Is Early Retirement More Attainable Than We Think?

in Financial Planning by

In 2002, veteran Doug Nordman reached a crossroads that would redefine the way he viewed work, life, and early retirement. After serving 20 years in the U.S. Navy’s submarine force, he faced the possibility of starting a brand new career at age 41. Needless to say, he wasn’t thrilled at the prospect.

It wasn’t that Nordman didn’t want to continue working. Quite the contrary, really. As Nordman tells it, veterans, in general, have a burning desire to continue working long after their military service has ended. Whether it’s to continue helping others, to continue serving, or simply to feel relevant, the drive to be a productive member of society is deeply ingrained in most veteran’s psyche.

But Nordman had a problem. Although he wanted to continue working in some capacity, the “regular jobs” he was considering weren’t all that appealing.

“I was curious about a civilian career, but not enthusiastic about any particular field,” explained Nordman. “I really wanted to avoid rush-hour commutes, meetings, office attire, and the other “dissatisfiers” of the workplace.”

Faced with an uncertain future, Nordman continued mulling over his options until, one day, his father asked a life-changing question that made him rethink everything – including his plans for the future.

“Why do you want to keep on working after you retire from the military?” his father asked. “Did you save enough money to live on?”

Nordman had, in fact, saved and invested enough money for his family to live on, although he didn’t realized it at the time. Not only did he have a military pension waiting, but he and his wife had a lifetime of saving and investing under their belts, often to the tune of 50% of their income.

Once Nordman ran the numbers, he realized that another option existed outside of the dreaded 9-5 civilian working world. He could retire. And when that lightbulb went off, there was no turning back.

“I stopped looking for a job and started building my new life,” he says.

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Becoming an Accidental Retiree

In a world where the vast majority of the population is woefully unprepared for retirement, it may be hard to relate to an “accidental retiree.” Still, it isn’t all that improbable.

According to Nordman, he and his wife’s most important financial move was saving 50% of their income at times, and sometimes more. No matter how you cut it, that’s a lot – even enough to allow for some mistakes, as Nordman’s story shows.

“We were not brilliant investors,” admitted Nordman. “We chased the hot actively-managed mutual funds, we paid 1980s sales charges of 2%, and we traded too frequently.”

But his family’s high savings rate was enough to make up for his investing shortfalls, he says. And even accounting for some waste, when you invest heavily and add in the magic of compound interest over twenty years or so, almost anyone can become an accidental retiree.

Still, as well as Nordman did and continues to do, he thinks you can do better. In hindsight, he and his wife realize that if they had taken more time to learn about investing when they were younger, they could have a lot more money stashed away – and enjoyed even more security because of it.

“Reducing our investment expense ratios by a percentage point would have accelerated our financial independence by at least a year,” says Nordman.

Hindsight is always 20/20, but you can’t change what you don’t know or understand. Years ago, investment ratios and trading fees weren’t always as easy-to-find as they are today. Financial education was lacking, and the treasure trove of educational data now housed on the internet was still being built.

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How to Put Your Early Retirement Dreams on Steroids

But now that all the information you could ever want or need is available at your fingertips, it’s still not enough. If you want to truly get ahead, you have to learn as much as you can and harness that knowledge. Based on advice from Nordman and financial experts, these steps are a good place to start:

Step 1: Drastically Cut Your Spending

Part of achieving early retirement relies on spending less than you earn. And if you want to retire earlier than most, you’ll probably have to spend less than most. But how?

“The best way to do this is to track your spending for a few months, cut out the wasted spending on the things you don’t care about, and spend your money only on the things that are important to you,” says Nordman. “By practicing this focus, you’ll soon find ways to spend on your values and boost your savings rate.”

Related Post: A Better Way to Track Your Spending Each Month.

Step 2: Save a Large Percentage of Your Income

But saving that money isn’t enough. To get the most out of your savings, you have to invest heavily – and invest smart. And the higher you can get your savings rate to climb, the better. The math is shockingly simple.

