Gabrielle Olya

Wed, Jun 4, 2025, 6:15 AM6 min read

Many Americans dream of retiring early — and with the right planning, they can make it a reality. While retiring before the traditional age of 65 isn’t easy, it’s certainly possible with a disciplined approach to your finances.

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In a recent Ramsey Solutions post, the Ramsey team outlined a checklist of everything you need to do to be able to retire early. See how many items you can check off.

Before you set a budget, you need to determine the type of retirement you want. Are you content with a simple, low-cost lifestyle, or do you envision traveling the world? Answering these questions will help you calculate how much money you’ll need to save.

Once you have a clear picture of how you want your retirement to look, you can create a mock budget. Your budget should include all of your monthly expenses, including savings, utilities, insurance, medical expenses, food, phone, internet, gas and entertainment. Depending on your goals, it may also include categories like charitable giving, a new car fund, a vacation fund, gifts and hobbies. It should also include an “extras” line for unexpected expenses.

The Ramsey Solutions early retirement budget notably leaves out a mortgage payment.

“That’s because you want to pay off the mortgage — and any other debt — before you retire,” the post states. “Debt will destroy your plans to retire early! It will eat up your monthly income and drain your retirement savings faster than you can say ‘foreclosure.'”

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In addition to saving up a sufficient retirement nest egg, you need to get your current finances in order. This means having a fully funded emergency fund, paying off all debts and actively investing for the future.

If you’re not quite where you need to be, consider taking on a second job or side hustle to speed up your financial progress.

If you plan to retire early, you likely won’t be able to access money in a 401(k) or IRA before age 59½ without paying 10% early withdrawal penalty. That’s why Ramsey Solutions recommends keeping additional investments in a “bridge account.”

“A bridge account will help you bridge the gap … between your early retirement and the time when you can start taking money out of your retirement accounts without a penalty,” the post explains. “That’s where a brokerage account — also known as a taxable investment account — comes in. Brokerage accounts are your best option to serve as your bridge account.”