3 Essential Ingredients to Early Retirement

3 essential ingredients to Early RetirementEarly retirement is a road less traveled for a good reason. The stars have to align just right for someone to retire early. Early retirees are a very small minority of the population, but awareness has been growing recently. The internet has made it much easier to share our stories and the early retirement stories are spreading to more people. If anyone is curious about early retirement, all they have to do is Google it. I’m sure most regular people are dubious, skeptical, and probably a little jealous. The truth is most of us can retire early if we make it a top priority. Early retirement just isn’t a high priority for most people. They tend to value things like an expensive home, luxury living, contributing to society, self worth derived from a prestigious career, and other things more than the concept of early retirement. So today we will look at the 3 essential ingredients to early retirement. Everyone’s situation is different, but you really need all 3 things to come together for early retirement to happen.

Ingredient #1 – The Push

No one ever goes to college, starts a career, and plans to retire early. When we’re young, we all want to be successful in our careers, gain recognition, and make a lot of money. Tell me if I’m wrong about this. Does anyone start off their career and plan to retire early from day one? I know I didn’t.

However, life rarely turns out like we plan. I was just 17 when I chose to major in electrical engineering. All I knew about the career was that the field is relatively secure and the pay is pretty good. I was handy with math and science so I thought it would be a good career for me. And it was a good career initially. I enjoyed working with technology and R&D was fun for quite a while. The job gradually changed as I got promoted, though. The company pressured senior engineers to take on more responsibilities and it wasn’t enough to excel only at engineering anymore. Gradually, I began to hate my old job and eventually it took all I had to drag myself to work in the morning. The career just wasn’t a good fit for me anymore. The stress caused a lot of physical and mental health issues and I knew I had to get out.

Things just don’t always work out like you hope. I’m sure many people had a similar problem with their job/career like I did. I also think there are many other issues that could push you out of your comfort zone. Life happens. Let’s try to list some of them here.

  • Career not the right fit – Most of us chose a career when we were too young to know ourselves. It seems like an apprenticeship program would work better. That way you learn on the job and if you don’t like it, you can start over quickly.
  • Evolving interests – People change as well as their passions. It was fun to work in technology in my 20s, but I don’t even care about it anymore at this point.
  • Career burnout – That was me.
  • Change in technology – Technology has a way of making careers obsolete.
  • Personal changes – Marriage, kids, and other family obligations can make you want to change.
  • Hostile working environment – Some companies are just terrible places to work.
  • Tired of the rat race – The competitive environment isn’t for everyone. Some of us want to live a more relaxed pace.
  • Health – Sometimes our health doesn’t permit us to continue working in the same field.
  • Age – We all get old. You can’t keep working forever and someday you’ll need to retire. I hope most of us here makes the transition early, of course.

So that’s the Push. There has to be some reason to make a change. If you’re happy with your work, then there is no reason to retire early unless some of these other issues occur.

Ingredient #2 – The Pull

I was planning to change jobs when I was struggling at my old company. I interviewed with a few companies, but they weren’t the right fit either. I didn’t really considered early retirement until RB40Jr came along. I wanted to spend more time being a dad and full time work prevented that. As a side note, I’m better with kids than Mrs. RB40 so I thought it made more sense for me to be the one to stay at home. We both did not like sending our kid to the daycare at all. We only got to see him a few hours per day and our lives were harried. Our son was the primary reason why I choose to retire early instead of changing jobs or starting over in another field.

That’s the Pull. There has got to be something calling to you. If you don’t have something calling, then changing jobs might be a better choice than taking an early retirement. A lot of people change their jobs or careers every day. It’s normal to change jobs to try to find a better situation. Early retirement is just one option. You have to figure out why you want to retire early or else it is just not very attractive.

  • Family – Some people want to spend more time with their kids, take care of their elderly parents, or just spend more time with their spouse.
  • Travel – Full time work takes a lot of time. Some people want to see the world and experience life to the fullest.
  • Freedom – You can set your own schedule and do whatever you want in retirement. Life without a boss is ridiculously amazing.
  • Pursue a passion – Most of us are not passionate about our jobs. We’d rather be doing something we care about instead. Early retirement will give you the time to follow your passions and interests.
  • Fulfillment – There must be more to life than working all day.
  • A mission – What’s your mission? The world needs saving.
  • Lifestyle – The normal American lifestyle just doesn’t work for some people. Some of us would rather have less money and more time.

