written by Mike Ballew July 30, 2023

FIRE is an acronym for Financial Independence, Retire Early. Many people today aspire to retire early. If you want to spend more time with your family, early retirement might be right for you. 

Eliminate Debt 

The first step to achieving early retirement is to eliminate all debt. Now that mortgage interest is no longer tax-deductible for most people, even your home mortgage should be targeted for debt-elimination. Every credit card and loan must be paid off in full. 

Remember in science class when we learned about magnet polarity? Magnets arranged one way attract each other, and when they are arranged in a different manner they repel one another. That is what debt is to early retirement: early retirement repellent. You need to pay off all of your debts including your home mortgage if early retirement is your goal. 

Downsize your Lifestyle 

Do you take nice vacations and fill your driveway with new cars? Might your house be described as a McMansion? Unless you are independently wealthy, early retirement is not in your future. You need to downsize your lifestyle. Buy only used cars, move into a smaller home, and take no more than one simple vacation per year.

Set your Adult Children Free 

If you want any shot at early retirement, you need to set your adult children free. Adult children should be weaned off parental support and eased onto a path of financial independence. If your child is still going to college at the age of 25, they should start paying for it.

Do you have an adult child who lives with you and doesn’t work, has no plans for the future, no ambition, no money, nowhere else to live, and whose subsistence relies entirely on you? If so, you need to get that failure-to-launch child off your payroll. You cannot retire early with an adult child dependent on you for financial support. 

Get a Second Job 

My father retired early at the age of 55. He did it by working a second job and taking the money he earned and investing it. His second job was a concrete business that he started with a friend. If your goal is early retirement, you need to get a second job. 

Does your spouse or partner work outside the home? If not, their employment would help immensely. Everybody should be working, all the time, as much as possible. If you’re serious about early retirement, you need all hands on deck earning as much money as possible. 

Invest, Invest, Invest 

Finally, take all of the money that you’ve saved from paying off your loans and downsizing your lifestyle and setting your adult children free and working two jobs and invest it in the stock market. If you want to retire early, you need to make aggressive investments. Become an expert at picking stocks and trading for maximum profits. 

Bottom Line 

Early retirement is not for everyone. Fortunately, you can try it before fully committing to it. Early retirement is not like jumping off a cliff. If you head down the path we’ve outlined here and decide you don’t like it, no problem. You can return to plans for a more traditional retirement.

Photo credit: Pixabay Eggstack News will never post an article influenced by an outside company or advertiser. Our mission is to help you overcome uncertainty about retirement planning and inspire confidence in your financial future.
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Eggstack founder, Financial Planning Association member, engineer, and software developer.