How to Retire Early Without Sacrificing Everything You Love

Save for your retirement dreams while living the life you want.

There’s no denying that you have to save a lot to retire early. Your nest egg has to last several decades — not just a couple. But that doesn’t mean you have to deprive yourself while working just so you can save enough money to leave behind the 9-to-5 before your 60s. At least, that’s not the approach “Our Next Life” blogger Tanja Hester advocates in her forthcoming book, “Work Optional: Retire Early the Non-Penny-Pinching Way.”

“You don’t have to be some frugal whiz to pull this off,” said Hester, who retired at age 38. “There are ways to let you live the life you enjoyed. Most of the people I’ve met who have achieved financial independence live pretty normally.”

Find out why you don’t have to live on an extremely tight budget to achieve financial independence and retire while you’re young.

Get Clear on Your Life Vision

For many Americans, saving for retirement is not a priority, an annual GOBankingRates survey found. Hester admits that it’s hard to find the motivation to save just because you’ve been told it’s the right thing to do. But once you figure out the payoff you’ll get from saving, it becomes easier to prioritize setting aside money for the future. That’s why Hester said you need to get clear on what you want in life if you’re trying to find the motivation to retire early.

Both Hester and her husband, Mark Bunge, had great jobs as political consultants. But they worked long, stressful hours that were taking a toll on their health and leaving them with little time to do things they enjoyed, such as skiing, hiking and volunteering. And, their jobs left them with little time for each other. “We realized we needed to figure out something else,” Hester said.

What Hester and Bunge figured out was that they wanted more time for the things that mattered most to them: living in the mountains, being outdoors, traveling and helping others. And, because Hester has a genetic degenerative disability that was passed down from her father, she realized that she might not have much time to do all of the things she wanted before becoming limited physically. Hester said it’s easier to make changes to your finances once you figure out what you really want in life.

To identify your life vision, Hester recommends asking yourself what makes you happiest, what you want to make time for every day, what you want to accomplish in life and what makes you feel best about yourself outside of work. In “Work Optional,” she shares more questions you should ask yourself and walks you through how to figure out what you value most in life.

Align Spending With Your Life Vision

Once you figure out your life vision, you won’t feel like you’re depriving yourself by spending less so you can save more. “After we realized early retirement was possible for us, the vision we shared of a life in the mountains made us feel so fired up that it became miraculously easy to stop spending or reduce our spending without it ever feeling like a sacrifice,” Hester wrote in “Work Optional.”

If you align your spending with your life vision, you can cut costs without cutting out everything you love. Hester recommends tracking what you spend to see how much you’re shelling out for things that don’t add value to your life — then eliminating those things. “Most people who get inspired to do this end up cutting out a lot,” she said.

For example, Hester realized that she and her husband were spending a lot of money on going out to restaurants and getting takeout frequently. So, they cut way back on that unnecessary expense. If you eliminate mindless spending and impulse buys, it’s OK to continue spending on things that make your life better. “We spend on those things without guilt,” Hester said.

Identify and Avoid Spending Triggers

You can reduce mindless spending if you identify your spending triggers and avoid them, Hester said. Spending triggers are things that cause you to overspend — such as stress, social pressure, emotional events or fear of missing out on deals.

“For me, I realized I would go into Target for a couple of things and leave with a cart full of stuff,” Hester said. “I decided not to shop at Target anymore. Nothing against Target. It’s because I love Target too much that I had to cut it off.”

Dodging things that prompt you to spend too much is a painless way to eliminate unnecessary spending so you’ll have more money to save.

Create a Money Mission Statement

To ensure that your spending aligns with your priorities and that you avoid triggers, Hester recommends creating a money mission statement. It’s a spending philosophy that spells out what you spend mindfully on without guilt, what you spend only as much as necessary on and what you don’t spend money on. The statement also acknowledges your spending triggers so you can be mindful of them. Most importantly, it highlights your priorities and details how your money will help you achieve your life vision.

Hester provides the following example in her book: “My money’s mission is to enable me to travel more and spend more time with my kids, made possible by saving enough to scale back my time at work. To support that mission, I will stop buying the kids toys and clothes they don’t need and didn’t ask for, I will delete my credit card numbers from Amazon and other sites so that it’s not so easy to make impulse purchases, and I will notice when I’m spending money to keep up with the neighbors.”

