Your best bet for early retirement is to live where you can find a high-paying job, expert says
High earners looking to retire early can make it happen in these cities by the time they hit 40, according to Redfin’s latest report.
If these individuals earn a household income in the 75th percentile for their metro, begin working at age 22, live in a median-priced two-bedroom condo, have average annual non-housing expenditure and set aside the rest – they would be able to accomplish early retirement in these big cities. Prospective early retirees would have to rely on compounded savings and investment accounts from age 40 until age 85.
"Many people dream of retirement, especially after a grueling day at the office," said Redfin chief economist Daryl Fairweather. “But accomplishing it by age 40 can feel especially lofty, short of winning the lottery. But it's not impossible. If you want to make it happen, your best strategy is to focus your efforts on living where you can earn a high income, rather than simply a place with really cheap living expenses.”
The six US metro areas where early retirement is possible include:
1. Honolulu, Hawaii
- Median sale price of a two-bedroom condo: $425,000
- Total non-housing expenditures: $40,745
- 75th percentile median household income: $184,000
- Estimated yearly savings needed to retire by 40: $77,806
2. Boston, Mass.
- Median sale price of a two-bedroom condo: $614,000
- Total non-housing expenditures: $45,301
- 75th percentile median household income: $207,500
- Estimated yearly savings needed to retire by 40: $82,104
3. Washington, D.C.
- Median sale price of a two-bedroom condo: $325,000
- Total non-housing expenditures: $50,820
- 75th percentile median household income: $207,000
- Estimated yearly savings needed to retire by 40: $91,494
4. Chicago, Ill.
- Median sale price of a two-bedroom condo: $220,000
- Total non-housing expenditures: $39,328
- 75th percentile median household income: $152,600
- Estimated yearly savings needed to retire by 40: $68,222
5. Tampa, Fla.
- Median sale price of a two-bedroom condo: $142,500
- Total non-housing expenditures: $31,522
- 75th percentile median household income: $115,375
- Estimated yearly savings needed to retire by 40: $52,522
6. Baltimore, Md.
- Median sale price of a two-bedroom condo: $200,000
- Total non-housing expenditures: $45,878
- 75th percentile median household income: $170,000
- Estimated yearly savings needed to retire by 40: $73,673
"Saving up for early retirement requires earning enough to afford to put away thousands of dollars each month,” Fairweather said. “It takes a lot of discipline to maintain such a frugal lifestyle, especially when you can afford not to. But the payoff, for some, to retire decades early might be well worth it."
