One Man's Foolproof Plan for Early Retirement

Steve Northrup and his wife will have more income in retirement than during their working years. Here’s how you can do it, too.

Credit: Getty Images
Credit: Getty Images

Written By Sarah Cocchimiglio

Steve Northrup and his wife worked hard and saved all their lives so that they would be able to loosen the purse strings during their retirement years.

The Northrups, of Downers Grove, Ill., started putting money aside for their golden years during the first year of their marriage. They tracked income and expenses, putting cash in their bank account first and living off what remained. Later, they began taking advantage of retirement accounts.

“We immediately saw the long-term benefits of tax-privileged accounts for wealth building,” said Northrup, an engineer who works for an electric utility company.

Now in their 60s, the couple plans to retire to Heathrow, Fla., a suburb of Orlando, where they’ve already purchased a home. They intend to travel, and Northrup will indulge in his passion: sports cars.

The Northrups also will continue to be active, with daily exercise, hiking, biking and more. “We plan to be healthy and exercise until we are 100-plus,” he said. “And we won’t have to worry about where our income late in life will come from.”

Think you can follow the Northrups’ lead? Here are tips for how you can retire early, too:

Contribute the maximum to retirement accounts—and start early: “We have achieved financial critical mass, where we can retire with more income than we earn today working,” Northrup said. During their working years, the couple maxed out their retirement account contributions. In retirement, those accounts will provide a substantial percentage of income.

The benefits of deferred income: Northrup also has deferred his Social Security income – he is eligible to receive benefits – allowing it to increase at a rate of 8 percent a year until it maxes out when he is 70. When he does collect, it will be significantly more than if he collected his benefits today.

Do your homework: “I have studied personal finance and done it all myself over the years,” he said. “You have to ask yourself: If I don’t do anything for me or us in the future, who else will? Start now to help your future self and your family.”

Get in the right headspace: Delay gratification, Northrup said. Instead of splurging on restaurants, luxury cars and tropical vacations, put that money aside so that you can enjoy those things when you have the time.

Take advantage of tax breaks to make the most of your savings. “Today’s tax-privileged accounts are so beneficial to your future that it is virtually a sin if you do not immediately start taking advantage of them,” Northrup said.

Be willing to sacrifice: If there is one thing Northrup knows, it’s that saving for retirement takes time and sacrifice. “You have to be willing to give up something now, knowing that you and your family will be better off in the future for your sacrifice and investment today,” he said.


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