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The Secret to an Early Retirement Isn’t What You Think It Is

The Secret to an Early Retirement Isn’t What You Think It Is

December 27, 2017

When I meet with Certified Registered Nurse Anesthetists (CRNAs), many assume that earning a high income is the key to retiring early. While it’s true that the high income CRNAs enjoy is helpful, the real secret comes down to two S’s: spending and saving.

It’s easier to retire early based on how much you save and how little you spend as opposed to how much you earn. This is for a few reasons. For one, if you’re spending at your income level, you’re more susceptible to what’s known as lifestyle inflation. As you earn more, you start spending more and living a lifestyle that may require higher spending.

For some CRNAs, this means that even though they may be earning $200,000 per year or more, they may not be saving any more than they did when they were earning $125,000 per year as their lifestyle needs increased as their income did.

Additionally, if you’re used to living a certain lifestyle that requires a lot of spending, you’ll need a higher retirement income in order to maintain that lifestyle. While there’s no set number for how much income you’ll need in retirement, many experts agree that the average retiree will need to replace about 80% of their income in retirement. If you can pay off your mortgage and other debt before retirement, this percentage may be even lower.

However, if you intend on traveling and spending more on entertainment and leisure in retirement, your retirement income may actually need to be higher than your working years. This can be risky if you’re already a higher spender, especially if you want to retire early.

If you want to retire early, there are a few key actions you can take now to help you save more and spend less. Get started with these five steps:

1. Adjust Your Lifestyle Needs

The truth is, if you want to retire early, you need to get serious about making lifestyle changes. You may dream of an early retirement, but are you willing to do the hard work to get there? Nothing of value comes without a price.

If you have debt (including a mortgage), get rid of it. You won’t be able to make saving a priority if your debts are growing and accruing a high amount of interest. It’s also helpful to cut back on unnecessary luxuries. Evaluate your budget and find ways to throw every extra dollar towards your retirement goals. A combination of these factors could radically change your retirement picture.

2. Save. Then Save Some More

The typical bachelor’s degree graduate will make $60,000 per year when they reach career peak. (1) That may not sound like much, but over the course of their entire career, they’ll earn $1.19 million, cumulatively. For CRNAs who earn significantly higher salaries, you can more than double that number. So why aren’t more average Americans millionaires when they reach retirement? Because they didn’t save.

For every year you delay in saving, you’ll have to contribute exponentially more to reach your savings goals because of compound interest. If you start saving $400 per month at age 25, you would have $1 million saved by age 65 (assuming a 7% annual investment return). If you don’t start until age 35, you’ll have to save around twice as much to reach $1 million by age 65.

3. Invest for Growth

Your goal retirement date doesn’t have to dictate your investments’ time horizon. You may be retiring in 10 years, but you don’t need to set a 10-year horizon for all your investments because you’ll only need a small portion of your nest egg in the early years. The rest of your money may stay invested for another 20 to 30 years. Make sure you are investing with the proper perspective and don’t cheat yourself out of years (or even decades) of potential growth.

Remember, while you want growth, avoid chasing returns or trying to beat the market as a strategy to retire early. You still need to maintain a proper asset allocation so your portfolio can grow healthily without an unnecessary level of risk.

4. Max Out Your Employer Match

Around one in four Americans leaves money on the table by not maxing out their employer’s 401(k) match. (2) No matter what match percentage is available, max out the match.

For example, if your employer offers a match of $0.50 per $1 up to 6% of pay and your annual salary is $200,000, that’s $6,000 in additional retirement savings and when added to your 6% contribution totals $18,000 saved for the year. Assuming a 7% return rate, if you started saving at age 30, you could potentially save $2.1 million by age 62 (not accounting for taxes or inflation).

Along with upping your contributions to your retirement accounts, try to avoid high-cost investments, which can eat away at your savings. The higher the fees you pay, the longer it will take for your investments to grow. Many people don’t realize the fees they’re paying (or assume they aren’t paying any), but retirement account expense deductions average 1.5% per year. (3)

5. Take Advantage of an Advisor

Saving for retirement, early or otherwise, takes patience, commitment, and diversified investments. Working with a trained and competent financial professional is a great place to start. It’s important to work with a CERTIFIED FINANCIAL PLANNER™ practitioner who specializes in serving the unique needs and circumstances of CRNAs.

At CRNA Financial Planning®, we specialize in helping CRNAs, like you, work toward retirement. To find out whether you’re on track, let’s meet to discuss your plans and how we may be able to help. Call our office at 855.304.3748 or email

About Jeremy Stanley

Jeremy Stanley is the founder of CRNA Financial Planning® as well as CRNA Tax Associates®. He has been providing advice and guidance for Certified Registered Nurse Anesthetists (CRNAs) for over two decades. As a CERTIFIED FINANCIAL PLANNER™, Jeremy has met rigorous certification and professional standards set by the CFP® Board. He is committed to adhering to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients.

Jeremy is also the author of The Wealthy CRNA and A CRNA’s Life After Anesthesia. The Wealthy CRNA features insights into becoming a financially successful CRNA and how to start planning for your financial future, and has been prior approved for up to 4 Class A CE credits by the AANA. A CRNA’s Life After Anesthesia serves as your financial roadmap for a smooth emergence into retirement. It reviews recent changes in the CRNA industry along with the new rules of retirement and the final steps of legacy planning. This book has been prior approved by the AANA for up to 2 Class A CE credits.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. Hypothetical examples referenced are not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.