How to Retire Early

We’ve all asked ourselves “how can I retire early?” The answer might actually surprise you! Figuring out how you can retire earlier than the average American all comes down to a simple math equation!

It’s not a secret or a hack that only a few know, it’s a goal that anyone can achieve with the right strategy and planning. If you’re ready to take charge of your financial future, let’s dive into the world of early retirement. 

Here’s the equation

To determine what you need to make to retire early, you need to first figure out what you’re spending. Then, secure enough passive income to cover those expenses. You’re probably wondering “but just how much passive income?” A good rule of thumb is that your passive income should be around 25x your annual spending. 

I like to think of this from an annual view. For example, if you estimate your yearly spending is $100,000, then you’ll need $2.5 million (100,000 x 25 = 2.5mil) to cover those expenses. 

This gives you a buffer to cover your current expenses without depleting your savings. 

How to expedite your retirement journey

To really expedite your journey to early retirement, you can consider adopting the 50% savings rule. This means putting away half of your income each month. And if you have a consistent monthly income, you can automate 50% of it to be put away. 

Saving 50% of your income can be a big goal to get to, but if you can, the math works out for you to be able to retire in 8-10 years even if you have nothing currently saved. We typically don’t miss money we never saw coming into our account. 
Retiring early doesn’t have to be a mysterious process. But in fact it all comes down to a simple, actionable equation. By working towards filling those gaps in your annual income with passive income, you’re well on your way to retiring early, and financially free. 

To help you get started now, I’ve put together a free monthly budget worksheet and a free annual budget worksheet, just for you.