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Could You Retire Before 40?


Have you ever thought about retiring before the age of 40? Do you think that it would be at all possible? Well, if you still have 5 years or more before that 40th birthday, I wouldn’t count you out of the running! There isn’t a large percentage of people that retire before 40 today, but I don’t think it’s as difficult as one would think. With a little planning and discipline, I’d say that a retirement party before the mid-life crisis is entirely possible.

The Traditional Retirement

Did you know that I used to be involved in a few different multi-level marketing businesses? While I didn’t get rich with these ventures, I learned to question the typical retirement plan. For roughly 95% of the population, working hard and retiring with a nest egg after 45 years of work is the norm. But, why wait until you’re 65? Why not work a little differently, develop a passive income, and retire much earlier? Based on my calculations, I’d say that the typical person could probably retire quite comfortably after only 15 years of consistent work.

How to Retire Before 40 Years of Age

My wife and I work hard for our age. I’m 27 and she’s still a spry 24, but we both have full time jobs and own two side businesses as well! With our current career path, I’d say that it’s not out of the realm of possibility for us to earn $200,000 per year within the next 3-5 years. Since we currently live on less than $40,000, we could really start stashing away some serious money in the next decade. And, by following the guidelines I’ve established below, it’s a very good possibility that we could consider ourselves retired before our 40th birthday.

1) Earn More Money – If my wife and I didn’t make an effort to increase our incomes in the past couple of years, we might still have some student loans or even some credit card debt. But, through careful preparation and schooling, we’ve found excellent jobs in our field and we’ve created some additional income by using our talents to start our own businesses as well.

2) Pay Off All Debts, Even Your House – We worked hard for 14 months to pay off $18,000 in student loans. Now the only debt we have is our home loan of $62,978, and if all goes according to plan, we’ll get rid of this within the next 3 years.

3) Don’t Inflate Your Lifestyle – If our income really increases to the $200,000 mark, think of how our day-to-day lifestyle could change. Our vehicles suddenly could upgrade from a GMC and a VW to a Porsche and a Mercedes. We could relocate to the “wealthy side of town”. And, we could probably afford to go out to eat every night of the week rather than just once. But, inflating our lifestyle would not improve our future life, it would only give us short-term thrills with happiness that’s surface deep.

4) Invest the Extra Cash and Develop Passive Income – Since you’re debt-free, living a frugal lifestyle, and increasing your income, the cash should just be rolling. The big question is, “What should you do with it?” The common answer would be something like, “Invest it in the market let it grow”. Personally, I don’t like this answer, especially if you plan on retiring early.

Rather than sticking all of our money into the market (yes, we’re still investing some there as a back-up), my wife and I will be looking at various passive income investments that will improve our equity AND our cash-flow. A great example of this would be real estate – whether it’s in commercial or residential, single family housing, the value of the properties look like they have nowhere to go but up, and with a large down-payment (maybe even a 100% down-payment), the cash-flow on the rental should be quite lucrative as well.

After 10 years of passive income investments, we could easily own $1,000,000 worth of properties that yield nearly $100,000 of income each year.

5) Keep the End in Mind – There are many different views of retirement out there. If you’d simply like to live in a 1 bedroom, 1 bath condo and live frugally for the rest of your life, then you won’t need millions and millions of dollars in your future. Chances are, you could scale back considerably and still live quite comfortably without ever worrying about spending your last dollar.

If, on the other hand, you have dreams of a mansion on the lake and plan to travel around the world on a yearly basis, you’re going to need an impressive plan for your future. One that includes a large equity base and passive income cash-flow. While this may take more planning, it’s still 100% achievable.

Do you have hopes to retire before 40? What’s your plan? Does it follow my guidelines above?

Money Passive Income


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Well… I am going to be 41 so I will say no. Plus I love doing what I do.

    • 41 huh? You look pretty dang good for 41! It’s good that you love to do what you do too. That’s pretty rare.

