How to Retire Early at 55

How to Retire Early at 55

How to Retire Early at 55

Our Five Year Plan


Do you dream of walking into your boss’s office one day and telling her you are leaving for good?  That you are off to travel and explore the world.  Or maybe you want to have time back for yourself to spend on passion projects or simply spend more doing the things that bring you joy, like family and friendships. 


In this video we share the strategies we have used to come up with a 100% replicable strategy for you to create your own plan to retire early at 55, or maybe even 40 or 30 – it’s up to you.  

DISCLOSURE: Some of the links below may be affiliate links; which is no additional cost to you. Meaning if you click the link and/or make a purchase, I may receive compensation.






  1. Reflect – Understand WHY you want to retire early.
  2. Review – Where You Are. Understand your current finances.
  3. Research – To understand and estimate what your expected expenses will be when you retire. 
  4. Reverse Engineer  – Look at your end goal and calculate what your expected expenses will be when you retire. 
  5. Retirement Income – Calculate your OTHER income streams that will help to cover your expenses at retirement.  
        • Investments
        • Retirement Accounts
        • Pensions
        • Business Income 
        • Real Estate 
        • Other Passive Income 

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1 and 2. Reflect and Review


When we envision retirement – we envision CHOICE. We envision being able to spend more time together as a family.  We also would like to possibly live abroad, or in a less expensive beach town than San Diego.   Curt may decide to continue working as a teacher – but he won’t have to.  I want to have a home where family and friends come to – to relax and laugh and enjoy a meal together.  I even have a plan for what our table will look like.  Where we can all escape the chaos of what our everyday lives look like right now.

We simply cannot do that here in San Diego – the cost of living is too high.  But we can do that somewhere else, which has been our measure for what we need to bring in via multiple income streams at retirement as well as how much we want to save.

Using this as a guideline – we have evaluated where we are now and where we want to be.  We believe we can more than comfortably live on $7,000 a month ($84,000.00 a year).  If we stay in the United States, that will cover all of our expenses and if we move abroad, we will likely have a surplus – which is excellent. 



These are the same strategies we used to get rid of over $650,000.00 and debt, reduce our monthly budget by thousands and buy 4 investment properties that cash flow over $1,000.00 a month!

3. Research


You may have noticed I mentioned moving abroad.  That is one of our retirement options.  Now you may not plan to move abroad, but you may want to investigate other geo-arbitrage options, like moving to a state that has favorable tax laws for retirees. 

If moving abroad or to another state, you will want to investigate costs as well as the many other areas that will impact your decision-making process. 

Some of these may include:  


      • What is the estimated cost of where you want to live
      • Will you need a Visa  and do you meet the requirements
      • Health insurance 
      • Education, if you will still have minor children 
      • Pets 
      • Quality of life 
      • Expat communities 
      • Realtor/Real estate agent 
      • Do you need an attorney
      • Estate Planning
      • Climate 
      • Politics
      • And more…

And even if you do not intend on moving, many of the considerations above still apply and should be vetted.  Particularly, areas that may have a significant budget impact, like healthcare.

4. Reverse Engineer


Now that you have an idea of how much you will need to live on at retirement, you will need to see what the gap is and how you will fill that gap. 

Some of the most common retirement income streams are: 

    • Investments
    • Retirement Accounts
    • Pensions
    • Real Estate 
    • Business Income 
    • Other Passive Income 
    • Other Income Streams 

If you plan to retire simply on your investments and/or retirement accounts, you will need to have saved enough money that by the time you retire, you have enough to last the rest of your life. 

The rule of thumb that most rely on in the FIRE community (Financial Independence Retire Early – of which we are a part of) is the Rule of 25.  The Rule of 25 is based upon the Trinity Study which attempted to calculate a safe withdrawal rate; it is also known as the 4% Rule. 

Essentially, the rule specifies that if you have saved 25 times your expected annual expenses and draw an average of 4% annually at retirement, your investment portfolio will last in perpetuity with a 95% success rate.  

For instance, if you believe that you can live on $40,000.00 a year, you would need to save $1,000,000.00 (1 million) before you can retire.  At retirement, you can withdraw $3333.00 a month ($40,000 a year) to live on and 95% of the time, your money will last the rest of your life. 

40,000 X 25 = 1,000,000.00 

1,000,000.00 X .04 = $3333

If you want to retire on more than $40,000.00 a year in income, your options are to 1) save more money, or 2) create additional income streams to reduce the amount of money you need to save. 


Another option is to live off the yield your investments earn each year.  Your yield is a combination of dividends, bond interest, and rental income from REITs (Real Estate Investment Trusts).  This is described as the “Yield Shield” – a term coined by Kristy Shen and Bryce Leung, authors of Quit Like a Millionaire, and the popular blog Millennial Revolution

In the simplest of explanations, it means your yield from your investment portfolio provides you a regular income to help support your retirement.  Instead of all of your returns going back into your respective investment accounts and compounding, a portion is paid out to you instead. 

If you want to know more about this way of funding your retirement – I suggest Kristy and Bryce’s book.  It is an excellent read and on my list of “Favorite Reads.”  

Like other streams of income mentioned above, if your investment yield is not enough to support your monthly retirement expenses, you will need to figure out what other income streams will make up the difference or save more money.  



