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How Some People Manage to Retire Early

June 13, 2023

We often blog about the challenges faced by many soon-to-be retirees, including delayed retirements or a lack of retirement funds. But on the other hand, there are people who not only managed to retire comfortably; they also did it early! How did they manage to do that?


Yes, an unlucky few have been forced to retire early, due to job market conditions, illness, or disability. But many early retirees actually planned it that way and pulled it off. What did they do differently from the rest of us?


Early planning is key. For most early retirees, their success lies in early and thorough planning. They knew early on in their careers, often in their twenties, that they wanted to retire in their forties or fifties. And so, they began saving early. Their plans included an optimistic growth strategy, and they made plans for healthcare because they knew Medicare eligibility would be a long way off at age 65. 


Realistic expectations create attainable retirement budgets. Most early retirees established retirement savings goals based on a modest retirement lifestyle. They usually aren’t taking six vacations per year or driving luxury cars. This allows them to live on a more modest budget. 


Budgeting during working years is equally important. To attain the level of retirement savings needed, early retirees lived on a budget during their working years. Rather than “keeping up with the Joneses” they dedicated a significant portion of their earnings to saving and investing. 


Living on a budget during working years also helps with retirement, because the transition to a fixed income doesn’t come as a shock. Responsible savings and living habits are already well established. 


A diversified income boosts savings. Obviously, earning more helps you save more. Early retirees often established more than one stream of income during their working years. 


Tax strategy is essential. A significant portion of earnings can be swept away by income taxes. But at the same time, a smart tax strategy can actually put money back into your pocket. 


Consistency keeps plans on track. Those who manage to retire early make a plan and stick to it, even during times of unsettling market fluctuations. They don’t panic, and they check in with their retirement professionals often to make necessary adjustments. 


We can help with that last part. If you haven’t yet created a retirement income plan, or if you haven’t received a “checkup” lately, give us a call. We can help you review your plans and update your strategy to match your goals. 

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