The 5 Top Secrets To Retire Early

For those of you seeking the Top Secrets To Retire Early, today is your day.  Below, I “bare all” in this overview of the 5 Top Secrets that allowed us to retire early.  Follow these secrets, and you’ll be well on your way to following us into the Freedom that is Early Retirement.

Ignore them at your peril.

5 Secrets To Retire Early

The 5 Top Secrets To Retire Early

Not to burst your bubble, but the secrets to retire early aren’t secrets at all.  Rather, they’re well-known techniques used by millionaires everywhere.  Many of the “secrets” are well documented in my post on The Millionaire Next Door.  The trick isn’t in knowing the secrets, but rather in applying them in your own life.  Today, I outline the top 5 secrets to retire early, along with some tips to encourage you to apply them in your situation.

1.  Practice Forced Scarcity

We all know we should spend less than we earn, but how do you do it?

For us, our secret was “forced scarcity”, where we automatically increased our savings whenever I got a pay increase.  For example, if I got a 3% raise, we’d increase our savings in our 401(k) by 2%.  Our take-home pay increased by 1%, so we felt like we had a bit more, but our savings increased even more.

When The USA Today wrote the story about how we became 401(k) millionaires, they included the following summary of Top Secret #1:

Fritz Gilbert The Retirement Manifesto in USA Today

Force yourself to live on less than you earn by automating your savings, and increasing your savings by the majority of your annual raise.  Repeat annually, and you’ll “automatically” avoid lifestyle inflation.  When you get that next promotion and a hefty 10% raise, follow the same principle and increase your savings by at least 70% of the raise. When you’ve maxed out your annual contributions to your 401(k), set up automatic ACH transfers into the mutual fund of your choice.  Don’t accepting “maxing out your 401(k)” as an excuse to not continue to increase your savings with each pay increase.

Automate it, and Forget It.  It’s one of the most powerful secrets to retire early.

2. Maximize Your Income

The second of the secrets to retire early seems obvious, but for some reason, most folks focus on Spending Less, rather than Making More.  You can only reduce your spending so far, but there’s no ceiling on how high you can increase your income.  Make it a focus, and be intentional on increasing your income.

Crush Your Career.

In my guest post on Budgets Are Sexy, I included the following summary of my earnings during my first 6 years out of college.  Note that I doubled my salary in the first 5 years.  More importantly, I focused in that guest post on how I did it.

How I doubled my salary - a secret to early retirement

Bottom Line:  Go above and beyond, and demonstrate your worth to your employer.  Take on additional responsibilities, and show initiative that makes you stand out from the pack.  If they don’t see your value, get introspective instead of placing blame on your boss.  If you’re really as good as you think you are, seek out opportunities where your true value will be recognized.  Consider a side hustle while you’re still working.

I doubled my salary in the first 5 years of my career by focusing on demonstrating my value. Secret #2: Maximize Your Income. Click To Tweet

stealth wealth

3. Practice Stealth Wealth

The third of the secrets to retire early involves a well-worn phrase, but it’s important:

Don’t keep up with The Jones.  

The Jones are too busy trying to impress YOU than to be impressed by what kind of car you drive. Secret #3: Practice Stealth Wealth. Click To Tweet

The Jones are also too busy worrying about paying their huge mortgage to think about the house you live in.  They’re also too concerned about keeping their grass green to notice how much water you waste watering your yard.  Water less, mow less, and never hire a yard service.

Buy less house than you can afford.  Period.

Drive an older car.  A trick I used throughout my career was to challenge myself to “Drive A Car For Less Than $1k Per Year”.  For example, I bought a used Miata for $12k, drove it for 5 years, and sold it for $8k.  $4k of depreciation / 5 years of ownership = $800 / year.  It’s VERY difficult to do, but it will force you to practice stealth wealth and drive older cars for a long time (it’s the only way I know of to achieve the $1k/year challenge).

Manage your house and your cars well, and you’re 80% of the way to living a life of Stealth Wealth.  Cars and homes are two of the biggest wealth destroyers, be VERY careful when you’re facing a decision on purchasing either of these two items.  Restrain yourself, and be content with what you have.

