If you’re a millennial, you know that the dream of financial independence is something that’s been burning in our hearts for a long time. But as much as we’d love to get there as soon as possible, we also know that it takes a lot of hard work and dedication to get there—and sometimes it can be hard to stay motivated when we’re not seeing immediate results.

But not to worry. Today, I’m going to show you how easy it is to reach financial independence at 40—and how you can make sure you’re doing everything right so that you don’t miss out on the best years of your life. So let’s get started!

Not maxing them out

The first big mistake people make when it comes to retirement accounts is not maxing them out. If you’re pursuing financial independence and early retirement, you have to contribute the most you can to those accounts so that whatever limitations are in place, you meet those limitations.

Experts say that if you want to retire in the most traditional manner – i.e. around the time you turn 65 years old – then you should contribute 10-15% of your income. However, if you want to retire a lot SOONER than that, then you’re going to have to contribute more.

Why? Well, the main reason is to make sure your money grows as fast as possible. And this is accomplished by maxing out your retirement accounts as soon as possible. There’s another reason why you should max out your retirement accounts: Social Security and pension funds aren’t guaranteed in the future.

So by adding more money into these accounts, they can grow faster and prepare for any potential changes down the road.

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Not investing in a retirement account

The next mistake you want to avoid is not investing in a retirement account at all. You already know that I’m a big proponent and advocate for index funds.

But there are other options! You can also invest primarily in bonds if you wanted to, but to be honest, those are a little too conservative for me.

I believe that the way we grew our accounts quickly — and the amount of time we can spend enjoying it — is by being more aggressive and investing on the stock side of things.

Of course, with a retirement account, your employer might also be matching some or all of your contributions. If this is the case then you REALLY need to make sure you contribute to your retirement or 401(k). It is basically free money!

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Borrowing from your 401(k) early

The next mistake you can make is borrowing from your 401(k) early. It’s actually more common than you might realize, even though most of us know better.

We borrow from our 401ks to pay off our credit cards and other debts, and we don’t think about the interest rate that we’re paying on the money we borrow.

But when you take money out of your retirement accounts, you’re also taking money out of the stock market and your money in the stock market is going to get the best return. The average annual return on stocks is about eight to ten percent, but when you take it out of a retirement account, it’s not going to get as much of that return because you’re losing time for your money to compound.

So before you borrow from your 401k, ask yourself: how much better would my retirement account be right now if I had never borrowed? And then ask yourself: if I hadn’t borrowed, would I be able to retire by now?

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Leaving their jobs and transferring their retirement accounts to a higher-cost brokerage

The next mistake people make is leaving their jobs and transferring their retirement accounts to a higher-cost brokerage. Of course you want to make sure you’re getting the best rates on your retirement accounts, but you also want to avoid paying more in fees than needed.

First, talk to a brokerage such as Vanguard or Fidelity. These two are great because they have some of the lowest fees in the business! We love Vanguard because they keep your money safe, and you don’t have to pay for services you don’t use.

Second, research what account you’re transferring your money into. Do your homework! If it’s not a good option for you, then maybe it’s time to move on — it could cost more than necessary down the road if you keep putting off doing things like this.

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Leaving it with an employer that is unorganized

The next mistake you can make with your retirement account is leaving it with an employer that is unorganized. When you leave your employer, you have the option of rolling it over to a different brokerage account—but some people decide to leave it with their former employer, which can be completely fine if your employer is organized.

But what happens when they aren’t? Well, when you do this, there are tax consequences—you’ll pay taxes on the money as income and also pay a penalty for doing so. But even more importantly: when you cash out your IRA or 401k, you will also be hit with a tax penalty!

So the next mistake you can make with your retirement account is leaving it with an employer that isn’t organized.

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Leaving your employer too early

Finally, the last mistake you can make is leaving your employer too early. If you’re planning on leaving a job, it’s important to stay until you get your match. But if you just leave without thinking about it, you could miss out on the vested amount.

And I’ve seen this happen a lot! Employers will have this policy that they’ll match your money, but if you leave too early, they take that back. So if you’re planning on leaving, maybe stay a couple more months so that you get the match—but don’t leave if it’s going to cost you money.

You might be going to a job that pays a ton more money and can recoup them out by taking that job—but in some cases, maybe not! It depends on what kind of money these new jobs make and how much more they pay than your current job does.

That’s why it’s really important to do an assessment when thinking about leaving an employer for another one. You know what they say: the only way to get better at something is by doing it. And that’s true when it comes to making mistakes.

The more you do something, the better you get at it. So if you’ve made some of these mistakes, don’t worry! It’s okay—you can recover from them and move on with your life. Retiring early is still within your grasp. In fact, I have a whole Article where I talk about how it is possible to retire in as little as 10 years.

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