4 Things Your Neighbor Who Retired Early Won’t Tell You About Their Financial Plan
Written by
Chris Adam
Edited by
Kristen Mae
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Retiring early may seem like a dream come true. And for some, it is — but often not for the reasons you might think. While more than half (58%) of workers retire earlier than planned, it’s frequently due to unforeseen life events, according to research from Transamerica Center for Retirement Studies and Transamerica Institute.
If you’re looking to retire early and want to do it on your own terms, now is the time to take a closer look at your finances and long-term plans. GOBankingRates spoke with some financial experts to uncover the things your neighbor who retired early probably won’t tell you about their financial strategy.
Save Aggressively and Invest Wisely
Dr. Annie Cole, a financial coach and founder of Money Essentials for Women, is a professional on track to retire in her 40s. One of her top tips is to make it a habit to invest early and often, no matter how much you earn.
“Even when I was making $26,000 a year and struggled to pay my rent and buy groceries, I still set aside $20 every month in my retirement account,” Cole said. “Investing is more about habit than the amount. If you can’t get yourself into the habit, you’ll have a hard time ever reaching your retirement goals.”
Focus on Income Streams
Cole also emphasized the importance of increasing your income — including passive income sources.
“I switched jobs every few years, advocated for raises and title changes and created multiple side hustles and businesses of my own to turn my unique skill set into income streams,” she said. “Think about one of your unique skills or strengths that you can turn into a consulting service, freelance offering, online course or ebook.”
In other words, early retirees aren’t just good savers. They’re also active earners who diversify where their money comes from.
Think About Risk Management
Many early retirees are quick to highlight their income streams, like rental properties or dividend-paying investments. But what often goes unspoken is how carefully they’ve planned for risk.
Filip Telibasa, certified financial planner (CFP) and owner of Benzina Wealth, said that behind the scenes, early retirees tend to be very intentional about protecting their financial stability. That includes building in safeguards like insurance coverage, long-term healthcare planning well before Medicare eligibility age, and a solid estate plan.
“These aren’t flashy topics,” Telibasa said, “but they’re critical for staying retired once you get there.”
Without those protections, even the best-laid early retirement plan can quickly fall apart.
Plan for Unexpected Expenses
One of the biggest challenges of retiring early is handling unexpected expenses and financial setbacks without a steady paycheck. That’s why it’s crucial to build flexibility into your budget.
Kevin Estes, certified financial planner (CFP) and founder of Scaled Finance, advises retirees to simplify their lifestyle, paying only for what truly matters to them and cutting expenses where they can. That might mean moving to a smaller home, doing your own yard work, and cooking at home instead of dining out.
These everyday trade-offs aren’t just about saving money — they’re about creating a financial cushion for when those surprise expenses inevitably come up. Whether it’s a medical bill, a family emergency or a home repair, having a little room in the budget can make the difference between a minor setback and a major disruption.
As Telibasa put it, “The people who pulled it off early made a thousand little smart, often invisible, decisions. It’s less about hitting the lottery and more about consistency, automation, and a clear sense of what matters most to them — both now and in the future.”
More From GOBankingRates
Sources:
- Transamerica Center for Retirement Studies, “Retiree Life in the Post-Pandemic Economy”
- Dr. Annie Cole, Money Essentials for Women
- Filip Telibasa, Benzina Wealth
- Kevin Estes, Scaled Finance
