Is Early Retirement Really Out of The Question For You? Here Are 10 Money-Saving Tips That Can Help Make It Happen. If you dream of retiring early, these strategies can help you achieve your dream lifestyle.

Traditionally, early retirement was defined as retiring at 60 — as opposed to 65. However, that's changed slightly over the years.

For those born between 1943 and 1954, the full retirement age is 66. If you were born between 1955 and 1960, your full retirement age gradually increases until it reaches 67. Anyone born after 1960 is eligible for full retirement benefits at 67.

Meanwhile, early retirement is being redefined.

Many early retirees define early retirement as retiring in their 30s, 40s, or 50s. Often, they want to retire so they can travel, work on passion projects, or relax. Some retirees have learned how to make $20K per month with just a side hustle during their retirement. It simply means that you no longer need to earn a living from working full-time.

Another way of saying early retirement is that you are financially independent. In other words, you work purely because you want to, not because you have to.

Retiring early is not easy; you need to start self-funding your retirement since you cannot receive Social Security benefits until you are 62. Even so, it would be better than the daily grind.

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1. Make a decision about the retirement lifestyle you want.

To plan for early retirement, you must first have a goal in mind. In many cases, this goal is the lifestyle you'd like to live in retirement.

Each person's definition of an ideal retirement is unique, however. There is no right or wrong way to spend your retirement, and what you decide might be different from what your friends, family, neighbors, or colleagues have decided.

Retirement lifestyles can be influenced by how money is anticipated to be spent. Once you're clear about the lifestyle you want, you can calculate how much money you'll need for early retirement.

Here are some questions you should answer to get you started:

• Where would you like to live?
• Is it important to you to be closer to your family? Or, do you think you would be interested in living somewhere that is less expensive?
• How will you spend your days? What are the associated costs? The cost of gym memberships or travel, for example.
• Do you still plan to work to generate additional income? Think about starting a part-time job or a side business.
• Is there anything you'd like to pursue as a hobby or interest?
• Are you dealing with chronic health conditions? It is possible, therefore, to spend more on out-of-pocket expenses like prescription drugs, doctor visits, and healthcare equipment than you have insurance or Medicare.

2. Develop a mock retirement budget.

The next step is to determine how much it will cost you to live the lifestyle you want when you retire early.

Work out a mock monthly budget with a pen and paper — or a spreadsheet if that's your cup of tea. Be sure to consider the following when doing so:

• Car
• Clothing
• Entertainment
• Food
• Gas
• Gifts
• Giving
• Hobbies
• Home and car repairs
• Insurance
• Internet
• Medical
• Phone
• Trips
• Utilities

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3. Assess the state of your financial health.

In the same way that your physical health is important, so is your financial health. By doing a financial wellness check, you can determine what changes you need to make in your life.

In order to assess your financial health, you need to determine your net worth. An easy way to find out how you're doing financially is to look at your net worth. It's calculated by simply taking the value of your assets and subtracting your liabilities. Some apps can do this for you. However, the math is pretty straightforward. Add up all your assets (cash, investments, home) and subtract all your debts (student loans, credit card debt, mortgage).

In short, this is merely a measure of what you currently have versus what your debts are. As such, no income is taken into account in this calculation.

For instance, let's assume that you only have your home as an asset and no other debts or creditors. If you own a $300,000 home and owe $250,000 on it, your net worth would be $50,000 ($300,000 - $250,000). Your net worth increases as you pay down your mortgage — so long as your home value remains the same or increases.

You don't need to worry if you have a negative net worth at the moment. Writing down your net worth today, and tracking it regularly, is important.

4. Calculate your retirement "number."

The next step is to determine the amount you want to save. Calculate how much income your savings will need to produce. Next, figure out how much you can safely withdraw every year from your retirement savings.

The "4% rule" is usually used by retirement planners. In general, 4% of your savings can be withdrawn in your first year of retirement. It can be adjusted upward as cost-of-living increases occur in subsequent years so that you won't run out of money. Although this "rule" isn't perfect, it's a good place to start.

Furthermore, it is relatively easy to calculate the 4% rule. To calculate your retirement income needs, multiply your retirement savings by 25.

If you need $2,500 from your savings each month ($30,000 per year), multiplying that by 25 results in $750,000 as your retirement savings goal.

Also, several retirement calculators are available for free, such as:

• Bankrate Retirement Calculator
• Nerdwallet Retirement Calculator
• Smart Asset Retirement Calculator

Some tools offer a greater range of features than others. Utilize a tool that allows you to input specific data about how much you've saved and how many investments you've made in preparation for early retirement.

5. Reduce your three biggest expenses.

The easiest place to save money is where you spend the most money, even if you can cut back on small purchases. But, where is your hard-earned money going? BLS estimates that people spend 2% and 13% of their take-home pay on housing and transportation, respectively. The next largest spending category was food, which accounted for 10% of all spending.

In order to cut back on each, here are the most effective methods.

