annual enrollment period, as losing an existing coverage plan counts as a qualifying life event, thus making you eligible).

An excellent alternative often favored by FIRE (Financial Independence, Retire Early) movement darlings are corporations who provide extended health insurance for part-time employees, such as Starbucks, JP Morgan Chase, and Costco.

They deal with the last hurdle, capable of crushing your early retirement dream — taxes.

It would be best if you try to minimize taxes as much as possible, but only within the limits of the law.

You can take early distributions from tax-advantaged accounts, such as IRAs and 401(k)s, but the minimum age to do so without taxes and penalties is 59½ years. 

There exist multiple exceptions to benefit from your investments without the burden of taxes.

But to effectively and strategically harness these exceptions, the skill of a seasoned financial advisor is required.

After effectively striking out these two hurdles (health insurance and taxes), your dream of early retirement squarely depends on your financial discipline and frugal living, as you’ll come to see.

Step #3. Estimate your total savings needs

This step may seem like a recap of the number 1 step, but estimating this yourself is needed to be thorough and detailed.

Retirement tools give you an idea of just how much you need to retire, but estimating your total saving needs would tell you exactly how much you need. 

As indicated in step two, there are financial rules to be taken lightly when estimating the amount needed to go into early retirement.

The multiply by 25 or rule of 25 rule is by far one of the most important.

After calculating your monthly expenses and annual expense, while considering emergencies, multiple your annual expense by 25.

For instance, if you figure you’ll spend $40,000 annually on calculating your expenses, then the multiply by 25 rule dictates that you have nothing less than $1 million before you slip into early retirement.

While having $1 million is okay, the rule of 25 dictates that you invest your retirement nest egg, so it’s increasing, as inflation may substantially increase your annual expenses.

An invested retirement nest egg ensures balance in your investment and annual expenses.

Another tile to keep in mind is the 4% rule, developed by financial planner William Bengen in 1994.

Bengen’s rule indicates that you can withdraw 4% of your entire retirement investment in the first year of investment and the same amount after adjusting it to meet the current inflation rate.

According to William Bengen, you can follow this method without exhausting the investment portfolio in 30 years.

While adhering to these rules can bring favorable results, it’s important to note that they are not foolproof.

It is thus recommended that you find an experienced financial advisor who can guarantee results as you adhere to these rules. 

Step #4. Settle all debts

At this point, you know exactly just how much you need before you call it quits on your job.

You also know how much you can afford to part ways with every month once you go into early retirement.

In your expenses, you most likely have included your monthly dues to settle your debts.

That may seem like a smart option, but it’s best to settle all debts before you go into early retirement.

In fact, ensure you owe $0 before slipping into early retirement. 

This is recommended because debt has an immensely negative effect on reducing your cash flow and the amount of money you have to save for your early retirement.

To tackle your debts, it’s best you start with high-interest credit card debts or your most expensive debts.

A practical approach to paying off your debt is making a list of all your debts, from the highest to the lowest.

Then cut back on your expenses to give more money to your debt payments.

After these, you can try out various methods of debt payments, such as renowned financial advisor Dave Ramsey’s Debt Snowball Method.

As you tackle your debts, from the high interest to the lowest, more and more money would be available for you to channel towards your early retirement savings.

Related: 100 Dave Ramsey Quotes On Debt, Money & Financial Success

Step #5. Earn more through passive income

At this point, you might have figured out that it’ll take you a pretty long period to save just what you need for early retirement while paying debts from your major income.

Besides these, you’ll also have figured out the common conundrum that retiring early means you have to save more money for the extra years of retirement.

But there’s a catch!

These challenges can only bother you if you do not have a reliable means of income, even in retirement. 

You might wonder, how do I have a steady stream of income after retirement?

Well, passive income makes that possible.

Passive income is generally a means of earning that requires little or no work.

In the age of technological advancements, there exist several of passive income schemes, as much as you’re ready to try them out.

These practical means of passive earnings include real estate Investments, vacation home rentals (Airbnb makes this possible) or driveway rentals, tutoring, ad revenues from blogging, YouTube channels, and several more. 

There exist endless means of getting a reliable passive income.

Investing a portion of your earnings from passive incomes in stocks and annuities can also substantially increase your passive income earnings.

Step #6. Reduce expense as much as you can

The key to allocating more and more money to your early retirement investment lies in creating alternative means of income (passive earning), and importantly, reducing monthly expenses. 

This can be tricky, considering that it requires a lot of financial discipline, which is hard to cultivate.

But, if at this stage, you’ve begun applying practical steps as indicated in step 4 (settle your debt), such as the Debt Snowball method for debt payments, you’ll most likely be used to frugal living.

However, if you’re new to frugal living, cutting expenses can seem to be an insurmountable challenge, which can be overcome with a key basic tactic. 

The jet to reducing expenses lies in keeping track of your monthly Expense, which you can do yourself, or recruit the assistance of free finance tracking services such as MINT and YNAB.

Once you get the hang of where your money goes monthly, try as much as possible to reduce unnecessary expenses like subscriptions to a service you barely use monthly.

This will go a long way in helping you achieve your dream of early retirement in no time.

Step #7. Spend only when necessary

Still on cutting expenses, spending only when necessary has to do more with the mindset of a person, than with finance. 

For many, frugal living isn’t a thing they are used to.

This is further compounded by flashy and emotionally manipulative advertisements from corporations who want you to spend on the latest trendy stuff.

But, if you want your dream of early retirement to come true, your mindset on spending has to change.

