Want to Retire Early? Try this Step-by-Step Guide

Summary: Retiring early isn’t just an option for the ultra-wealthy—it’s possible for anyone with the right strategy. This guide breaks down the essential steps to financial independence, including investing wisely, reducing expenses, and building passive income.

Dragging yourself out of bed for yet another workday can make you wonder—what if you didn’t have to do this forever? Retiring early sounds incredible: more time for family, travel, hobbies, or just living life on your own terms. But for most people, it feels impossible, like it’s only for the very wealthy. With a solid early retirement plan, however, you can retire early with no need to win the lottery.

Why do more people want to retire early?

Working until 65 used to be the norm, but more people are rethinking that plan. In fact, the average retirement age in the United States is now 62, and nearly 60% of Americans say they’d like to retire early—though less than half believe they actually can. ^{(1) (2)}

So, why are so many people eager to leave the workforce early? Some common reasons for early retirement are:

• More freedom: People want to travel, pursue hobbies, or simply enjoy life while they’re still young and healthy.
• Burnout is real: High-pressure jobs can take a toll, and many seek an early retirement plan to escape the grind.
• Better health: Less stress, more sleep, and time for exercise? Sounds like a win.
• Financial independence: The goal: working because you want to, not because you have to.

Of course, wanting to retire early is one thing—making it happen is another. That’s where planning comes in. A solid early retirement plan, combined with the right tools and guidance from a financial professional, can help turn this dream into a reality.

5 strategies to retire early

Depending on your location, the annual cost of a comfortable retirement varies by as much as $67,981, according to a GOBankingRates analysis using Bureau of Labor Statistics data on the cost for food, shelter, transportation, healthcare and utilities.³

The variability in costs and living expenses is just one reason that, to retire early and comfortably, you need to be intentional about the financial decisions you make today. Let’s break it down step by step.

1. Define your early retirement goal and number

The first step to achieving early retirement is knowing exactly how much money you’ll need. A common guideline is the 25x rule, which helps estimate your savings target:

• Multiply your estimated annual expenses by 25. If you expect yearly spending of $40,000, you’d need $1 million saved for a comfortable early retirement.
• This rule is based on the 4%-withdrawal rule, which suggests you can safely withdraw 4% of your savings each year without running out of money.

But, if you plan to stop working decades before the traditional retirement age, you’ll need to account for a longer retirement. The 4%-rule assumes a 30-year retirement, so early retirees may need to aim for a higher savings goal or adjust their withdrawal rate to avoid running out of funds.

To get a more precise estimate, an early retirement calculator can help you factor in variables like inflation, investment returns, and your ideal retirement lifestyle. You may also want to work with a retirement professional to create a sustainable strategy that helps ensure your savings last for the long haul.

2. Maximize your savings rate

If you want to retire early, saving just 10–15% of your income won’t cut it. To reach financial independence faster, aim to save at least 30% to 50% of what you earn. It might sound ambitious, but with the right approach and some sacrifice, it’s possible.⁽⁴⁾

Start by focusing on your biggest expenses—housing, transportation, and food. Making smart adjustments, like downsizing your home, purchasing reliable used cars and driving them a long time or cooking more meals at home and meal prepping, can free up significant cash without making life feel restrictive.

Automate your savings so a portion of your paycheck goes directly into investment accounts before you spend it. Take full advantage of tax-advantaged retirement plans, like 401(k) and IRA, and Health Savings Accounts to help your money grow faster than in a savings account.

And if your current income won’t get you there fast enough, consider negotiating a raise, starting a side hustle, or finding other ways to increase your earnings. The more you save and invest now, the sooner you can step away from full-time work on your own terms.

3. Invest wisely for long-term growth

Saving aggressively is important, but how you invest those savings determines how fast you can retire early. The key is to focus on long-term growth while managing risk. Work with a financial professional to help determine your risk tolerance, time horizon and suitable investments for your goals.

A well-diversified portfolio—mixing stocks, bonds, and alternative assets—helps balance risk and reward. As you get closer to your target retirement date, adjusting your asset allocation can help protect your savings from market downturns.

