Skip to Content

10+ Strategies To Retire Early, Even When You Start Late

Save this post to read later:

While creating a secure financial future in retirement is something that many of us know about, there are some who don’t consider the reality it until they are closer to retirement age, particularly after spending our 20’s and 30’s building a life, career and family.

Here is when the once almost hypothetical questions become important:

  • How much do you need to save?
  • What is the best age to retire?
  • What will my expenses be when I retire?

But what if you don’t just want to save for retirement, but want to retire early?

Research carried out by Fidelity in 2018 suggests a general rule of thumb when creating a retirement savings plan: aim to save at least 1x your salary by the age of 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67, based on the assumption that a person saves 15% of their income annually beginning at age 25, invests more than 50% on average of their savings in stocks over their lifetime, retires at age 67, and plans to maintain their preretirement lifestyle in retirement.

Don’t worry, all is not lost. If you have reached (or are close to) midlife and haven’t been able to put away a sizeable nest egg for the future, earn an annual six-figure salary and still want to retire early, the dream of escaping the daily rat race is indeed entirely possible but requires a detailed level of planning, budgeting and discipline.

Here are some great strategies to retire early, even when you start late:

1. Define what early retirement means to you. Realistically decide on the age that you would ideally like to retire – this will help when working out future expenses needed.

2. Work out your current financial situation and budget, including all of your debts. This is always a useful activity even if you aren’t considering early retirement – having a full understanding of your monthly income and expenditure will allow you to identify key areas in which your hard-earned cash is being frittered away. Retiring early, (especially when starting late) means that you have less time to save and ideally should be debt-free, without the burden of mortgage payments, car loans, student loans, medical expenses and credit cards.

3. Estimate your retirement expenses and projected income. Work out how much you will need each month based on your findings from your budget, take into consideration taxes and healthcare expenses, and then add at least 20%. Be realistic in your numbers – you want to be able to enjoy the extra time you will have after retiring and vacations, new hobbies and experiences don’t come cheap.

4. Start a retirement savings accounts. There are lots of options available to start saving money for early retirement, including a 401k (offered by an employer in which a percentage of your paycheck is put into the fund and is then matched by the employer with their own capital), an IRA, Roth IRA and Health Savings account. 

5. Start over-paying your mortgage. Paying extra on top of your mortgage payments will not only reduce the number of repayments made, but will also reduce the amount of interest you pay over a long period of time. Speak to your lender and remember to check your contract for any early repayment penalties – some lenders put these into contracts to ensure that they don’t lose out on interest payments.

6. Live below your means and target your debts. Removing those large credit card debts (and the interest and fees that comes with it), will instantly free up much more disposable income to put into your mortgage payments or squirrel away into savings – remember, the key goal is to cut back and make sacrifices in the present so that you can relax and enjoy your future.

Using the data from your budget, cut back on as many non-essential items as you can: gym memberships, hair and nail salons, restaurant meals and take-outs, expensive coffee from large chains are all lovely, but fall into the ‘I want this’ rather than ‘I need this to live’ category.  Shop on clearance and from thrift stores, create meal plans, cook food in bulk and freeze, take lunch bags to work instead of purchasing expensive sandwiches, get rid of cable and streaming services and go on vacations that don’t incur expensive hotel and travel costs – you’ll be amazed at how quickly you can save money when you stop spending it!

7. Sell your items. Your home is a treasure trove of items you no longer use or want. Unfortunately, you probably spent a pretty penny acquiring those items so you are reluctant to just toss or donate them. Good news! There are so many ways you can get rid of your stuff and make money. You can go the traditional way and host a yard sale or sell your unwanted items on eBay, Kijiji or Craigslist, just to name a few online sites that you may post on. 

8. Start a side hustle. Work out your current free-time and skills and use them to your advantage.

Are you creative and crafty? Open up an Etsy or Shopify store and sell physical or digital products:

  • knitted or crocheted garments
  • handmade cards
  • blankets or throws
  • photographs
  • printables
  • and more

Maybe you love to write. You could be a ghostwriter or offer editing services. Have lots of social media knowledge? Become a VA. Enjoy reading? Create a book review service. Petsit, babysit, deliver packages, newspapers and flyers, take online surveys – there are endless ways to earn that extra cash if you are prepared to put the time and effort in.

9. Downsize your life. If you are an empty nester and have adult children that are financially independent, think about downsizing your house. While downsizing may seem like an extreme idea, it could be a fantastic way of creating an almost immediate lump sum of money that could potentially pay off another, much smaller mortgage in full with extra cash that be invested and saved elsewhere.

10. Rent out a space in your home or on your property. This requires a lot of work, but there are plenty of people who have been able to raise some much-needed extra funds by becoming a highly-rated host on Airbnb or landlord. I was very lucky and able to rent out two bedrooms in my home to two people for over 10 years before they decided to move on. That extra cash helped me pay my bills, do renovations and start a savings account.

11. Get rid of one car. The expenses involved in maintaining multiple vehicles can be enormous, and while logistically this would take some planning if you’re used to using several cars, it would inevitably save money in the long term, and also create a lump sum from the sale of the car. It may take some thought and one person may be slightly inconvenienced sometimes but I bet if you look out on to your driveway, most times, both cars will be just sitting there.

12 Consult a financial advisor about investing. Deciding on how much to invest and where can potentially be confusing and tricky if this is something that you have never done before, but  speaking to a reputable advisor may give you some ideas as to how to make your savings earn more for you before you retire. 

Early retirement is a wonderful goal to work towards, even when you start late. By planning, working out a budget, cutting back, selling or creating side-hustles, you’ll be surprised at how much you can save in a short period of time!

Save this post to read later:

This site uses Akismet to reduce spam. Learn how your comment data is processed.