Here are practical steps that can help:

  • The major mistake people consistently make about saving is that it deprived them of the good stuff. Rather, think of saving as a rain check on the good life. Remember the words of Dave Ramsey;  “If you will do the things others won’t do, then someday, you will have the life others won’t have.”
  • See saving as empowerment for the future, just as Dave Ramsey’s quote reveals. Look forward to the time, where the present’s sacrifice would result in immense calmness, peace of mind, and financial security when you retire.
  • The most practical way to help you further change your mind on spending is seeing every dollar spent as buying your freedom. This will motivate you to save more and spend less. 

Step #8. See your spending as early retirement time equivalent

Saving for early retirement is something most people can do without hitches.

However, it’s a constant battle for others, even after trying to re-orient their minds on spending.

One practical way to help with this is by seeing your spending as the equivalent of your early retirement time.

Sounds vague, right? Well, look at it this way.

Imagine you spend $2 on a coffee each working day of the week.

That translates to $520 spent on coffee every year.

The expense could go as high as $1500, depending on the sort of coffee you take.

Now, you’ll agree that $500 – $1500 on coffee is quite a sum, right? Take a look at your retirement budget; $1500 could be the amount of money you need to get by each week. 

Now, before you go buy that $2 – $5 worth of coffee, which could cost you as much as $1500 in a year, think of that $1500 which could save you weeks of stressfully burdening your self with your demanding job, as one week of early retirement saved. 

Do you see? Why not just drink your home-brewed coffee, just the way you like it.

Step #9. Master the rules of tapping early retirement savings without penalty

While saving up for your early retirement goal, you should learn the rules of tapping from your early retirement without the hefty penalty involved.

Most early retirement savings schemes, such as the IRA(s), and 401(k)s, often charge a hefty 10% penalty for withdrawals below the age of 59.5 years.

You’ll agree that 10% is a lot of money, which can easily halt your early retirement dream.

However, there exist several ways of tapping from your early retirement without the 10% penalty.

I’ll cover some of these options to withdraw from your retirement savings without penalty in the next article.

Step #10. Create a long-term budget for early retirement

You already have a budget that details just how much you need before you can comfortably go into early retirement.

But, it’s best you make that budget as detailed and long-term as possible. 

Rather than focusing on the monetary aspect, your long-term budget should focus on where and how you wish to spend your retirement, as well as the financial implications of those decisions.

As frugal as you want to be about this, you should plan something that gives you utter joy, such as a vacation to a destination you’ll love.

It’s best you do this, as the less you spend in the future (make your budget in this way), the less money you’ll need to save before you bring your early retirement dream into life.

You can use different retirement planners to set this budget, but it’s important that you set your expenses and activity levels as your age decreases and your interest changes. 

Doing this will give you a pretty close accurate projection of how much money is needed to make early retirement a dream come true.

Step #11. Always have a foolproof retirement investment plan

Saving is a good way to start your early retirement dream, but relying on that alone, would do you little good. 

This is because factors such as inflation may render your savings ineffectual.

As a result, a foolproof investment scheme, which would keep you above inflation, is required.

But caution has to be applied when choosing where or what to invest in.

Do not trade every dime, or rely on some stock tip.

Rather, rely on the expertise of an experienced financial advisor who’ll understand the industry you wish to invest in.

Related: Top 100 Warren Buffett Quotes For Success

Step #12. Plan for your health

Retirement typically means reduced physical activity, which can be threatening to your health, depending on your early status.

Thus it’s practical and wise that you make a plan to keep your health in the best condition. 

It’s best you plan on regular routine of outdoor activity, as well as health insurances.

As indicated in step 2, you’ll most likely have set up plans for health insurance, as you most likely would not be qualified for Medicare.

Also, do well to improve your diet, and habits, as it has a prolong effects on your health.

Step #13. Plan a retirement job

This may sound confusing, as your reason for retiring early is most likely to get away from the stress of a demanding job.

And it’ll be impractical to go back to another after retirement.

However, a retirement job isn’t a job like the one you’re currently holding on to now.

This is mainly about doing something that you clearly derive joy from doing. 

The focus would not be on the income, though that’s an alternate way of generating an income stream. 

When it comes to getting a retirement job, do well not to pressure yourself, as you’re not desperate for the money; rather, you’re propelled by interest. 

Review offers, and see if it suits well with you.

You can check out websites such as,, and

Step #14. Do not confuse early retirement for early social security

Those seeking early retirement often make a common mistake by diverting social security funds to their early retirement savings.

This may be an easy and quick way to achieve early retirement, as you’ll save more money.

But that’s a classic case of making use of money, which will serve a better purpose in the future now.

Confusing early retirement for early social security will lower your monthly benefits as you advance in age. 

Hence, it is recommended that while you plan for early retirement, social security should not be seen as a means of boosting income. 

Rather, use retirement planners software to calculate just the right age, where starting social security would be productive.

Step #15. Plan your retirement activities

In the course of planning early retirement, much attention is devoted to planning how to achieve this.

But little or no time given to the exciting things to do during retirement.

Often, most believe that early retirement would give them the luxury of time to figure out what to do.

But you should plan now for the activities you wish to enjoy during your retirement.

Try to include periodic vacations, as this would add more life and thrill to your retirement.

Related: 90+ Retirement Quotes For A Wealthy & Happy Life

Final Thoughts on Retiring Early

Hope this article on how to retire early, build wealth and feel secured was helpful.

As you come closer to your dream of early retirement, the frugal habits you pick up would become less and less difficult to live with.

Hence, you’ll be happy with less.

Remember, while early retirement means not entirely devoting yourself to rigorous work, you still can be involved in secular work.

But your retirement job should be on your own terms and without the iron-clad supervision of an annoying boss.

Remember, the key to achieving early retirement is to make more money with less work.

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