Housing.

It is important that you do everything in your power to minimize or eliminate your housing expenses. What is the easiest way to do this? House hacking.

If you are unfamiliar with this strategy, it involves renting out the extra rooms in your apartment to offset, cover, or even earn money on your rent or mortgage payments. It's also possible to live like this 26-year-old who rents out her main house while living in a tiny house in her backyard.

I would recommend this to anyone looking to increase their savings rate (Percentage of income saved) and net worth (assets minus liabilities).

If this isn't an option, consider downsizing to a smaller property or relocating to a more affordable area.

Transportation.

If you don't need a car, don't buy one. If you need to buy a car, always buy a used one. A new car costs the average American approximately a year and a half to buy. Most American cities offer used cars under $5,000 that are reliable, safe, and can get you to your destination.

Rather than spending $40K+ on a new car, invest the savings in a used one.

Food.

You can save money on food in a number of ways. Remember, you're paying a lot for convenience when you eat out or order food delivered.

6. Streamline your income and diversify it.

When your expenses have been optimized, it's time to go out and make more money. After all, when you earn more money, you can invest and save more. In order to do this, you usually have two options; maximize your full-time job or start a side hustle.

For our parents and grandparents, it was the norm back then for them to go to school, get a job, work there for 30-40 years, and then retire. Today, we are now left to fend for ourselves since pensions are an endangered species. Luckily, making more money has never been easier.

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The tools, strategies, and blueprints for making money are more accessible than ever before. For example, YouTube or an online course can teach you skills in less than a week. Alternatively, you can map someone else's blueprint to your own business. You can also join a community of people who work together to create wealth and make money.

Exploit your 9-to-5.

According to Steve Adcock, who retired at 35, he invested in his employer's 401(k) and received a company match of 4%, which was free money.

Depending on your full-time job, you may also have educational and training opportunities to strengthen your marketable skills like computer programming and accounting. As you progress in your career, these skills will help you get promotions and raises.

Become a side hustler.

Some side hustles can make you more money than others, but not all of them are created equal. You can literally make money doing anything while side-hustling, which is both good and bad.

A side hustle will always be limited by the number of hours in the day if you are working for someone else. If you work 9 to 5 and drive all night for Lyft, you're probably going to be exhausted.

Therefore, you must think of side hustles that you can do. After all, in order to make money from side hustling, you need to balance money and time. That's why building a passive income from your side hustles, such as blogging or real estate investing, is a win-win since you can use this as an additional post-retirement income.

7. Don't let debts hold you back.

There are many barriers to early retirement, one of which is debt. It is important to get out of debt as soon as possible. Generally, debt is repaid using two methods.

• Snowballing debt. Regardless of interest rates, make minimum payments on all debts and focus on paying off the smallest debt first. Using this method will help you achieve quick wins and feel like you're making progress.
• Avalanche debt management. Making minimum payments on all debt and focusing on paying off the debt with the highest interest rate is how the debt avalanche method works. Financially, this method is advantageous, as it reduces your overall costs.

8. Get a handle on investments.

It goes without saying that retiring early means:

• Your saving period is shorter.
• The savings you have will need to support your spending for a longer period of time.

This means focusing on investment returns. To get the best returns, invest in a portfolio that aims for long-term growth. Make sure you use stock-heavy index funds for as long as possible. Although it seems counter-intuitive, taking less risk prior to retirement makes sense. In retirement, your funds should continue to grow for at least 50 or 60 years.

When you get closer to retirement, you might consider shifting a small amount of your savings into safer, more liquid investments so you can tap them without having to worry about losing money. It might be helpful if you used a year or two's worth of expenses as a benchmark. However, the rest should stay invested, gradually converting to cash as needed, to support that 4% distribution rate.

Lastly, if you plan to retire before 59, you will need a brokerage account, such as online options, or a more traditional brokerage, such as Fidelity. It's best to choose a fund with no more than 0.5 percent in fees, so you can retire earlier.

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9. Be flexible with your plan, but stick to it.

The process of retiring early takes focus, so you should keep track of your progress and make adjustments as necessary. Tracking your spending habits or monitoring your savings and investments could be easier with a financial planning tool. To align your current budget and lifestyle with your financial goals, you may even want to work with a financial advisor.

Even the best plans must allow for flexibility since no one knows exactly what the future holds. In the event of a promotion or layoff, your savings strategy might need to be adjusted.

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Spending habits and recurring expenses are the things you can control. When life throws you a curveball, what's the best way to handle it? Building an emergency fund can help you prepare for the unexpected.

10. Schedule regular meetings with a financial advisor.

Your money needs to be monitored — even if you've stuck to your plan. Whenever you encounter concepts or terminology that is unclear, you should ask questions. Engage in your portfolio, but talk things through with a professional who has the patience to explain things to you before making any decisions.

That's a lot to keep in mind. If you're considering an early retirement, you must talk to a financial advisor.