Are you dreaming of an early retirement? With the right planning and strategies, it's possible to retire in just 10 years. However, it's important to note that 45% of baby boomers fear outliving their retirement savings and investments, ranking it among their top retirement concerns. In this comprehensive guide, we'll walk you through the 8 steps to prepare for early retirement, ensuring that you have the financial security you need to enjoy your golden years.

1. Understand How Much Money You'll Need

One of the most crucial aspects of early retirement planning is determining your "retirement number." Unfortunately, 64% of workers may have less than $10,000 saved toward retirement, which is far from enough. Additionally, 22% of Americans are uncertain about the amount needed for a comfortable retirement.

Retirement saving habits across generations

While the general advice is to replace 70% of your pre-retirement income, this rule can be tailored to fit your specific lifestyle. If your mortgage is paid off, you may need less. If you plan on traveling the world, you may need more. Utilizing a retirement calculator or seeking advice from a financial advisor can help you determine your retirement number.

Retirement Number Formula

To calculate your retirement number, consider the following formula:

Retirement Number = (Annual Retirement Expenses) / (Safe Withdrawal Rate)

Steps to Determine Your Annual Retirement Expenses

1. Estimate Annual Retirement Expenses:

  • Current Annual Income: Start with your current annual income.
  • Adjust for Lifestyle Changes: Increase or decrease based on your expected lifestyle in retirement (e.g., mortgage paid off, travel plans).
  • Account for Inflation: Adjust for expected inflation.

Estimated Annual Expenses = (Current Annual Income x Percentage of Income Needed) × (1 + Inflation Rate)^Years Until Retirement

2. Calculate the Safe Withdrawal Rate:

3. Determine Your Retirement Number:

Retirement Number = Estimated Annual Expenses / 0.04

Example Retirement Number Calculation

1. Estimate Annual Expenses:

  • Current Annual Income: $100,000
  • Percentage of Income Needed: 70%
  • Inflation Rate: 3%
  • Years Until Retirement: 20

Estimated Annual Expenses = (100,000 × 0.70) × (1 + 0.03)^20

Estimated Annual Expenses = 70,000 × 1.8061 ≈ 126,427

2. Calculate the Retirement Number:

Retirement Number = 126,427 / 0.04 ≈ 3,160,675

Factors to Consider

  • Current Annual Income and Expected Annual Income at Retirement: Helps establish a baseline for your expenses.
  • Current Savings and Investments: Indicates how much you already have saved.
  • Expected Retirement Age and Life Expectancy: Determines the duration of your retirement period.
  • Desired Retirement Lifestyle and Estimated Expenses: Helps tailor your annual expenses.
  • Inflation Rates and Potential Investment Returns: Affects the value of money and growth of investments over time.

By taking these factors into account, you can create a more accurate picture of how much money you'll need to save for retirement. It's essential to be realistic about your expectations and to regularly review and adjust your retirement plan as your circumstances change.

2. Plan for Higher Medical Expenses

Managing retirement healthcare costs is a significant concern for many retirees. According to the Employee Benefit Research Institute, retired couples should anticipate needing savings ranging from $184,000 to $383,000 to adequately address their medical costs, depending on their Medicare coverage. This figure is expected to rise in the future, making it crucial to plan for these expenses well in advance.

Percentiles of annual out‑of‑pocket expenses for individuals ages 65 and above under different types of Medicare coverage
Source: T. Rowe Price estimates based on 2024 Medicare premiums and data from the HRS

To prepare for these costs, consider the following options:

share of premiums in total annual health care costs
  • Long-term care insurance: These expenses typically increase with age, and Medicare doesn't cover many long-term care costs. To safeguard your retirement savings, consider purchasing long-term care insurance early for lower premiums and higher acceptance rates.
  • Health savings account (HSA): For those in high-deductible health plans who are eligible for HSAs, maxing out contributions is beneficial for tax advantages. Unused HSA funds can grow tax-free until retirement, when you can withdraw them for qualified medical expenses.

It's important to remember that healthcare costs can vary significantly based on your individual health status, location, and the type of care you require. By planning ahead and considering various options, you can better prepare for these expenses and protect your retirement savings.

3. Start Saving More Aggressively

To retire in 10 years, you'll need to save for retirement more aggressively than the traditional advice of saving 10% to 15% of your pre-tax income. The earlier you aim to retire and the higher your retirement number, the greater your yearly savings target should be.

Take your retirement number and subtract the savings you already have to see how much you need. Divide that number by the years left until retirement to determine what your annual savings should look like. Start saving toward that goal as soon as possible, as starting early allows your investments more time to grow.

