The Keys to Early Retirement

After reading enough books on retirement that I swear I could write one now, I’ve noticed a few common threads on early retirement. Not that these are rules per say, but rather some general guidelines.

  1. Start Early – With the wonder of compound interest working for you every year you start earlier the easier you will get to your goal. Vice versa if you are thirty and want to retire by 40 you’ve got to take some extreme measures.
  2. There is a Price to Pay – A high consumption lifestyle with all the latest upgrades doesn’t work well with early retirement unless you’ve made insanely large amounts of money during your working life. So for the rest of us something has to give. The good news is all that extra crap doesn’t mean people are more happy anyway.
  3. Don’ t Reach for a Calculator at the Start – Strangely enough jumping right into determining money is actually the worst thing you can do at the start since it can generate an overly large number. The first step should be to examine your life and find out what is making you happy and what isn’t working. Then by removing the excess you can put more funds towards your plan. Start saving, yes, but don’t panic on exactly how many dollars yet.
  4. Frugal is Your Friend – There is no shame on not spending money like everyone else. So don’t buy a new car if you don’t care about it. Do treat your money like a precious resource because it is one. It literally the very product of your time. So don’t waste time or money on things that don’t mean something to you.
  5. The Goal is Happiness, Not Early Retirement – Early retirement should be a logical extension of your life when you get there. It should be about freedom being worth more than things. It should be about loving your life and wanting more time for yourself. It shouldn’t be a release from misery. Otherwise you might find your dream will be poisoned by issues you should have dealt with decades ago.

So that’s my top five themes I’ve noticed. What do you think we should add to the list?

This post is now part of a carnival of personal finance.

11 thoughts on “The Keys to Early Retirement”

  1. What great advice. That really is it, isn’t it, pursuing happiness. And since extra crap really doesn’t make you happy, it seems a small price to pay in pursuit of happiness for yourself.

    I would add that it’s NEVER too late to start (I got a later start myself–a little harder but if that’s what you want you still have time.)

  2. There is an age old wisdom in the question, “What should it profit a man if he should gain the world, but lose his soul?”.
    I was 31, working in a job I hated, but kept cranking it out, because of the big house, the nice car, the 2.5 kids. Almost like it was meant to be, I got laid off, and was down to $86.00 in savings and 90K in debt. Wow, what a shock… what to do? We went through a tough time, re-examined life, and started over.
    We read books ( for free from the library), built our lives around friends and family ( for free), and started a small business in our basement( on a shoestring). Now, 18 years later, we have a networth of over 3 million, and still laugh everyday with friends that we get to work with at our business (no longer in the basement), and we’ve had a ball starting from nothing. We’re both “free” from the “corporate security” – (Ha, like it ever existed). We both discovered we love the idea of waking up every morning looking at a potential goose egg in sales, thinking, “Hmmm, how we gonna make a buck today?”, and then spending the day doing stuff we love with people we like. What retirement? Everyday is a good day when you’ve seen the bottom.

    Forget the plan and let life happen! You’ll be surprized what washes up on the beach of life when you realize that life is what happens while you make other plans. You sound like a wonderful young man! Spend time with your family, laugh with your friends, and get up everday and enjoy everyday. The money will come.

    Keep up the great posts!

  3. Syd,

    Great point. Just because you don’t start when you are young doesn’t mean you still can’t get out at least a few years earlier.


    Excellent story! Thank you for sharing an inspiring story on looking after what matters most.


  4. Great post! I especially like the part about “The Goal is Happiness, Not Early Retirement “. I think a lot of us finance geeks get so focused on early retirement sometimes that we put our lives on hold until we retire.

    Although retirement, early or otherwise, is an important (and achievable) goal, it shouldn’t be the primary driver in our lives.

  5. @Been2TheBottom

    You probably already knew this, but your quote comes from the Bible (Mark 8:36). Solid advice, and age old wisdom indeed!

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