← Back to Glossary
Early Retirement
Definition
Early retirement means leaving the workforce before the traditional retirement age of 65, requiring significant savings to fund a longer retirement period.
Explanation
The FIRE (Financial Independence, Retire Early) movement has popularized early retirement through aggressive saving (50-70% of income) and strategic investing. Early retirees need to plan for healthcare costs, longer retirement periods (possibly 40+ years), and withdrawal strategies that preserve capital.
Early retirement doesn't necessarily mean not working — many early retirees pursue passion projects, part-time work, or entrepreneurship.
Example
Someone aiming to retire at 45 with $40,000 annual expenses needs about $1 million invested (using the 4% rule) before accounting for inflation.