A family making $100,000 per year for twenty years who saves 20% of their pre-tax income will have approximately $877,304 in retirement if they earn 7% across their portfolio. Meanwhile, a family with the same income who saves 40% will wind up with more than $1.75 million. Want more money in retirement? Saving more and investing as much as you can in pre-tax accounts is one of the easiest ways to get there.

Step 3: Know Your Expense Ratios

Although investing in anything over the long haul will likely beat the result of not investing at all, choosing investments with low expense ratios can drastically improve your returns over the course of your working years.

The good news is, no matter who you invest with, you can find out this vital information for free and without risk. By linking all of your accounts to Personal Capital, you can gain access to our free retirement fee analyzer. The Fee Analyzer “helps you uncover what you are really paying in fees, calculates the impact on your retirement, and helps you make informed decisions on how to invest for retirement.” If you want to know where you stand, Personal Capital can help you find your next steps.

Step 4: Build Passive Income Streams

Along with a healthy savings rate, the Nordmans did something else right; they socked some money away in rental and investment property early on, and built a few somewhat passive income streams along the way. And his military pension didn’t hurt either.

Whatever your situation, building several passive income streams is a smart way to further improve your chances of reaching- and staying in- early retirement. Whether your passive income stream comes from rental real estate, a portfolio of dividend-producing stocks, royalties from an invention or book, or something else, reaching early retirement will be made that much easier by its existence.

Related Post: Why Real Estate Should Be a Part of Your Retirement Strategy

Step 5: Stay the Course

It’s easy to get caught up in the hype of active investing, but the DIY route doesn’t always pay off. And that’s one of the biggest regrets Nordman experienced during his journey towards “accidental retirement.” By choosing the active management route, the Nordmans forked over far too much of their earnings in fees. And those fees, while seemingly insignificant at the time, ate away at their returns in a big way over time.

One way to stay the course is to choose passive index investing, only taking the time to rebalance once or twice per year. Another strategy: choosing a low cost online personal financial advisory firm such as Personal Capital. Either “set-it-and-forget-it” method can drastically cut down on the time you spend investing, while also paving the way to greater returns over time.

As with most things, sometimes the most obvious strategy is the best one. So choose a long-term investment plan you can live with and stick with it.

Early Retirement May Be More Attainable Than You Think

If you based all of your views on retirement on what you see on the nightly news or read in newspapers, you would think retirement is some dream scenario only experienced by the ultra-rich. But take a look at Nordman and others like him and you know that that couldn’t be further than the truth.

The real truth is this: Having a high savings rate and the discipline to invest those extra dollars every month is sometimes all it takes to set yourself up for life. Anyone who says otherwise simply isn’t saving or investing enough, and they’re projecting their shortcomings onto you. Don’t let them.

Ignore the statistics. Shrug your shoulders at the naysayers. Yawn and roll your eyes at anyone who says retirement is a lost cause and an impossible feat. They’ve got it all wrong.

Early retirement isn’t something for trust fund babies or the top 1%. In fact, it’s more attainable than most people realize. And if you follow the steps outlined above, you may get there before you know what hit you – and maybe even on accident.

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Holly Johnson

Holly Johnson is a financial expert and award-winning writer whose obsession with frugality, budgeting, and travel plays a central role in her work. In addition to serving as Contributing Editor for The Simple Dollar, Holly writes for inspiring publications such as U.S. News and World Report Travel, Personal Capital, Lending Tree, and Frugal Travel Guy. Holly also owns two websites of her own - Club Thrifty and Travel Blue Book. You can follow her on Twitter or Pinterest @ClubThrifty.


  1. Joe

    Thank you for this article.

    Yes, anyone can achieve their retirement goal as well as early retirement, if they really put the effort in it. The article was very well laid out and provide good concrete steps to help anyone reading it start an action plan.

