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8 tips towards achieving early retirement


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Increasingly, employers are not offering traditional pensions to their employees, which in the past allowed them to supplement their guaranteed income and potentially retire early. If you have a pension with your employer you are in a lucky minority, but it may not cover all of your expenses if you plan to live large in retirement. With or without a traditional pension, it’s important to have a plan in place if you wish to make your dream to retire early a reality. Here are 8 tips to work towards achieving early retirement. 

1. Contribute to your workplace retirement plan.

The best place to start is by contributing to your workplace retirement plan. You want to always contribute at least the amount your company is willing to match you (it’s free money!). Once you’ve reached your employer match, try to increase your contribution by 1% every 6-12 months. Some plans offer the election for this to be done automatically to avoid having to remember on your own. Check with your HR department to find out if your company matches any contributions and whether you can set up automatic increases to your contribution amount. Not eligible for a workplace retirement plan or is one not offered by your employer? There are other ways to save (IRA, Roth IRA, SEP, etc.) for retirement. Speak with a financial advisor to determine the best option for your situation.

2. Avoid withdrawing from your retirement accounts early.

It may be tempting when you see a sizable balance to take a lump sum out for a large purchase, however the longer your assets are invested, the more potential for growth. Another reason not to withdraw from your retirement fund: in most cases the IRS charges a 10% penalty for withdrawals taken before age 59.5, in addition to having to pay ordinary income tax on the amount withdrawn. So, remember, always keep your eyes on the prize!

3. Ask yourself what's more important to you.

Do you want to live your best life now or in retirement? You don’t have to choose one or the other, but when making financial decisions it’s an important question to ask yourself. In most cases, we want both so it’s best to remember this question and then compromise. If early retirement is one of your top priorities but you enjoy traveling, compromise and instead of going on a vacation every year, go every 2 years.

4. Pay off & avoid debt.

This may seem obvious but it’s important. Each long-term loan that you take on jeopardizes assets that could be used for retirement purposes. In addition, you’re increasing your costs by having to pay interest – a completely unnecessary and avoidable expense. to increased costs from interest being paid.

5. Invest early and often.

If after paying your fixed expenses you have discretionary income, consider automatically directing a portion to an investment account to utilize for savings and retirement. Use the power of compounding to your benefit!

6. Consider a Health Savings Account (HSA) for health expenses.

Health care costs are one of the main concerns when individuals contemplate early retirement and HSAs are an often overlooked tool for savings. HSA accounts, offered in conjunction with some high-deductible health care plans, allow for you to contribute tax free, have the assets grow tax-deferred and make withdrawals for qualified expenses tax free. Contributions made to the account carry on year to year and even carry on with you if you change employers. If you can avoid withdrawing from the health savings account during your working years, any amount remaining can be used in retirement for qualifying health needs. It’s not for everyone but it’s worth considering and asking your advisor if it makes sense for you.

7. If offered, take advantage of employee benefits such as employer stock plans.

You may have the ability to purchase company stock at a discount or get a matching contribution from your employer. Check with your HR department to see if there's an option available to you. 

8. Set up multiple sources of income.

This could include investing in income generating assets such as a rental property or small business, or more traditionally, taking on a part-time job or side-hustle. Alternate income streams help to cover your cost of living so you can save more towards your end goal.


People are living longer and therefore have more years to cover in their retirement. Retirement can mean different things to many people, whether it’s moving to paradise, spending more time with your family, or being able to do something you truly love such as volunteer work or travelling. Whatever it is to you, the more you plan now the better position you will be in the future to set yourself up for retirement and maybe, if you’re lucky, fulfill your dream of early retirement.


Please note: Financial advice should be tailored to individual circumstances and the content of this article should not be viewed as recommendations. This article is not an endorsement of any particular product, service or organization; nor is it intended to provide financial, tax or legal advice. It is intended to promote awareness and is for educational purposes only. Any specific applications and services noted are not necessarily endorsed by John Hancock or any of its affiliated businesses.

Advisory services offered through John Hancock Personal Financial Services, LLC, an SEC Registered Investment Adviser. Boston, MA 02116. 888-955-5432.

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