  2. Yes, it is possible. Below is “ABOUT” from my blog. It directly relates to your question.

    Hello there! I am in my mid-30s. I am a Professional Engineer with a Master’s Degree from New York. I am happily married and I am the father of a wonderful 7-year-old son (as of 2012, do the math if you are reading this later). After working 10+ years for others including as a hands-on engineer and later as a supervisor, I resigned to join forces with my wife, who is a Computer Engineer with a Master’s Degree and a Mathematician, to run our IT/Web consulting company full-time where I was working part-time since 2003.

    We work from home and plan to travel overseas since our business does not require us being psychically in New York or anywhere in particular as long as there is an Internet connection. I have always loved reading, especially financial magazines and books, that and working hard & smart have helped us well: We do not have any debt! We paid off our home within 5 years of purchase, our vacation apartment within 3 years of purchase, our two cars within 2 years of purchase. We always pay our credit cards in full every month, and have never ever carried any credit card balance.

    We definitely feel like we are already retired; no debt, work from home or wherever, plan international travels, etc. We want our blog to reflect our debt free, retired at 30s lifestyle. My wife and I will both blog about our experiences, how we got here and where we want to go. We hope you will find it interesting, inspiring and helpful.

    • Sounds like you’re doing an awesome job! So do you make any goals to the future anymore? Maybe retirement planning?

      • Yes, we do. One of the bat; our current plan is to replenish our cash reserve and travel/live overseas for a year or two.

        • Oooo, my wife would love the sound of that. I think if we could travel to Europe with no need to return right away, she would love me forever! We’re on that plan though – it will happen down the road I’m sure. Must be exciting for you! Love it!

  3. We would both like to retire young (around 40). We need to start developing passive income though, as right now we have none.

  4. Derek, unfortunately, $200,000 isn’t as much as you think after taxes.

    I dont think you’ll be able to earn a net operating profit of 10% in real estate as well. There are a lot of costs that are hard to tell until you start paying them and doing the math.

    BUT, no doubt you can retire by 40 if you decide to do so.

    • Yeah, those taxes will get ya…. Even if the taxes take us down to $140,000, we can still bank $100,000 a year. I would think that that would add up pretty fast!! I’ve got 13 years until I’m 40. I still think it’s possible.

  5. It’s definitely achievable but not for the average person. A lot of it depends on how you picture retirement because our visions differ greatly.

    • My wife and I used to be average. A month before we got married, our combined income was about $35,000 per year, but then we decided to change that and become un-average! As for your point on how you picture retirement, you are absolutely right. We all picture retirement differently and one vision could cost $30,000 per year, whereas the other might cost $100,000 per year. It all depends on the person.

  6. I love this post! My husband is targeting that we retire from work before we reach 40 years old. It means retiring to work for money. Because by then we wants to run as a Mayor… and I’ll end up becoming the first lady of course(*if he wins).

    Currently we’re working our butts off to make passive income sources. We are also cultivating as much business ideas now. Things look a lot different when you shift your perspective.

    Best regards,

    PS I’ll be visiting your other site.

    • Sounds like you guys are in for an awesome ride! A change of perspective is exciting isn’t it?

  7. I am working on my passive income strategy, but it will be mainly though dividend investing.

    • Be sure to diversify. Yes, dividends seem like a sure thing, but the share price can (and is often more suseptible to) go down, causing your overall asset value to drop, even though you may still be receiving dividends.

  8. I don’t plan to retire by 40 but that isn’t saying things might change down the road. I think anywhere from 50-65 would be my goal age. Also by retire I mean quit working completely. Might I have my own side business before I’m 40 and no longer be in corporate? Maybe, but only the future will tell.

    • Sounds pretty similar to me. I think I would still continue to work at something, as long as I enjoyed it, even if I no longer need to work at corporate.

