Want an Early Retirement? 4 Ways to Quit Your Job Sooner

a man enjoying retirement on a beach

Early retirement is possible if you play your cards right. | iStock.com

After a brutal day in the office, who hasn’t dreamed of throwing off the shackles of a 9-to-5 job for good? Retire early and you could say goodbye to spreadsheets and conference calls, and hello to a life of freedom and relaxation.

For most, the idea of an early retirement is no more than a fantasy. Yet for a select few, retirement by 45, 40, or even (gasp) 35 is a reality. Even better, you don’t need to be born rich to do it. While it won’t be easy, smart planning and aggressive saving in your 20s and 30s can make it feasible to retire decades sooner than most people, even if you don’t have a trust fund to fall back on, say financial experts.

“Early retirement will not be likely for many, but with proper planning, realistic goals, and discipline it is possible,” Scott Moffitt, the president and CEO of the Summit Financial Group in Loveland, Ohio, told The Cheat Sheet.

If you can’t wait until 65 to say goodbye to your boss, here’s what you need to do to enjoy an early retirement.

1. Start saving – a lot

Money, cash, $100,

Cash money | Paramount Pictures

Forget stashing 10% or 15% of your salary in your 401(k). If you want to retire early, you need to think about saving half of your take-home pay, if not more. The earlier you start saving aggressively, the earlier you’ll be able to retire.

“Millennials who want to retire 15 or 20 years before full retirement age of 67, as defined by Social Security, will need to save a substantial amount of their income, quite possibly as high as 50%,” Moffitt said. “A two-income family should consider living on one income and completely saving the other.”

“If you save a reasonable percentage of your take-home pay, like 50%, and live on the remaining 50%, you’ll be Ready to Rock (aka “financially independent”) in a reasonable number of years,” wrote personal finance blogger Mr. Money Mustache, who retired in his mid-30s.

2. Live frugally

wallet full of cash

Slash unnecessary spending to make your retirement dreams a reality. | iStock.com

Think saving half of your salary is impossible? It can be done, super-savers say, but you need to rethink your lifestyle. To save as much as possible, you need to cut back on your spending (and we mean doing more than just giving up your daily lattes). According to Mr. Money Mustache, the trick is realizing “your current middle-class life is an exploding volcano of wastefulness.” Once you accept you don’t need all the stuff you think you do, you can get comfortable with spending way less.

“The number one thing people in their 20s or 30s can do if they hope to retire early is not buy in to the ‘keeping up with the Jones’s’ mentality most Americans take,” Charlie Harriman, a certified estate planner and financial adviser with Cloud Financial Inc., told The Cheat Sheet.

“Learn to live a lifestyle that is comfortable for you and your family but also feels a little tight. If it doesn’t feel tight at all that probably means you are spending more than you should,” he added. As your income rises, don’t increase your spending. Instead, continue to live as you always have and save the extra money, Harriman advises.

3. Plan for future expenses

Your choice sign

Financial planning is up to you | Justin Sullivan/Getty Images

Sure, you’re young and healthy now. But what happens when a health crisis strikes, or your kids are grown and start looking for help with college expenses? Early retirees need to account for these additional expenses when planning. If you don’t, you may find yourself navigating a difficult return to the workforce.

“Something that can really make early retirement a reality is quitting your full-time career and taking a job you enjoy doing that will provide health insurance for you and your family,” Harriman said. Health care reform has also made it easier for early retirees to secure insurance.

If you have kids, you also need to consider college expenses. “When you are setting your early retirement date, make sure you have taken in to account if your children will be in college and if this is something you plan to help them with,” Harriman said.

4. Invest wisely

money in piggy bank

Pay close attention to your investments if you hope to retire early. | iStock.com

Blindly transferring a chunk of your paycheck to your 401(k) every month isn’t going to be enough if you hope to quit work in the next decade or so. You’ve turned retirement saving from a marathon into a sprint, which means you’ll need to take a more hands-on approach to managing your money if you want to reach your goal.

“Your investing window has shrunk if you plan to retire early,” Harriman said. “Monitoring your investments earlier than you would at a normal retirement age is crucial.” Working with a professional can help you set goals and motivate yourself to stick to a plan, he added. “Winging it rarely pays off, especially when it comes to retirement.”

In addition to traditional investments, finding ways to supplement your income once you do stop working full-time can ease the path to life beyond the office. “Creating a passive income stream during retirement years would be beneficial as well. This could be a home-based business, rental property, or something similar,” Moffitt said. “Even $1,000 per month, or $12,000 per year, is the equivalent of an additional $300,000 of investments using the 4% income rule.”

Follow Megan on Facebook and Twitter

More from Money & Career Cheat Sheet: