Mar 30

How to retire by 40.



Photo by Steven Depolo

Early retirement is a hot topic these days and for good reason, it is attainable by nearly anyone who really wants it and pretty freaking awesome. There are thousands of gurus/blogs/coworkers who claim to have the definitive opinion on this topic but I’m here to give you the lazy man’s simple approach, specifically designed for the W2 wage slave like most of us. I actually am ambivalent about the word early retirement because everyone I know who “retired” before 40 didn’t actually retire. They became free, and then they did what they loved. Exactly none of them stopped being productive or stopped making money or stopped creating. OK, here it is. Brace yourself.


  • Step 1: Get an income, preferable a decent one. I’m assuming you are 22 and either fresh out of college or have spent the last 4 years since high school learning skills and becoming valuable in the marketplace with these skills.
  • Step 2: Save 50% or more of your income and invest the money wisely.
  • Step 3: Become financially independent in about 17 years.
  • Step 4: Do whatever you want because you are free!


You’re welcome. Get to it and enjoy your new freedom!



OK, maybe a little too simple. Here are the gory details in no particular order in brain download format*: Starting age 18. Go to school, or get a job. Maybe start a business. Alternate path for some; join the military. Regardless, learn a high value skill(s). If you choose school do not choose an expensive one unless you are able to get grants or scholarships. Community college and state schools will suffice for most, and economically you will probably come out way ahead. Expensive schools are for people with rich parents paying their way or people who don’t want to retire early. Don’t go to a 40k/yr school to become a social worker or reporter. The math doesn’t work. If you get a job try and find one you don’t hate. Be awesome at it so you become valuable. Awesome and valuable people make more money. Learn high value skills, preferably while getting paid. Devote some of your free time and money to learning and skill building. Make this a habit. Between libraries and the internet a kick-ass education is almost free. Don’t consume too much passive entertainment. Don’t smoke. Don’t do drugs that harm your mind or body. Buy or borrow these books: Your Money or Your life. How I Found Freedom in an Unfree World. Understand the concepts. You don’t have to agree with every word but understand this: you are responsible for your own freedom and  your time, money and life energy are the same thing. Maximize 401k up to employer match, health savings account if available, Roth IRA**, rest of 401k, taxable account if anything left over, probably in this order***. Be frugal. Don’t be cheap. Live life fully. Be ruthlessly efficient with the big three; housing, transportation and food. Be ruthlessly efficient with everything else. Hate recurring fees as much as I do. Consider renting. Consider roommates. Acquire cooking skills. Eat healthy. Eat actual food. Avoid foods that destroy your brain. Floss. Maintain a healthy body– you will feel better, make more money and have lower medical costs on average. Buy used. Consume less. Only buy and keep things that give you joy. Have fewer things of higher quality. Eliminate clutter. Bike and walk everywhere you can. Kill your television. Constantly increase your financial intelligence. Run your personal finances like a business. Marry wisely. Live close to work. If you purchase a home use a fixed 15 year mortgage so it’s paid off before you are 40. You need a smaller home that you think you do. Stay healthy; medical disasters are one thing that can derail you. Divorce is a financial weapon of mass destruction. Kids don’t have to be. Consider investing in a rental, or two, or ten; especially if you are handy. Become handy if you are not. Consider a side business. Be a lifelong learner. Buy as little insurance as you have to. Buy as much insurance as you need. Grow a mustache. Align your spending with your life vision.






Become free.




*Dumb way to get people to read your blog but fun and lazy way to write.

**There is endless debate about whether one should contribute to a traditional IRA or Roth IRA. The higher your tax rate the more attractive a traditional IRA becomes, the lower your tax rate the Roth becomes more attractive. The more important point though is to max out one of them!

***Invest in your financial and personal development before saving for retirement. For most people this gives the biggest bang for the buck.


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    • Jefferson Hamlin on March 30, 2016 at 7:40 am
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    1. Yes, very important step.

      And flossing, dental work is expensive!

  1. Pretty tough for a physician to pull off retirement by 40, but not impossible if you can avoid the usual trappings of a stereotypical doctor’s life. 45 or 50 is more realistic, particularly for a 1-income household.

    Many of your excellent recommendations have little to do with the ability to retire at 40, but will give you better health so you are able to enjoy doing whatever you want for a longer time in early retirement. The health and fitness aspect of early retirement often plays second fiddle to the monetary aspects. Both are vital to success.

    1. Agreed. Becoming a physician is a very poor choice for retiring at 40 as the combination of student loan debt and getting a later start on earning is quite limiting. It is very specialty dependent. There are also some structural costs involved in being a physician that raise the floor on your spending. A much better scenario is to build a practice that you don’t want to retire from.

  2. Sounds good to me! The main thing to know is that it’s possible if you follow the steps and put your mind to it.

    1. Exactly.

  3. It is that easy. Start young, make wise investment choices, and just keep feeding the beast. I’m doing the last two. I wish someone would have grabbed me 25 years ago and taught me step 1.

    1. As the saying goes, youth is wasted on the young. There are so many financial mistakes I made while young, fortunately they were all with relatively small dollar amounts attached to them. Starting early though can make up for a lot of other deficiencies. Compounding is truly magic stuff.

  4. Just came over from POF site. Nice summary there! You have a good blog. I hope you find my articles worthwhile to summarize like this! Best wishes in your 10! journey. TFR

    1. Thank you TFR! Glad to have you here, enjoy the madness 😉

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