    In terms of the story, Doug’s story is definitely inspirational. I know the author had mentioned in the story how he and his wife really worked together as a team to achieve this result. I think his wife was not given enough credit!! It was great that she was also a saver, smart with her money (willing to make sacrifices), and was able to work with Doug to achieve mutual financial goals.

    So Doug’s best decision was definitely finding and marrying his wife. He second best decision was “accidental retirement”. So maybe there should be an “*”: Early retirement is achievable! For married couples, you must have a partner with align financial goals.

    Great read! Thank you!

    • Holly Johnson

      You’re probably right- his wife all the credit in the world for her willingness to save and focus on investing. Having an equally-focused spouse really does help too- the fact that my husband is also frugal has certainly made my life easier and helped us build our net worth much faster.

  2. raj

    sorry to write but I’m a learner and want to know how comment section works.

  3. masterofnone

    Thank you for the encouraging article, Holly. I retired at 45 by living well below our income level. I have to admit that the uncertainties of the stock market does scare me a lot. And the real estate properties I’ve owned haven’t had that great a ROI. The home in Rapid City,SD did somewhat well but only if you include the price appreciation of the home. We bought a property in Florida after the 50% off sale and I made about 2% per year. Not very good and certainly not worth the hassle of dealing with renters and HOA’s.

    I wrote a program that allows you to enter a list of funds and how much you are willing to lose in years like 2008. It will take those requirements and show you what the optimal combination of those funds are to give you the highest returns while maintaining the minimum loss in years like 2008.

    Here’s an example. Because I’m retired, I specified that I was only willing to lose -4% in years like 2008:
    Fund Portfolio Percentages
    VFITX 25
    TEGBX 15
    FNMIX 15
    OAKBX 15
    PSA 15
    FSRFX 15



    2014 12.47851059
    2013 9.393404957
    2012 9.893648928
    2011 7.146280318
    2010 16.70326285
    2009 16.12859418
    2008 -3.257844235
    2007 2.648613454
    2006 13.39985571
    2005 9.098881717
    2004 15.11805974
    2003 22.8159376
    2002 5.453886184
    2001 13.38886443
    2000 13.93926718
    1999 6.722264202
    1998 0.732517903
    Avg Return 10.10611798

    Parameters for this run:
    Start Date: 1/1/1998
    End Date: 12/31/2014
    Min Portfolio Return: -10%
    Max Consecutive Negative Years: 5
    Min Return After Neg Year: -4%

    Feedback would be good.


    • PG

      I plugged your portfolio suggestion into Morningstar’s Portfolio X-ray tool, and it was not kind. Basically, the portfolio is an unbalanced disaster and is far too expensive (I suggest low-cost ETFs over higher-cost mutual funds). Here’s what Morningstar has to say:

      Cash = 12%
      U.S. Stocks = 38%
      Foreign Stocks = 2%
      Bonds = 47%
      Other = 1%

      Average Mutual Fund Expense Ratio = 0.71%

      Your overall portfolio style: Unclassified
      Your portfolio doesn’t have a clearly discernible style and isn’t well diversified among the main areas of the style box. Depending on your investment goals, you may want to further diversify our portfolio by increasing your exposure to small/mid-cap value stocks.

      You have a lot of exposure to Real Estate, Industrials, Hard Asset, and Cyclical sectors.

      You have very little exposure to the Consumer Cyclical, Financial Services, Energy, Technology, Consumer Defensive, Healthcare, Slow Growth, Classic Growth, and Aggressive Growth sectors.

      Most financial advisors would suggest that you diversify your stock exposure among a broader variety of stock types.

      • masterofnone

        PG – Thank you for the comments. However, wouldn’t the suggested diversifications have given results like most financial planner portfolios in which they lost 35% in 2008 or only had average returns of about 5.5% per year? The portfolio has had fairly consistent returns for 18 years and has weathered the declines in 2000-2001 and 2008. It did far better than a diversified portfolio recommended by one of the large brokerage houses including the declines in 2000-2001 and especially the mini depression of 2008.