When you’re working in a job you don’t enjoy, retiring early and doing nothing all day sounds heavenly. However, I doubt early retirement will work out if you don’t have something to retire to.

Ingredient #3 – The Hurdle

Early retirement is tantalizing, but it’s out of reach for most people. There are a lot of hurdles you have to overcome. Finance is the first thing we need to think about when it comes to early retirement, but it isn’t the only hurdle you have to deal with.

  • Finance – How will you pay the bills when you’re not working full time anymore? You don’t have to be financial independence, but it would make early retirement much easier.
  • Lifestyle – Most of us are accustomed to a certain lifestyle. Would you have to cut back if you retire early?
  • Personality – I don’t think early retirement would work for Type A people.
  • Social pressure – Society expects us to work until 65. Retiring in your 40s is frowned upon by most people.
  • Family – Your family might not be supportive of early retirement. Luckily, I was able to convince Mrs. RB40 that early retirement is a better option for our family.
  • Identity and self esteem – Is your job your major identity? Can you keep your self esteem when you’re no longer a big shot at work?

The good news here is you don’t have to deal with all these hurdles at the same time. Most of us will start off working on the financial part while figuring out the rest. Financial independence can take many years to achieve. I started saving and investing right when I began my engineering career in 1996. That gave me a head start when I figured out that early retirement was my goal. I only needed to make a big push in the final few years to achieve my net worth goal.

3 Essential Ingredients to Early Retirement

All 3 of these essential ingredients have to come together to facilitate a successful early exit from the rat race. If you’re missing one of them, early retirement will be a struggle. For me, everything came together just at the right time and early retirement has been working out well.

What do you think? Do you have all 3 ingredients needed for a successful early retirement? 

Image by Steven Pisano

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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42 thoughts on “3 Essential Ingredients to Early Retirement”

  1. I make $71,000 gross and live on half of that. I always max out my 401k and IRA and also save all extra income after maxing out. I also save my tax refund. I live in Los Angeles and still can do it. Please see my blog where I list my networth, ways I save, and my budget.

  2. The post definitely resonates as do many of the comments.
    When I was green in my career, everything was new and I was learning so much. I was finally starting to make some cash and was able to spend some serious money on a consumer life. Life was good but I didn’t even understand my work benefits let alone the concepts of FI and RE.
    Fast forward many years and I’m starting to burn out too. I regular joke that I’m in a midlife crisis/rut but I think in reality, I think I’m just seeking challenges in things I’m more passionate about. I’m pretty fortunate that I somehow stumbled into most of the textbook savings and investment basics, and also married a gal that’s a saver (bonus!) so basic FI is not a problem. The final push goal at this point is the degree of lifestyle. I’m also pretty lucky that a handful of friends who also share a passion for travel are on track for FIRE so that will hopefully keep us busy at least some of the time.

  3. That’s an interesting way to put it! I also think there’s some privilege involved, and whether you want to call it an ingredient or a prerequisite or a precursor, it’s there. It’s awfully tough to retire early without having gone to college or at least without having had enough of a safety net to start your own business. Same goes if you’re a single mom trying to work two jobs to support a family. Not that it’s impossible — there will always be exceptions that prove the rule — but most of us in this space at least when to college and probably also had some level of family support, even if that only support was someone we could move back in with if we failed at whatever we tried. That stuff matters a lot!

  4. Great post. In my opinion financial independence should be targeted first and it is relevant to many more people before they think about early retirement. I feel that the F* You Money enabled me a high level of flexibility during my working life and contributed to my career. FI gave me the freedom to choose if and when to retire and that’s a big plus.

    • FI is a much better goal for most people. I didn’t know about FI until I was in my 30s. Earlier, I was just saving and investing for financial security.

  5. Great post. I don’t really have much push but definitely there’s some pull especially for family reasons.
    The idea of early retirement is probably tantalizing to most people but most of people don’t really understand it’s possible to achieve, or how to achieve that. Reading blogs like yours is really helpful to me and I can have a better assessment of where I am and what to do.
    Thanks for sharing.