Find Ways to Do What You Love for Less

Another way to save a lot for early retirement without giving up things you enjoy is to find ways to do them for less, Hester said. Travel is the perfect example. “People say, ‘I love to travel. I can’t give up travel,'” she said. “It’s not an on/off switch.”

Because Hester and her husband didn’t want to sacrifice traveling to save for early retirement, they changed the way they traveled. For example, when they visited Taiwan, they stayed in a small room in a local hotel for a quarter of the price they would’ve paid for a room at a large hotel chain. If you love traveling, you could stay at an inexpensive hostel rather than a hotel, or you could take the bus rather than fly.

It’s Possible: How to Travel the World for Practically Free

Generate More Income

One of the keys to saving enough for early retirement without penny-pinching is to find ways to earn more money. You might be thinking that’s easier said than done, but Hester said there are many ways for people to make more money. “We all have more options than we think,” she said.

For starters, even if you want to retire early, you could become very dedicated to your job. “Give it your all to negotiate more pay,” Hester said, which is what she and her husband did. Hester also had a side job teaching yoga and spinning classes.

Don’t Increase Spending as Your Earnings Grow

Earning more money won’t help you retire early if you increase your spending as your income rises. In other words, you have to avoid lifestyle inflation. “Keeping your spending at a steady level that feels comfortable to you and not like a sacrifice, that will get you further,” Hester said.

Two of the best ways to avoid lifestyle inflation are staying in your starter house instead of buying a bigger one and sticking with the car you have for as long as it will run. “If you can avoid upsizing cars and housing, that goes a long way,” she said. Hester and her husband bought less house than they could afford. She also drives a 15-year-old Honda Civic, and he drives a 7-year-old Subaru Outback. Sure, their cars are far from new, but that’s one of the reasons why they don’t have to drive to work anymore.

Put More Into Your Savings Over Time

When Hester and her husband started down their path toward early retirement, they were saving about 40 percent of their income in 2011. But they bumped that number up to 70 percent over the course of the six years it took them to build up a large enough reserve to make work optional. The income that they were stashing away included contributions to 401k plans, a taxable brokerage account and a savings account for emergencies, as well as additional payments on their mortgage — which they paid off before retiring.

“We never lived a life that looked like one of deprivation,” Hester said. “We got to a point where we were comfortable and put extra money away.”

It’s worth noting that both Hester and Bunge had six-figure salaries. Of course, if your income isn’t that high, it would be tougher to save 70 percent or even 50 percent annually. But that doesn’t mean you can’t retire early. Hester said you might be able to retire early even if you save a smaller percentage of your income annually as long as you have other sources of retirement income, such as a military pension or a pension from an employer. You also could invest in real estate to create a stream of income in retirement.

The key, though, to retiring early — or even having enough to retire in your 60s — is to put any extra money you get through raises, bonuses or side gigs into savings. “Doing that can really increase your savings rate so quickly,” Hester said. Even if you can’t afford to set aside much now, you can increase the amount you save over time. Aim to save 25 to 35 times your annual expenses by the time you retire.

Read More: This Expert Found His Magic Number for Retirement — and You Can, Too

Find a Timeline That Works for You

When Hester and Bunge started talking about the possibility of retiring early, they thought it would take them 10 years to reach their goal. “But it wasn’t a real plan,” she said. “We started down the road but didn’t have a clear destination.” Within a few years, they got serious about retiring early, made a concrete plan and reached their goal in six years.

However, if you want to create a “work optional” life without penny-pinching along the way, you have to do it on your own timeline, she said. And you don’t have to completely retire — you might just want to have a large enough financial cushion that you can work part-time or in a lower-paying but more rewarding career.

Find Out: Your Best Age to Retire

Also, don’t assume that it’s too late to retire early if you’re no longer in your 20s or 30s. “You haven’t missed the boat,” Hester said. “You can get started down a road like this any time. If it doesn’t lead you to early retirement but helps you become more conscious of spending or retire at a regular age, those are big wins,” she said.

Click through to find out what it would take to retire now.

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