        It is past performance but then all the portfolios generated by financial planners and large brokerage houses also have nothing more to go on than past performance. This one at least has weathered past performance really well and covers several asset classes.

  4. Jasen

    As a military retiree he has a huge expense covered: health care.
    Also many kudos to his wife. A 50% savings rate most likely means they were living FAR below the level of their peers. I was not so fortunate in that department. Enough said.

  5. Financial Samurai

    There seems to be an “early retirement movement” that is gaining steam, doesn’t it? Or, am I in my own early retirement bubble, associating frequently with others who decided to give up Corporate America early as well?

    Life speed accelerates the older we get. The great thing about early retirement is hedging out an early death to enjoy life to the MAX!


  6. JeffB

    We save about 40% of our income and can probably retire now if we wanted to, but we both have about 5 good earning years left to really guarantee a great retirement where we won’t have to worry about doing large amount of traveling. Anyone can sit at home and not spend money, but that isn’t our goal. We can retire with $4M dollars and keep our lifestyle under $90K a year in spending and we will be able to do almost anything. I get a good pension once I put in my time at work and the wife will stop her corporate job at 50, but do something else for a few years. If I didn’t have a pension I would quit a few years earlier. I am curious how the impact to SS will be with 2-3 years of zero income coming in since most people don’t retire until after 62.

  7. Spencer

    Doug’s story is an awesome inspiration to others in the military seeking financial independence and early retirement. I didn’t see it mentioned in the article but he writes at Like another commentator said, having a partner who’s goals are aligned with yours is critical to success.

    Right not we’re saving almost 40% of my income and about 80% of my wife’s, so we’re approaching the 50%+ mark. We hope to achieve financial independence before age 40 while I work for the US Air Force. With a high savings rate and passive index fund investments, I think anyone in the military should be able to achieve financial independence just before or right after military retirement. The military pension could double your retirement annual earnings. Great article, thanks for getting the word out!

    • Holly Johnson

      Sounds like you’re doing awesome. Keep it up!

  8. Damian Efetobore

    Great read.

  9. MM

    The section “Step 1: Drastically Cut Your Spending” could be a separate article by itself. I have a feeling that most people think that this is just penny-wise stuff like “Brew your own coffee instead of going to Starbucks” and “clip coupons”.

    But the top 3 pound-foolish things people spend their money on are housing, transportation, and food — so take a hard look at BIG changes: whether you really need that big of a house with rooms you’re not using or if you could downsize; buy a used instead of new car (or see if you could get rid of one car — or all cars if public transportation/Uber would suffice); and eat out less.

    • Anonymous

      Getting rid of my car was the best decision I’ve made. I have so much more money to save and pay off debt now!

      • Holly Johnson


    • Holly Johnson

      Agreed. It is hard for me to understand why people blow all their expendable income on car payments and fancy restaurant dinners. It’s a shame, really.

    • Anonymous

      Great point.
      Use of the Pareto principle is key to successful cost reduction

  10. Kyra

    This guys is a 20 year VETERAN. That means he has something most of us do not; a REALLY NICE PENSION.

    You can’t compare his story to anyone who works without a pension. There just is no comparison to having a pension for life vs trying to save it all yourself. None.

    I could retire right now if I had his pension to supplement what I’ve saved. My own 50% savings rate is the only reason I’m going to have a retirement at all!

    • Paul

      The funny thing is; many people in the military don’t think their pension is enough and in fact, have to continue working after retirement. Standard of living expectations I suppose. I was in the Air Force for 8 years and started saving aggressively in the last half (the first four years were spent getting out of $4,500 in credit card debt and a 19k car loan). I got out with $150k in net worth, and ex

    • Holly Johnson

      I hear ya. A pension would sure be nice!

