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The Four Keys To Super-Early Retirement

Most people would love to learn how to retire early. I mean, early, as in, well before the age of fifty. But they think it’s impossible, that to achieve such a goal they’d have to win the lottery or make a mid- to high-six-figure income (or more) every year.

Well, my husband and I retired in our early forties while making an average income. I describe all the steps to do it, as well as share our story, in my book, Hatching The Next Egg.

In this article, I am going to boil the contents of the book down to the four most important things you need to know in order to learn how to retire early.

Key #1: Debt is a no-no.

One of the most frustrating events in my life was when, less than a decade ago, a young man with little life experience became a bestselling author with a book that instructed people to build wealth by accruing credit card debt.





I don’t care what kind of car you drive, how big your house is, or how many of the latest gadgets you have in your possession. If you’ve bought the stuff on credit, you are one of the poorest people in the world. Why?


Now, sometimes using a credit card can actually help you live less frugally. For example, certain department stores will take a huge chunk out of your bill at the checkout counter if you put it on a store credit card. If you travel a lot, certain credit cards give you points toward free miles with certain airlines for every purchase you put on the card.

I will reluctantly concede that using credit cards to save money is acceptable…as long as you pay off the credit card bill in full every single month the very day it arrives in the mail.

If you want to retire early, and know you can’t or won’t do that, stay away from credit cards!

Also, only buy the kind of car you can afford to pay with cash, avoid student loan debt like the plague, and be extremely frugal when it comes to buying a house. Whatever debts  you have now, you need to ruthlessly plug away at paying them off. 

Key #2: The more money you have left at the end of every month, the sooner you can reach early retirement.

Obviously, if you want to retire early, you have to be able to save up a substantial nest egg within the next ten to twenty years. And you can’t do that if you’re living paycheck to paycheck. You can’t do that if you’ve only got 100 dollars left at the end of every month.

Let’s say you want to retire in the next fifteen years. If you invest into a portfolio that will give you an annual average increase of eight percent, and you think you can retire on $700,000, you’ll need to invest $2,000 every month of those fifteen years to get there.

What if you want a million dollars at the end of fifteen years? Then you’ll need to invest $3,000 every month.

Of course, if you can be patient and wait an extra five years, then you don’t have to invest as much every month. For example, investing $2,000 per month at an eight percent annual increase will turn into $1,186,150.11 after twenty years.

There are only two ways to have more money at the end of the month than you do now: increase your income, or decrease your spending.

Key #3: The most popular way to invest will interfere with your early retirement goal.

I agree with Dave Ramsey about a lot of things. But one major area where the two of us part ways is how to invest.

Mutual funds, the way that most people invest – and the way that Ramsey recommends – are a safer investment than purchasing individual stocks. However, they are not stable. Why? Because they are all stock market investments.

Ditto for total stock market funds, although those are a bit safer because they encompass a much wider variety of companies than any individual mutual fund.

If you want to learn how to retire early, read up on the Ivy Portfolio and the Permanent Portfolio. During the crash of 2008, people who had all their retirement in mutual funds lost almost a third of their investments. And never quite gained it all back.

People who had their money invested either the Ivy Portfolio way or the Permanent Portfolio lost less than five percent. Of course, they regained their pre-crash values within a few months, and then started building again, while the mutual fund values were still slowly climbing back up out of the hole.

I explain both the Ivy and Permanent Portfolios in my personal finance book. Click here for an article about the Ivy Portfolio; click here for one on the Permanent Portfolio. Better yet, purchase each book that describes in great detail how to properly invest in and handle the respective portfolios.

UPDATE July 2020: As happened during the 2008 crash, the stock market downshift during the initial COVID19 panic caused those who invested solely in mutual funds to lose a decent chunk of their investments. DH and I invest the Permanent Portfolio way, and have had just the opposite happen!

Key #4: Being a miser will make you miserable.

“It is better to give than to receive.”

“Give, and it shall be given onto you, good measure, pressed down, and running over…”

“Whatever you sow, that shall you also reap.”

Yes, after telling you to save money and invest it wisely, I am telling you to be a giver.

This may sound contradictory. How can you give away money and still expect to retire early?

But the truth is, a miserly heart is a miserable heart. If you spend the next ten to twenty years counting every penny and living like Ebenezer Scrooge…well, you remember what the Ghost of Christmas Yet To Come revealed to Scrooge, right? (If you haven’t read Charles Dickens’ classic short story, “The Christmas Carol”, you can probably find it for free online. Find it, and read it. It may change your life.)

I’m not talking about throwing away ten percent of your income because of a horrible misinterpretation of the Bible based on the greed of religion. I’m talking about having an open heart and open wallet when you encounter people with real needs. I include bonafide charities here, too.

Being able to help others financially brings a satisfaction that doesn’t compare to watching your nest egg grow. It also makes you a more compassionate and empathetic human being. More loving. And the more love you put out, the more you’ll get back into your life. The more good things will come your way.

You might choose to set aside a certain amount every month to give to someone. Or, you might just keep your eyes and ears open and give a large amount once or twice a year to an individual, family, or organization that you feel strongly about helping.

Whichever way you choose, do be a giver as well as a saver and investor.

I’ve done my part. I’ve told you how to retire early. Now the ball is in your court. I would suggest going after it, taking careful aim, and hitting it as hard as you can.

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