Early Retirement Strategy

Early Retirement Strategy

Using the exact retirement strategy in this post I’m hoping to retire early in my 40s. For those of you that are just getting started in the workforce, definitely plan for your retirement as soon as you can! It’ll make things way easier. I don’t regret the money I spent on clubbing in my 20s but sometimes I really regret the YOLO mentality that I had. *shudders

Learn from my mistakes!

Early Retirement and what is it exactly?

Whenever we think of retirement we think of it as a time when we stop working forever. It’s better defined as the moment when we no longer have to work for money. However, if you do enjoy working, you can continue to work if it gives you a sense of fulfillment. When you have the freedom and flexibility to leave a job when you get tired of it though, that feeling is priceless. That is the power that saving up enough money can give you.

Working in many ways is good for you. If keeps your mental faculties sharp with the constant stimulation. When you build a high-income skillset and achieve financial freedom through the FIRE Movement, you can shift from the work that you have to do to work that you want to do.

My Early Retirement Strategy

There are three areas to keep in mind when you want to strategize how to retire early:

Income: The amount of money you’re making

Expenses: The amount of money you’re spending

Saving: The amount of money that you’re saving and investing

The first step in your early retirement strategy should be to determine your financial independence (FI) number. This is the amount of money that you need for work to simply be an option. It’s not an exact science but it’s a mix of how much money you need to live the life you want today and planning for the future “you”.

Your financial independence (FI) number has one very specific meaning: having enough money saved up to support you for the rest of your life. This number can change and will change as you change your lifestyle and habits. From today, it can take 1,2,5, 10, 20, or 30+ years to reach Financial Independence. As your lifestyle evolves you’ll be constantly calculating your FI number in the coming years.

What is the amount of money that I need to retire?

You’ll need to save approximately 25-30x your expected annual expenses to have enough money to last you the rest of your life. This is based on your expected withdrawal rate. This withdrawal rate is based on the percentage of your investment growth that you’ll be able to withdraw each year to live on. A safe retirement withdrawal percentage is between 3%-4% when you adjust for inflation.

Say you spend about $60,000 per year… you’ll need somewhere in the neighborhood of ($60,000 X 25) $1,500,000 to ($60,000 X 30) $1,800,000.

If you decide to live in an expensive area of the country or have kids…this will have a profound impact on your Financial Independence. Keep in mind that the less money you can live on, the less you need to retire early.

The Financial Independence Formula

The Financial Independence Formula has two parts. The first part calculates your FI number which is the total amount of money requires to give you a sufficient income for life:

FI Number = Yearly Spending/Safe Withdrawal Rate

To figure out how many years it will take to reach FI is the second part of the formula:

Years to FI = (FI Number – Amount Already Saved)/Yearly Saving

This will give you an idea of how far away from FI you are right now. Once that is determined, you can determine your early retirement strategy. Let’s read on!

Cut back on Housing, Transportation, and Food (Three Biggest Expenses)

While it’s possible to cut back on small purchases, the biggest amount of money that can be saved is where you spend the most amount of money. For the average American family, over 70% of their income is spent on housing, transportation, and food. For low-income families, the burden is even higher. I will present the most effective ways to tackle these expenses and cut back on them so that you can level up your early retirement strategy.


For many of us Millennials, buying a house is an even greater burden than it was on our parents, especially if you are paying California prices for a house in a good area. If you do decide to buy a house, you must do everything that you can in order to bring down housing expenses. One way to do this is to “house hack”. This is a strategy in which you can rent or buy a 2 or 3 bedroom apartment and rent out the extra rooms to offset or completely cover the cost of your rent or mortgage. By using this early retirement strategy, you can increase your savings rate and net worth.


A car is an asset that depreciates as soon as you leave the lot. If you don’t need to buy a car, then don’t buy one. If you REALLY have to buy a car, then get a used one. A used car will take you from point A to point B safely and reliably for under $5,000. When the average American works a year and a half of their life to buy a new car, it makes much more sense to buy a used car. You can then invest the savings into other investment vehicles. With Americans spending around 19 full workdays a year stuck in traffic, you can at least let your money work for you. With the average American living 16 miles away from work and with gas currently around $4 a gallon, it also makes sense to utilize these ideas to cut costs commuting to work.


This one is tough… but there are so many ways you can save money on food expenses. You can buy food in bulk at Costco, eat less meat, and make food at home. When comparison shopping, calculate the cost per unit when comparison shopping. Use coupons! Eating out or having food delivered to you is an incredible cost over time for convenience. With the average American household spending $3,000 a year dining out, it makes sense to check out these tips on how to save.

There are so many ways to save money. Here are 101 Ways to Save Money to supercharge your early retirement strategy. You’ll thank me later ?

