How to retire early

2019-03-14 10:11

Be able to do the things you really want to while you are still young and have vitality, writes Mapalo Makhu.

The old way of thinking about retirement is becoming less and less attractive to the younger generation. It used to be that you would work for one or two companies, have a career spanning about 40 years and only retire at age 65.

There are growing voices from a generation that wants to retire early. Retirement has always been looked at from an age perspective and this way of thinking assumes that, if you work for long enough and save money over 40 years, you can retire comfortably.

The new school of thought argues that retirement is not just about age, it is about financial freedom. So, whether you reach financial freedom at 40 or 50, that could be your retirement age.

I think what is most misunderstood about the Fire (Financial Independence, Retire Early) movement is that it’s really about owning and reclaiming one’s time; being able to do the things you really want to do while you are still young and have vitality, and not so much about never working again.

Most people who have achieved this type of financial freedom continue to work, but do work they love and are passionate about, and they still contribute to society.

When I think of the Fire movement, a quote by finance and business expert Dave Ramsey comes to mind: “Live like no one else, so later you can live like no one else.”

The quote puts emphasis on what you have to do now, so you can live a financially free life later (but much sooner than has been the norm) when everyone else is still chasing their “golden age”.

Be advised: Since government still looks at retirement the same way they did decades ago, the legal retirement age is still from the age of 55, meaning you cannot exit a retirement annuity before then. Other retirement vehicles like pension or provident funds have great tax protection benefits, which you will forfeit if you retire earlier than the prescribed retirement age.

So what can you do to retire early?


At retirement, it is assumed you would have paid off your house and car, which make up the biggest expenditure in your budget. You then look at your living expenses on a month-to-month basis; this gives you an idea as to how much you will need in retirement. Studies show that most people cannot maintain the same or similar lifestyle they were used to before they retired.

To maintain a similar lifestyle, you will want to replace at least 70% of your preretirement income. This means that if you earn R500 000 a year, your goal should be to create enough retirement income so that you are able to live on at least R350 000 per year.

Don’t forget that costs like medical aid can get expensive the older you grow, so take that into consideration as well when calculating costs of living.


To retire early, you need to be frugal. You need to spend much less than you earn and invest the rest. You need to decrease your expenses so you can boost your savings.

It’s not about how much money you make, but about how much you make your money work for you. If you earn a good income and spend it all, you will never reach financial freedom.

Therefore, you need to aggressively review your budget and see what you can live without.


Whether it is an increase in your salary, a bonus or a “side hustle” to bring in extra income, be sure to put it towards your retirement funding. To retire early, you need to acquire more investments or assets than you acquire lifestyle assets such as expensive cars and houses. You need to be conscious of your financial decisions and how they impact on your plans for early retirement.

Because retiring early means that your savings have to support you for much longer than, say, 20 years, you have to focus your energy on saving more.


We all know how detrimental high fees are to investments: the higher the costs, the less you will have when you need your retirement funds the most. Look for investments that carry a lower cost.

According to 10X Investments, paying a more expensive fee compounds over time, and could mean you end up with 40% less money when you retire!


I find that when most people think about their finances, they think along the lines of their salaries. As I mentioned earlier, it is not so much about how much you earn, but more about putting your money to work for you.

Tracking and increasing your net worth ensures that your assets can pay for your living expenses and other luxuries.

The net worth calculation is really simple: assets less liabilities.

The Fire concept is definitely not for the faint-hearted; it requires discipline and demands an individual to be resolute in their decisions.

Although it is the road less travelled, the financial freedom is certainly worth it.

Makhu is a personal finance coach

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October 13 2019