Finance expert reveals seven simple tips to help you retire early

Many people dream of retiring early but cost of living pressures are delaying plans to sip cocktails on the beach for millions of Aussies.

According to the latest data from the Australian Bureau of Statistics, 156,000 people aged 45 years and over retired in 2024-25, with an average age of 63.8 years.

There are now a total of 4.5 million people aged 45 years and over who are retirees in Australia, with the average age at retirement of all retirees being 57.3 years.

The average age people aged 45 years and over intend to retire is 65.6 years — a slight increase on 2022-23 which was 65.4 years.

Super Guy founder and chief executive Chris Strano says there are seven simple tips people can follow to help them reach their early retirement dream.

1. Invest with purpose

Mr Strano says people need to figure out what investment return they need to attain their expense objectives.

“Realistically, you should be thinking of an average long-term annual return of somewhere between four per cent and 10 per cent based on your comfort level with risk. Anything less is too conservative and anything more is unrealistic and unsustainable,” he said.

“When you determine the level of return required and your comfort level with the associated risk, you are now investing with purpose.”

2. Build a passive income stream

For every $1000 you invest, you are creating a passive income stream of $50 per year, increasing with inflation for the remainder of your life.

“Now, $50 doesn’t seem like much, but think about the amount of times you could have put $1000 away over the course of your life,” Mr Strano said.

“In Australia, there are around 250 working days per year. If you invest $6000, you now only have to work 249 days to earn the equivalent amount, based on an annual wage of $75,000.

“Invest another $6000 and you’re down to 248 working days — and that assumes you’re only living off the income of your investment.

“If you’re happy to draw down on the capital as well and leave nothing behind, then you probably only need two-thirds of that.”

If you think saving $6000 per year is difficult, Mr Strano says it is simple.

“Stop buying dumb stuff. Or, keep buying dumb stuff but downsize your home,” he said.

3. Downsize your home

No matter the size of your house or the suburb you live in, there will always be somewhere you can buy cheaper, if you are willing to.

“Your home is a lifestyle asset – a creature comfort – it does not provide you with an income and does not help with your intention to retire early,” Mr Strano said.

“Downsizing your home can free up a few hundred thousand (dollars), which can be invested and produce investment income to cover your retirement expenses – or at the very least, shave another 20-30 working days off your year.”

4. Invest in superannuation

The main benefit of making additional contributions to your superannuation is that you are investing in a tax-effective environment, Mr Strano says.

The tax on super earnings is less, which means your wealth can accumulate at a faster rate.

“The downside is that you can’t access your super until age 60,” Mr Strano said.

“So, does making extra super contributions allow you to retire early? Well, I guess that depends on your definition of early.

“Some people consider age 67 to be the retirement age in Australia, others consider 65 to be — so, I guess age 60 could be classified as early for some people.”

5. Stop spending on “stuff”

Before making a purchase, people should ask themselves if they need it or just want it.

“Each time you buy something, you are not only reducing the amount that you can save and invest, but you are simultaneously and subconsciously increasing your standard of living,” Mr Strano warns.

“Think about how many unnecessary things you buy because it’s only $20 or $50 or it was ‘on sale’. Or how many times you upgrade a car, a phone, a watch or an outfit.

“What you’re really saying is that you value these bargains and objects over your time. The only way you can pay for them is by working more and retiring later.

“By increasing your standard of living, you are effectively delaying your retirement, because the amount of non-work related income that you will need each year is getting higher and higher in order to cover your increasing standard of living.

“Once your standard of living increases, it’s very difficult to go back.”

6. Get through to age 60

To retire early, you need your investments to cover your expenses from when you decide to retire until you reach age 60.

Then you will have access to your superannuation and possibly the age pension.

“Your first step is to project what your super balance is expected to be at age 60,” Mr Strano said.

“Then calculate how much income this will provide you with throughout retirement, in conjunction with any Centrelink age pension payments.

“If it’s enough, then you’re halfway there. If not, contribute as much as required to super until the projected balance at age 60 is enough.

“The next step is to then build enough wealth outside of super to cover expenses between now and age 60 ... you need to be focusing on investing your surplus income to a point that will get you through to age 60.

“The less you spend on stuff, the more you save and the quicker you get to retirement.”

7. Retire overseas

The cost of living in places such as the Philippines, Thailand, Indonesia and Vietnam are much lower than the cost of living in Australia.

“By moving to South-East Asia, you should be able to retire earlier, because you need a lower sum of money to provide the level of retirement income to cover expenses,” Mr Strano said.

“Better yet, all of these countries are located conveniently close to Australia, meaning you can still pop back for weddings, funerals and the grand final.”