Retiring before the age of 50 may seem like a lofty goal, especially for those without a millionaire’s bank balance.
But Sonia Smith, a retired 47-year-old accountant from San Antonio, Texas, shows it’s achievable through strategic planning, financial discipline, and a few key financial decisions.
Here’s how she retired from her 9-to-5 job without needing a $1.5 million nest egg.
1. Develop a Side Income Stream Early On
Smith’s journey toward early retirement started in 2019 when she began working with a multilevel-marketing cosmetics company.
Her aim was to create a secondary income stream that could eventually match her 9-to-5 earnings, giving her financial independence outside of her primary career.
Tip: Establish a side hustle that you enjoy and can grow over time. Smith’s goal was to bring in $10,000 per month, ultimately meeting her financial goal by bringing in a comparable income through her side gig.
2. Maximize and Monitor Your 401(k)
Smith knew that her 401(k) would play a big role in her retirement planning, so she started contributing to it from the start of her career. Her goal was to ensure it held at least half of her five-year salary.
Tip: Take full advantage of your 401(k) and company-matching programs. Contributing consistently over time allows compounding interest to grow your savings, especially when you start young.
3. Consider Your Family’s Financial Future
Smith and her husband, parents to three adult children, emphasized building a financial cushion to cover unforeseen events, like supporting aging parents. Smith factored her family’s financial needs into her retirement plan to ensure she could help with family expenses if necessary.
Tip: Include your family’s future needs in your planning. Having a financial support system or emergency fund can ease concerns about unforeseen costs.
4. Invest Early — Don’t Rely on Just a 401(k)
While Smith’s 401(k) provided a foundation, she advises against relying solely on it. Investing beyond a retirement account can help build wealth over time. She regrets not exploring investment options in her 20s but stresses the importance of doing so early for those seeking early retirement.
Tip: Seek guidance from a financial advisor and diversify your investments. Look beyond your 401(k) to maximize growth and avoid over-reliance on a single income source.
5. Make Your Money Work for You
Smith’s approach to retirement involved learning how to stretch her savings to provide consistent, lasting income. She urges others to explore investment strategies that can create passive income.
Tip: Educate yourself on the financial options available and research ways to make your income streams sustainable. With planning, you can create a portfolio that works for you over the long term.
By combining smart investments, disciplined saving, and multiple income streams, Sonia Smith’s approach proves that early retirement is possible without needing a millionaire’s bank account.
With an early start, diligent planning, and dedication to financial independence, more individuals can retire on their terms before 50.
