The Top 5 Things You Can Do in Your 20s to Retire Early
Its never too early to start
So you’re in your 20s, and someone just dropped the word retirement into your life.
Maybe you laughed. Maybe you rolled your eyes. Maybe you’re thinking, “Dude, I just got my first paycheck, I’m not even sure how taxes work yet.”
Fair enough. Retirement might feel like a lifetime away. But here’s the secret sauce: the earlier you start planning for retirement, the easier it gets and the sooner you can stop working if you want.
I’m not saying you need to live like a monk and hoard every dollar. I’m saying there’s a smart way to set yourself up, and it starts now.
Whether you want to retire at 60, 50, or even 40, here are the top 5 moves you can make right now in your 20s to get on the fast track to early retirement.
1. Start Investing ASAP Even If It’s Just a Little
Let’s get this out of the way: saving is good, but investing is better.
I know, you might be thinking, “I don’t have a lot of money yet.” Totally normal. Many say they want to wait until they have money before they start to invest, but this mindset delays the process far too long. But, even small amounts invested in your 20s can turn into serious money later on thanks to one magical little thing called compound interest.
Here’s a quick example:
Let’s say you invest $200/month starting at age 22 and keep doing it until you’re 60. That’s a total of $91,200 out of pocket.
Assuming a 7% annual return (which is average for the S&P 500), you’ll end up with over $500,000.
Now imagine if you increase that amount over time or start making more aggressive contributions. The numbers get wild. Fast.
The earlier you start, the less you have to save later.
Action steps:
- Open a Roth IRA or start contributing to your company’s 401(k) if they offer one—especially if there’s a match.
- Use apps like Fidelity, Vanguard, M1 Finance, or Charles Schwab if you’re DIY-ing it.
- Stick to low-cost index funds (like an S&P 500 ETF). You don’t need to become a day trader to grow wealth. Very few investors are actually able to beat the market.
2. Live Below Your Means and Avoid Lifestyle Creep
You land your first real job. You’re making more money than ever. $1000 per week feels like a ton of money. Suddenly, $7 coffees, Ubers everywhere, and random Amazon splurges become the norm.
That’s called lifestyle creep, and it’s a silent killer of wealth-building.
Here’s the trick: the moment your income increases, don’t increase your spending to match it. Instead, stash that extra income away—into investments, savings, or debt repayment. 10 years ago when I landed my first job after college, I said no to the fancy apartment, newer car, and weekly high end dinners.
I’m not saying don’t enjoy your life.
I’m just saying: if you can keep your cost of living low while your income grows, you’ll unlock a powerful financial advantage—a fat gap between what you earn and what you spend. That’s where early retirement lives.
Think of it this way:
If you can live off 50% of your income and invest the rest? You could be financially free in about 17 years—even faster if you’re smart about it.
Some action items you can implement today:
- Track your expenses for a month. Every dollar. Break it down into various categories and see where its all going.
- Create a budget with a savings or investing goal as a line item, not an afterthought.
- Ask yourself before every purchase: “Does this get me closer to freedom, or further away?”
3. Maximize Your Tax-Advantaged Accounts
Taxes are like sand in your financial engine. For many people, they are the largest expense one will ever have in a lifetime. You can’t avoid them completely, but you can optimize around them.
In your 20s, you probably have a lower income than you will in your 30s and 40s. That makes this the perfect time to use accounts like a Roth IRA, where you pay taxes now but your money grows and comes out completely tax-free in retirement.
If you’re working a W2 job and your company offers a 401(k), take full advantage, especially if they offer a match (that’s free money).
Also, look into HSAs (Health Savings Accounts) if you’re eligible. These are triple tax-advantaged—yes, triple:
- Tax-deductible contributions
- Tax-free growth
- Tax-free withdrawals (for health expenses)
And bonus: after age 65, you can use it like a regular retirement account if you don’t need it for health stuff.
Action steps:
- Contribute at least enough to your 401(k) to get the full employer match.
- Open a Roth IRA and automate monthly contributions.
- If you’re self-employed, look into a Solo 401(k) or SEP IRA.
- Learn the yearly contribution limits and set up your plan accordingly.
4. Build Multiple Income Streams
Want to retire early? You need income that doesn’t depend on you clocking in.
Your 20s are a great time to experiment with side hustles, freelancing, content creation, real estate, or building a small online business. You’ve got time on your side and fewer responsibilities than you probably will in your 30s.
Even a couple hundred bucks a month can change the game.
And here’s the best part: when you take that extra money and invest it instead of spending it, it accelerates everything.
Let’s say your side hustle makes $500/month and you invest it. That’s $6,000/year or over $400,000 in 30 years assuming the same 7% return. That’s just from your extra income—not even your main job.
Not sure what to try?
- Start a blog or YouTube channel about something you love
- Flip items on eBay or Facebook Marketplace. I’ve done this many times.
- Offer freelance services on Upwork or Fiverr. I have tutored and helped colleagues revise resume’s.
- Buy a rental property (house hacking is a great strategy for beginners). I’ve house-hacked twice and now manage those properties as regular long term rental properties.
- Sell digital products like templates, guides, or courses.
Action steps:
- Pick one side hustle idea that excites you and commit to 90 days of consistent effort.
- Separate your earnings into a different account so you don’t spend it accidentally.
- Reinvest your profits—into your business or your retirement accounts.
5. Get Clear on Your “Why” and Create a Financial Plan
Here’s where a lot of people go wrong: they focus on money without a goal.
Don’t get me wrong—money’s awesome. But early retirement isn’t about escaping work. It’s about creating freedom to do what you want, when you want, without being chained to a paycheck.
So take a moment to ask yourself:
- Why do I want to retire early?
- What would I do with my time if I didn’t have to work for money?
- What kind of life do I want to build over the next 10, 20, 30 years?
Once you have clarity, build a plan around it.
That means:
- Knowing your FIRE number (Financial Independence, Retire Early)—this is the amount of money you’d need to live off your investments.
- Creating a monthly savings rate goal (the percentage of income you’ll invest)
- Tracking your net worth every quarter (or monthly)
- Checking in on your progress once a year and adjusting as needed
Here’s a rough formula to figure out your FIRE number:
If you need $40,000/year to live? You’ll need about $1 million invested to safely withdraw 4% annually (based on the 4% rule, a rough retirement guideline).
And if that number seems huge right now? Don’t panic. Just reverse-engineer your way there.
Action steps:
- Use a calculator like networthify.com or FIRECalc to see your timeline.
- Create a simple spreadsheet with your income, expenses, and net worth.
- Revisit your goals once a year—things change, and so should your plan.
Final Thoughts: You Have Time—Use It Wisely
Let’s be real: in your 20s, it’s tempting to put off retirement planning.
But your future self? They’ll be so damn grateful if you start now.
You don’t need to be perfect. You don’t need to make six figures. And you definitely don’t need to sacrifice your whole life for this.
You just need to be intentional.
Even if you only apply two or three of the five things on this list, you’ll be miles ahead of your peers. You’ll have options. Flexibility. Peace of mind.
And maybe, just maybe, you’ll be sipping a drink on a Tuesday afternoon at 45 while everyone else is stuck in a meeting that could’ve been an email.
Start small. Stay consistent. And play the long game. That’s how you win.