  6. Great post, I have the push, my life has changed since starting my job and I no longer have a desire for the same things inonce did. The pull for me is volunteer work and spending time with family. My hurdle is finances and getting them in order once that happens (which I’m working diligently on) then early retirement isn’t far off

  7. I graduated university in 2014 and have been working full-time for 2years now – I’m ready for retirement 😛 not because I don’t like working (although some days at work make me question nursing lol) but my need for freedom is stronger. I gotta get through my hurdles. Thanks for putting early retirement this way.

  8. Great insights and spot on advice! I just early retired at 45; after 20 years as a trial lawyer. So many of your points including (for me) spending more quality of time with my wife, high school boys and dogs — all have proven so much more valuable to me than anything my former profession provided. Looking back, it has proven to be a means to an end; the “end” has more recently been defined. But, for me, spending quality time to be my wife’s companion and true partner has been the most fulfilling.

  9. Wow, Joe, so much of what you shared there resonates with how I was starting to feel about engineering towards the tail end of my own career. At first, it was really exciting, but over time I also burned out and the job of a more “senior” engineer slowly morphed to encompass a lot of other things that I didn’t originally sign up for. Although I jumped around a bit, there really wasn’t enough difference from one company to another to warrant me staying.

    Like you, I found a pull (in my case I really want to travel the world), to finally convince me to walk away and do something else.

    Take care!

    • It’s too bad the job changed so much as we get more senior. I liked the technical work and that what I signed up for.
      Looking forward to reading about your travel. Good luck!

  10. This is actually a good framework. I will do the analysis on myself

    1- the push: it is for now only a small push. I like the job I have, it is challenging and I have a lot of freedom. At the same time, I can manage my work-life balance. If I imaging myself being totally free, I fear the boredom of not having a challenge. It is very likely that I will take up other challenges. It would because because I want, not because I have.
    Reaching that point most likely requires too much scarifies today…

    2- next to work life balance (see above) travel would be at this time my biggest pull. As I do not have the patience to home school our kids, we keep them in school for now. This limits are travel opportunities to school holidays. This part of the pull will get more satisfaction when I take a month or so off in the coming years to do some camping. At least, this is the plan.

    Looking at the above, the biggest hurdle seems to be me. I am not sure I am ready to FIRE. FI for sure, RE not.

  11. Retiring early is something that I feel everyone should be aiming for. I’m relatively young (late twenties) but it always shocks me how many people I talk to in my age group that still haven’t even started loading anything into their 401k. It’s crazy to me. Most use the excuse that they don’t have the free funds to load anything into it because they seem to have never been taught how to save anything (even a couple dollars a month is out of the question for these people). I’m hoping that I can convince them otherwise but I think without the right push and pull that you’ve mentioned, no amount of convincing from me is going to do much good. We’ll see!

    -Dividend Reaper

    • When life is going along fine, there is no incentive to change. That’s why most people find it so difficult to save. It’s just much easier to enjoy life now and deal with it later. It takes some lessons in childhood for people to start saving young. We weren’t well off so I knew I need to save for the rainy days.

  12. Wonderful post Joe! I really enjoy the pull part of the ingredients. I’m looking to start a family and really enjoy the motivation to help provide for a family one day.

    The wonderful thing about early retirement is that you have so many more options to do whatever you want. The consultant portion of early retirement really is something I did not anticipate and look forward to doing every so often.

    • Thank you! For me the push was the biggest part and the pull came a bit later. It all came together just at the right time, though. If we had a kid earlier, I don’t think I would consider early retirement. You’re doing fantastic in your early retirement.

  13. I don’t know how early my husband and I will retire. But I am glad this has come on to our radar now rather than much later. I love reading your blog, and similar stories as it helps us keep things in perspective and question our financial choices. I certainly want to have the security to retire at a relatively young age, so recently we have been doing a lot to monitor our expenses, be more mindful of them and also push more aggressively toward paying off debt, and increasing our 401k (we are still super early in our journey). Thanks for sharing your journey!

