Early Retirement Extreme
Early Retirement Extreme

Everyone dreams of retiring early, or at least while there’s still enough time to “enjoy” life without the daily grind of a 9 to 5 job sucking the last few gasps out of a person. With the right philosophy and some life style changes, Jacob Lund Fisker, author of Early Retirement Extreme, describes an alternative method of how to retire with only a few  years of working in the work force.

Early Retirement Extreme isn’t a “how-to” book on how to retire early nor is it a “get rich quick” plan that will explain how to become a millionaire over-night. What it is, though, is a “philosophical” guide on how to change your lifestyle so that you can save enough money to retire by minimizing your expenses and becoming more self-sufficient so that you can ultimately save money by not paying others to do what you can do.

Books that make me reflect on our American lifestyle that we’ve grown so accustomed to are some of my favorites, and this is a focal point in this book. Our society is currently stuck in a cycle that revolves around working and spending, then working some more. This kind of life is completely dependent on the economy: If the economy is in an upswing, then most people benefit; if the economy takes a turn for the worse, many people must scramble to keep themselves afloat.

Jacob’s lifestyle isn’t as affected by how the economy is doing. Instead, he describes a way to be less dependent on these monetary cycles and more self-sufficient.

A few points Early Retirement Extreme makes that were key to me understanding this philosophy were:

  • Live off 25% of your income. This is the key to Jacob’s success. By reducing your expenses to 25% of your income, that gives you the ability to save 75%  of the remaining income. Here is where compounded interest becomes important. Once retired, live off the interest of the investments.
  • Learn useful skills. If you’re able to fix your own plumbing, plant your own garden, or repair bikes or cars this can save you money or you can even charge for your services.
  • Become a Renaissance man/woman. Having many potential streams of income means you can switch gears whenever something doesn’t work or work intermittently at your leisure.

Many of Jacob’s equations and graphs were over my head, but he does explain them in layman’s terms making the formulas digestible. Where many will find this philosophy extreme, I found it refreshing.

The one drawback to this extreme retirement plan that wasn’t fully touched upon was health care. Jacob describes how to stay in the best optimum shape, but this doesn’t cover diseases or old age. No matter how fit a person is, this alone won’t make them immune to cancer or Alzheimer’s disease. Medical expenses can become extremely expensive in old age if such an illness makes one unable to care for themselves or expensive procedures are needed to get well. In the future, I’d like to see this topic expanded upon within the Early Retirement Extreme philosophy.

Do you think you’d be able to retire by 40?


  1. Live off 25% of your income sounds to me more feasible then saving 75% of your income. I know that it is the same, but for me the perception of it is different.

    • @S – I can see that the idea of saving 75% of one’s income is difficult to swallow. But if you’re able to live off 25%, then the remainder would go into savings, or somewhere, no? I’m not able to make this kind of commitment yet, but maybe someday.

  2. Dialing down expenses is a good idea, but 25% is more than I am willing to do. I have downsized since my kids are out of the house. I want to enjoy life along the way.

    • @Krantcents – I think it would be difficult for many people to do that. It would take a major lifestyle adjustment to reduce living expenses. I know that for me, I’d have to move someplace a lot cheaper (probably a camper!), cancel my current cell phone and phone plans, find a cheaper way to host my husband’s web clients (our dedicated server is costly right now) and ditch my car! I’m just not quite there yet. 😉

  3. @Early Retirement Extreme – Thanks for clearing this up for me. I know a few people who retired with what they thought was enough money, then ended up living with alzheimer’s disease for more than a decade. The last 10+ years of their lives were in retirement homes, albeit nice ones, that were quite costly. Thankfully, their funds lasted until the end, but just barely! This is why I brought up this topic. But it sounds like you’ve covered all of your bases.

  4. Well Heeled Blog Reply

    Is Jacob talking about saving 75% of gross income or net income? Because if it’s gross.. I don’t even net 75% of gross income after taxes. And that’s accounting for all the tax deferral I get for maxing out my 401K.

    • @Well Heeled Blog – That’s a very good question. I’m going to have to say that it would have to be 75% of net. I’ll have to clarify that with him. Thanks for pointing that out!

  5. Barb Friedberg Reply

    I really like reading about this lifestyle. You outlined the main points quite well. I can learn from him without adapting the whole approach. Thanks for the insight.

    • @Barb Friedberg – Thanks for that comment. Those were the points that definitely stuck out to me. Now if I could only figure out how to live on 25% of my income instead of 90%, I’d be looking good! 😉

  6. Jacobs blog was the first blog that got us to start re-thinking how we spent our $. My husband read his blog for about a month and came to me with the idea of spending 1/2 of what we made (the other 1/2 went to our consumer debt and emergency fund). We did it and our lives have changed for the good. That was over a year ago. My husband is about to be laid off from his well paying job. We are hardly phased by it. We live on so little that the part time job I work is enough to cover our expenses.

    • @Molly on Money – I read your blog and am really impressed at how you were able to cut your expenses so much. My largest expenses are rent and utilities. So until I move to a less expensive area, I probably won’t be able to do much better than saving 10 – 15% of my income.

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