Real estate can also be a powerful wealth-building tool. Rental properties, for example, can generate passive income, covering expenses and reducing how much you need to withdraw from your investments. Whether through traditional real estate, REITs, or house hacking, strategic property investments can speed up your path to financial independence. A financial professional can help you develop a strategy that aligns with your goals, risk tolerance, and timeline.

4. Build multiple streams of income

Investing for early retirement requires careful planning. To truly achieve financial freedom, you need multiple income streams that keep money flowing in—even when you’re no longer working.

Work with a financial professional to ensure you build a retirement income plan that meets your needs after your regular paychecks stop. This may include multiple streams of income, like annuities, dividend stocks, real estate or other business opportunities. Rental properties can also be a solid wealth-building tool, generating income while the property appreciates. If you prefer something more flexible, an online business or side hustle can grow into a steady source of revenue.

For added security, annuities from Mutual of Omaha can help to provide guaranteed retirement income, giving you a dependable financial cushion.

Plan for healthcare and lifestyle adjustments

To retire early, you need more than enough money; you must also ensure you meet your lifestyle and healthcare needs. One of the biggest hurdles is health insurance. Since Medicare doesn’t kick in until age 65, you’ll need a plan to bridge the gap. Options like private insurance, an HSA, or even part-time work with benefits can help.

Beyond healthcare, think about how you’ll actually spend your time. More travel? Picking up new hobbies? Moving to a different city? These things cost money, and it’s easy to underestimate expenses when you finally have the freedom to do what you love.

There’s also the emotional side of early retirement. Work provides structure and purpose, and stepping away can feel like a big change. Staying engaged—whether through volunteering, passion projects, or even part-time consulting—can help to make the change smoother.

Making early retirement a reality

Retiring early isn’t just for the lucky or the ultra-wealthy—it’s possible with the right early retirement plan. It takes more than just dreaming about it; you need a solid strategy, smart investments, and the discipline to make your money work for you. The good news? You don’t have to figure it all out alone.

At Mutual of Omaha, we help people turn early retirement from an idea into a well-executed plan. Whether it’s through annuities for guaranteed income, smart investment options, or financial guidance, we’re here to help ensure your retirement savings last. Read more in our Retirement Planning category for more insights. Annuity guarantees are backed by the claims-paying ability of the insurer.

Frequently asked questions

Q1. Can I retire early without a high income?

Yes, but it requires disciplined saving, strategic investing, and a lower-cost lifestyle. Many early retirees achieve financial freedom by prioritizing savings, living below their means, and building passive income sources.

Q2. What are the biggest risks of early retirement?

Some key risks include outliving your savings, unexpected healthcare costs, and economic downturns affecting investments. A well-structured plan with diverse income sources and an emergency fund can help mitigate these risks.

Q3. Do I need life insurance if I retire early?

Life insurance can be valuable if you have dependents or outstanding debts. It helps ensure financial security for your loved ones, especially if your early retirement plan relies on passive income that could stop if something happens to you.

Q4. How can I access retirement savings before 59½ without penalties?

There are strategies like Roth IRA conversions, SEPP (Substantially Equal Periodic Payments), and investing in taxable brokerage accounts to provide early access to funds without penalties. A financial advisor can guide you based on your specific situation.

Q5. How do I stay productive and engaged after early retirement?

Many early retirees find fulfillment through part-time work, passion projects, volunteering, or travel. Having a coherent plan for how you’ll spend your time can help maintain purpose and avoid boredom in early retirement.

Sources

1. U.S. News & World Report, What is the average retirement age? March 2025
2. The Financial Brand, Magical retirement thinking: Most Americans want to retire early, but few have plans to get there, August 2024
3. GOBankingRates, How Much a Comfortable Retirement Will Cost You in Each State, October 2024
4. NerdWallet, Financial independence, retire early (FIRE), October 2024

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

All investing involves risk, including the possible loss of principal and there can be no assurance that any investment strategy will be successful.

Real estate investing can be subject to a number of risks including but not limited to general market risk, liquidity risk, credit risk, structural risk, and leverage risks.  The strategies mentioned may not be suitable for everyone.

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