  14. You’re such a liar, Joe. I figured I could easily find a few things to add to your list of “three ingredients”. Turns out you’ve got 21 bullet points, all of which could qualify as essential ingredients to any early retirement. You’ve made my job difficult, darn you.

    If I could add a fourth ingredient, it would be the ability to formulate and execute an actual plan to realize your early retirement. The Push & Pull are the Why. The Hurdles are the Why Not. Creating an action plan and following through with it would constitute the How.

    You’re on the track, you know why you’re there, you can see the hurdles lined up in your lane, now all you need is a strategy to move yourself around the track and across the finish line.


    • You’re right about the execution. It’s just all talk until you make some progress. There are so many resources now. I don’t think the how is such a huge problem anymore. If you want to retire early, you just need to make it a priority and work on it. It probably will take many years, but anything worthwhile does.

  15. I took a sabbatical and struggled during an early retirement experiment mainly due to loneliness and not knowing what to retire into…until a year ago.

    When people retire early, especially in their thirties/forties – it doesn’t mean doing nothing. Those who judge others for retiring early like friends and family need to realize that retirement isn’t sitting in the beach drinking all the time. It means doing what you want to do without the pull of money.

    My view of early retirement is taking breaks in between working different projects as a consultant and trying out new careers/businesses.

    That’s why I love your 7 phases of retirement concept, because it is different for each person and how they want to get there.

    • Early retirement really isn’t a good fit for some people. If you’re the go getter type, it’s just going to be hard to relax and live a slower pace. 🙂

  16. Nice post RB40, our biggest hurdles are family & social pressure; we haven’t told anyone yet about our ER. We’re currently testing out early retirement abroad in Ecuador, we’ll go to Europe next, and then Asia after that. We hope to determine by the end of the year if we want to make the leap to a permanent retirement abroad. If not, we’ll need to grow our nest egg a bit more before retiring comfortably in the US.


    • Enjoy your trip! My main hurdle was convincing Mrs. RB40. Once she was on board, I didn’t really care about other people. Social pressure didn’t make any difference to me at all. Good luck!

  17. Right now I’m only well positioned for #3. I feel hardly any push and even less pull. Ironically the push was intense during my very first week on the job over 25 years ago so I may be an exception to your “no one starts a career looking to ER” rule.

    I had joined a megacorp where I didn’t know anyone and the business was flailing so there was outright fighting between groups and individuals. This nightmare honeymoon was what made FI possible for me because this push started before I “grew into” my new paycheck. But after surviving years of layoff rounds and making a name for myself in a hot specialty that I pretty much created, the push has all but disappeared.

    Ironically my brother joined a smaller tech company and had a Cinderella honeymoon that lasted over a decade. It was a gradual downhill past that point, though, and he’s feeling the push getting stronger year by year. He says he needs to slog another two decades and he doubts he can make it.

    Even though a strong push can force ER, I don’t think it’s necessary. As long as you have enough pull, I think ER will work out fine. And that’s just what I’m waiting for. Or maybe my push comes abruptly out of the blue, in which case I’m ready to ER. For sure no more resumes or job interviews for me!

    • Wow, what a contrast between you and your brother. Maybe you can help him achieve FI. 2 decades is a long time to be unhappy.
      It’s great that you like what you do. There is no point quitting at this time.

  18. I still don’t quite understand why the financial services industry stays away from preaching the merits of Financial Freedom. If I had know about it when I first started working I would have crossed that finish line much sooner than I did. I tend to separate the two terms Early Retirement vs Financial Freedom and focus mainly on the FF aspect. I’m a believer in working at something that you like for as long as you like and FF gives you that opportunity. For me the first part of my working life was devoted to taking care of my family and really when I think about it I was working just for the money. The work was hard, there was a lot of stress, but there was no way around it until the day I achieved FF. That was the day that I finally stopped ducking at work and believe me I had done a lot of ducking over the years! About a month ago I disclosed to the bank(my employer) that I had been working on a retirement book about FF and last week they finally came back saying that they didn’t want me to follow through on the project. Something about protecting the brand etc.We quickly discussed options and finally settled on me resigning from the bank so that I could pursue my project. I felt a strange sense of calm making that quick decision which I knew was due to me recently winning my own FF. My mission from this point on is to teach as many people as I can about FF and how people can us it to deliver a lifestyle that they have always dreamed about.

