15 Steps to Take if You Plan to Retire Early

Retiring early is a dream for many Americans. It can be a hard goal to reach, though, as far too many people have too little saved even to retire comfortably at the normal age.

If you're serious about leaving the workforce before you're in your mid-60s (or later), you'll need to work diligently toward saving the money to make that happen.

These 15 steps can help get you there -- especially if you start taking them ASAP.

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If you're planning to retire early, you're going to need a lot of money to cover costs without a paycheck for many years of your life.

It's imperative you figure out just how much money that is.

There are a number of different ways of doing that, but the best option may involve determining the amount of income you expect to need and working backwards from there to figure out the requisite size of your nest egg.

ALSO READ: 3 Ways to Calculate How Much to Save for Retirement

Retiring early means you aren't going to be able to count on Social Security to take care of you.

You won't be eligible for your retirement benefits until age 62, and many people planning early retirement hope to leave work well before that age.

Furthermore, claiming benefits before full retirement age (FRA) shrinks your benefits. If you retire early, you'll either have to wait until you've been retired for quite a while to claim your benefits or you'll have to accept monthly checks that are pretty low.

Retiring early means different things to different people. You need to know what your specific desired age is.

That decision will shape your retirement goals by determining the amount you need to invest each year to be ready to leave the workforce on schedule.

Once you know your timeline and the desired amount of money you'll need to retire, you can figure out exactly how much to save every single month to hit your target. There are tons of retirement savings calculators online to help you do this math.

Breaking down your big goal into small ones gives you an actionable step to take today and makes it easier to track your progress over time.

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Saving enough for an early retirement is probably going to require some sacrifice -- and some careful spending.

You should know how much you need to save every month in order to be ready when you'd like to retire. Once you know that, you can build your budget around investing that amount.

If you discover you need to save $800 a month, you'd start with working that into your budget with your other essential bills. If you don't have enough income to cover everything, you'll know you need to make bigger sacrifices or change your retirement date.

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When you've built your budget around savings, you should be confident that you'll have enough spare cash each month to invest the required amount in retirement accounts.

But don't force yourself to actually move that money each month. Instead, set up an automated transfer on payday -- or ask your employer to take the money directly out of your checks and put it into your 401(k).

By automating the investing process, it becomes far less likely you won't hit your monthly savings target since that will be the default unless you act to stop it.

In the vast majority of situations, you won't be able to save enough to retire early unless your money is invested and earning reasonable returns.

As a result, you need to learn how to be a smart investor. For some people, this will mean learning how to invest in exchange-traded funds (ETFs), which track the performance of the market.

For others, the best approach is to research investment options carefully, develop an investment thesis, and put at least some of your money into buying shares of individual companies. You could potentially beat the market with this approach, making it easier to retire early. But it's a riskier strategy that's unlikely to pay off unless you devote the time to do it right.

It's important that you expose yourself to the right level of risk when it comes to investing for early retirement.

After all, if you're too conservative, it will be much harder to build a big nest egg quickly enough. But if you're too aggressive, there's a greater likelihood you'll suffer big losses that make early retirement more difficult.

Since risk and potential returns have an inverse relationship, evaluate your risk tolerance carefully to make informed choices about how your portfolio balance should be distributed.

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Once you've carefully figured out an appropriate asset allocation and invested your money, you can't just sit back idly.

Over time, it's likely some of your investments will perform better than others. When this happens, your portfolio could become too heavily weighted in a particular type of asset.

You should rebalance your portfolio at least once per year, both to adjust to life changes and to make sure you still have the right asset mix.

This is important for anyone saving for retirement, but especially essential when early retirement is your goal and each year of saving and investing matters so much more since you'll have fewer of them.

Debt can kill your early retirement dreams. Other than debt that can increase your net worth -- such as a mortgage or student loans -- you don't want to borrow if you hope to quit work early.

It's especially important to avoid credit card debt, payday loans, and other types of borrowing that can be especially expensive.

Debt can damage your efforts at early retirement in two ways: by reducing your ability to save for retirement and creating an additional monthly obligation you'll have to budget for as a retiree (if it won't be paid off by the time you're ready to quit your job).

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If you're serious about early retirement, you want to keep your cost of living as low as you can.

By avoiding committing to large expenses, it's more likely you'll have the money you need to save enough to leave work early. You also won't need as much money as a retiree, which makes it easier to build a nest egg that can support you.

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If you invest in the right type of tax-advantaged retirement accounts, the government will actually help you save for your golden years.

Traditional 401(k) and IRA accounts give you an up-front tax break for investing for your future. That makes it much cheaper to invest large sums in the year you contribute to these accounts.

Roth accounts, on the other hand, allow you to make tax-free withdrawals in retirement. When you don't have to worry about losing part of your money to taxes, you won't need quite as much of it saved.

Tax-advantaged retirement accounts come with restrictions on withdrawals. In most cases, you can't take money out until you're 59 1/2 (although there are some exceptions).

If you're hoping to retire before 59 1/2, you'll need some money in a taxable brokerage account so you can live off it while you wait to access your retirement funds.

You won't become eligible for Medicare until age 65. Since early retirement usually means leaving the workforce well before then, you'll need a plan for medical coverage.

Chances are good it will cost you a lot to either keep employer coverage through COBRA or buy private insurance. You'll need money to cover these costs of maintaining coverage.

Even after you become Medicare eligible, the expenses don't stop. In fact, you may end up needing far more than you think for out-of-pocket care expenses. Factor these costs in when planning how much money you'll need saved for early retirement.

ALSO READ: Americans Are Underestimating Their Senior Healthcare Costs -- and Could Wind Up Broke in Retirement Because of It

It's important to monitor your progress toward early retirement and make sure you remain on track to meet your goals.

Do a thorough review of your finances at least once a year and make any changes necessary if you find you aren't on schedule to retire at your chosen age.

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Retiring early is within reach if you're serious about making the sacrifices necessary to do it.

The sooner you start following these 15 steps to early retirement, the greater the chances of being able to give notice when you're still young enough to enjoy life.

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