I like to read articles about people that retired (or at least could have retired) at a really early age.  I am not talking about early retirement at age 55 or 60.  I am talking about people retiring when they are 35 years old.  And I am not talking about people who won the lottery or who started an internet company that sold for tens of millions of dollars.  I am referring to people who had jobs or, at most, owned a small business.

It almost seems impossible.  I can understand being able to retire at age 50.  Anything before the age of 40 seems hard to fathom.  And let’s be clear that it is very rare.

There are basically three main factors that go into accumulating a lot of wealth.  First, there is your income.  Second, there is your spending.  Third, there is your rate of return on the money that you have already saved.

Interestingly, when I read stories about these really early retirements, the rate of return is not a major factor.  It is typical to see the person having invested in rental real estate, something that I advocate for those in the right position.  If done right, it can give you a fairly solid rate of return.  It is not without risks, but it is also not like investing in the stock market.

The vast wealth accumulation is usually a result of high savings.  This is usually a combination of a high income and low spending.  But it is important to point out that I have seen stories where the person’s income was not extraordinarily high.  It might have been a little above average.

The spending, or lack of spending, is where the person is really different.  They will proudly say that they don’t watch television (no cable expenses), don’t have an expensive cell phone (if one at all), don’t go out to eat much (if at all), don’t spend much on entertainment, and are very cautious with everything that is spent.  I’m not sure that is a life most people would want to live, but it might be worth it if you only had to do it for 10 or 15 years in order to enjoy financial freedom.

Of course, the stories I hear are usually about a single guy or a married couple.  I rarely hear mention of kids.  Having kids will delay your retirement by years, or maybe decades in some cases.  So if you really want to retire at 35, then don’t plan on having any kids.

The other interesting thing I note is that I will read these stories and then something will be said about what the retired person or couple is doing now.  They are usually writing a book, or running a small business, or doing consulting work, or something else part time.  Perhaps they are doing this for reasons that have nothing to do with money.  But somehow, I doubt it.  While it is great to have a cushion or to be able to take a few years off working or to be able to work only part time, I still can’t say it is retirement. To me, retirement is really having the ability and choice to never work again, while maintaining your current lifestyle.

For most people, these stories about people retiring before the age of 40 are not realistic, if they are even real.  But I still enjoy reading them.  I think there is some good advice to be found in them, particularly when it comes to spending habits.  They are also a good reminder that the only way to accumulate wealth is to spend less than you earn.  It sounds basic, but it is amazing just how many people don’t follow it.