How to Retire Early – The Basics


PEOPLE always ask me how they can retire early and gain financial freedom. Well, this is a quick guide on how to kick-start your dream. Think of them as financial life hacks.

I’ve been following these simple rules for years and they’re helping me towards my goal of becoming a millionaire. This is how you can start your journey…

The Rules

• Cut your spending (Don’t buy stuff you don’t really need)

• Pay off debts (Start with highest interest rate first. Don’t overpay mortgage if rate is below 4%)

• Bank 3-6 months of salary in an emergency fund. (High interest, instant access account)

• Save 50% of your salary (If you can live on half your income you can retire after 17 years. Save 65% of salary and retire in about 10 years)

• Increase your income (This is the hardest part, but even a little extra will give a better standard of living)

• Open a tax-advantaged account (In Britain this means a stocks and shares ISA)

• Within this account invest your cash in a low-cost global stockmarket tracker (I like the Vanguard Lifestrategy funds. I’ve got the 80% shares version which has 20% bonds. More bonds should mean less volatility but too many will probably reduce returns over the long term)

• Pay into a pension (Especially a work pension. If your employer matches a certain amount of the money you put in, this is a no-brainer because it is free money!)

• Don’t give up!

PS. I’ll go into more detail on each of these rules in future articles. This is just a checklist to get you started.

What do you think? Are you working towards early retirement and using this type of method? Do you have any tips? Feel free to have your say below.

Simon Saves

I'm a national newspaper journalist for hire who has a passion for personal finance. Currently saving and investing towards my first million. All comments welcome. Follow me on Twitter: @MyRichFuturecom

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4 Responses

  1. Great summary Simon. This just about covers the areas I look at in my book ‘DIY Simple Investing’.

    Looking forward to reading more articles and to see how your blog unfolds – good luck with it!

  2. Simon, Editor in Chief says:

    Hi diy. Cheers for the comment. I know I’m preaching to the converted when it comes to you.

  3. Good work, Simon – brief and to the point. I like your last point (the ‘Don’t give up!’ one) Most people just settle for things and get into ‘predicaments’ rather that trying to find creative solutions to BIG problems. Keep it up :).

    • Simon, Editor in Chief says:

      Hi Maria, thanks for visiting.

      Yes, it’s important to keep a positive attitude. Sometimes progress can be slow (especially in the beginning) but I’ve found that if you stick at it, financial freedom can be in everyone’s future.

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