Millions of us are looking forward to retirement, when we will be more able to do things we really want to do, like spend all day reading, golfing, hiking, traveling, or doing a jigsaw puzzle. Wouldn't it be nice to be able to start that phase of life even earlier than planned?

Early retirement may not be possible for everyone, but with some planning and work, it might be within your grasp. Here are five steps to take if you'd like to retire early.

The words "Retire in," followed by "15 years" and "5 years"; "15 years" is crossed out and "5 years" is circled.

Image source: Getty Images.

No. 1: Take inventory

Start by taking inventory. Do you want an early retirement? Many people actually find themselves bored and restless and sometimes even depressed in retirement, without the socializing and structured days that jobs provide. If you think this might be you, retiring on time or later might be best. It's a big decision, so read up on why retiring early may be a good idea or bad idea for you. (Note that there are alternatives such as a sabbatical, too.)

If you do want to retire early, consider your big picture, including factors such as your health, how long you might live, your goals in retirement, how you might spend your time in retirement, and so on. If you're not in great health and suspect your life may be shorter than average, an early retirement might serve you well. If you stand a good chance of living well into your 90s, consider that your nest egg might have to support you for 35 years, if you retire at, say, 62 and then live to 97. According to the Social Security Administration, one out of every three 65-year-olds today will live past age 90, while one in seven will live beyond age 95.

Think, too, about how much money you have saved for retirement so far and how much you would need to have to retire. Consider all your likely expenses in retirement, and all your sources of income, such as Social Security, pensions, annuities, dividends, interest, and your general investments.

No. 2: Come up with a plan

Once you've figured out how much you need to save, you can come up with a plan as to how you'll do that. The flawed-but-still-helpful 4% rule can help. It suggests withdrawing 4% of your nest egg in your first year of retirement and adjusting that withdrawal for inflation in subsequent years. Here's how much income variously sized nest eggs would generate in year one:

Nest Egg

4% First-Year Withdrawal













$1 million


$1.5 million


$2 million


Calculations by author.

Once you know how big a nest egg you need, an online calculator can help you figure out how much you'll need to save each year. With this calculator, for example, you can put your expected growth rate from your investments in the "interest rate" box and find out how much you'll end up with saving various sums regularly over time. A little trial and error will get you to the needed sum. For instance, if you're aiming to amass $1 million by retirement in 20 years and expect to earn an annual average of 8%, you'll quickly see that saving and investing $5,000 per year won't get you there. You'll need around $20,000 per year, instead. That can be broken down into monthly installments of $1,667. That's still a hefty sum, but it should seem a bit less intimidating.

The table below will give you an idea of how much you can accumulate over time when socking away $10,000, $15,000, or $20,000 annually and earning an average annual gain of 8%.

Growing at 8% for

$10,000 Invested Annually

$15,000 Invested Annually

$20,000 Invested Annually

5 years




10 years




15 years




20 years




25 years


$1.2 million

$1.6 million

30 years

$1.2 million

$1.8 million

$2.4 million

Calculations by author.

Be sure to factor healthcare costs into your plan, because there's a good chance that they will be a big-ticket item in your retirement spending. One estimate, from Fidelity, suggests that a 65-year-old couple retiring this year will spend $285,000 out of pocket on healthcare throughout retirement -- not including long-term care or Medicare expenses. That's not even the steepest estimate out there. Aiming to get healthy and stay healthy is a great way to try to keep healthcare costs down throughout your life -- and it can extend your life, or at least the quality of your life, as well. Making smart Medicare decisions will also help.

Someone holding up a small blackboard, on which is printed the words "save" and "spend," with the word "spend" crossed out.

Image source: Getty Images.

No. 3: Save aggressively

Unless you've already got a sizable nest egg, you'll need to save aggressively in order to be able to retire early -- or possibly to be able to retire at all. To save needed sums, you might need to think outside the box, coming up with ideas for ways you can spend less and bring in more. For example, you might spend less by making your own coffee each morning instead of buying one, forgoing a seemingly minor $5 per day expense that -- whether it's a coffee or a midday snack or a pack of cigarettes -- amounts to almost $2,000 per year. You might bring in more money by taking on a side hustle or just by gradually selling items you no longer need or use -- there's a good chance your basement, garage, and/or attic is full of such things.

As you sock money away, consider making use of tax-advantaged retirement accounts such as IRAs and/or 401(k)s. The contribution limit for IRAs in both 2019 and 2020 is $6,000, plus an extra $1,000 for those 50 and older. Note, too, that it's not too late to make a 2019 contribution to your IRA(s) -- you have until the tax deadline, April 15, 2020, to do so. You can make your 2020 IRA contribution(s) anytime between now and April 15, 2021.

With 401(k) accounts, meanwhile, the 2020 contribution limit is $19,500, plus $6,500 for those 50 and older -- that's up from $19,000 and $6,000, respectively, in 2019. The deadline for 2019 contributions has passed, so work on your 2020 contributions.

No. 4: Invest effectively

It's not enough to save aggressively. You might save $20,000 per year, but if you're just stuffing all that into a bank account earning 1.5% interest, it's not going to grow very briskly for you. Your long-term dollars (those you won't need for at least five, if not 10, years) are likely to grow the fastest in the stock market. The research of Wharton Business School professor Jeremy Siegel backs that up. He calculated the average returns for stocks, bonds, bills, gold, and the dollar, from 1802 to 2012:

Asset Class

Annualized Nominal Return









U.S. Dollar


Source: Stocks for the Long Run by Jeremy Siegel.

You can spend a lot of time learning about investing in stocks and can become a terrific stock picker, but you don't have to go that far. Instead, you can just park your money in one or more low-fee, broad-market index funds. An index fund is invested in the same holdings as a specified index (such as the S&P 500) and offers nearly the same return as it. Perhaps surprisingly, index funds tend to outperform most non-index stock funds. As of the middle of 2019, for instance, the S&P 500 outperformed fully 90% of large-cap stock mutual funds over the previous 15 years.

Here are a few index funds to consider:

  • SPDR S&P 500 ETF (SPY 0.63%)
  • Vanguard Total Stock Market ETF (VTI 0.66%)
  • Vanguard Total World Stock ETF (VT 0.68%)

Respectively, they'll have you instantly invested in 80% of the U.S. stock market, the entire U.S. market, or just about all of the world's stock market. There are index funds targeting bonds, too, and other segments of the market.

No. 5: Revisit your plan and stay the course

The last step is simply to stay the course. You may have devised a perfect plan to get you to an early retirement, but if you stop saving and investing the necessary sums on your necessary schedule, you won't get there. Revisit your plan every now and then, too, to make sure it still makes sense, given your current situation.

Keep learning, too, because the more you know, the better financial decisions and moves you'll likely make.