Early retirement is becoming a reality for more and more everyday people who have realized that you don't need to win the lottery to make it happen.
Nor do you need to earn six figures. Consider Sean of "My Money Wizard," who is well on his way to retiring before age 37: The Minneapolis-based millennial earns $70,000 a year but started his journey to financial independence on a salary of $50,000.
To help you get started on the road to early retirement, here are tips and strategies from regular people who are on track to retire before 45, or who have already succeeded.
MAKE A CLEAR, SPECIFIC PLAN
"Get a plan together as soon as you can," says Google engineer Brandon, who saves 80% of his income and plans to retire by 30 with $1 million. "The sooner you have a plan, the sooner you'll see your contributions compounding into something meaningful and substantial."
"Getting a plan together" means deciding exactly when you want to retire or be financially independent, Brandon explains.
Next, you can focus on execution, which for Brandon means maxing out his 401(k) each year, putting money into a Roth IRA and brokerage account, and contributing to a health savings account (HSA).
FIGURE OUT EXACTLY HOW MUCH YOU NEED
Now that you know when you want to retire, you have to figure out exactly how much money you'll need to fund your lifestyle in retirement. That's what "Mr. and Mrs. 1500" — the pseudonym of husband-wife duo Carl and Mindy, who reached their goal of becoming financially independent in 1,500 days — did.
Using the "four percent rule" — the formula some say can help you determine the amount you can withdraw from your retirement savings each year without running out — the couple came up with their magic number.
"Based on the four percent rule, I need about $800,000 to retire with no debt," Carl wrote on the blog in 2013. "However, I'd like very much to be able to help my children through college, so I'm going to bump the number up to $1,000,000."
The couple committed to putting $2,000 a month toward their investments in order to reach the seven-figure mark, which they did ahead of schedule — in April 2016.
DOWNSIZE
"Live big in a tiny home," says Matt of "Distilled Dollar," a Chicago-based CPA who saves 60 percent of his income with his fiancee and plans to be financially independent by age 35. "We live in a neighborhood where most of our neighbors are paying a higher percentage of their income towards rent. Of course, we could pay the same percentage and upgrade to a nice 2 bed/2 bath, but we're more than happy with where we live today."
He and his fiancee pay less than 15 percent of their income for their 700-square-foot condo in Chicago. They estimate that they save about $12,000 a year, "seeing as how we could easily afford paying an extra $1,000 a month," says Matt.
Also, don't be afraid to negotiate your rent. It never hurts to ask. In Matt's case, it yielded a $2,400 return.
KEEP FIXED COSTS LOW
"A minimalist mindset is simply realizing that more is not always better," says Sean of "My Money Wizard," who built up $150,000 in savings by age 26.
"It means becoming aware of the things that you own, becoming aware of the burden 'stuff' can create, and carefully scrutinizing items before bringing them into your life."
Living minimally has allowed him to keep his expenses at bay. "If you look at my spending compared to most people, the two main areas I save the most on are rent and car payments," says Sean, who keeps his monthly fixed costs between $900 and $1,000. "I drive a 13-year-old truck that's completely paid off and I split rent with my girlfriend in Minneapolis."
DISTINGUISH "WANTS" FROM "NEEDS" BY TRACKING EXPENSES
Matt and his fiancee easily saved a couple thousand dollars by cutting back on things like dry cleaning, massages, Starbucks and going to the movies, he says.
To cut back on "wants," start by evaluating exactly where you spend your money. Try recording each and every purchase you make for a couple of months, whether that means writing expenses down in a notebook or using an app that will track your spending, such as Mint, Personal Capital or Level Money.
After all, you can't save until you know where your cash is going.
GO CAR-FREE
This may be more feasible for some than others, but if possible, trade in your car for public transportation, a bike or your own two feet.
By moving to a place within walking distance to work, Matt estimates that he and his fiancee save nearly $9,000 a year on commuting costs. "This single decision has made me healthier, happier and wealthier over the past year than nearly any other decision," he writes.
RESIST THE TEMPTATION TO KEEP UP WITH THE JONESES
"Question the things you're spending your money on," says Sean. Thinking through your purchases will keep your spending in check and help you refrain from shelling out more than you should to "keep up with the Joneses."
"Just because your friends enjoy spending lavishly on clothes, doesn't mean that's for you," Sean writes on his blog. "Don't waste money on things that aren't important to you."
COMMIT TO STARTING NOW
"We stopped a nasty habit we had of reading about great tips and then failing to implement them," Matt writes. "Avoid our mistakes. ... Literally, do something today from this list and start saving money."
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