Want to Retire Early? - Focus on This Rate
Do you remember when you thought that retirement involved grinding away for thirty to forty years in the workplace before you could even think about retiring? Don’t be shy! Raise your hand! Most people think like this. I once thought like this.
But, people don’t have to think like this. It all begins by slowly changing the retirement mindset . . . by thinking about financial independence and retiring early.

That’s right! Amon and I retired before forty and more and more people are retiring early these days. Think about all the things you could do if you could retire in your 50s, your 40s . . . or even in your 30s! With the FIRE movement, gone are the days where you have to wait until 65 before you can sit back and enjoy the fruits of your labor without worrying about working that grinding 9 to 5.
It just takes some pretty simple math to figure out how to make early retirement feasible for you. And I’m here to guide you through it!
Let’s start with your savings rate.
Your savings rate is the key to reaching financial independence and retiring early. Calculating your savings rate is simple - you just need to take the amount that you save and divide it by how much you make. Let’s say you earn $100 and save $50. Your savings rate would be 50%. If you want to work toward early retirement, you need to increase your savings rate. There are two ways to do this.
First, you can make more money without increasing your expenses. I know this seems obvious, but think about what you did when you got your first pay raise (or any pay raise!). Did you set up your investment accounts to automatically invest more money . . . or did you go out and buy that new purse, that new watch, those new shoes, did you go celebrate at a fancy restaurant . . .
Do you get where I’m going with this?! Most people tend to spend more as they make more. Step one, to raise your savings rate - make sure your expenses don’t increase along with your increased income!
There’s also a second step/another way to increase your savings rate: Decrease your expenses! And there are so many great reasons for decreasing your expenses. For one, it conditions you to be more mindful of your money. It makes you analyze your expenses and forces you to focus on buying only those things that matter the most to you. Two, it also helps you grow your wealth! By saving more money, you’re able to invest more money!
So you’ve got one of two options to increase your savings rate. Amon and I actually did a combination of the two - we saved more and we reduced our expenses. But, of course, you can’t just save your way to early retirement. You need to go one step further . . .
What To Do With Your Savings?
Saving money is great, but investing is an essential part of reaching early retirement. We mention this a lot on our YouTube channel. The idea is that if you’re pursuing financial independence to retire early, you want an investment portfolio worth at least twenty-five times your anticipated annual expenses in retirement. This is based on the 4% rule - the idea that you could live comfortably in retirement by only withdrawing 4% from your investments every year and never run out of money.
So if you’re pursuing financial independence and retiring early, you need to go beyond the typical savings and investing mentality that most Americans have.
Here’s an example of what I mean.