8 Moves to Help You Retire Early

8 Moves to Help You Retire Early — Even If You Don’t Make Six Figures

By  Jen Smith  Staff Writer

For some of us, 30 minutes seems too long to wait (especially if it’s lunchtime). But if you’re thinking about retirement when you’re in your 30s, you could be looking at another 30 years.

That’s because at 59½, you can start withdrawing from your retirement accounts without penalty and at 62 you can start taking partial Social Security.

But those days can seem far off, especially if you’re in a job you don’t love and have too many cities unchecked on your travel bucket list.

If you’ve decided you don’t want to wait until your 60s to retire but don’t think you make enough to retire early, then keep reading.

Do You Need a Six-Figure Income to Retire Early?

TL;DR answer: No.

Long answer: The equation for early retirement isn’t just mathematical. If you can commit to learning some basic personal finance concepts, changing behaviors and putting a little extra work in now, you can retire early — even if you don’t make a lot of money.

But that doesn’t mean you can retire early on any lifestyle.

The average household pre-tax income is around $73,000 and the average American household spent around $60,000 in 2017, according to the Bureau of Labor Statistics.

That spending includes expenses you might not have in retirement, like pension contributions, but excludes income tax — which you still have to pay on most retirement account withdrawals — so it’s a reasonable amount to base retirement calculations on.

But if you want to live off of $60,000 for 40 years, you’d have to save almost $2 million before retirement. Which, if you have 20 years to save, would require you to contribute over $2,000 a month to retirement. Feasible for some, but not for all.

8 Steps to Take Now If You Want to Retire Early

If you want to retire before 66 but your income doesn’t allow you to invest thousands of dollars a month, we’ve got eight simple — though not necessarily easy — steps you can use as a starting point to set your retirement planning up for greater success and earlier achievement.

1. Write Down Your Goals For Retirement

Before you start, figure out when and how you want to retire.

Create a projected annual budget for your first year in retirement. Make educated guesses as to how much you’ll travel, whether you’ll have a mortgage, what your healthcare could cost, and what the cost of living in your dream retirement location might be.

Then look at your current budget, and adjust your expenses to determine how much money you’ll need to withdraw that first year. It won’t be 100% accurate, but it’ll give you a goal to shoot for in your savings.

Once you’ve decided what you need every month, you can plug that into a retirement calculator to see how much you need to save every year and for how long.

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