Secrets to Retiring Early: It's Not Just for the Rich One in five Americans plans to retire before age 65, according to a new study, and they're not just the ultra-wealthy. There's hope for everyone to bail out of the daily grind before age 65, if they adopt the behaviors and attitudes of these savers.

The Transamerica Center for Retirement Studies, an organization funded in part by the Transamerica Life Insurance Company, surveyed more than 4,000 U.S. employees and delved deeply into the responses of the group they label "future early retirees."

"We had two hypotheses: They were privileged and ultra-affluent or wildly optimistic," says Catherine Collinson, president of the center. But just 52% of the future early retirees had a college degree, and 49% reported an annual household income of less than $100,000. They are equally divided among men and women; half are over age 40.

"They are far more likely to be like the 'Millionaire Next Door' than a Bill Gates or Warren Buffet," Collinson says, referring to the 1996 best-selling book that found many U.S. millionaires lead relatively modest lifestyles.

The future early retirees weren't pathological optimists either. The study authors extrapolated from the data on their savings behavior, and found they were actually "well on track to meet their goal," she says.

So who are the future early retirees, and why are they successful? They started saving earlier -- age 25, on average, versus age 30 for their later-retiring peers. They contribute more to their company plans -- 10% of income on average, versus 6% for other respondents. They are much more likely to save for retirement outside of workplace plans -- 69% versus 60% of those planning to retire after 65.

They're also luckier: While about three-quarters of those surveyed enjoyed access to a company 401(k) plan, the future early retirees were more likely to have company-funded pensions as well (25% versus 14% for those retiring after 65).

More Likely To Dream Big

But a big part of their success relates to priorities and attitudes. Retirement is a huge value for them; nearly one-third called it their top financial goal, versus less than a quarter of their peers. They were also the group most likely to have a vision for their golden years.

"All groups look forward to spending time with family and friends, but future early retirees are much more likely to dream of traveling and pursuing hobbies," says Collinson. "The idea of retirement has captured their imaginations." The early birds were the least likely to work part-time in retirement -- 46% versus 59% of those who plan to retire later -- but more likely to do it for enjoyment.

More Likely to Plan

In terms of personality, the future early retirees have a propensity to plan: 71% have a specific retirement strategy, versus 56% of the post-65 group. Researchers have tested people for this trait, and found it actually predicts financial well-being, as measured by credit scores.

"There are four things that are part of being a planner: You set goals; you think about the means to achieve them; you use tools to keep track of progress and see the big picture; and you like to plan -- it feels good to plan rather than being spontaneous about a particular domain," says John Lynch Jr., a professor at University of Colorado and director of the Center for Research on Consumer Financial Decision Making.

"You can have two people who are similar in every way -- income, education, ethnicity -- but if one is a high planner and the other a low planner, the high planner will have a much better credit score," says Lynch.

More Likely to Balance Immediate and Future Spending

Planners also score high in conscientiousness, frugality and self-control. One reason is that their planning allows them to see potential expenses down the road and allocate money for them -- so they have a better handle on their spending today. Thus they'll whip out a coupon in the grocery store, knowing that small savings will add up over time for their future goals.

Steve Spiller, a marketing professor at UCLA, has studied the concept. Planners "can see ahead and realize they are bumping into [spending] constraints, whereas people who are not planning go about their merry way until they're just about to run out, and think, 'Oh, if I spend this dollar now, I can't spend this tomorrow,'" Spiller explains.

Even if someone isn't a planner by personality, it's crucial to try to set a retirement goal. Anna Maria Lusardi, an economist at George Washington University who studies financial literacy, has found people who make an attempt to estimate their savings goals for retirement ultimately save more than those who don't. (Take 30 minutes to try to ballpark your number for free at this site.)

More Self-Reliant and Nimble

The future early retirees also appear to be more self-reliant -- nearly two-thirds say their primary source of income in retirement will be their own retirement savings -- versus 54% of those who plan to retire after 65. They also seek out information on retirement. They're much more likely to spend time on financial information websites, and to talk with friends and family about their plans.

In addition, they also responded to shifting economic times. Asked how their savings habits had changed since the recession, 45% said they were saving the same and 26% said they were saving more. "What the data implies is they have chartered a course and are sticking with it, and adapting to difficult conditions," Collinson says.

The study authors decided to spotlight future early retirees as an inspiration amid economic gloom and doom. "Hopefully people can look to them as role models in their own planning and saving, and may become future early retirees themselves -- or at least retire sooner and on better terms than they expect," says Collinson.

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November 07 2011 at 7:42 PM Report abuse rate up rate down Reply
Richard Steiner

Wow... When I was 35, I had it made. I had a nice retirement nest egg, I owned a home, and we were less than two years (by my figuring) away from being completely out of debt except for the mortage.

10 years and two layoffs later, my retirement nest egg is a mere fraction of what it was, I'm living in a different state, and I'm hoping I can manage to stay employed for the next 20 years so I can actually save up enough to live on when I retire. If I ever retire.

Planning is good, but sometimes it isn't enough. You also need to be lucky enough to be left in peace long enough to retain what you're earned.

