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Most of us would love to quit our job and retire early. Who wouldn’t want the freedom to pursue their own goals and interests? However, it’s already difficult enough to save to retire at 65. How can anyone retire from their job earlier? Well, it often takes a lot of hard work to get there. Here are five things you need to do to retire early:

Track your expenses

The first thing to do is track your expenses to see where all your money is going. Many people have no idea where their paycheck goes. By the end of the month, all the money is gone and it’s a struggle to make it to the next paycheck. Whether you are spending on new car payments or a daily coffee fix, find out what your money is buying.

Once you see what you spend money on, you can determine what you can live without and start eliminating unnecessary expenses. Do you want to spend your whole life working to pay for luxury cars, cable TV and gasoline? To retire early, you need to prioritize financial freedom above some of your needless expenses and cut them. If you know your annual expense, you will also have a better idea of how much you need to save for retirement.

Save a bigger percentage of your income

Most financial advisers recommend saving 10 to 15 percent of your income for retirement. This is fine if you want to retire at 65, but you need to save more if you want to retire earlier. Some people save 50 percent or even 70 percent of their income in order to leave the workforce early.

Saving a large percentage of your income has two very big benefits: You will be able to build up a significant retirement fund quickly, and you will acclimate to living way below your means and won’t need as much money in retirement.

Make money on the side

Of course, most people can’t save 50 percent of their income even if they cut every insignificant expense. So, you need to increase your income, too. One way to do this is to explore ways to make money on the side. People are busy these days and need a lot of help with everything from babysitting to putting IKEA furniture together. You can rent out a room in your house, provide consulting skills, participate in a focus group, tutor, write freelance articles or deliver pizza on weekends. There are endless ways to make a little cash on the side and everyone has talent for something.

If you are lucky, you will be able to make money doing something you enjoy and retire from your day job earlier. Another benefit of making side income is you might be able to put off withdrawing from your retirement fund until later.

Start saving and investing early

There is no way around it. If you want to retire early, you need to start saving early. The magic of compound interest will work in your favor and your retirement fund will accumulate faster. The stock market is a great wealth generating machine if you have a long investment horizon. When you’re in your 20s and 30s, a stock market crash can even be a good thing. You can keep buying and investing, and you will most likely do very well in the long run. The later you start saving, the harder it will be to retire.

Figure out how much health insurance costs

Finding affordable health insurance is a big issue for early retirees. You won’t be eligible for Medicare until 65, and you will need to buy your own health insurance. The cost will increase every year as you get older, and you need to make sure you budget adequately for it. However, you might qualify for federal subsidies to help pay for health insurance depending on your taxable income, so do your research before taking the leap.

Early retirement requires a lot of planning and preparation. Those who have been saving a large percentage of their income since starting their first job are considerably ahead in this game. People who don’t start saving until late in their career will have to make considerable adjustments in order to exit the workforce, but early retirement can still be a possibility if they pay attention to these five essential steps.

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