---
title: 'How Do I Start Saving For An Early Retirement?'
source: 'https://youtube.com/watch?v=96wZTUq6kcU'
video_id: '96wZTUq6kcU'
date: 2026-06-28
duration_sec: 0
---

# How Do I Start Saving For An Early Retirement?

> Source: [How Do I Start Saving For An Early Retirement?](https://youtube.com/watch?v=96wZTUq6kcU)

## Summary

Dave Ramsey advises a 26-year-old caller on funding early retirement. He emphasizes mastering 'baby steps' first, then suggests two main strategies for accessing money before age 59½: investing in real estate for immediate income, or using low-turnover mutual funds (like S&P 500 index funds) for tax-deferred growth taxed at capital gains rates when withdrawn. The discussion also clarifies that 'retirement' often means wanting early access to wealth, not stopping work.

### Key Points

- **Focus on Baby Steps First** [0:57] — Before planning early retirement, the caller should first work Dave's 'baby steps' (e.g., getting debt-free, building a full emergency fund, investing 15% into retirement). Only after that should he consider early-access strategies.
- **Strategy 1: Real Estate Investing** [1:47] — Save cash to buy income-producing real estate (e.g., rental houses, small apartment complexes). The rental income provides cash flow accessible at any age, not requiring 59½.
- **Strategy 2: Low-Turnover Mutual Funds** [2:17] — Invest in mutual funds with low turnover (e.g., S&P 500 index funds, ~5% turnover). These funds buy and hold stocks, so you don't pay taxes on growth until you sell. When sold after one year, gains are taxed at capital gains rates (often 15%) instead of ordinary income rates.
- **Clarifying 'Retirement'** [5:23] — Dave and John suggest that many peopling saying 'retire early' actually mean they want earlier access to their wealth (before 59½), not necessarily to stop working. They recommend finding work you love rather than aiming to 'do nothing'.

### Conclusion

To access retirement funds before age 59½, focus first on foundational financial steps, then consider real estate for immediate income or low-turnover mutual funds for tax-efficient growth. Ultimately, the goal is to build a life you love, not just escape work.

