How to Retire Early as a Trucker

Photo by ALE SAL, Unsplash

When we think of jobs that lets us retire early, we think of lucrative tech jobs or entrepreneurs. Rarely if ever would trucking come to mind. However, trucking is an excellent career for anyone who wants an early retirement.

Trucking offers decently high pay without needing a college degree, which means you’ll be able to start working sooner and save more of your money instead of paying student debt. Trucking also has great job security, allowing you to shop around for competitive wages and benefits. Of course, there are downsides as well, trucking can be a dangerous profession, and it can be very lonely when time on the road keeps you from your friends and family. Even so, this does not take away from the advantages truckers have when it comes to achieving an early retirement.

How can a trucker retire early? Largely by doing the same as every other aspiring early retiree: make money, reduce spending, and invest as much as you are able. 

The Steps to Early Retirement

Step 1) Pay Off Non-Mortgage Debt

When it comes to financial health, becoming debt free is always the first step. Fortunately, truckers are ahead of the game. As trucking doesn’t require expensive degrees, truckers don’t have massive student debt. Being a trucker by trade, there is also less temptation to purchase an expensive personal car.

The final type of debt, consumer debt, is the most expensive. Credit cards charge anywhere between 15% to 25% in interest. If you have credit card debt, it will always be in your best interest to pay them off ASAP. However, on the bright side, credit card debt can generally be paid off within a few months of hard work, unlike car loans and student loans which often take years to pay off.

After you are debt free (or if you’re already debt free), the next step is:

Step 2) Optimize Your Savings Rate

Truckers are also well-positioned to have an excellent savings rate. As truckers spend much of their time on the road, they often:

• Travel as a part of work – As a part of the job, truck drivers frequently travel all across the US and sometimes also Canada. Truckers have the ability to plan their routes and many also plan their schedules to spend a weekend getaway out of state. Trucking offers the unique opportunity for inexpensive travel as a part of work. 
• Develop inexpensive hobbies – Much of your day as a trucker is spent on the road. This means occupying your time with activities that won’t distract you from driving, like audio books, music, and podcasts. Enjoying hobbies like these are easier on your wallet and a boost to how much of your income you can save.
• Food prep for long distances – It can be challenging to prepare adequate meals for the long haul when it’s so much easier to get takeout at truckstop. However, it’s much healthier to prepare your own meals and cheaper. Travel cookware and a fridge/freezer can be a great investment for both your physical and financial health.

Step 3) Emergency Fund

The next step to the journey of financial independence is to establish an emergency fund. Open a new high yield savings account (here are some great options) and use that for your emergency fund. This way you won’t be tempted to spend it and it’s encouraging to see the number go up. To know how much you need in your emergency fund, you’ll want to track your spending for 1 month and multiply that by 3 so you have 3 months worth of your living expenses.

It takes a bit of work, but you can track your expenses on a notebook, or through excel. If you’d prefer a faster, more efficient method, WeFIRE is currently running a limited time offer. Download the WeFIRE app and come try out our secure account tracking features and the AI Copilot for 1 month for free by clicking on this link. 

Having an emergency fund is important because it offers you a sense of security. This way in the case of accidents or unexpected costs, you have a couple thousand dollars sitting in the bank that can cover you. It also means you have a safety net while investing. Knowing that you’ll be fine even when the markets are down will give you the fortitude to stay invested, which is how you really reap the rewards of investing.

Step 4) Tax Shelters

Before fully getting into investing, especially stock investing, it’s important to know which taxes you can avoid paying. Your take-home income has already been taxed. In order to encourage the public to save for retirement, the government offers programs like the 401(k) and the IRA to reduce the taxes you have to pay.

Here’s a table comparing the 4 main types of tax shelters.

401(k)/403(b)/etc	Roth 401(k)	Traditional IRA	Roth IRA
Offered by company – Employer match a percent of your contributions – Investment options depends on company	Offered by company – Employer match a percent of your contributions – Investment options depends on company	Self-directed – Open to most financial investments	Self-directed – Open to most financial investments
Higher contribution limits – 23k in 2024, employer match does not count towards the limit – cumulative across all 401(k)s	Higher contribution limits – 23k in 2024, employer match does not count towards the limit – cumulative across all 401(k)s	Lower contribution limits – $7k in 2024 – cumulative across all IRAs	Lower contribution limits – $7k in 2024 – cumulative across all IRAs
Don’t pay regular income tax – contributions are tax-deductible, then pay tax on withdrawal	Don’t pay investment income tax – contributions are not tax-deductible, withdrawals are not taxed	Don’t pay regular income tax – contributions are tax-deductible, then pay tax on withdrawal	Don’t pay investment income tax – contributions are not tax-deductible, withdrawals are not taxed

Because of tax incentives, it’s best to max out these accounts first before opening up an independent taxable brokerage account. Also, while stocks, bonds, and futures can be held in these tax advantaged accounts, real estate cannot and can still be taxed.