    • Oh wow, that’s a big step. Good luck with your project and congratulation on stepping out.
      I think the financial industry doesn’t talk much about FF because it won’t make them as much in the long run. Not sure if that’s true, though.

    • Did you get a severance package? If not then I fear they duped you into resigning. Should have just wrote the book and coming into work. Soon they would have delivered a bag of money to your desk.

      If you didn’t negotiate severance then you are a sucker. A financially free sucker but still a sucker.

  19. I feel like I have all 3, the biggest being the push. I’ve found myself in a similar situation, where the pressure to move up has taken me away from the work I used to enjoy into a high pressure management role, and I certainly have no desire to do this for another 30 years. I can see trying to step down back into a worker role in a few years.

  20. You mentioned-technology has a way of making careers obsolete. A career counselor told me the workplace today is a revolving door environment. And once you land a job, you better be planning your next one.
    Speaking of rat race-the commute has much to do with that. Getting to work was a relief. The really smart upper level execs would/could walk to work.
    And now a quote from a Max Lucado book- “Something happens to us along the way. Convictions to change the world downgrade to commitments to pay the bills. Rather than make a difference, we make a salary.” Enough said.
    Good post, Mr. RB40!

    • Yeah, it’s pretty crazy how often we have to change jobs these days.
      I detest the commute too. Thanks for the quote. That’s on the spot for most of us.

  21. You ask: “Do you have all 3 ingredients needed for a successful early retirement?”

    Evaluating myself based on your 3 ingredients is way too complicated for me. Having said that, I believe that I have had what it takes to be happily retired at an early age. The primary ingredient for me was detesting the typical workplace with intense passion. Indeed, I looked at the typical workplace as a prison for free spirits.

    Three or four years ago I put together a book (still unpublished) called “The Joy of Being Retired: 365 Reasons Why Retirement Rocks (and Work Sucks!)” The book has actually 365 reasons and another 50 Bonus Reasons. Here are 7 of the reasons:

    Why Retirement Rocks (and Work Sucks!) — Reason #7
    You no longer have to be nice to all those former co-workers whom you didn’t like all that much at the best of times. Better still, you can anonymously send nasty e-mails to them every day.

    Why Retirement Rocks (and Work Sucks!) — Reason #11
    No more nightmares about the workload that will await you when you arrive at work in the morning.

    Why Retirement Rocks (and Work Sucks!) — Reason #14
    When you take early retirement from a stressful job you immediately look about seventeen years younger — simply because you feel about seventeen years younger.

    Why Retirement Rocks (and Work Sucks!) — Reason #21
    Your brain, after being brainwashed by corporate culture for so long, just may be jarred into new ways of thinking. Indeed, new perspectives on living are usually fostered when people have more time to reflect and reassess the true meaning of life.

    Why Retirement Rocks (and Work Sucks!) — Reason #27
    You can now preach the shortcomings of the work ethic and proclaim to the world — as the great philosopher Bertrand Russell once did — that “the morality of work is the morality of slaves and the world has no need for more slavery.”

    Why Retirement Rocks (and Work Sucks!) — Reason #35
    You can finally find the time to write a scathing exposé of that ruthless bastard-of-a-boss for whom you used to have to work. Also, no more of that fat guy in the stupid-looking suit getting all the credit for the great work that you did.

    Why Retirement Rocks (and Work Sucks!) — Reason #48
    Retirement is the time to do the things you intended to do when you were still working — and if you don’t do them, who cares?

  22. Good post Joe!

    I had several things ‘pushing’ at the same time, I could probably tick every box in the ‘push’ category.

    The pull however was simpler – I believe there must be more to life than just work, and I actually wanted to know my boys before I die (more than just two hours a day).

    It’s certainly not for everyone, as you said. I set out to find my freedom…and I did.

    • I didn’t like having other people raising our kid at all. I really enjoyed being a dad full time and I hope it makes a lasting impact on our kid. So many parents don’t have the opportunity to know their kids while they’re young.


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