How to retire in 20 years. Or less.

 Any police officer can retire in 20 years (or 22, or 25, depending on the department you work for). After all, that’s exactly how the career is structured. We call it “20 and out.” You simply put in the required amount of years and then leave.

Of course, most police officers end up needing to work in some capacity after “retirement.” Either that, or they end up moving to an area with a much lower cost of living.

But, I’m talking about more than that. I’m talking about retiring in 20 years and being financially free. I’m talking about serving the required amount of years and being completely out of the “rat race.”

That means being able to live roughly the same lifestyle as you do when you were working, living in the same house that you’ve been trying to pay off for most of your career, and not needing to work another day in your life. You can work if you want to, but it shouldn’t be necessary. That takes a bit more discipline. That’s what I mean by “twenty and out.”

The short answer is to make your expenses significantly lower than your income, AKA being frugal, or living below your means. At the same time that you’re being frugal and lowering your expenses, you should also try to increase your income so that the difference between the 2 gets larger, allowing you to save more, giving you a better cushion against inflation, etc.

The somewhat longer answer is you need to have quite a bit of discipline, to live WELL below your means, to save and invest a SIGNIFICANT portion of your income, in order to ensure that your pension carries you WELL beyond retirement.

Most police officers I work with began their careers in their 20s and will retire in their 40s. That’s about 20 years your pension will have to carry you until you are eligible for social security benefits, assuming social security will still be there. And, then, that same pension will have to carry you into your 70s.

You don’t want to “retire” for a few years only to realize that you need to pick up a security job because your pension didn’t keep up with your lifestyle or inflation. You also don’t want to “retire” and have to sell the house that you’ve spent 20 years paying down because you need to find a more affordable place to live. And, you definitely don’t want to “retire” and live the rest of your life like a miser. Those are not ideal ways to exit the rat race.

So, how do you make sure that you retire in 20 years, or less, with the right amount of funds? These are the main principles that my wife and I have stuck to in order to ensure that we would be able to retire when we want to, and that my pension and our retirement funds would take care of us long after retirement.

You certainly don’t need to follow all of them exactly as we did. But, like dieting, long term success is more easily achieved if you combine multiple techniques-eat less, exercise more, develop healthy eating habits, have a workout partner, etc. It’s very hard to reach/maintain a healthy weight by starvation alone.

So, the more of these principles you follow the more prepared you will be to completely leave the rat race. Each skill builds on top of another, expanding your opportunities, and increasing your chance of success. You create your own luck, if there is such a thing. Each one of these topics can be talked about at length and I will cover them in much more detail in separate articles:

1. Work/study hard, especially when young.
2. Be frugal: Live well below your means.
3. Save and invest: Pay yourself first, pay yourself early on.
4. Have no debt, other than a moderate mortgage and student loan.
5. Create goals. Meet them, and exceed them. Constantly out-perform your goals.
6. Talk to your spouse about finances and goals. You must both be on the same page.
7. Have discipline: Do what you have to do, and stick to the plan, no matter what.

That is what we’ve done for nearly 20 years. It’s not the sexiest life-style, nor is it the only way or best way toward an early retirement.

Perhaps, we could’ve enjoyed ourselves more, took more vacations, and spent more on luxury items.

Perhaps, we could’ve done better with our money, as some of our business-savvy friends have, and ended up retiring with a larger income stream.

Perhaps, we could’ve aspired to be more than what we are, moved further up the ladder, and maybe lived a flashier life-style.

But, looking at my numbers and our life-style, I’m confident of our decision. I think we struck a good balance between work and life, and made out alright for ourselves.

So, unless the market turns completely upside down like it’s never done before, we should have more than enough to live on for the rest of our lives, living the same middle-class lifestyle and living where we want to live.

Having the freedom to choose, being able to live how and where you want to live-isn’t that the real goal of retirement? You can do it, too. It’s not too late to start planning for your retirement.