      Still, it isn’t impossible to retire early without a pension. I’m self-employed (no benefits and certainly no pension) and my husband and I should be financially independent at 46. We’re 35 now. Investing in real estate and saving a large percentage of our high incomes has made it all possible.

      • PG

        Investing in real estate is great for some, not for others. The areas of the country where real estate investing is lucrative are very small, mainly the larger metro areas. In most of America it’s barely a break-even proposition. I know a couple of people who sold their rental properties because the headache of owning it exceeded the rental revenue they were getting. Plus it’s a non-liquid asset that requires enormous upkeep costs, so it’s not for everyone and doesn’t work in all areas.

        As for “flipping”, an old classmate of mine and his wife bought a fixer upper about an hour from where I live, and they spent a year fixing it up. After they sold it I asked him how he did. “We barely broke even” he said with a frown. So again, it all depends on the right property in the right place, and then you better hope your profits aren’t swallowed up by the cost of maintenance, repairs, property taxes, and other expenses.

    • Joel

      His pension is not what is allowing him to retire, and while nice, it is not as good as having your own money. I would much rather be paid more and not have a pension so that I get to control the money.

      Pensions aren’t as good as a 401k because:
      1) The assets are illiquid, meaning if you want more than the monthly check, than too bad.
      2) The assets die with you – no inheritance to children.
      3) The money is managed by someone else, meaning your payout could be reduced or eliminated if the company/government is fiscally insolvent.

      If you can live off 50% of your income I don’t think you should be complaining. Be glad you aren’t forced to contribute to a pension and get your own money.

      • Kyra

        I think you missed my point. I never said the pension was allowing him to retire. I said you cannot compare someone with a military pension after 20 years (a nice percentage of base pay for life – once you hit that 20) with someone who has no pension. It’s EXTRA retirement income, in addition to what he could save, that MOST OF US don’t find with regular employment anymore. His pension income is also guaranteed by the federal government, which might not mean much, but sure means more than you could lose half your value or more in the next crash.

        My point was he has both, where most of us these days are completely on our own with just the one thing; our own savings. If I’d had that realization a bit earlier in life, I’d have spent my first 20 working years after college in the military. 🙂

  11. Leah

    I’ve been working on early retirement for several years now. Last year I saved 55% of my income. Going for 60% this year!

  12. Mr. Michael

    I’m loving all the coverage Early Retirement is getting lately. My wife just resigned this week at age 42 and I’ll be resigning in the next year at age 41. Thanks to high savings rate, starting saving young, low cost investing with 80%+ in stocks, choosing not to have kids and choosing not to have a car. No pension for either of us in our futures.

    Holly: my only beef is that #4 should not be on your list! Passive income may be useful during early retirement, but stay away preparing for retirement! It’s all about acieving maximum total gain during accumulation phase at a volatility you can stomach. Gain = capital gain + income. Your total gain in real estate or dividend stocks will pale compared to the total stock market requiring you to work months or years longer.

    Asides from that, thanks for spreading the word!

    • Holly Johnson

      Hey, I just disagree. My husband and I bought rental properties when we were 25. Minimal money down and our renters have paid them off for us this whole time. They will be completely paid off in less than 11 years, when we are 46. Zero regrets aside from the fact that I wish we would have bought a few more. Remember, rental property is paid off with someone else’s money – not your own. At least that’s the way it should be.

      • PG

        US News and World Report has an article called “The Pros and Cons of Rental Real Estate”:

        Money Crashers also has an article called “8 Issues with Buying Rental Property and Becoming a Landlord”:

      • Mr. Michael

        Maybe so, Holly, just run the numbers to be sure. If you found a rental that is the exception to the rule, congratulations!