In the conclusion of my article on Stealth Wealth I had the following quote, which is worth repeating here:

Just because you choose to spend more doesn’t make you wealthy. Just because I spend less doesn’t make me poor. Click To Tweet

balance your sacrifices - secrets to retire early

4.  Balance Your Sacrifices

The race to early retirement is a marathon, not a sprint.  If you focus exclusively on saving, saving, saving, you run the risk of burning out well before you’ve achieved the point of Financial Independence. Conversely, if you spend everything for the enjoyment of today, you’ll never be able to retire.  The fourth of the secrets to retire early, Balance Your Sacrifices, may seem counter-intuitive, but it’s aimed at creating a sustainable journey.

If you sacrifice everything today for the sake of tomorrow, life isn't much fun. If you sacrifice tomorrow for the sake of today, retirement is impossible. Click To Tweet

Focus on a few things which you truly enjoy, and make room for them on your journey.  Sure, you may retire a few years later by spending a bit more today, but it’s a tradeoff which we chose and would recommend for others.  You must decide for yourself what balance is appropriate, but decide you must.

We took wonderful vacations every year while our daughter was growing up, and have built a pile of memories which will last a lifetime.  Sure, we did it with frequently flier miles, and we kept our vacations reasonably affordable, but we used every bit of our vacation time.  Don’t leave vacation time on the table.

Enjoy today, while saving for tomorrow.

Live a life of balance.

measure your progress - a secret of early retirement

5.  Measure Your Progress

We all know the saying “What Gets Measured Gets Done”.  If you’re serious about retirement, there are some key measurements which you must put in place.  The 5th secret to retire early is to Measure Your Progress, and I’d suggest the following metrics are essential to achieving early retirement.

Note:  If you’re not yet using Personal Capital, I’d encourage you to check it out.  Their dashboard will include all of the metrics shown below and more.  It’s free, though they will call you a few times to try to get you to let them manage your money.  Just say no.  In full disclosure, the link above is an Affiliate link, and I’ll get some revenue if you sign up.  Just trying to make a living….smiles.

Net Worth

If you’re not yet tracking your Net Worth (tsk tsk), I strongly encourage you to read How Much Fuel Is In Your Tank.  That post explains what Net Worth is all about, and why it’s important.  If you haven’t built a Net Worth spreadsheet yet, feel free to use mine (just make do “File / Make A Copy” before you enter your numbers).  The value in tracking your Net Worth is the recognition that you’re making progress.  The steps you’re taking ARE increasing your wealth.

Net Worth example

Be patient, and recognize that it takes a long time for compounding to kick in.  Stay at it, and enjoy watching your Net Worth increase year over year.  I’ve been tracking mine for 26 years, and I still smile when I update my numbers every December 31st.  If there’s ONE metric you need to track, it’s Net Worth.

Asset Allocation

As your investments grow, it’s important to monitor your Asset Allocation to ensure that the risk your taking with your money is aligned with your personal risk tolerance.  I use Personal Capital to monitor my Asset Allocation, and every year-end I review the allocation and determine what adjustments I want to make over the coming year.

Asset Allocation from Personal Capital

That’s my Asset Allocation as of December 31, 2018.  Do you know yours?

Retirement Calculators

Since we’re sharing secrets to retire early, I’d be remiss if I didn’t encourage you to begin tracking a few retirement calculators as you get closer to retirement.  In my case, I used several which I outlined in The Best Retirement Calculator.  Every year, after I updated our Net Worth, I’d run a few of my favorite retirement calculators and save the output in a spreadsheet.  I compared the results year-over-year, and made sure we were getting a “green light” across multiple calculators before we pulled the plug.  I also developed my own Retirement Cash Flow Model, which projected our spending/investments/balances out to Age 95.  Feel free to use it (just do “File/Make A Copy” before inputting your data).

Retirement Spending Projection

Finally, as you approach retirement, it’s critical that you develop a realistic estimate of your spending requirements in retirement.  You can’t retire without knowing your spending needs. In our case, I tracked our actual spending for a year while we were still working, then modified it based on changes I expected in retirement (more spending on health insurance, less on commuting, etc.).  I also inflated each of the categories in future years to ensure that I was adequately addressing inflation risk.

