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Four Things You Really Need To Do To Retire Early

Four Things You Really Need To Do To Retire Early
Steve Gillman Dec 4, 2019
Want to Earn Some Extra Money?

I retired at age 33. Well, almost. I was still working one day per week, and I later went back to work several days per week when I got married. But I’ve had more than one “mini-retirement” since then (and no full-time work), and now, at age 55, I work just three or four hours per week on income-producing activities.

How did I do it, and how can you do it? There are four ways to get there, and in theory you can focus on just one or two of them, and still arrive at a nice retirement… eventually.

On the other hand, that’s not the fastest way to get there. Approaching the goal from all four directions is the way to go if you want to retire young, and then there are some additional, more radical steps to take if you’re really determined to retire as soon as possible.

We’ll get to those more radical steps, but first let’s look at the…

Four Things You Can Do To Retire Early

Four basic actions will help you retire as soon as possible. They are:

  1. Make more money.
  2. Spend less money.
  3. Save more money.
  4. Invest your savings wisely.

Again, it’s true you can focus on one or two steps. After all, if you make enough money you may need to save only a small percentage of it, and make only modest returns on your investments. 

But why not follow through on every one of these four parts of the puzzle? That’s how you’ll retire as soon as possible.

Your path to retirement is your own, and only you know what you’re willing to do, but I’ll tell you a bit about how I handled each of these four steps, to give you some ideas.

To start with, making more money was not my strength, but it was part of the plan. I was always looking for ways to work less, which meant making less employment income. But I made up for that deficiency by generating other streams of income. I rented out rooms in my home, for example, which is how I managed to work only one day per week in my thirties.

I also made thousands of dollars annually from bank bonuses and credit card rewards.

Making money, of course, is covered in the pages of Frugal For Less, including our big list of 115 Ways To Make Money Without Leaving The House. Consider developing an extra stream or two of income to speed your way to retirement. And for best results, make some of the many possible passive income streams, which may continue to come in even after you retire.

Keeping expenses low was crucial for me. Paying off my housing debt early helped with that. I also took some more-radical cost-cutting measures, which I’ll get to in a moment. You can find hundreds of ways to reduce your expenses throughout the pages of Frugal For Less.

Of course, making more money and spending less only help if you actually put some of that money aside in savings. Even when my wife and I were making very little, we spent less than we made and saved the difference. When our online business was doing well we saved as much as 50% or more of what we made.

While putting aside money is great, you need those savings to work for you, so you have to invest. We chose to first invest in paying off any debt, including mortgages, as quickly as possible. Then we invested in real estate in many ways, ranging from loaning money to house flippers to flipping properties ourselves to investing in Real Estate Investment Trusts (REITs).

Investing in index funds in the stock market is simpler, and will usually provide nice returns over time (with many ups and downs along the way). There are many more common and uncommon investments to consider, but in the meantime, at least move your emergency funds and other short-term cash into one of the best bank accounts out there.

That’s the basic outline for speeding up that retirement date: Make money, control expenses, save a good chunk of what you make, and invest wisely. Now let’s take a look at the more radical steps you might consider if you really want to retire young.

Nine More Radical Retirement Plans

What if you are willing to do almost anything to retire as young as possible? In that case, you might want to try some more radical measures. Here are nine suggestions…

1. Move To Make More Money

Moving to where you can make the most money after expenses, without regard to other concerns, will get you to retirement as fast as possible. The highest wages, according to, are found in Alaska, with an average median wage of $22.68 per hour.

Of course, it’s not that simple, and you can’t entirely ignore those “other concerns” (there are some places I wouldn’t live for almost any wage). Your compromise might be to list the places where you can make the most money, and then choose whichever of the top three or four fit your other needs most closely.

The highest wage you can make also depends on your skills. If, like myself, you have few skills, you might want to move to one of the states with the highest minimum wage. More likely, you’ll just go where your particular skills and experience can get you a better wage.

And expenses matter, so what you’re really looking for is where you’ll net the most after meeting your needs. Things like groceries, furniture, and clothing don’t vary in price too much from place to place (at least in the U.S.), so housing costs will probably be the biggest factor.

It makes sense to move where you’ll pay $400 more for rent every month if you’ll make $600 more in wages, but not if you’ll only make $300 more. So do the math.

2. Move Again To Retire 

An expensive city with high wages can be great for building that nest egg, but it makes sense to move again at retirement, this time to a low-cost town. That alone can move your retirement date up by several years, because you’ll need less income to retire.

