The author describes how she was able to retire early at 38

While the financial independence, early retirement, or FIRE, movement may seem too unrealistic, everyday changes can lead to early retirement.

“My husband Mark and I just saved a big chunk of our income and let time and the magic of compound interest do the rest,” Tanja Hester, author of “Work Optional: Retire Early The Non Penny-Pinching Way,” told Yahoo Finance Direct. Hester retired early at 38.

“It’s something not everyone can do, so we were really lucky that way,” Hester said.

Hester and her husband saved not only most of their income, but also the bonuses they earned. They saved any raises they earned and lived on their previous income level.

“Every time we got a raise, even if it was small, could we bank that raise? Could we keep our spending the same as it had been the year before, more or less?” said Hester.

(Photo: Getty Creative)

Hester also advised people who dream of early retirement to get serious about cutting big expenses.

“The big things for most people are housing and transportation,” Hester said. “Perhaps staying in a smaller home can be a good solution to help you save a lot more and invest a lot more in the long run. Drop a car for the household, or look at other ways to reduce your transportation costs.”

In addition to big expenses, Hester suggests that people who want to join the FIRE movement also look into small expenses to save money.

“See where your money actually goes. In the case of my husband, Mark, and I, we found that we were spending a lot more at restaurants than we thought. So for us, it wasn’t, we can eat at restaurants and get takeaway several times a week or not? No, it was, maybe we could cut it in half?” said Hester. “You get a lot more bang for your buck that way than trying to figure out where every single nickel goes.”

As people begin to cut back on spending, Hester also recommended retirement plan options for workers who want to join the FIRE movement.

“There are really a lot of good tax-advantaged opportunities out there,” Hester said. “So for people who don’t have a 401(k) or a 403(b) or something like that offered at work, there are, of course, your IRA, Roth IRA options. And there are things like the SIMPLE IRA and the stand-alone 401(k ), which have high individual limits. So you can potentially save quite a lot that way.”

People can—and should—save money outside of retirement accounts, especially if you plan to retire early.

“You can still save in traditional investments, like just having a brokerage account with a brokerage firm and buying regular investments,” Hester said. “You don’t get the tax-free growth on the front end, but then when you take withdrawals, there are no age restrictions, no early withdrawal penalties.”

Ella Vincent is a personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.

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