Megan M. says, “My husband is a teacher who makes around $50,000 per year and loves his job. I’m an engineer and make about $120,000 per year. We currently live off of my husband’s salary except for our car and mortgage payments. While I enjoy my job, I’d like to retire early, perhaps in my 30s. How should that affect my choice to contribute to a Roth or a traditional IRA?”
Thanks for your great question, Megan. I love hearing from a growing number of young people who are planning for an early retirement. There’s a growing movement called FIRE, which stands for financial independence, retire early.
No matter if you’re fed up with a high-pressure job, want to travel more, or just dream about a different lifestyle that doesn’t require full-time work, being ready for retirement sooner rather than later is a wonderful and wise goal.
I’ll cover six tips and strategies to help you amass enough money to make a transition to a less lucrative career or to quit working altogether and enjoy an early retirement.
6 Tips and Investing Strategies to Retire Early
- Calculate your savings target.
- Invest consistently.
- Watch your investment fees.
- Minimize taxes.
- Know the retirement withdrawal rules.
- Understand 72(t) payment plans.
Before covering each tip, let’s consider what early retirement is and whether it’s a goal you want to achieve.
What Is Early Retirement?
The concept of retirement as a time to spend your days in a rocking chair after you stop working for a company is completely outdated. Now, retirement is when you no longer have to work. But many who retire early still choose to work.
Maybe you want to “retire” and work part-time if you enjoy it. You might choose self-employment or volunteer work that keeps you involved in your community. Or you might take a sabbatical to travel and work remotely.
The idea is that retirement doesn’t have to be the end of income-producing work. It can be shifting from work you must do, to work that you truly want to do. If you want to join the FIRE movement, use these strategies to make early retirement a realistic goal.
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