I Plan to Retire Early. Here Are 5 Steps I'm Taking to Do It

Retirement doesn't need to wait until age 65 or 70.

The first time I read about the early retirement movement, I was instantly drawn in. Known as FIRE, short for "financial independence, retire early," it's a lifestyle where you save much more than average so you can retire at a young age, like your 40s or 50s.

Even if you're not sure you want to retire that soon, the principles of the FIRE movement can benefit anyone. Ultimately, it's about growing your savings and investments, which gives you more financial security.

I'm aiming to become financially independent in the next 15 years. I don't necessarily plan to fully retire then, but I'd like the freedom to work as much or as little as I want. It's a big goal, so there are a few things I'm focusing on doing to get there.

1. I maximize my income

A larger income makes just about any financial goal easier. That's why I regularly look for ways to increase income.

Personal finance guides often focus on how to save, and that's certainly important, as well. But you can only save so much. If you make, say, $60,000 per year, you have the option to save considerably more than if you make $30,000 per year.

I'm big on having a work-life balance, so I would never suggest working heavy hours to maximize income. Instead, continually look for advancement opportunities, whether that's at your current job or by finding a new one.

2. I save at least 40% of the money I make

It's normally recommended to save at least 20% of your income. If you want to retire early, the best thing you can do is increase your savings rate as much as possible.

Everyone's situation and the amount they can save is different. What worked for me is gradually working my savings rate higher as I earned more and got better at managing money. You could go from saving 10% to 15%, or from 20% to 25%. Smaller steps like these are more realistic than trying to make a huge change all at once.

3. I keep my living expenses down

The key to a high savings rate is low living expenses. When only 30% to 40% of your income is going toward your regular bills, you have the flexibility to save significantly more.

I like to focus on reducing the big expenses. Saving on housing or transportation makes a much greater impact than getting rid of that weekly drink from Starbucks. Here's how I save on these kinds of bills:

• Since I'm a remote worker, my home base is a country (Colombia) with a low cost of living.
• My healthcare costs are also much lower because I live outside the United States.
• I don't have a car and get around walking and with rideshares.

Even if none of those are doable for you, there may be other ways to save on big costs. For example, maybe you could stick to an older used car instead of buying a new one and save yourself a $600 car payment.

4. I invest in a low-cost mutual fund

The best way to grow your money is to invest it. Although you can and should use tax-advantaged retirement accounts to do this, they typically charge a penalty if you make a withdrawal before reaching age 59 1/2. If you expect to withdraw funds earlier than that, it's smart to have investment accounts you can access penalty-free at any time.

As far as what to invest in, I like to keep it simple. I picked out one of the top mutual funds, and now I invest in it monthly. A similar option is exchange-traded funds (ETFs). These types of funds are ideal because they allow you to put your investing on autopilot. You can just invest a set amount in the fund you chose regularly, without needing to spend time picking specific stocks.

5. I stay out of debt

As a general rule, I try to pay for everything in full upfront and avoid taking on debt. I'd rather get a purchase out of the way instead of taking on a new monthly payment and getting charged interest.

That's not to say all debt is bad. There's nothing wrong with getting a mortgage or financing a car purchase, to give a couple of examples. But it's easier to save money when you keep debt to a minimum. Credit card debt, in particular, can be a serious drain on your finances. If you have any, it's worth planning how to get out of credit card debt and avoid it in the future.

As you can see, I'm not doing anything extreme. I'm not living in a van, and I haven't completely changed my lifestyle to maximize savings. That's the nice thing about the FIRE movement. All the methods work, it's just a matter of how far you want to take them.