Retiring Early? These Smart Money Moves Can Make Your Savings Last Decades
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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Retiring early has obvious appeal — more freedom, more time and the chance to enjoy life while you’re still young and healthy. But early retirement also means your savings may need to last 40 to 50 years. That requires a strategy built on flexibility, tax awareness and careful planning.
Here are the smart moves to make now to make early retirement sustainable, according to financial planners.
Build Wealth Outside Traditional Retirement Accounts
Having money outside of accounts like 401(k) plans and IRAs will provide the flexibility and liquidity needed to retire early.
“Without that, retirement isn’t realistic for someone who is in their 40s or 50s,” said Derek Munchow, CFP, founder of Augustus Wealth. “Most retirement plans are efficient for tax deferral, but they restrict access and limit optionality.”
He recommended utilizing a nonqualified brokerage account to avoid the early withdrawal penalties you’ll be subject to before age 59½.
“This becomes the engine for flexibility, liquidity and pre-age 60 optionality,” Munchow said. “In addition, this allows your retirement accounts to continue compounding for the expenses you’ll face later in life — i.e., healthcare costs.”
Capture Your Full Company Match
Even if you’re prioritizing savings outside your 401(k), don’t skip free money.
“Contribute enough to your employer’s retirement plan to receive the full company match,” Munchow said. “Don’t leave money on the table.”
Create a Strong Financial Foundation
Before you transition out of the workforce, make sure you have a solid emergency fund with three to six months’ worth of expenses and have paid off high-interest debts, like credit card debt.
“Liquidity and balance sheet strength come before growth,” Munchow said.
A strong base makes your early retirement far more resilient.
Increase Your Savings Rate and Invest for Growth
While you’re still working, you’ll need to set aside as much of your income as you can to serve as your retirement nest egg.
“The goal is to reach critical mass as quickly and efficiently as possible,” Munchow said. This means building an asset base that can cover your lifestyle, handle emergencies and continue compounding.
This usually requires:
- A high savings rate during working years
- A long-term investment strategy focused on growth
- Minimizing lifestyle inflation
The faster you build your base, the sooner early retirement becomes realistic.
Use Withdrawal Buckets To Reduce Risks
To mitigate the risks posed by inflation and bad market returns, Steven Rogé, CFP, CEO of R.W. Rogé & Company, Inc., said to funnel money into three different “buckets”:
- Bucket 1: Holds zero to three years of basic withdrawals in high-quality cash equivalents. This protects daily spending from market swings.
- Bucket 2: Holds years four to 10 in high-quality bonds. This refills the cash bucket during down markets.
- Bucket 3: Invests year 11 and beyond for growth. This keeps long-term money working for you.
“Set a fixed monthly transfer into checking, then refill the cash once or twice a year by trimming winners,” Rogé said. “This structure turns volatility into a tool and keeps lifestyle steady.”
Plan Ahead for Early-Retiree Healthcare Costs
If you retire before you’re eligible for Medicare at age 65, you’ll need to find other ways to cover healthcare costs. Rogé recommended pricing three options every year:
- Coverage under a spouse’s plan
- An ACA marketplace plan
- COBRA for short gaps
“This is one place where account selection pays dividends,” he said.
Boost Financial Durability With Part-Time Income
After leaving your 9-to-5, you may want to keep working part time to give your finances a boost.
“Even a small amount of part-time income dramatically improves durability,” Rogé said. “Earning a modest sum for a few years can reduce withdrawals, preserve tax flexibility and make Social Security delay easier. It also keeps structure in place, which helps spending stay on plan.”
Map Out a Long-Term Tax Strategy
A retirement plan isn’t complete without a tax plan. Having a plan for which accounts you withdraw funds from and when can save thousands of dollars per year.
“Good tax planning can help you to stay in lower tax brackets, avoid Income-Related Monthly Adjustment Amount (IRMAA) surcharges and know exactly when to do Roth conversions, if at all,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Trust.
Early retirement isn’t just about saving enough — it’s about structuring your finances so your money can last for decades. By building flexible savings, investing wisely, planning for taxes and healthcare, and creating a resilient withdrawal strategy, you can turn early retirement from a dream into a durable reality.
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