You can start your planning with a list of cheap places to retire, but do the math based on your own lifestyle and circumstances. For my wife and I, Tucson, Arizona appears to be our home for life (after 12 moves in 18 years). We live in a small, inexpensive condo, and cheap groceries, public transportation, and medical care are within walking distance.

On the other hand, houses are not cheap here (hence, our condo). If a regular house is a necessity for you, there are many cheaper places to live, which brings us to your next possibility…

3. Consider Really Cheap Housing

Since housing is usually the largest living expense you’ll have, it makes sense to consider your options carefully. Prior to retirement inexpensive housing reduces your expenditures so you can save more money. In retirement cheap housing means you’ll need less to live on, and so you can retire sooner.

See my article listing 40 cheap housing options for ideas. My first home was a mobile, and there are good reasons to consider mobile homes. I collected more renting out rooms than the mobile cost, and sold it for more than double what I paid (it was on a small lot).

The key here is not to simply buy a home with a low price, but to buy (or rent) something that has low monthly expenses. That way you free up as much money as possible for saving and investing. Alternately, buy something that works for the next potential step…

4. Rent Our Rooms

I was semi-retired early in life because the rooms I rented out (3 of them once I built a small efficiency on the back of my mobile home) covered most of my living expenses. That let me work very little, but it could also be a way to produce and invest an extra $5,000 or $10,000 or more each year, which will really speed up that retirement.

For more on this strategy, see: “How To Pay Off Your Mortgage By Renting Out Rooms,”

Also, if you’re okay with living with people, a nice four-bedroom home can almost be a retirement plan in itself, especially once your mortgage loan is paid in full. And you can always build a little apartment for yourself and your spouse if you don’t like sharing common space with others.

5. Pay Cash For Your Home

If you borrow $200,000 for a home at 5% on a 30-year mortgage loan, and pay it until the end, you’ll have paid over $186,000 just in interest. You can verify this for yourself using any mortgage payment calculator.

What if you didn’t have to spend anywhere near that much on interest charges, and so could have most of that money available for retirement? See my article, “How To Pay Cash For A Home” for an idea of what’s possible. My wife and I have had several mortgage loans, but we paid every one in full within a few short years. That has helped save us a fortune.

6. Don’t Have Kids

We love being child-free. We wouldn’t be retired if we had kids. Children are expensive. Yeah, I know this strategy won’t work for everyone. Enough said.

7. Start A Business

A big part of why I can work so little now is the business my wife and I started. We invested no more than a few hundred dollars, and built it into a six-figure income for a few brief years — long enough to save a lot of money. Here are some resources to get you started:

If you keep the risk low, the worst case scenario is that you waste your time. Best case? You make it big and generate enough income to save more than half of it and retire in ten years.

8. Live In Your Investments

A home is not normally an investment, especially if you keep rolling the equity you build into bigger and more expensive homes. But homes can be investments, and they get special treatment, according to the IRS.

You owe no taxes on profits from the sale of your primary residence, up to $250,000 for an individual and $500,000 for a couple, as long as you lived in it for at least two of the five years prior to selling it. Even better, you can take this capital gains tax exclusion as many times as you like. This means you can buy a fixer-upper, live in it while preparing it for sale, sell it two years later for a nice profit, and repeat the process again and again. 

My wife and I made tax-free profits this way several times. Then, step-by-step, we downsized our homes (most recent purchase prices $89,000, $65,000, and $62,000), selling each for a healthy profit as we moved on, until we arrived at our $55,000 retirement condo in 2017.

Now that our condo is worth about $75,000, we might move again (but stay in Tucson), this time into a $30,000 mobile home, which would free up about $40,000 to invest for a richer retirement. We’re willing to do what’s necessary to have our freedom. And that certainly includes the next and last step…

9. Practice Radical Frugality

Spending less means you have more to save and invest. That can mean retiring a lot sooner. It also can mean having a richer retirement.

That’s why my wife and I went without a car at times, and why our napkins were always paper towels torn in half.

Being frugal got us here faster, but if you’re willing to also be frugal during retirement you further speed up the process. After all, the less you need to live on in retirement, the less you need to save and invest prior to retiring. That’s why we have inexpensive Netflix instead of cable TV, and why we go to the movies only on Tuesday matinees, when they’re much cheaper.

Work on ways to truly enjoy life without spending as much money, and you’ll be prepared for a much earlier retirement.

If you have retired early, tell us how you did it … and keep on frugaling!

Steve Gillman

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