Step 5) Investing

As a rule of thumb, to achieve financial independence, you’ll need to have 25x your yearly expenses saved and invested in a broad-based index fund. This is called the 4% rule and it guarantees you 30 years of retirement income, as long as you withdraw no more than 4% of your stock portfolio. We also have an article going into detail on the 4% rule if you’d like to learn more.

Even so, there are a variety of ways to invest so that your money grows with time. Let’s go through them now, starting with…

Stocks

Since the creation of a tracking system for the US stock market, it’s been recorded that the US stocks has grown by an average of 10% every year. If we assume an inflation rate of 3%, that makes for a real annual return of 7%. As long as you invest in a broad-based index fund, you’ll be able to capture the stock market return at very low management fees.

Of course, the market is volatile and unpredictable in the short term. It can be up 15% one month, only to drop by a third in the next. Trying to time the market doesn’t work, which is why it’s better to ignore short term price increases or dips and focus instead on the very long term. Only then will the 10% average returns prove out.

Because effective investing is so long-term, the headstart truckers get for their career means you’ll be able to invest more and sooner, which will have big payouts after compound interest works its magic. For example, at an average of 10% compound interest, an additional $1k in monthly contribution to stock investments from ages 21-25 works out to $3.3 million when you turn 65.

Bonds

A bond is a contract between you and a company or the government, where you agree to lend them a certain amount of money and they agree to pay you back by a certain date plus an additional amount in interest. 

Bonds are graded according to how trustworthy the burrower is. If you’re lending money to the US Government (Treasury Bonds), you’re guaranteed to get your money back but the interest will be lower, however if you’re lending money to a company that has a history of defaulting on bonds (junk bonds), the risk is much higher and so the interest will also be much higher. Exactly how someone with a higher credit score can borrow more money for lower interest.

In today’s economy, bonds don’t offer very high interest rates. The 10-year US Treasury bond offers a yield of 3.78%which only barely covers inflation. Meanwhile CCC junk bonds have a yield of 13.38%, but come at the fairly high risk of losing your principal (initial amount you lent out).

At these rates, bonds do not make for an effective method to store wealth. A high yield savings account offers rates from 4.5-5% and because they are FDIC-insured, they’re almost as safe as US Treasury bonds. 

You may want to keep a certain amount of money in bonds for the purpose of diversification as you near retirement but at their current rates, they are not good for building wealth. Interest rates often change, if bond yields increase in the future, then we’ll reconsider.

Real Estate

Unlike stocks or bonds, real estate serves a purpose beyond growing wealth; shelter. People need places to live and well-situated locations are especially in demand. If chosen correctly, a real estate property can be a very good investment, both as a property you rent out, and as an asset you sell after its value increases.

Before diving into the choppy waters of real estate investing, there are somethings to consider:

• Real estate is not a passive investment. Unlike monthly contributions to a broad-based index fund, real estate ownership requires finding a good property, bidding, maintaining the property and vetting renters if you intend to rent it out. Finding a good place to rent out requires a good eye for consumer demand. Although rent income is a great income stream, the process can be time consuming.
• The US housing market is currently in a bubble. Does this mean that buying a house now will definitely lead to a drop in value and cause you to lose money? Not necessarily, we wouldn’t dare try to predict when the bubble will burst (or if it even will, for that matter). The fact is, mortgage application is at its lowest since May 2023 and home prices are still far above what the average salary can afford.
• Houses take time to buy and sell, which means a big opportunity cost. As an illiquid asset, your money can be tied up in real estate for years and decades. During this period of time, you won’t be able to put it anywhere else, whether or spend it, in stocks, or in bonds. It’s quite a lot of money too, since a big down payment has to be made.

Other Investments

Aside from the options above, there are many other ways to invest. Each comes with its own risks, and some can be quite risky. So if you do invest in them, it’s best not to put too much money in them (5-10% of your total portfolio).

• International Investment – The US stock market is not always in sync with foreign markets. For example, while the whole world was impacted by the Great Depression, Japan and Latin America were less affected. There is also growth potential in emerging markets as they transition from developing to developed countries, i.e. Brazil, Russia, India, China, and South Africa. 

BEWARE: Today’s global economy is far more interconnected which has reduced the efficacy of diversification. The potential of emerging markets also comes with risk as these economies are less regulated and mature. Finally, there is additional cost that comes with international investment, as you need to pay currency exchange rates and higher management fees.

