How to retire early

Updated February 21, 2017

Although it may be difficult, retiring early can be a possibility for many workers. Some employees have the ability to retire as early as age 40. If you do wish to retire early, you must start planning years in advance.

Begin saving as soon as you enter the workforce. It is very unlikely that you'll be able to retire early if you start saving in your 30s. Ideally, you should start putting away money during your early 20s.

Take a significant portion out of your paycheck. If you want to retire in your 40s or early 50s, you need to calculate how much money you need to take out of your paycheck each month. For early retirement, you should take out 20 to 25 percent.

Invest the money. A money market account may be the safest bet for someone looking for a decent return. Talk to a financial planner for additional investment opportunities.

Work part time. You can retire early from your daily grind job and choose a job that you enjoy with reduced hours. This can reduce how much you depend on your retirement savings.

Find out about any penalties that you may incur due to early retirement. IRAs and pensions typically carry a 10 percent penalty for workers who retire before the set retirement age.


Make sure that you have health coverage if you plan to retire early. Medicare benefits are not offered until a person reaches the age of 65.


Beware of the financial risks associated with early retirement. An economic downfall or inflation can cause your retirement savings to lose their value.

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