## Transcript

[Music]
alex is in houston texas hey alex what's
up
hey nothing much dave and john hey so
i've got this question that i haven't
been able to find a good answer to
and essentially it has to do with
early retirement and how best to fund
that via mutual funds
or or however that best looks as to be
able to access it you know when you're
oh so you'll need an income prior to the
59 and a half to be able to cash out
your other stuff
yes sir gotcha okay how old are you now
i'm 26 right now okay
and
um so you are debt free
debt-free um currently cash flowing my
wife's college
but trying to get a few things lined up
uh once that's over and and kind of hit
the ground running okay
well my point is i want you to work the
baby steps before you worry about the
answer to this question so that this
this discussion
is fine to have but i want it to be a
little bit theoretical for right now
okay
okay i don't want you to take your eye
off the ball and go work on this stuff
we're getting ready to talk about until
you've worked the baby steps
in other words you're jacking up your
regular retirement first
because we don't need to talk about
retiring early and you have no money in
your 401k or roth iras you follow me
yes sir okay now
two ways that you can do that once you
are debt-free housing everything and
you're starting to really load up your
regular retirement funds
and you want to do some additional
investing that you can access earlier
before 59 and a half
one is you can begin to save and pay
cash for real estate
and obviously real estate throws off an
income from the first day if it's income
producing real estate which is the only
comment i'm suggesting right now but you
save up and buy a rental house you save
up and buy a a small apartment complex
or a little office building or something
and you begin to work that way that is
obviously money you can access
at any time
and you you have to access it the rent
that comes off of it it's not optional
the second thing you can do
is you can invest in
uh what are called low
turnover mutual funds
now the way a low turnover mutual fund
works is they don't turn the stocks in
the mutual fund over they don't sell
anything it's a buy hold
strategy by and large so if you have a
five percent turnover ratio that means
they only sell five percent of the
holdings a year does that make sense
yes sir and that if it if they don't
sell it and you don't sell it it's a
capital gains growth meaning that you
have the growth
but you don't pay any taxes on it until
you actually sell some of it so an
example of that that's easy to do is an
s p 500 index fund
and so i dump some money in an s p 500
index fund almost every month i've got a
good deal in there uh as my overflow
funds
because that money then grows and i
don't pay any taxes on the growth or
hardly any
until i actually pull it out and use it
and if i've left it in there at least a
year when i pull it out and use it i pay
capital gains rate on the taxes
rather than ordinary income rate on my
taxes so in in most people's cases
that'd be 15
instead of 30 or 40 or whatever your tax
rate is okay my case i make too much
money so my capital gains is way more
than 15 but
um so because i'm rich and i must be
punished and that's how that's how the
thing works these days but
uh but anyway the the
the point being that you're getting two
benefits here one you're not paying
taxes until you take it out and then
b when you do take it out you're paying
less taxes
okay
so the low turnover mutual fund works no
matter how much you take out exactly
whatever you take out is going to be
taxable on the gain
so it works like it works like this easy
way to remember is let's just take a
single stock let's say you bought a
stock of a share of home depot and i
don't even know what home depot sells
for okay i'm just making this up
but um
you bought it for fifty dollars
and next year it's worth sixty dollars
you do not pay any taxes on that ten
dollars in gain
unless you sell that stock and you'll
pay taxes on that ten dollars then
but if you hold it ten years
and it goes up from fifty dollars to 150
you don't pay taxes on that hundred
dollar gain until you sell that stock
and what we're doing inside that low
turnover mutual fund is there's a whole
bunch of home depots in there they're
just holding them all
and they're all going up up up up up up
up up up up up up up up up up and you're
not selling them and so you're getting
the value going up without paying any
taxes until you do sell it and you only
pay taxes on the amount it went up and
the amount you sell and it's only at
capital gains rate so it's at a reduced
rate and it is uh gives you a delayed
a tax deferred growth the capital gains
growth on it and that's that's what a
whole lot of people do for their what we
call bridge
uh investing to make the bridge between
50 and 59 and a half work
dave i hear this question a lot from
people in the early 20s what do i have
to do to be able to retire sooner rather
than later
my initial pushback on that question is
always
why are you already planning on
what what is it about the life you're
setting up for yourself that you can't
wait to do something else with it yeah
and agreed is that a great am i off
because there's something about like man
if you love coaching then be the best
coach you can be and love coaching and i
don't i don't have any plans to quote
unquote do nothing you know what i mean
that's not one of my life goals
i like what i do
i've always liked what i do to your
point if that young man is
uh wanting to do this his motivation is
because he hates his job today right but
go and change shout outs
yeah get ken coleman's book paycheck to
purpose and start making plans to go do
something you love and you'll make more
money anyway so uh if you're doing
something you love if that's the point
i have already done the flip and
sometimes it's wrong when i've done it
because i'm when i hear people say
retire
what they're really saying is i want
wealth that i can i want to be able to
access some of my wealth there you go
okay before i'm 60. gotcha before i'm 59
and a half and so that's how i
interpreted the question okay and if i
was wrong and you were right then your
advice is actually correct because i
don't know i didn't ask him that i
didn't i didn't think about that
question that's i just i just you know
how can i get to some of my money before
i'm 60. uh okay because i don't want it
all kind of trapped over there
in retirement and he's already he's he's
running spreadsheets this guy's running
spreadsheets that's exactly right he's
he's 26 and he's projecting he's nerding
out right and uh because i know him
because i do it all the time so i did it
all the time when i was here how quick
can i get out of this this quote unquote
life thing right yeah well how how quick
can i get to make get access to some of
this money the live like no one else
portion of dave said yeah yeah yeah yeah
if that's what he's saying then i'm fine
with it but if he's saying oh i hate my
job and i can't wait to figure out a way
to not have to do it anymore
that's what retirement means that's when
i look at the retirement data and that's
where people just die yeah right or
their bodies fall apart yeah man and so
it's time to go and start doing
something set up the life you love yeah
something and you don't have to make
less money to do it either no you just
get king coleman's book and you learn
the clear path that he's got there it's
very clear on exactly what to do we talk
about in the ramsey show all the time
but you're exactly right so
it's uh i didn't thought about that
chris hogan was ramsey personality did
that book retire inspired we kept
dealing with that
a lot that you know one of the things
chris used to say is beautiful saying
and i'll steal it uh is uh
uh
retirement is not an age it's a number
yeah yeah
and and really what we're saying there
is wealth is a number yeah
accessible accessible that i can get my
hands on so it's a good good
clarification to talk through