Consider the following retirement savings strategies to boost your retirement savings:

  • Increase your 401(k) contributions: If your employer offers a 401(k) plan, aim to contribute as much as possible, especially if your employer offers a matching contribution.
  • Open an Individual Retirement Account (IRA): If you don't have access to a 401(k) or want to save more, consider opening a traditional or Roth IRA.
  • Automate your savings: Set up automatic transfers from your paycheck or bank account to your retirement accounts to ensure consistent savings.
  • Take advantage of catch-up contributions: If you're 50 or older, you can make additional catch-up contributions to your 401(k) and IRA.
  • Invest in a diverse portfolio: Diversify your investments across various asset classes, such as stocks, bonds, and real estate, to minimize risk and maximize potential returns.

Remember, the key to successful retirement savings is consistency and starting early. Even small contributions can add up significantly over time, thanks to the power of compound interest.

4. Develop a Budget and New Spending Habits

Reducing expenses is crucial for saving more, a key factor in retiring early. Take a closer look at your spending habits and identify areas where you can live more frugally. Creating a budget is paramount in this endeavor. Categorize your expenditures as essential or non-essential, and evaluate non-essential spending for potential cutbacks. Invest the savings and take pride in watching your nest egg grow as a result of your budgeting efforts.

Consider the following tips for developing a budget and new spending habits:

  • Track your spending: Use a budgeting app or spreadsheet to track your income and expenses for at least one month to identify areas where you can cut back.
  • Prioritize essential expenses: Ensure that your essential needs, such as housing, food, and healthcare, are covered before allocating money to non-essential items.
  • Cut unnecessary expenses: Look for ways to reduce or eliminate non-essential expenses, such as dining out, entertainment, or subscription services.
  • Shop smarter: Compare prices, use coupons, and look for deals to save money on everyday purchases.
  • Adopt a minimalist lifestyle: Embrace a simpler way of living by focusing on experiences rather than material possessions.

By developing a budget and adopting new spending habits, you can free up more money to put toward your retirement savings and achieve your early retirement goals faster.

5. Downsize Your Debt

Reducing new debt and paying off most consumer debt can significantly reduce the portion of retirement income used for interest payments and alleviate stress. Prioritize accelerating mortgage payments to clear the loan before retirement.

Household debt across generations

As retirement approaches, avoid indulging in a new vehicle purchase and ensure your reliable daily driver is fully paid off. To prevent new credit card debt and stay within budget, opt for cash payments for major purchases once your debts are settled.

Consider the following strategies for downsizing your debt:

  • Create a debt repayment plan: List all your debts, including balances and interest rates, and prioritize paying off high-interest debts first.
  • Consider debt consolidation: If you have multiple high-interest debts, consolidating them into a single, lower-interest loan can help you pay off your debt faster.
  • Avoid taking on new debt: Refrain from making large purchases on credit, and pay cash whenever possible.
  • Negotiate with creditors: If you're struggling to make payments, reach out to your creditors to discuss potential payment plans or interest rate reductions.

By downsizing your debt, you can free up more money to put toward your retirement savings and reduce the financial stress that can come with carrying debt into retirement.

6. Max Out Retirement Accounts

Maximizing your retirement account contributions is essential for early retirement. Aim for the maximum allowance in your 401(k), IRAs, or other qualified retirement plans. While you're still working, strive to qualify for any matching contributions your employer offers. Look for any additional catch-up contribution plans you're eligible for, which usually kick in around 50 years old.

As you approach retirement, consider consolidating accounts, such as combining similar IRAs at one institution. This can streamline investment management and provide a clearer view of your overall retirement assets. If you've changed jobs throughout your career, be sure to track down any 401(k) accounts that you didn't roll over and familiarize yourself with your distribution options.

Keep in mind the following contribution limits for retirement accounts in 2024:

  • 401(k): $23,000 (plus an additional $7,500 catch-up contribution if you're 50 or older)
  • Traditional and Roth IRA: $7,000 (plus an additional $1,000 catch-up contribution if you're 50 or older)

By maxing out your retirement accounts and taking advantage of catch-up contributions, you can significantly boost your retirement savings and reduce your income taxes in the years leading up to retirement.

7. Optimize Your Investments

Developing the right investment strategy and investment allocation for retirement is crucial for early retirement. Review your investment allocation and consider transitioning your portfolio from stocks to bonds as you age to safeguard your savings.

According to the rule of 120, subtract your age from 120 to determine the maximum percentage you should allocate to stocks.