I used this Spending Tracker to track our actuals, then input my adjusted retirement spending forecasts into the Retirement Cash Flow Model to ensure that our investment portfolio was sufficient to cover our spending needs in retirement with a safe withdrawal rate (see Early Retirement Now’s Safe Withdrawal Rate series).


The secrets to retire early aren’t really secrets at all.  However, beyond knowing the secrets, the real challenge for someone seeking an early retirement is to apply them in their everyday life.  Hopefully, today’s post will give you some ideas on ways you can incorporate some of the 5 secrets on your journey.  In summary:

The 5 Secrets To Retire Early

  1. Practice Forced Scarcity
  2. Maximize Your Income
  3. Practice Stealth Wealth
  4. Balance Your Sacrifices
  5. Measure Your Progress

I challenge you to “score yourself” based on the 5 secrets to retire early:

  • A+ You practiced all 5, and you’ve already retired!
  • A:  You’re practicing all 5, it’s just a matter of time.
  • B:  You practice 4 of the items.  (Time to get serious about the 5th one)
  • C:  You practice 3.  Time to step up, but retirement is within reach.
  • D:  You practice 2.  Retirement is slipping.
  • F:  You practice 1.  Don’t you want to retire someday?

If you’re practicing all 5, congratulations.  You’re well on your way.   If my words help just one reader incorporate 1 additional item into their lifestyle, I’ve accomplished my mission of…

…Helping People Achieve A Great Retirement.

Your Turn:  What grade did you get?  Any secrets that I missed that have been important in your journey?  Let’s chat in the comments…


  1. I think #3 is what derails most people. Living near DC, which is the richest area in the country, I see it all the time. Everyone makes a good income and has wealth, but they can’t figure out the stealth part. Flashy car, flashy home, flashy clothes. Not very stealth.

  2. You really did lay out all of the secrets of life. Nice work. I am in the plannijg phase for a home purchase and it’s a good reminder to buy less then I can afford. A very good reminder. Thanks friend!

    1. Good luck with finding the right house of your dreams. With all that you’ve been through since the FIRE, I’m sure you’re looking forward to settling back into “normal”. I’m glad my words were a helpful reminder at the key point of searching for your new home!

  3. Fritz, though it’s not implicitly stated in #4, the human side of the equation cannot be understated. As you note taking time for vacations with your family is important. I’d also offer, the impacts that a focus on physical and mental health have to support balance in the present as well as potentially providing a longer life with lower health care needs. It’s very easy to neglect taking care of ourselves when chasing financial and career goals. I certainly have my share of learning experiences in this area.

  4. Good list, Fritz. As for buying less house than you can afford, people need to know that bankers (and real estate agents) will often try to push you into a more expensive house. Resist the urge. Set aside money first for saving and giving, and then build your budget using what’s left.

    1. Prequalifying for home loans is a real trap. Just did so for a second (retirement) home in NC mountains – USAA says I can qualify for $1.1mil mortgage – without selling current home. Yeah, right. With that kind of mortgage, I’d need to work like this forever! A house can’t love you back – avoid the trap of too much house!

        1. Love your exchange and fully support buying ‚less house‘. At one stage I ‚qualified’ for a $4.2m house loan but when I asked the guy I wanted only 40k to help me buy a 400k apartment he thought I wasn’t serious started criticising my choice to live below my means when I thought I am about to really stretch myself here. Why would I need more than one bedroom? I don’t have kids and if family or friends come visit I have a really comfortable couch. I left the bank and never looked back. Loan free, living within my means since, I thank this Banker almost daily.

    1. You are ABSOLUTELY correct, Jack. I’m blessed beyond words to have found the perfect spouse, she shares the same values as I do, including financial restraint. I feel for folks who have a mismatch, it certainly makes early retirement a MUCH bigger challenge. Great addition, shame on me for not including it in the Top 5.

    2. Spot on Jack. Getting a divorce 16 years ago definitely set me back for an early retirement. But I dusted myself off and espoused those wonderfully crafted and salient five secrets Fritz wrote and found myself retired at 59, albeit about four years later than I anticipated. I also found the right one along the way and we are very happy. I jokingly tell my friends that this marriage will work because my motto is: one alimony payment at a time. LOL.

