How Much Do You Have to Save To Retire Early?

Fifty Percent of Your Income Will Get You There.

Early retirement comes in many stripes, meaning various things to various people. There’s retirement at 30, that Holy Grail, the sign you are a rugged, independent-minded genius. Even if one doesn’t accept 30 as the arbitrary magic number, retirement by 40 or 45 is a much-hyped, much coveted lifestyle and sign of uber-success.

Here, we’ll discuss early retirement, which means anything under 65. The lower you set the age, the more intense you’ll have to be in implementing this advice. Our main goal will be to take a look at how much it takes to build up a retirement sum—and how to do it.


To figure out how long your work life will have to be to get you to retirement age, here’s a simple formula. It’s all about how much of your take home pay you can save, as a percentage.

30% will get you there in 30 years; 40%: 20; 50%, less than 20. So if you’re looking to retire around 40, you’ll need to try to save nearly half your income. Of course, having a bigger income will cut that.

You’re all familiar with the snowball effect. As you save your income, you get a larger overall bundle of cash in your funds, with snowballing returns.

The beauty of this is that it’s all in your hands. Early retirement, using this formula, doesn’t require the serendipity of your start-up really taking off or being bought out. It will happen as long as you have the discipline to save up.

It’s hard to get started, but once you get in a groove you should be able to cope. The secret is doing things such as trying to get by without a car, using public transportation, walking, biking, etc. If you’re married, getting by with one car can be a great strategy.

Cutting down on packaged foods and other inefficient expenditures of money can be a corner stone. Cutting back on all impulse buys or unnecessary purchases is key.

We’ve discussed the length of time, but to get down to the brass tax of the brute amount, a lot of people think that about half a million in investments—with a paid-off house—will suffice. The inspirational guru of frugal early retirement, Pete, who prefers to keep his real name private and to go buy Mr. Money Mustache, says he feels you need about a 4% return on your investment throughout your quest for retirement.

Without question, retiring early requires a particular mindset. Being frugal and going through such great lengths might be extreme, but anything one does to retire early is. This post gives the mindset behind really going after it, doing what it takes.

The people who delve into this plan fancy themselves renegades, beating the system by deciding to live with less, and deciding to do it to give yourself the ultimate freedom when it’s all done. The beauty of it is, you don’t have to retire til you want to.

When you feel comfortable, whether it be at 45 or 50, you’re ready.