Retire Early – Two Things You Must Do

Early retirement and extreme early retirement (as young as 30) have become more common in the last decade. There are several excellent sites dedicated to helping you retire early and the majority focus on extreme frugality and very high savings rates (see Mr. Money Moustache and Early Retirement Extreme).

While frugality and large savings deposits are extremely important, there are several other factors that can play an even larger role. The three most important steps you can take toward early retirement are:

  • Start an LLC
  • Ask your boss for a raise

One last, vital component to retiring early is realistically assessing your wants and needs both in retirement and prior to retirement. However, this is such an important topic, we’ll cover it in a separate article.

Start a Limited Liability Company (LLC)

Why should you start an LLC, Limited Liability Partnership (LLP) or other business entity? Obviously LLCs provide liability protection but that’s not why I’m suggesting it. You should start an LLC because it forces you to get serious about generating new revenue streams. Psychologically, it moves you out of the every-day working-for-someone-else Joe and makes you a soon-to-be-successful entrepreneur.

Starting an LLC doesn’t take a huge amount of effort but it does require several steps. Taking the time to follow these steps will help you consider a business plan and force you to spend time on your own income-producing entity. When my wife and I first started an LLC, we didn’t do much with it. The first year we made almost no money and nearly closed the company. We were just trying a few odds and ends on the side and weren’t seeing much success.

However, every time we paid taxes or renewed the business license it encouraged us to put more effort into the business — it changed our paradigm. Over time we were able to generate more income and branched out into other ventures (software development) that were more successful.

Look at the people who have been successful at retiring early. How do you know they were successful? Because they’ve written about it, blogged about it, spoken about it. They’ve spun those blogs and articles into passive income streams. Nearly every early retirement story includes some form of business ownership.

Personally, I love to write about a number of topics (software development , design, fiction and children’s stories). Passive income from blogs, articles and e-books will help augment my investment income.

Don’t wait until you have a perfect idea. Don’t wait until you’re the world expert on your topic. Don’t wait until you feel comfortable. Just start doing something you’re passionate about and start your business.

Ask Your Boss For a Raise

Quick, what’s the easiest way to make some extra cash? Okay–legally, what’s the easiest way to make some extra cash? We often forget about our day-jobs when we’re thinking about early retirement. We spend hours obsessing about dividends, bond yields and tax strategies but we don’t spend fifteen minutes looking for a new position that comes with a promotion. We’ll invest money in risky propositions like BitCoin but won’t face the risk of rejection when asking our boss for a raise.

It’s important that you balance your day job with your extra-curricular activities. Extra hours you spend at your day job are hours you could have spent on your LLC generating new revenue streams. But, the most sure-fire way to increase your income is to get a raise–find a new position, accept new responsibilities, switch companies, etc.

If you get an effective $3,000 / year raise and save that $3,000 in a tax-advantaged, indexed fund with low administrative fees you’ll have an extra $46,000 within 10 years assuming an 8% return. So, don’t neglect your day-job. While your ultimate goal is to not need a day job, improving your day job is still your best shot at being able to retire early.


If you want to retire early, there are two things you must do: start an LLC that generates passive income streams, and get a raise at your day job. Then, take all that money and save, save, save!

Leave a Reply

Your email address will not be published. Required fields are marked *