  5. I agree with Dave about number 3 derailing people. Yet it’s the easiest one on your list to achieve in that it requires nothing but a shift in perspective to change your behavior. You might be waiting for a better job or working on increasing your value at work but you can practice stealth wealth right now.

    1. Mrs. G!! I agree that Stealth Wealth should be the “easiest” one, but it’s sad how often folks are influenced by trying to maintain an image (that no one cares about except them, btw!). Thanks for stopping by, happy for your and Mr. G that your transition into The Groovy Ranch is finally behind you, can’t wait to see it later this year!

  6. Hi Fritz, Very informative post. We practiced several of these; we drove cars until we couldn’t, our houses were always well within our means, maxed out Dan’s 403b, and we lived life along the way – although our family vacations were always within a reasonably tight budget. What is the other saying?…Life happens while you are making plans. Important to experience life as you are living it. Your children are only young once. Make the memories.
    Now that we are retired we are careful with the money – our income has been reduced substantially – but we have budgeted and analyzed the budget inside and out and we are confident that we will have enough. Our motto is that the time is more valuable than the money.

  7. Fritz, these are valuable pointers, especially for anyone who needs to be more mindful about their plan. Your 5 “secrets” align pretty closely with the themes and takeaways I discussed in my blog posts about our FIRE journey.

    While reaching FI, were in the SF Bay Area, so we also saw a lot of people trying to keep up with the Joneses (and some may have been shooting for the Zuckerbergs and Ellisons). Luxury vehicles were common even in our “middle class” neighborhood — meanwhile, we were driving 10+ year old unassuming cars and quietly living as the millionaires next door. I did not especially emphasize the importance of a spouse with a shared vision in my posts, but I should have.

  8. I am glad to know I am following most of these. The hardest part I have is I do not have a side hustle and I am not sure I even want one, but I know it will get me to my goals faster so it is a dilemma. I have a high stress job now and not sure where I would find the time and still have balance…..

  9. After 35+ years, we are still practicing these fundamentals. In fact, we don’t know any other way. Although our advisor has said that we could afford to loosen up a bit 🙂 … therefore, planning to retire from corporate work in 11 months @ 56 and some change to pursue some other interests. I have passed a number of your articles including this one to our two kids who are now early in their own journeys, both of whom are well positioned at this point compared to where my wife and I started out. Having this re-enforced by the experience of you and your readers helps them realize that it’s just not mom and dad being, you know…”mom and dad” but that through a solid work ethic and a discipline/balanced approach can lead to more freedom of choice in the future where perhaps they can be positioned to make the same decision that we are making, perhaps earlier. Thanks for sharing!

    1. Paul, your advisor is on to something, many folks who have been aggressive savers have a tough time moving to “spender”. You may be interested in the post I wrote about how we’re addressing that tendency: It’s Time To Live Like No One Else.

      Congrats on your early retirement in < 1 Year! Seems only yesterday I was in your shoes, and retirement has been even better than I expected. I hope the same is true for you! Thanks for spreading the word with your children, seems they often don't want to listen to "Mom and Dad", hope my words help spread the message to the next generation.

  10. I do not see a whole lot of self graded papers.

    I’ll reward Road2Eudemonia household with a big fat A.

    I like the quick 5 points Fritz. You could put a lot more under each one but you captured the essence in a concise manner to make this a great and easy to read post.

    Note to self – word counts are not as important as content. 🙂

    1. Haha, I was thinking the same myself! Only 1 reader graded himself (a B+ via Twitter), happy to hear you’re at the head of the class! Makes me wonder if folks read these posts all the way through…but at least I know YOU did! As for word count, I usually struggle with my posts being TOO long, happy to hear this shorter one is working as well. Sometimes it’s good to keep it simple!

  11. You doubled your in your first 5 years! That is impressive. You made me want to check my own history, so I pulled up my Social Security statements. Although I earned $30,000 my first year in engineering in 1986, I didn’t double my salary until 7 or 8 years later when I changed jobs and negotiated for a better deal. I think you make a good point about maximizing your income. Many people focus on reducing spending, which is probably the most important part, but you can only frugal yourself so far.

    1. Yeah, I was a bit surprised to find my “2X in 5 years” when I dug through my salary history for the guest post on BudgetsAreSexy. It was a good exercise, glad to see you did your homework as well. I suspect you’re well above average with your 7-8 year doubling.

