Tanja’s story may sound extreme, but the truth is, a lot of people can reduce their working years, with a little financial foresight and planning. “Many middle-class-and-up folks could retire earlier than they think, even without having big advantages,” says Hester, who now lives in Lake Tahoe, Calif., and recently wrote Work Optional: Retire Early the Non-Penny-Pinching Way ($10; amazon.com). In fact, there’s an entire movement of people retiring in their 30s and 40s—they call it FIRE (financial independence, retire early). Even if you can’t or don’t want to quit work quite that early, you still have the power to bring your retirement date forward a bit—by making smart money moves now. She determined which expenses brought her joy (travel, for instance) and which didn’t (new clothes, unnecessary takeout), and then she attacked the low-joy parts of her budget. “So much of our spending is mindless,” she says. “When you really start tracking, you’ll be surprised by how much you can scale back and save.” Before you stash that extra cash in a retirement account, tackle any non-mortgage debts, says Deacon Hayes, founder of the financial education company Well Kept Wallet and author of You Can Retire Early! ($8; amazon.com). “Any interest you’re paying is snowballing you in the wrong direction,” says Hayes. If you get that balance to zero, you could bump your yearly retirement contribution by more than a grand and not even feel the pinch. Spending significantly less than you earn may feel uncomfortable, even unfair, but it’s a great way to see how disciplined you’ll be once you’ve kissed your paycheck goodbye. “If the sacrifices feel really onerous, working longer may be more realistic than rushing to retire,” says Jill Kismet, a chartered retirement planning counselor with Plan for Joy in Tucson, Ariz. Let’s say your portfolio is spread across stocks, bonds, and cash savings and you hope to quit work at 55 and live on $50,000 a year simple living plan. With $1 million, there’s only a 73% chance your money will last. To get that probability closer to 90%, you could aim for more like $1.3 million in savings, scale back your retirement spending to $40,000 a year, or work for an extra eight years. Note: Even if you’re a numbers nerd and love online money tools, it’s worthwhile to ask a fee-only certified financial planner for a second opinion, says Hester. “If you’re thinking of retiring early and you don’t have a Roth IRA, open one and put in a small amount, like $100, if only to start that five-year clock,” says Day. Even then, a Roth IRA isn’t a giant investment vehicle, says Kismet. For 2022, you can invest up to $20,500 in a 401(k), while the total contribution limit for traditional and Roth IRAs is $6,000 ($7,000 if you’re 50 or over). “If you plan to retire before 59, you need a brokerage account for the majority of your money,” says Kismet. (Think online options or more traditional brokerages, like Fidelity.) An easy way to retire with more? Avoid high management fees. A 1 percent fee may not sound like much, but over 30 years it could shrink your portfolio by more than $200,000, according to a NerdWallet analysis. Find a fund with a 0.5 percent fee, and you’ll be sending out invitations to your retirement party that much sooner.
