I'm 30 With No Long-Term Savings. Should I Give Up on Early Retirement?

Some people work stressful jobs and realize at the midway point of their careers that they'd like to exit the labor force on the early side. You, however, might come to that conclusion by age 30 if you're in a demanding industry and already feel yourself burning out.

Of course, early retirement has its benefits. You can reclaim your days and use your time at a point in your life when your health might be stronger. And not having to work a stressful job could do good things for your mental and physical health.

But what if you decide at age 30 you'd like to retire early, only you have no savings so far to support that goal? You might assume that early retirement is off the table. But if you change your savings habits, you may find that you're able to make an early workforce exit despite your somewhat late start.

It's definitely not too late to pursue early retirement

Fidelity says that to retire at a typical age, it's a good idea to have 1x your salary saved by age 30. So if you're 30 with no money in your IRA or 401(k) whatsoever, then it's easy to see why you might think your early retirement plans are doomed.

But remember, early retirement can mean a lot of different things. Social Security's full retirement age for people born in 1960 or later is 67. And Medicare eligibility begins at age 65. As such, these are common ages to kick off retirement, and it can be argued that leaving the workforce at any point prior is considered retiring early.

But let's say that to you, early retirement means wrapping up your career at age 55. If so, that gives you a 25-year window to build up a nest egg.

One thing you'll need to be mindful of is that if you're saving for retirement in an IRA, your money won't be available to you penalty free at 55. So a good bet is to keep some of your retirement savings in a regular brokerage account. You may be able to access your 401(k) funds without a penalty if you're tapping the retirement plan offered by your most recent employer, and you separated from that employer in the calendar year you're turning 55.

What the math might look like

With that out of the way, you now have 25 years to accumulate enough funds to retire early at 55. It's smart to invest your savings in stocks if you have multiple decades ahead of you before you expect to need your money. Even though stocks can be risky, the market's average annual return over the past 50 years has been 10%. If you go heavy on stocks, your returns might be similar (though past results don't guarantee future performance).

Meanwhile, let's say you commit to socking away $1,200 a month between a retirement plan and a brokerage account for the next 25 years. At a 10% annual return, you're looking at accumulating over $1.4 million. With careful money management, that could be enough to allow you to retire early.

Of course, it's hardly an easy thing to go from saving nothing for retirement to saving $1,200 a month. But remember, not all of that money has to come from you. If you have a 401(k) plan with a generous match, your employer might end up contributing a nice chunk of that.

You can also look at downsizing your lifestyle to free up the money for your retirement savings. That's not an easy thing to do, but the idea of retiring early just might motivate you.

Another option to consider

It's more than possible to retire early even when you're a bit late to the savings game. But remember that early retirement has its risks.

When you retire early, your savings need to last longer. And if you retire before you're eligible for Medicare, you might need to bear the cost of health insurance on your own, which could be enormous.

If your main reason for early retirement is to shed the stress of a job, before you do that, try switching jobs or careers. You may find that a lower-paying job gives you the benefit of health insurance and a paycheck that allows you to leave your nest egg untapped a bit longer.

You can also look at shifting over to part-time work in your 50s rather than leaving the workforce for good. Some employers will let you retain your health coverage as long as you work a certain number of hours.

There are many different paths you can take to early retirement. If you want to increase your chances of success, it's best to start saving for that goal from as young an age as possible. But if you've already missed that boat, don't write off the idea of early retirement when you have the potential to ramp up on the savings front in a meaningful way.