5 tips for people who want to retire by 45, from financial planners

I've started asking all of my friends a personal finance question that I'm eager to know — around what age do you plan to retire? Most respond with a long pause before saying they really haven't thought much about it. 



  • Most people think they'll retire in their 60s or 70s, but some may plan to retire much earlier.
  • Financial planners can offer guidance and advice if you want to retire in your mid 40s.
  • Using work benefits, reducing expenses, saving raises, and maxing out contributions can all help.

However, the other day, one of my friends said that her plan is to retire by age 45, which is only 18 years away for her. I was shocked! I always thought I'd probably retire around 65 or 70, because I didn't start getting serious about financial planning until my early 30s. 

I was eager to find out what she was doing so I could adopt some of those practices into my money habits, and hopefully retire sooner. So, I chatted with a handful of financial planners about ways that people can start planning and saving now if they want to retire by 45.

1. Take full advantage of benefits at work

A big regret I have around my retirement plan is that I didn't opt into any benefits that my companies offered in the past. Charles Thomas III, a financial planner, said that about one-third of the average American worker's compensation is in the form of benefits, and taking full advantage of retirement benefits at your job is a must.

"Despite the massive value represented in benefits, many employees leave money on the table by not taking full advantage," said Thomas. "Be sure to maximize benefits at work, especially ones like contributions to health care accounts like an HSA, employer matching, or student loan pay-down assistance."

2. Ruthlessly manage expenses

My friend who wants to retire by 45 said that this is her primary financial goal, which dictates her budget and every aspect of her spending. Thomas said that if you're hoping to retire in your 40s, it's important to keep close tabs on household expenses, both before and after you retire.

"This doesn't mean living in your banking app all day, every day; what it does mean is if a new fee pops up at your bank, address it immediately," said Thomas. "It also means keeping disciplined with your budget and staying on track."

3. Max out retirement contributions in tax-deferred vehicles

A big mistake I make with my own retirement fund is that I don't contribute to it on a monthly basis. Doing so adds immense value, said financial planner Mike Kazakewich, who is a partner and director of planning at Coastal Bridge Advisors.

"Time and compounding are significant contributors to growing capital over time," said Kazakewich. "Growing that capital in tax-deferred accounts eliminates the impact of taxes during the growth phase."

4. Stick to a clear plan

While I am fascinated by the idea of retiring at 45, it's important to understand what it takes to make that happen before attempting it yourself. Kazakewich stressed the importance of having a plan and sticking to it.

"Retiring at 45 doesn't just happen; it takes specific objectives and behaviors that will culminate in meeting the goal," said Kazakewich. "By understanding how much capital is required to retire at 45, it's easier to incorporate savings strategies to meet the annual targets required."

5. Save your pay raises 

Brian Walsh, a financial planner and senior manager of financial planning at SoFi, recommends tapping into bonuses and raises as part of your retirement growth strategy. 

He stressed that especially younger workers should consider saving as many of their pay raises as possible, and that the way your lifestyle expenses change over time are sometimes even more important than the total amount you're currently saving for retirement.

"Saving a majority of your raise does two things: first, you are saving money, which can be invested and grow over time," said Walsh. "Second, you are slowing the growth of your expenses, which means you will need less money to replace your lifestyle at retirement."

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