If you feel you're lagging in savings, leaning towards a higher stock allocation can offer greater growth potential. However, it's crucial to strike a balance between the risk of losses and the risk of insufficient retirement funds. Avoid the temptation to take excessive risks in attempts to outperform the market, and be cautious of aggressive marketing and investing tactics that take advantage of retirement fears.

If you're unsure about managing your portfolio, consider a target-date fund. These funds align with your retirement year, with a professional manager crafting an investment strategy for your time horizon.

Consider the following factors when optimizing your investments:

  • Your risk tolerance: Determine how much risk you're comfortable taking on and adjust your asset allocation accordingly.
  • Your time horizon: As you approach retirement, consider shifting your portfolio towards more conservative investments to protect your savings.
  • Diversification: Spread your investments across various asset classes and sectors to minimize risk and maximize potential returns.
  • Fees: Be aware of the fees associated with your investments, as high fees can eat into your returns over time.
  • Regular rebalancing: Periodically rebalance your portfolio to maintain your desired asset allocation and risk level.

By optimizing your investments and regularly reviewing your portfolio, you can maximize your potential returns and ensure that your retirement savings are on track to support your early retirement goals.

8. Track Your Progress With Kubera

An important step in retirement planning is deeply understanding your financial situation. This includes knowing how your assets, liabilities, and investments all behave together. Kubera provides that view as an all-encompassing financial dashboard, effortlessly syncing with a multitude of assets to offer a holistic perspective of your entire retirement portfolio.

Kubera Portfolio Tracker

With Kubera, you can:

  • Get a Big-Picture View: See your entire portfolio, including your 401(k), Roth IRA, and other retirement accounts, as well as other assets and liabilities like bank accounts, cryptocurrency accounts, brokerage accounts, real estate, and loans.
  • Rebalance Your Portfolio: Adjust your asset allocation to align with your retirement goals and timeline. Use Kubera’s features to monitor and tweak your investments, ensuring they fit your retirement plan.
  • Model Real-Life Situations: Use Kubera’s tools to simulate various financial scenarios. This includes changes in income, expenses, savings, investments, taxes, inflation, and interest rates, allowing you to see how these factors impact your future wealth. Traditional retirement calculators often use fixed rates, which may be too simplistic for today’s complex financial landscape.
  • Track Finances in Real-Time: Monitor your net worth and asset ROI in your preferred currency. Kubera provides real-time updates and organizes your financial documents all in one place, helping you stay on top of your finances and make informed decisions.
  • Collaborate with Your Team: Work with your spouse, attorneys, and financial advisors to ensure everyone is aligned with your financial plans. Kubera supports collaboration, making it easier to manage your finances as a team.
  • Access Anywhere, Anytime: Use Kubera’s secure and encrypted platform from any device. This accessibility ensures your financial information is always at your fingertips, regardless of where you are.
  • Enjoy a User-Friendly Interface: Kubera’s simple and intuitive design makes wealth management easy and even enjoyable. The platform is designed to help you stay on track with your early retirement goals.

Tracking Your Progress

Staying on track with your early retirement goals requires regular monitoring and adjustments. Here are some concise tips to help you:

  • Set Milestones: Break down your retirement savings goal into smaller, achievable milestones to stay motivated.
  • Review Regularly: Revisit your retirement plan periodically to ensure progress and adjust for any changes in your financial situation or market conditions. Use Kubera's Fast Forward feature to simulate future scenarios and compare your current progress against your planned milestones.
  • Celebrate Successes: Acknowledge and celebrate milestones to maintain motivation and commitment to your plan.
Retirement and Glide Path Planning with Kubera

By consistently tracking your progress and making necessary adjustments, you can stay on course to achieve your early retirement goals and enjoy financial security and freedom.


Retiring in 10 years is an ambitious goal, but with the right planning and strategies, it's achievable. By understanding how much money you'll need, planning for healthcare costs, saving aggressively, developing a budget, downsizing your debt, maxing out your retirement accounts, optimizing your investments, and tracking your progress, you can set yourself up for a successful and enjoyable early retirement.

Remember, the key to achieving early retirement is to start planning and saving as early as possible. By taking action today and committing to your retirement savings goals, you can enjoy the financial security and freedom that comes with retiring on your own terms.

Take control of your retirement planning with Kubera. Sign up for a trial to utilize its comprehensive tools for managing your portfolio, simulating future scenarios, and collaborating with your financial team, ensuring a well-rounded approach to achieving your early retirement goals.

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