Want to retire early? Do this one thing.

retire early

Have you ever noticed that the time it takes you to do something expands to fill the time you allow yourself to do it?

I see this most frequently at work. If I have 5 tasks to do and all day to do them, it takes me—surprise!—all day. If I only have half a day to do the same five tasks, however, I am somehow able to check them all off my To-do list before lunch.

I don’t think I’m alone in this. You do it too, right?

Too Much Runway

With that in mind, think about your retirement. The typical retirement age is 65, which means we give ourselves about 45 years to get “Retirement Ready.”

At the risk of stating the obvious, forty-five years is a LONG time. Too long. Giving yourself that much runway almost guarantees that you will procrastinate and not take things very seriously. After all, there’s always next year (or next decade).

What would happen if you only gave yourself 40 years? Or 35? Or 10? Answer: You’d be much more serious about hitting your goal. You’d save aggressively, spend intentionally and invest wisely. How much could you shave off the typical 45-year timeline? Let’s look at an example.

Ben and the Incredible Shrinking Career

We’ll need to make some assumptions here, but just keep in mind that the end result is more important than the assumptions. Let’s say you have a 20-year-old guy named Ben who wants to retire with $1 million. Let’s assume the markets return 8% per year and Ben makes $50,000 per year throughout his entire career and never gets a raise.

Given those criteria, if Ben saves about 5% per year he will hit his $1 million goal in 45 years. But what if he saves more?

Save 10% = Retire in 37 years

Save 15% = Retire in 32 years

Save 20% = Retire in 28 years

Save 25% = Retire in 26 years

So Ben could retire in his 40s or 50s instead of his 60s if he decided to spend his money on mutual funds instead of mojitos.

I’m guessing I have exactly zero readers that are 20 years old, but the above math can apply to you as well. Sure it won’t be as dramatic because you don’t have as many years as Ben, but you’re also not starting from $0, you’re in your prime earning years, your kids are grown and if you’re over 50 then you’re eligible to make catch-up contributions to your retirement accounts.

You probably won’t be able to shave 20 years off, but could you shave off one? Five? Seven? Each year is a year you can spend with your spouse and friends instead of your boss or that difficult client. It’s a year you can spend seeing the world instead of staring at your cubicle. It’s a year you can spend sitting at the beach instead of stuck in meetings.

With so many people behind on their savings, retire later is a common piece of retirement advice. Given human nature, however, retire early might yield better results.  And don’t forget…

Life is short.  Be intentional



3 Responses to “Want to retire early? Do this one thing.”

  1. Jean July 18, 2014 at 7:12 pm #

    i also recommend that anyone who is thinking about early retirement read The Retirement Maze by Rob Pascale, Louis H. Primavera and Rip Roach (Rowman and Littlefield, 2012). Their research shows that most early retirees plan for retirement financially, but don’t plan for it socially or psychologically. As the reader of my blog who recommended this book to me put it, “I assumed that the quality of life would take care of itself; it didn’t.” Pascale et al.’s research shows that early retirees have a more difficult time with the transition to retirement and become less happy with their retirement decision over time. The lesson here: Especially for early retirees, retirement planning is not just financial planning.

  2. Mark July 21, 2014 at 10:19 pm #

    Hi Joe,

    Parkinson’s Law … hard to fight. I slip sometimes. But, living in the now, “steering” one’s destiny is the only way to go -a good “kick in the butt” in the face of reality if you have full awareness of your own mortality. (I cherish poignant movie lines) Andy Dufresne in Shawshank Redemption: “Get busy living or get busy dying.” So, …follow suggestions on the order of nut “squirreling”: I’m lucky enough to fully fund my 401k, Roth IRA and HSA (a powerful supplement for post-retirement health funding) -and as you suggest, do it early. I think of it as everybody’s personal snowball rolling along collecting “snow”: different sizes, the rate of rotating is the same (assume), but HUGE differences depending on when you started and what the size of your “snowball” is now (the “um-teenth” compounding analogy). -Mark

  3. Will @firstqfinance August 15, 2014 at 9:17 am #

    Hey, man. Great site. I read your recent article in the OWH. I live in Lincoln.

    Right now I save 85% of my income so I can retire ASAP. Financial freedom before 30 is my goal. I’m 24 now.

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