5 Ways to Retire Before Age 40

How to finance an extremely early retirement.

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Voluntary early retirement before the age of forty is not typical. Leaving work behind as early as possible to focus on other aspects of life is a popular goal, but most people will not achieve it.

In order to retire in your forties and still have the funds you need to finance all that you'd like to do, you need to create the right environment to foster extraordinary results with your money. Don't count on winning the lottery or selling the company you built in your basement to Google.

[See 10 Affordable Mountain Towns for Retirees.]

Those who leave the workforce before age forty compose a small percentage of the working population, just as Olympic-level swimmers are a small percentage of everyone who competes in the sport. To achieve in the Olympic Games you need to take several extreme actions. To retire early, you will have to do the same. These tips may help you generate enough money to retire before age forty.

Ignore what other people think. You'll need the right mindset. As you make choices that could lead you to extreme early retirement, you may face resistance from family and friends. The decisions you will need to make are often directly opposed with others' expectations. Find like-minded individuals whose advice and encouragement will help move you in the right direction.

[See Why You Could Be Saving Too Much For Retirement.]

Save as much as possible as soon as possible. This is the first of your unpopular decisions. You will need to sacrifice your spending at the beginning of your career in order to have a better chance of living the way you want when you want, with financial freedom, for a longer amount of time. To you, frugality should be elevated to an art form. Your friends may call you cheap, but you won't care because you are focused on your goal without distraction.

Earn as much as possible as quickly as possible. With more income, you can keep more money in high-yield savings accounts and investments. Those funds will be ready for your early retirement. While it's the amount you save that matters, you can significantly extend those savings by earning more. Work more hours or take an additional job or two. Olympic athletes train and practice constantly and this is the same intensity you need to achieve an early retirement.

Avoid fees while investing. While this concept is one part of saving as much as possible, it deserves its own mention. Most investments underperform index funds and you'll pay higher fees for those lackluster results. While some investments do beat the market, you won't know which investments will skyrocket until it's too late. Invest in index funds and make sure you have a sensible mix of asset classes that present a good chance of protecting you from down markets when you need the money you've invested.

[See 5 Alternatives to Traditional Retirement.]

Consider a new definition of retirement. You may still want to work in retirement to earn additional money, particularly if you can do work you enjoy. Consider a part-time job or even a full-time job with a non-profit organization aligned with your interests and values. Leaving the corporate world to work for an organization you care about can be exhilarating and you will enjoy the work. Extreme early retirement is an achievement most people will not accomplish, even if you put forth a good effort. Leaving the workforce behind before the age of forty is an extraordinary accomplishment and it requires dedication, intensity, and a willingness to live differently.

Luke Landes writes for Consumerism Commentary, where he encourages discussions about money and consumer issues. Consumerism Commentary regularly tracks and reviews the best online savings accounts and other financial products.