woman standing on papers after quitting her job - How To Retire Early and Live Life On Your Terms

How To Retire Early and Live Life On Your Terms

How many times have you wished you could quit your job and retire early?

Think that’s an impossible pipe dream? Think again!

I quit the workforce and retired early (in my early 30s) and I now live off the passive income from my blog, and investments.

The FIRE movement (Financial Independence Retire Early) is becoming more and popular, and it’s one that I’m a tiny bit obsessed with.

masterclass - Become A Content creator_banner_3

As an affiliate partner of various brands and sponsored content, HerPaperRoute may earn commission on qualifying purchases. Disclaimer | Advertise With Us

So I decided to write this post introducing early retirement and explaining the super simple math behind it. I’m going to spill the (not-so-secret) secret behind how to retire early.

I am seriously excited to bring you this post about early retirement and financial independence.

Before leaving the workforce, I always knew I didn’t want the prescribed life of work, retire, die. It wasn’t that I had some massive burning desire to do anything in particular. I just wanted the freedom to live my life on my own terms, and went for it.

This is exactly what early retirement and financial independence allows and provides; the freedom and security to live life the way you want to.

So without further ado, let me introduce early retirement and financial independence!

How to retire early

What Is Early Retirement And Financial Independence?

Contrary to popular belief early retirement and financial independence aren’t necessarily about quitting work.

Confused? Don’t worry I was too at first.

FIRE is actually about having enough money saved up that work is no longer a mandatory obligation for you to live your life.

masterclass - Become A Content creator_banner_3

So, in a nutshell, it would be someone having enough money saved and invested wisely that the income they received from that saved money more than covers their outgoings. 

Therefore they are no longer reliant on a paycheck.

They may still choose to work in paid employment, they may volunteer or they may just chill. Many will aim to quit their job so they can earn from a passion project.

The point is their income is coming from whatever day-to-day activity they take part in. (Assuming their annual spending doesn’t increase).

I bet you’re now thinking that early retirement is just for the rich? Well actually anyone can retire early (within reason).

Surely You Must Need Millions And Millions To Retire Early?

Well no actually. You probably need far less money than you think.

And if you carry on reading I will show you how to work out exactly how much money you need to retire early!

Plus, it’s really easy to calculate, win!

But What If I Don’t Want To Stop Working?

If you love your work and want to continue that’s fine, reaching financial independence doesn’t mean you have to quit the workforce.

In fact, a lot of early retirees quit their career but then take up more meaningful work (like starting their own online business where they can earn passively).

But Then What’s The Point Of Becoming Financially Independent If You’re Not Planning On Stopping Work?

Now this question here, this is the most important question to ask.

How about never having to worry about money again? You know your bills will be paid, you know you can afford that holiday.

There will always be food on the table and a roof over your head. Plus if you lost your job or had to leave for some reason, no worries at all!

Financial independence to me is the ultimate sign of succeeding in life (in the financial/ money arena that is.) To me, that means you have made it.

That’s why I think everyone, regardless of whether they want to stop working or not, should be aiming for financial independence.

All that freedom and all that security. Don’t wait until you’re 65 to be financially secure. Surely do it now and then you have the best years of your life to enjoy that security and freedom.

Enter: F.I.R.E

That’s right. As I mentioned earlier FIRE stands for ‘Financial Independence Retire Early’ and this is the main nickname for the movement.

It’s also called financial freedom, financially secure and many other variations on the theme.

Seriously FIRE is the coolest thing in personal finance.

Now is the time to get on board with FIRE because it can only change your life for the better.

So let’s get FIRE’ed up!!!

So How Much Money Do You Need To Retire Early?

The Math Behind Early Retirement And Financial Independence.

No number works for everyone. It’s entirely based on your annual expenditure.

So next time you read some financial advisor touting random numbers.

Oh, people in their twenties will need at least 60 million saved otherwise they will have to work until they are 105.  

Well, it’s just wrong. Each person, or household (however you most prefer to work it out) will have a different number.

To work out what your magic early retirement number is we’re going to use some info from the Trinity Study. This paper is now widely used in the investing and retirement industry.

In summary, it says that with a retirement portfolio, so money saved up is invested properly in stocks, you can afford to withdraw 3% to 4% of the total amount each year without the portfolio ever running out.

This is because, historically, investing in the stock market has produced average annual returns of around 7% to 9%.

Now obviously the stock market can be quite volatile which means that you may have to adjust your withdrawal if it’s a particularly bad year. But realistically the good years should even this problem out.

So as long as you don’t increase your withdrawal rate all should be well and you should have enough money until you pop your clogs.