November 01 2011 at 6:13 PM Report abuse rate up rate down Reply
1 reply to Richard Steiner's comment

...not to nit-pick, but you didn't own your home and were nowhere near out of debt if you had a mortgage. The bank owned it and you were working for them.

November 02 2011 at 9:00 AM Report abuse rate up rate down Reply

This article would have been true if it were written more than six years ago. Since then everything's changed. The only way to make money in equities is to time the market... good luck. Bonds are no sure thing. FDIC insured savings will get you about a 1% return if you hunt carefully for it. To get close to the $100k income that seems to be about the median according to this article, and do it safely, you would need $10 Million!!! Of course that would come down if you actually had a pension. Good luck since most defined benefit pensions were done away with, legally, courtesy of a bill passed back in 2006.

November 01 2011 at 2:29 PM Report abuse rate up rate down Reply

I retired at 49 Years old and didnt attend College,..I also paid out $500,000.00 for the 2 divorces I wanted..I planned on as much as I could at the ages of 21-29 with 401K's,457's,Mutual Funds,Stocks,and Real Estate in California.I raised 3 children and hardly ever starved myself from the goodies I enjoyed,Porshe's,Maserati's,Corvettes,etc,and still live the life I planned on since I graduated High School in 68...Life is never easy but its something you could accomplish if you plan and stick to it within reason..

October 31 2011 at 7:35 PM Report abuse rate up rate down Reply

Condley you are a smart man. I retired or was forced out at 52. We left Long Island one of the most ripoff parts of the US. Other than dealing with the he haws we like the South

October 31 2011 at 7:00 PM Report abuse +1 rate up rate down Reply

what poop. The bottom line is this. You need a pile of wompom and good medical insurance. Stay the help out of a nursing home or assisted living establishment at all costs. They will rape you of all you ever worked for and then some. Dont you just love the way our country takes care of its own. If things get real bad go in the backyard and end it all so your family wont be in debt the rest of their lives as well. At least you can give them something instead of our lovely govt taking it. Sounds bleak doesnt it

October 31 2011 at 6:57 PM Report abuse +1 rate up rate down Reply
1 reply to rtgarton's comment

when it is time, its a 357 magnum, no nursing home for me

January 20 2013 at 9:20 AM Report abuse rate up rate down Reply

Whaat we need to retire on are the new Obama bucks that have his picture on them and are totally worthless and will remain so.

October 31 2011 at 2:43 PM Report abuse +1 rate up rate down Reply

another stupid writer that knows nothing but gets paid all the same

October 31 2011 at 4:02 AM Report abuse -1 rate up rate down Reply

Do not go to school, occupy walls street, & vote for Obama.
After the POTUS redistributes everyone assets (wealth) we'll all live the same standard of life
even if you do not work or have an education. I sitting back doing nothing watching my neighbors that work their butts off trying to make ends meet & provide for their families.
I just sit around protesting or watching TV & laughing my azz off at those fools. I get food stamps, free cell phone rent substance & free health care at the community hospital. I pay no taxes & just about live for free off of everybody else. You all should try it. Retirement at 30 & crusing thru life.

October 30 2011 at 11:33 PM Report abuse rate up rate down Reply
1 reply to pws1946's comment

I guess I would be sitting around and watching the neighbors try to work their butts off, except their aren't a lot of neighbors to watch on some streets in my town as they lost their jobs and their houses to foreclosure. We have entire streets that are deserted with only one or two houses even on the market because the banks evict people then hold on to basically abandoned property for months. This drives down the value of the untended houses and the whole community as no one then pays taxes to the city or schools. This also invites crime and helps diminish the view residents have of their surroundings, not to mention their property values.

I wish those people who lost their jobs were getting some meaningful assistance as they might have been able to afford to live here.

November 01 2011 at 1:37 PM Report abuse rate up rate down Reply

I retired at 54. The key is to start saving and investing in your 20's. Definitly live below your means. No credit cards. Kids are an option. Don't take expensive vacations. If you get married, stay married. And live in a low cost of living part of the country.

October 30 2011 at 10:31 PM Report abuse rate up rate down Reply
2 replies to Condley's comment

life is to live, what have you gained if you gain the whole world but do not have any fun doing it, I pity you

October 31 2011 at 4:03 AM Report abuse -1 rate up rate down Reply
1 reply to straveler222's comment

The end point of life is death for everyone. Being dependent on anyone, for anything, means less freedom for everyone. It is better to be totally and completely independent in every way including financially. The sooner that happens the better because without financial independence first there is little other independence to be had.

October 31 2011 at 2:47 PM Report abuse -1 rate up rate down

I already have credit cards. Vacation is just expensive. I guess it won't be called vacation especially if you do something cheap, low cost, and local. I live in Harlem (the hood). Most of the tenants are on public assistant. Now what? I still have to pay for my phone, cable, and light bill. Those are expensive.

October 31 2011 at 8:28 AM Report abuse rate up rate down Reply
1 reply to Jackies351's comment

Ditch the cable. Save that money. Watch TV online for free. =)

November 01 2011 at 4:37 PM Report abuse rate up rate down