In our case, we will have a few different income streams that will remain through retirement so we won’t need to save up as much as if we were solely relying on our investment portfolio (and, in fact, won’t ever have to draw from our retirement if all goes as planned).  

Currently that shortfall is $4600.00 per month (not counting any money coming from our retirement accounts.) We already have ongoing income streams of about $2,400.00 a month. 

$7,000.00 – 2,400.00 = $4600.00

So, we either need to save more money which, at our current age of 49, is not very realistic given our short retirement window or we need to have additional income streams to fill this gap. 

5. Retirement Income Streams




Though there are not many companies these days that provide pensions, you may be one of the lucky ones.  Typically, a pension is a fund set up by your employer while you are employed to which you and/or the employer deposit money while employed and when you meet the conditions of retirement (typically age and/or years of employment) you are eligible to receive periodic payments. 




In our case, we are fortunate that my husband will receive a pension.  Based on the calculators provided by the pension plan, we believe that he will receive a monthly pension payment of approximately $1,300.00.    


That reduces our monthly shortfall to $3,300.00. 


$7,000.00 – $2400.00 – $1,300.00 = $3300.00




Another form of investment income is real estate.  Real Estate investing is not for everyone and if you want to become a real estate investor, we highly recommend that you educate yourself, do a lot of research and go hang out with other real estate investors to gain more knowledge before even thinking about becoming an investor. 


Jumping in and not knowing what we were doing was one of our biggest financial mistakes during the 2009 recession. It took us a decade to be mentally prepared to even begin considering real estate as an option for us.  We talk more about that in one of our previous episodes. 


Since then and after  A LOT of calculations, research, books, podcasts, internet searches, and seeking out other investors, we decided that the best path FOR US was to use real estate to fill the gap for our monthly retirement income. It was scary to jump back in again – but we felt much more equipped and confident in the foundation of knowledge we have under our belt this time around. 




We currently have four rental properties that provide us a monthly cash flow of about $1,000.00.  I say “about”, because things happen regularly that can affect your monthly cash flow.  But on average it is $1,000.00.  Going back to our calculation, we are now down to about a $2,300.00 a month shortfall. 


$7,000.00 – $2400.00 – $1,300.00 – $1000.00 = $2300.00


For the remaining $2,300.00 a month we will fill the gap by purchasing additional rentals to increase our monthly cash flow as well as grow my online business.  This leads us to one of the final means of retirement income, which is business income. 




If you own a business and you have grown it to a point where you can sell it for a profit, you now have money you can use to invest and fill the gap. 


It may also be that you own a business that either you have left for someone else to manage and you have become a silent owner.  This income can also be used to fill the gap. 




In our case, we plan to grow my business over the course of the next five years as we wait for Curtis to reach 55 and become eligible to draw upon his pension. 


This piece of our investment plan is currently an unknown dollar amount.  Our hope is that our business continues to grow and it will not only provide enough income to fill the gap, but also allow us to never draw upon our retirement accounts so we can leave that money to our kids. 


Leaving a family legacy is one of our biggest goals and is part of our retirement plan. 


Growing my business income would also mean we would not have to purchase additional rental properties if we chose not to.  In short, it gives us additional options. 


If you have followed the calculation, we plan to use Curt’s pension, real estate income, and business income to provide us with a monthly income stream that covers our monthly expenses. 


We are using the next five years to acquire more investment properties, grow my business, and keep adding to our retirement accounts to grow that legacy. 




There are a few other income streams that may figure into your own equations.  The most common are: 


  • Social security 
  • Annuities
  • Royalties
  • Inheritance


For any of these, the calculations remain the same.  Determine how much each of these streams you have (or will have) and then calculate the difference between it and how much you believe you will need. 


What is left, will need to be supplemented with any one or more of the retirement streams described above. 




A word about social security. 


For many Americans, Social Security is the only form of income they have planned for when they retire.  The sad reality is that, in all likelihood, your monthly social security check will not be enough to live on. 


In fact, a recent study found that 56% of Americans don’t know how much they will need to live on at retirement. An astonishing 22% of Americans have less than $5,000.00 saved for retirement and, even more shocking, 15% have no savings at all.  


That is worrisome. 


But not for you. You are here and, by being here, that tells me you want to do better and not included in those numbers. 


Given this data, it is important to have an idea of how much of a social security benefit you will receive, if any, depending on when you decide to draw upon it.  If you are unsure of what your benefit will be, you can find an estimate on the Social Security website




Our plan also does not include social security.  When we begin receiving our Social Security benefits, it will reduce the amount we need to draw upon our other investments and those funds will continue to grow in our legacy fund. 


We believe we have mapped out a plan that will not only allow us to retire and have our needs met but also allow us to do it years before our peers. 


Imagine how much earlier we could have retired had we started this plan in our mid-forties? 




We hope you feel confident now in your ability to know what it will take to retire WHEN YOU WANT.  Whether you are in your 20’s, 30’s 40’s or even 50’s, building your retirement fund right now gives you choices later. 


As you can see, if you are creative and diligent about creating multiple streams of income – you will not have to save as much money as you think to retire early AND you can do it much earlier than you ever imagined. 

Love and Prosperity,

Wendy and Curtis







Connect with us and each other.  Our group is full of other parents on the same journey.  We built our group to share and support one another and grow our House of FI family!


2 thoughts on “How to Retire Early at 55”

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