If you want to retire early, there are a few steps you can take to help you get there. Retiring “early” is different for everyone, but it’s a concept that has been gaining popularity over the past 5 years. For some people, retiring early means retiring at 60 instead of 65. For others, it means retiring in their 40’s or even their 30’s if they are a part of the FIRE movement, which means “Financial Independence Retire Early.”

But, how do people achieve early retirement, and what steps do they actually take to achieve it? Below are a few tips that can help. While none of them will guarantee an early retirement, most of them will help you improve your financial habits over time.

Enroll in an Employer Sponsored Retirement Plan

If your workplace offers a retirement plan with an employer match, it’s important to take advantage of it. An employer match represents free money as a reward for deciding to save and invest a portion of your income.

The key is to start saving and investing when you’re young. Too many people forget to enroll in their work 401(k) plan or plan on doing it when they’re more established. Really, it’s best to invest as early as possible, even if it’s a small amount. The younger you are, the more you have compound interest on your side.

Also, anytime you get a raise, consider investing it instead of spending it. So many people increase their lifestyles when their salary increases. Instead, increase the percentage of your income that you put into your retirement accounts, keeping in mind there are limits to the amount you can contribute each year.

Ultimately, a work sponsored retirement plan is the most straightforward way to plan for your retirement. However, you can’t withdraw money from your 401(k) without penalty until you’re 59 and a half years old.

So, if you want to retire sooner than that, you’ll also need to consider investing in a brokerage account outside of your 401(k) plan until you reach the age where you can withdraw without penalty.

Live on Less Than You Earn

In addition to investing in a retirement plan (and investing outside of your retirement plan) a commonality among many people who retire early is that they live on less than they earn.

Forbes recently reported that “78% of workers live paycheck to paycheck.” This is not surprising given the burden of student loans, growing families, and other financial responsibilities adults have. Because of this, living on less than you earn might seem like a faraway goal.

However, it is possible if you plan, work hard to increase your income, and reduce your debt. Many financial experts, like Dave Ramsey, say the first step towards financial independence is to save a $1,000 emergency fund. This will cover you if your car breaks down or if you incur a large expense in your home. That will help you stop the cycle of going further into debt.

The next step is to eliminate any consumer debt you might have. This includes credit card debt, personal loans, and student loans. Work hard to earn extra money by doing side jobs, having a garage sale, and doing your best to earn promotions and raises at work.

Once you earn extra money, throw it all at your debt. When you’re completely free from debt payments, it becomes so much easier to live on less than you earn.

Plus, if you set a goal to save a certain percentage of your income or to be debt free by a certain date, that will help you to stay motivated. Remember, the quicker you get out of debt and the more you save, the earlier you can retire.

Avoid Lifestyle Inflation

It’s so tempting to buy a bigger house or upgrade your car, but the more expenses you have to pay every month, the harder it will be to save extra money for your future.

People spend the most money in three categories: their homes, their cars, and their food. In February, the Washington Post reported that 7 million Americans are 3 months behind on their car payments. This is usually a result of driving cars that are too expensive for their budgets or rolling negative equity into a new car payment too many times. Additionally, homes in America are bigger than ever.

Although your home might feel small, especially if you have a growing family, try to resist upgrading if your goal is to retire early. After all, one day, you’ll have an empty nest. The bigger your home is, the emptier your nest will feel.

Share Your Goal With Others

Many people think retiring early is impossible, yet there is an entire movement of people who are working their way towards it every day. That’s why the final tip I have for you is to share your goal with others. If you’re married, it’s incredibly important to have your spouse on board. It’s hard to retire early when one person is saving and the other is spending needlessly.

So, work hard to communicate and find shared goals. Talk about what you would do if you were able to retire early. Turn it into something you can work on together as a couple.

If you’re single, it’s still important to find a tribe. There are numerous websites, get togethers, and conferences that all talk about financial independence and retiring early. Find people who have similar goals and who think like you when it comes to finances. That will help you to stay accountable and remind you that your goals and dreams are valid.

Final Thoughts

Retiring early is possible but not without careful planning, goal setting, and sacrifice. Use the tips above to help make your goal of retiring early possible.

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