Increase and diversify the number of income streams that you have

Once you’ve optimized your expenses, the next thing that you have to do is to try to make more money. The more money you can make, the better. That’s because you’ll have more money to save and invest for Financial Freedom. You should start by optimizing your full-time job and starting a side hustle.

In the old days, all you’d have to do was to go to school, get a job, and work for 30-40 years until you went into retirement… and that’s if you were lucky enough to make it that far. The company that you worked for took care of you with a lifetime pension. Today, those days are mostly gone. Luckily, there are more opportunities to make more money thanks to the internet.

There are more tools, strategies, and blueprints that can accelerate your income earning potential. One of them is learning a new skill set. Skillshare, Udemy, and online boot camps like Springboard can help you invest in yourself to increase your earning power by becoming more valuable to employers.

Optimizing your 9 to 5 Job

You should optimize your current full-time job to ensure that you’re maximizing the amount of money that you’re making. Negotiate a much-deserved raise if you can and see if there are remote working opportunities available to you. This will ensure that you have more control over your time and have more money to make on the side. Take advantage of all of the employee benefits that are offered to you. This includes any commuter benefits, HSAs, and all retirement investing account opportunities.

Start a Side Hustle

Anyone can make a few hundred extra dollars a week on the side. There are many ways to make extra money. In my case, I work in UX, make money blogging, and use a tool called “Publisher Rocket” to help me sell self-published books on Amazon. I am also an Affiliate Marketer and receive a commission on various Affiliate Products.

Not all side hustles are created equal and some may make you more money than others. The best part of side hustles is that you can literally do anything to make money. Keep in mind that if you are side hustling for someone else, the money that is available to make is limited by the number of hours that you have in a day.

That is why I am focusing on building up Swanky Finance as an informative blog that genuinely helps people to embark on Financial Independence. With Affiliate Marketing, you can build a website that can one day make you a full-time income. The beauty of Affiliate Marketing is that you no longer trade time for money. Instead, you can make money while you sleep!

Things won’t magically happen overnight. It will take tons of dedication and effort but if you have enough GRIT, your chances of success will be much greater. When deciding on a side hustle, make sure that it’s something that you love. It makes it much easier to stick with it and won’t feel like work.

Set Daily, Weekly, Monthly, and Annual Savings Goals

It’s important to break down all money goals into daily goals. As humans, it’s a bit tough to “plan for the future” when every day we live in the present. Networthify has a great early retirement calculator that you can try out to see how long it will take to reach financial independence. It’s a good idea to max out that 401K!

Create an investing strategy

A simple and good early retirement investing strategy would be to consistently focus on stocks, bonds, and real estate. A short term investing (money you’ll need in the next five years) and long term investing (money you’ll need in 10+ years) strategy will be crucial for achieving Financial Independence.

If you’re looking for Zero Commission Trading, You can sign up for WeBull (Affiliate Link). They have an amazing mobile application for your smartphone that’s intuitive and easy to use for beginners to start investing.

Charles Schwab (Affiliate Link) is also great if you’re looking for a more established company to work with in regard to your investments.

Invest more and Fast Track Your Early Retirement

Depositing money every day into your investment accounts is a great early retirement strategy. One of the best reasons to start a side hustle and have multiple sources of passive income is to create additional income for yourself that you can use to invest. The more money you have to invest, the faster you can retire early.

Track your Savings Rate and Net Worth

You can earn a high salary but if you don’t save you are on thin ice. What matters isn’t how much money you make. What matters is how much you keep and invest. The money you have now can be worth so much more years down the road. Your daily Starbucks cup of coffee could have been invested and gave you returns over time if invested. For your early retirement strategy, it’s important to look at both your savings rate and net worth.

Savings Rate

Your savings rate is the percentage of your income that you’re saving either before or after taxes in all of your accounts. There’s a direct correlation between your savings rate and the years that it will take to retire early. No matter how much money you make, here’s the math on how long you have to work to save 1 year of living expenses.

10% savings rate: 9 years of work (1-0.1)/0.1

25% savings rate: 3 years of work (1-0.25)/0.25

50% savings rate: 1 year of work (1-0.5)/0.5

75% savings rate: 1/3 of a year of work(1-0.75)/0.75

The higher your savings rate is, the faster you’ll be able to retire early. Check out this Savings Rate Calculator.

Net Worth

Your net worth is the single most important metric that you should be tracking. It is calculated by subtracting your liabilities (debt/what you owe) from your assets (what you own that has value). Your net worth won’t be much if you’re always spending and wasting your money. Save and invest!

Check out this Net Worth Calculator from NerdWallet.

Will you implement an early retirement strategy this year?

I hope you learned various ways to invest every day. Remember that the more you invest, the faster you can reach financial independence. Every investment is one baby step closer to being free from financial worries. Good luck!

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