  9. Hi, I like the idea of passive income, but the idea of having the rentals,doesn’t sound like retirement, because you need to upkeep the rentals, collect the rents, and keep the tenants and happy.

    I do like the idea of divdend stocks 🙂

    • Rentals can create some work, but compared to a full-time job, 5-10 hours a week isn’t that big of a deal. If you still don’t like the idea of working to keep up the rentals, you could always hire a property management company to do it for you. It would cost you about 10% of your rental income. If you still have a decent monthly cashflow after the management fee, then it might be entirely worth it!

  10. Too late for me! I’m shooting to retire by 60. 😉 But I actually just completed my credential and want to teach for 20 years. I love teaching (been doing it 10 already). Of course it helps that I only work 180 days out of the year. Maybe that’s why I’m all for working another 20 years.

    • Better late than never! Yes, being a teacher definitely has its perks. I’d like to have a 2-3 month vacation each year! Anyway, good luck with your goals – I’m always rooting for you!

  11. I want to be making 6 figures by 35. I never thought about retiring by 40, but if I socked away enough, it would def be a possibility!

    • It’s entirely possible! I’m only 27, and I can definitely see a 6-figure income in my future (between my day job AND my side-business). Just set your goal, make a plan, and get to work! Good luck Nell.

  12. Check, check and… check!

    I’m 23 and have been switched onto this way of thinking since University. I’m in a good career and have developed a supplementary passive income, and am investing for the long term.

    I pondered the other day that as a single gentleman I only spend about £6,000 ($9,000) per year on rent, food and entertainment. Therefore with a portfolio yielding 6% per year, I’d probably need only £100,000 to produce enough income to live (ignore the nasty effects of inflation). Well, I know I’m only young, but due to the sale of a business, and saving so far – £100,000 is only two years around the corner, and therefore in theory I pass my first ‘financial independence threshold’ (the earliest POSSIBLE date that I could retire) at… 25.

    But naturally I’m a dreamer. I don’t save because I want to be munching on potato and gravy for the next 80 years of my life (although £6,000 per year gets you a very good diet)! So I’ll continue to work and we’ll see what happens. Keep up the great writing Derek. You’re clearly inspiring a lot of people here.

    • Thanks for the awesome comment Simon! It sounds like you really have your head on straight for a 23 year old. I can tell that you’re going to go a long way in life. Just ignore your teasing friends – they won’t be laughing at you in 20 years (or maybe only 2 years according to your reports) when you’re doing what you love because money isn’t a factor. Keep coming around here and let me know how you’re doing on your goals! I always love to hear the progress reports.

  13. It would be a serious effort to retire at 40, but I’ve done a lot of work refocusing where I want to be in life over the past couple of years. Now that I’ve defined my goals better, getting to a destination like retirement will be a LOT easier!

    • Now that is for sure! Without having a reason to retire early, it would be extremely difficult to stick with the plan. The first step is to get your “why”, and once you have that, the sacrifice today will be so much easier.

  14. I have also wish get retire before 50? I am now half of the mark 😀
    I am trying increase my bank balance had targeted increase it twice in every year. Within 5 to 7 years I will invest in couple of business from where I can get residual income

    • Sounds like you’re on the right track. Keep up the good work Cristina!

  15. Hi Derek!
    I’m just turning 22 this year; I have a full time job and a part time for extra income. I’m single and I already have my own house. I’m one of the people aspiring to retire at the age of 40. I just hope that my love life will permit what I’m dreaming of. Thanks for the tips! I’ll make sure that I bookmark your blog.

    • Glad you found the site! I’m currently 27 years old, and I can see myself retiring by the early age of 40. I’ll keep living life and writing about it, and hopefully you can keep learning from it and retire by 40 like you’re hoping! Good luck!

  16. Great tips, but i’m not sure I will be retiring at 40 – thank you for sharing! It’s really hard to find good resources on “Passive income and early retirement plans”, so I appreciate your tips.

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