For example, you have your pot of money that you’ve invested, the first year it increases by 50%. Crazy year. The following year it may drop by 40%.

Everyone is really worried but you’re not because you know that the stock market has averaged out. And as you’re using the safe withdrawal rate of between 3% and 4% you know that your pile is unlikely to run out.

Also, in case you were wondering, inflation is also covered by the safe withdrawal rate. Brilliant!

Formula For How Much Money You Need To Retire Early

Let’s say the formula is:

  • Your annual spending x 25 = (Total pot you would need for a 4% withdrawal rate)
  • Your annual spending x 33 = (Total pot you would need for a 3% withdrawal rate)

While 4% withdrawal should be fine, I like to be on the safe side and aim to have a pot between 3% and 4%. (The smaller your number the less likely it is to run out…).

Example: say your annual spending is $19,600.

  • $19,600 x 25 = $490,000
  • $19,600 x 33 = $646,800

Therefore I would need a pot of money amounting to between $490,000 and $646,800 to retire early.

Now realistically I would probably want to spend more than that annually at some point in my life. But for now, that is an excellent goal for security and freedom.

Let’s do another example just so you can see how easy it is.

A household spends $35,000 per year.

  • $35,000 x 25 = $875,000
  • $35,000 x 33 = $1,155,00

So you would want a pot of between $875,000 and $1,155,000 to never have to earn money again.

Pretty cool right? And so darn simple!

How Long Will It Take Me To Save That Much?

Well, that depends on you and your savings rate.

The suggested savings rate of 10% to 15% in my eyes is way too low. You are literally setting yourself up to work forever!

Mini Fire Roadmap:

Now, this post was only meant to be an introduction the FIRE life and math behind it and I was going to leave the post there.

But I felt like it would be more helpful if I wrote a kinda of roadmap/ basic action plan to early retirement so you can see the different steps needing to be done.

This obviously doesn’t cover everything because things like debt, or home ownership all will affect it. But it’s just so you can get an idea of what you need to do to retire early.

Step 1:

Work out your annual expenses.

Step 2:

Work out how much money you would need in your retirement savings pot by using the formula above.

Step 3:

Plug that data into the tool I shared so you can see how long it will take you to save with your current savings rate and current annual expenses.

Step 4:

Reduce your annual expenses to speed up the process.

Step 5:

Increase your savings rate further by increasing your income. Thus speeding up the process even more.

You should start a blog to earn more money! You can check out this tutorial here where you can set up your blog today.

Or if blogging isn’t your bag then check out these other 19 ways to make money online instead!

Step 6:

Invest your money into an index fund. Or buy revenue-generating websites.

Step 7:

Rinse and repeat until your retirement savings pot is looking healthy and full.

How To Retire Early and Live Life On Your Terms – Conclusion

In conclusion, charting a path toward early retirement and a life shaped by personal choices is a tangible objective with thoughtful planning and commitment.

This journey is more than a financial endeavor; it’s an opportunity to tailor your future to your aspirations and values.

As you navigate this path, remember that the essence of early retirement lies in the empowerment it offers – the ability to make choices that resonate with your lifestyle and desires.

The key to this endeavor is a balanced approach that combines pragmatic financial strategies with a clear understanding of what you seek from your life after retirement.

Adjustments and recalibrations along the way are part of the process, reflecting the dynamic nature of life and personal goals.

Early retirement is essentially about crafting a future where your time and choices are your own.

Whether your vision includes new ventures, leisure, or personal growth, the steps you take now lay the groundwork for a future that aligns with your vision of fulfillment and contentment.

So, move forward with confidence and clarity, knowing that each decision brings you closer to a life defined on your own terms.

Here’s to building a future that resonates with your deepest aspirations!

Also if you enjoyed this post would you mind sharing it on Pinterest, it would massively help me out!

entrepreneur planner profit business planner notion

Similar Posts


  1. I’ve had a dream of retiring early for the past year now, but I get overwhelmed with all the numbers that go into it just because math has never been my strongest subject. Thank you so much for your clear and easy to follow explanation!

    1. Chelsea HerPaperRoute.com says:

      I’m so pleased this post has helped you! Honestly the math behind early retirement is actually quite simple so it makes me super happy that I was able to show that! 🙂

  2. Wow! I hadn’t even considered that retiring early was an option! Thank you for sharing. I’m going to start working out how much I need to save straight away.

    1. Chelsea HerPaperRoute.com says:

      I got so excited when I came across the concept! It’s just not something that discussed very often but it’s totally do able!

Leave a Reply

Your email address will not be published. Required fields are marked *