        By run the numbers, I mean pretend you took every dollar that you put into the house over the 21 year duration of the loan – the down payment, mortgage principle, mortgage interest, property taxes, maintenance charges, HOA fees, insurance, utilities, and whatever else – and instead put that toward an S&P 500 index fund. Figure the difference and project how large the hypothetical fund will be in 11 years when you pay off the mortgage versus how much equity you’ll have in a home in a 11 years. Add in the rental income you are getting. To project the next 11 years, assume 6-7% after inflation for S&P 500, 0% after inflation for the home, the long-term averages for each. A home holds a great intrinsic return, but it’s most often a poor investment, not to mention a source of stresses that you just don’t get from an index fund.

        I love this post for many reasons why:

        Thanks for the blog post and for responding to our comments!

        • Holly Johnson

          Yes, I am very well aware of how it works =) I own three businesses and write about money for a living. Do you really think I don’t know how to run the numbers?

          We live in a low cost area, purchased two affordable single family homes (one with zero down), and manage to bring in a nice profit each year that we use to prepay the mortgage and/or finance repairs. Every penny of equity we have in both homes has been paid by someone else, and all of the repairs so far have been financed with rental profits.

          Remember, rental property is paid off by someone else. I wouldn’t have invested that money elsewhere- it wasn’t mine to begin with. The key is finding rentals that are profitable enough to make it work, which I did. Also, I agree with J. Collins that your primary home shouldn’t be seen as an investment. However, rental property is an entirely different animal. The sole purpose of owning rental property is to use it as an investment. A handful of people do it wrong, but there are plenty of us who do it right.

  13. Ed

    50% of my income goes to Uncle Sam.

    • Kyra

      Congratulations!! With an income in that bracket, and saving 50% of what’s left, you should be nearly ready for retirement yourself. Enjoy!

    • Holly Johnson

      As a self-employed individual who pays one of the highest tax rates in the country, I feel your pain!

    • Sara

      I’m in the 38% tax bracket, I’ll be thrilled to earn enough to hit the next one! Congrats!

  14. David

    > A family making $100,000 per year for twenty years who saves 20% of their pre-tax income will have approximately $877,304 in retirement if they earn 7% across their portfolio. Meanwhile, a family with the same income who saves 40% will wind up with more than $1.75 million.

    Is that math right? It’s saying by saving twice as much, over twenty years, you end up with… exactly twice as much. Shouldn’t there be some portfolio gains in there?

  15. Richard Zimmerman

    Holly, so glad you get it! So may people do not understand. A rental property is an investment that is given to you with someone else’s money. I have ten rentals and not all make a profit each year. But it doesn’t matter. Because in 10 more years they all will be paid for and I will have an income of over $15K per month with just the rentals. All done with someone else’s money. No brainier! My wife and I still have all the traditional 401k and savings. We also have 3 children that are better than any saving we would want. Don’t give up children for savings life not with living without them. I could not have done this without my best business partner, my wife.

    • Holly Johnson

      That’s very sweet, Richard! My husband is the world’s best business partner too! =)

  16. George Nkansah

    I live in Tema, a small city in Ghana. Thanks for your wonderful article. It’s been a source of encouragement for me as a military officer. I started investing in rental real estates at the early stage of my military career and it has been my source of motivation. In fact my wife has been very helpful. What I do is to build and rent in Tema since I do not have large sum of money to buy outright. All the constructional works are supervised by my wife and I advertise my rentals in her name and phone numbers. This allows me to concentrate on my military work. The family now owns 9 units of two bedroom apartments and 10 units of one bedroom apartments. We are now constructing our biggest project of 16 units two bedrooms which we hope to complete in phases. Once again I thank you for your encouragement.

  17. Steve Miller

    Hi Holly,

    Great article. My wife and I retired early (at 50 years old) and are now enjoying travel and new hobbies. We chronicle our travels at

    One of the things I wish I’d had before I retired was an app to count down the days until it happened. As a techy guy, I am creating an app that does it (the basic app will be free and will work on iPhone and Android). It is in development now, but it would be good to get your feedback on the idea:

    All the best,

    Steve Miller


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