How to retire early

How to retire by age 43

Extreme savers can stop working after less than 20 years. Their ‘guerrilla frugality’ is too much for me, but they have a point


retire-richOver the many years I’ve written on financial independence, I’ve paid only scant attention to a subgenre of the field known as “Early Retirement Extreme.”

That’s the title of a 2010 book published by Jacob Lund Fisker, which recounts how he stopped working for money after only five years. To do so, he lived super-frugally, saving more than half of what he earned, and collecting stock dividends ever since.

Since Fisker urges frugal readers to use library books, I borrowed a copy, subtitled A philosophical and practical guide to financial independence. It lays out the case for what I’d term frugality to a fault, but which he depicts as the proper lifestyle of renaissance persons like himself. His website ( promises financial independence within five years, using “a combination of simple living, anti-consumerism, DIY ethics, self-reliance and applied capitalism.”

A similar philosophy is espoused by Mr. Money Moustache ( This web site cheerfully describes itself as a “cult” devoted to financial freedom and has attracted much media attention. Now 39, Mr. Moustache—or Pete (he values his privacy too much to reveal his surname)— lives in Colorado but spent time in Canada. He “retired from real work” in 2005 to raise a family. His wealth is in Vanguard index funds and a few rental properties.

This approach is too extreme for more than one in a thousand. To embrace it, you would live in a tiny home in a rural enclave, furnished sparsely with other people’s castoffs. You’d grow a lot of your own food, buy the rest in bulk and never set foot in a restaurant. You’d be fit because you’d walk or bike everywhere, eschewing car ownership and the expenses that accompany it. Ideally, what stuff you did own—like lawn mowers, snowblowers and the like—would be communal, assuming you could find equally frugal people in your neighbourhood to share with.

At one level, this is quite a sane approach. Most of us in the working/consumption mainstream would regard the idea of retiring in your 20s or 30s as an impossible pipe dream, never mind retiring in your mid-50s or early 60s. These ideas are worth highlighting, if only to lay out one extreme end of the continuum between the “normal” retirement age of 65 and “extreme early” retirement.

For folks like Fisker, the only way off the nine-to-five treadmill is to cut back expenses so severely that you can save 25% to 75% of your income. Do this for five or 10 years and your money can work for you, rather than the reverse. The higher your saving rate and the greater your investment returns, the sooner you can forego earning an income.

Fisker says a 15% savings rate coupled with a 10% annual investment return lets you “retire” after only 20 years of work. He himself worked just five years as a research associate, saving a prodigious 75% of his net income, then “retired with enough money to last me the rest of my life.”

Most of us are so mesmerized by consumer culture that few will adopt these extremes. My own book uses phrases like “guerrilla frugality” and “freedom, not stuff” to describe the attitude needed to spend less than you earn and invest the difference. Compared to Fisker, though, even I’m a spendthrift. He would look at our family’s three-car suburban lifestyle with horror, even if all three are paid for (two are hybrids) and parked in the drive of a paid-for home.

Fisker’s dwelling is only a few hundred square feet, which makes him ahead of his time. Bloomberg recently described a trend of Americans downsizing to truly tiny homes. We’re not talking moving from monster homes to condos here either, but to homes under 500 square feet. A new TV series called Tiny House Nation has begun to air to celebrate the movement. Still, let’s face it, 99% of us are urban creatures with families and jobs, and enough “stuff” that we need space to store it all.

There is value in at least considering “Early Retirement Extreme,” if only because it opens your eyes to just how much waste and unnecessary spending most of us are addicted to. We pay a high price for our high-salaried, highly taxed office jobs and division-of-labour society. There’s little doubt that those who take the time to learn how to fix their cars or do their own plumbing richly deserve the resulting acceleration in their net worth.

Philosophically, I agree with Fisker et al, but am too moderate to embrace his form of extremism in practice. True, today’s computer-literate young people have a route to findependence that baby boomers didn’t enjoy when we were their age: web entrepreneurship: a theme I’ve explored in recent blogs. That makes Early Retirement Extreme more possible now, albeit through boosting revenue, not minimizing expenses.

However, offsetting this is the trend to rising longevity—if anything, we should be planning on retiring later, not earlier. We’ll look at this next column.

Jonathan Chevreau is editor-at-large at MoneySense.