I don't know of anyone who wishes to work until the day they die, in fact, I think most people would like to retire as early as possible. The trouble is that most Americans aren't saving nearly enough to live the retirement they desire. Did you know that most investment professionals recommend saving 15% of your income from the moment you start working? Given that fact that as a culture we are inadequately prepared for retirement I would be surprised if the majority of fresh graduates saved anything like this amount.

If you're reading this it's unlikely you're fresh out of school. It's another unfortunate fact that we don't start to think about retirement planning early enough. I happen to think that financial education and an education in retirement planning should be taught to kids in school. Anyway, if you're not straight out of school it's still not too late to start working towards your retirement goals. In fact, thanks to the power of compound interest, the earlier you start the better. Once you understand the power that time plays on compound interest you will have a sense of urgency about organizing your retirement financial plan immediately.

Ok, so now that you're determined to get your retirement finances in order to retire early, here are the tried and tested steps you need to follow in order to retire early:

Step 1: Reduce your outgoings

In order to have more money available to put towards your retirement you need to reduce what you spend. This sounds like a painful exercise but it need not be at all. There are many things which can be reduced in price without having any negative impact on your quality of life. Obvious examples include using discount detergents rather than premium brands. Does this really negatively impact the quality of your life? Searching every year for the cheapest home and car insurance. This can save you hundreds of dollars. Does this really negatively impact the quality of your life? These are just two simple examples, you need to get creative and cut your costs yourself without impacting the quality of your life.

Step 2 (Optional): Boost your Earnings

Step 1 alone will get you on the right track, but to magnify your results and get too retirement even sooner you could try to boost your income. Note that any extra money you make must be put towards your retirement fund and not spent. Examples of how you might boost your income include: selling unwanted possessions on ebay, making things to sell on ebay, getting paid to write articles online etc etc

Step 3: Increase Assets

Now that your outgoings are reduced and that you've thought about boosting your earnings, it's time to put your newfound monthly wealth towards your retirement by buying assets. Everyone is different so make sure you thoroughly investigate the options before you commit your money to anything, to ensure the investment is the right one to meet you needs, both in the short and long term.

Step 4: Repeat

Now all that is needed is to repeat steps 1 to 3 to achieve an early retirement. At first it may seem as though you are making no progress but over time you will gain huge momentum thanks to your regular contributions combined with the power of compound interest.


It isn't rocket science to achieve early retirement, yet most Americans aren't adequately prepared. Now that you understand the power of compound interest, following the steps above will get you well on your way to being able to retire early.