      As for focusing on spending vs. income, it does seem most people focus on spending, but I’d argue the impact could be greatest if folks spent more time on income. Thanks for being a loyal reader, much appreciated!

  12. This is quality stuff, Fritz – mainly because you blazed your own trail (and are now blazing real trails for fun!!)

    I’m a huge fan of #4. Enjoy life while the clock is ticking. Time is the most precious resource. And that should give perspective to those squeezing so much and sacrificing so much that they forget how to enjoy LIFE.

  13. I got A+! 😉
    I did all these in my 20s and 30s and it paid off. Although, I think forced scarcity and stealth wealth are pretty much the same. Great summary.

  14. Spot on Fritz! The three human attributes required to make this work are focus, discipline, and patience. Those who have it can be successful regardless of their cash flow pre-retirement. Those who don’t, won’t.

    Aging in retirement is great if you have good health and some money. You need both. Take it from a healthy and financially independent octogenarian.

  15. I am going to give myself a B++

    I can’t give myself an A+ because I have not followed item 3 on the big ticket items. BUT in an attempt to grade grub…

    1) I live in the UK and housing has been largely a one way bet throughout my life. (This may be about to change – surely there has to be an upper limit to UK house prices?!) So, I do own a “larger than needed” house but (probably luckily) it has appreciated so much that I can consider it one of my contingency plans. I could sell it and happily live someone far smaller if I need some extra money – although I am hoping I will not have to as i really like living here.

    2) Although I buy new cars I keep them practically forever. My current car is just entering its 15th year and passed its annual test with minimal fuss. As I paid well under £15K for it I am now well under £1k a year and falling every year – Hoorah! These days cars are really well made and last a really long time with pretty minimal effort.

    BTW – I think there is a small typo in 2
    “You can only reduce your income so far” Should that say expenses rather than income?

    1. B++! Now we’re splitting hairs, though your logic makes sense. You’re fortunate to have had a continuous appreciate in home value, something we’ve not been fortunate with here in the USA (some areas are STILL below the prices they sold for back in 2008). New cars, driven forever, are a good formula if you have the patience to truly drive them “forever”. Clearly you do, well done.

      Thanks for pointing out the typo on “income”. Argh. Fixed now!

  16. Great article.

    Practice Forced Scarcity
    Maximize Your Income
    Practice Stealth Wealth
    Balance Your Sacrifices
    Measure Your Progress

    It all comes down to how much can I invest in my future, every month. Once I realized that, things changed. I practice all your steps, am financially independent and retired, so, using your scale, I get a grade of A+. My story is a little different and am still working on accumulating the cushion I want so would give myself something like a B. I no longer have any W2 income so maybe that should be an A? I’m retired, financially independent and still working on financial freedom. An emergency could still hurt deeply. Return from my investments pays my current expenses, with enough left over to continue putting aside for the future.

    For me, the bottom line is: How much can I put aside, each month, and invest it for future income. Your steps help with increasing this amount. It’s a never ending game, for me. Maybe, one day, I will have “enough” and it won’t be anytime soon. My focus for today is still to put aside as much as possible, and invest it to produce more current income, which I currently reinvest.

    1. A+, B and A all on the same test? Haha. I’ll give you an A since you’re FI and retired, though I’ll hold off on the A+ since you’re still accumulating a cushion. Then again, since your investments are generating more than enough to cover your expenses, perhaps it really is an A+. Ok, I’ll give you and A and an A+, since it seems multiple scores are allowed on this test.

  17. Great post! Struggling with that second point right now about maximizing my income at work. I’m a recent graduate and work quite long hours at my current job in NYC. The pay is great, but working 60+ hours a week is definitely taking a toll. Not sure whether or not to take a lower paying job for more of a life outside of work or keep pushing along. I personally love what I do and how much I learn but definitely taking a toll on my body.

    1. That’s a tough call, SS. I certainly had periods in my career where the work was intense, but the money was good. Life’s all about finding the right balance (Secret #4), and only you can determine that for yourself. Good luck on your journey, and thanks for stopping by!

Leave a Reply

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

This site uses Akismet to reduce spam. Learn how your comment data is processed.