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Author details how she was able to retire early at 38

While the financial independence, retire early, or FIRE, movement may seem too unrealistic, everyday changes can lead to an 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 Live. Hester retired early at 38.

"That's something that not everybody can do, so we were really lucky in that way, “ Hester said.

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


“Each 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?” Hester said.

Happy woman quitting her job leaving the office building with her belongings - Happily quitting job concept
(Photo: Getty Creative) (anamejia18 via Getty Images)

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

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

In addition to large expenses, Hester suggests that people who want to join the FIRE movement also examine small costs as well to save money.

“Look at where your money's actually going. In the case of my husband, Mark and I, we discovered that we were spending a lot more at restaurants than we thought. So for us, it wasn't, can we eat at restaurants and get takeout multiple times a week or not? No, it was, could we cut back by half perhaps?" Hester said. "You'll get a lot more bang for your buck that way than trying to figure out where every single nickel is going.”

Jamie Grill via Getty Images

Once people start cutting expenses, Hester also recommended retirement plan options for workers who want to join the FIRE movement.

“There really are a lot of good tax-advantaged options out there," Hester said. "So for folks 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 self-employed 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're not getting 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 the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago.

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