• Cryptocurrency – This is a new technology that offers decentralized currency with a cap on supply so value is maintained. Since Bitcoin’s introduction, it has seen incredibly dramatic peaks and troughs, going from record highs to a quarter of its value in a span of days. 

BEWARE: Bitcoin is perhaps the most reliable and least volatile of the cryptocurrencies and even then it has seen scary drops. Crypto is also very complex and its price is driven mostly by hype and has little in the way of real world value. Crypto advocates argue that the value comes from crypto’s potential to become a universal global currency separate from any single government, but if that were to come to fruition, the crypto would no longer have the same dramatic price hikes it does now, reducing its potential in wealth building.

• Gold/Precious Metals – Ever since the US stopped using the gold standard, there have been growing concerns with the value of money. Buying gold served as a way to mitigate this fear, the idea being that if your wealth was stored as an objectively valuable and scarce resource, it offers stability and safety that fiat currency cannot.

BEWARE: While gold has increased steadily in value, it’s not a wealth building tool with its low return on investment that only just keeps up with inflation. Gold has little practical use or ability to generate wealth for the economy, meaning its value is tied to the same thing as regular fiat money: social belief in that it’s valuable.

Other Things Truckers Should Consider 

Beyond the universal steps to early retirement, there are also some considerations specific to truckers. The most important of these are…

Health

It’s been said that truck drivers live to an average age of 61, 17 years less than the average American male life expectancy of 78. Although the legitimacy of this statistic has been brought into question, it does point to a worrying truth: trucking is a dangerous career. This is for a number of reasons.

• Truckers have higher odds for getting into car accidents and worse consequences. By being on the road so often and operating such a big vehicle, truckers have a much higher chance of getting caught up in an accident. Doing proper safety inspections will go a long way towards preventing the worst of these accidents, but the carelessness of other drivers can’t be managed the same way.
• Being on the road makes it difficult to maintain healthy lifestyle habits. It was briefly mentioned before, but a 14 hour work day with 11 hours on the road and truckstops filled with fast food can be a challenge to both maintain a healthy diet and decent exercise routine. It’s not impossible, however, in the mandated 10 hour break, truckers can prepare their own food and walk quick laps around the truckstop. Fast food restaurants also always offer healthier alternatives, in the form of salads and lettuce wraps.
• The mental health struggles of being a trucker can lead to unhealthy coping mechanisms. Truckers are prone to smoking and alcoholism. This is the result of many factors, from the stress of staying alert for long hours, to being apart from your friends and family, to dealing with the lack of respect society has towards truckers. 

In a practical sense, these factors likely lead to higher insurance premiums and general higher healthcare costs. Statistics may imply that truckers won’t have a retirement as long as the average American, but with care and planning, that doesn’t have to be the case.

Investing Timeline

Also a point mentioned earlier, truckers make more money sooner than most other professions. Following this early start, truckers are well positioned for career growth and wage increases as they gain experience. For example, you can go your own way and become an owner-operator, earning anywhere from $185k to $556k per year.

With such an early start and promising growth prospects, it only makes sense that truckers are at an advantage for early retirement. Contributing $1k every month to your stock investments from ages 21-25 means $3.3 million at age 65. Contributing $2k every month for 25 years means you’ll have $2.36 million at 46, if you start at 21. Enough for a fairly comfortable retirement at a 3% withdrawal rate for $70k annual expenses to last you the next 50 years at minimum.

Job Security

Because of how important trucking is to the function of the economy, there is always a demand for truckers. Thanks to this job security, truckers have the option to pick and choose between different positions for the best benefits and best compensation. On that same note, job hopping is also a good strategy to raise your income — even while employed, it’s worthwhile to keep your ear to the ground for better opportunities.

The final benefit of job security is for those who are uncertain of their retirement income stream. If there are concerns that the markets are down and not generating the promised return on investment, it’s fairly easy to find work as a trucker, especially when you’re experienced.

Conclusion

Trucking may not be a glamorous profession but it’s practical and it gets the job done. With their relatively high salary and a headstart on their career, truckers are at an advantage for early retirement. The only thing holding them back from this realization is an unfortunate lack of financial understanding. 

If you would like to learn more about achieving FIRE (financial independence, retire early), our article on FIRE essentials will serve as an excellent foundational guide. And of course, working hard to retire early is only half the problem. What do you plan to do in retirement and how will you lead a fulfilling post-retirement lifestyle? Check out this article and come explore this topic with us.

Retiring early is a marathon, not a sprint. Stay steady and keep saving! Good luck, we believe in you!