I thought early retirement wasn't for me, but a financial planner gave me a '3-bucket plan' that changed my mind

Our experts answer readers' investing questions and write unbiased product reviews (here's how we assess investing products). Paid non-client promotion: In some cases, we receive a commission from our partners. Our opinions are always our own.

• If you want to retire early, start early and look at your expenses, your income, and your assets.
• How much you need to retire depends on when that retirement is, and it may be worth waiting a bit.
• Your savings plan should include short-term, mid-term, and long-term investments at varying risk levels.

When I first read "Your Money or Your Life," it changed how I thought about money. But I didn't pay much attention to the second half of the book, which lays out a plan to retire early.

Retirement? That's something other people do!

But over the years, retirement has become more appealing. Recently, I've been thinking about what early retirement might look like. I spoke with certified financial planner Bryan Cannon, CEO of Cannon Advisors and author of the book "Retirement Unplanned," to get his suggestions for retiring early.

The first step is to start planning early

Of course, the first step is the same as the first step to retiring well at any age: Start planning and saving early. "The best candidates are the people that plan well in advance for it," Cannon says. He suggests beginning by "taking a good look at expenses relative to income, relative to assets."

"First and foremost, you need to define your goals," he said. "Make them realistic to your situation." A longer retirement might include making some lifestyle changes. For example, if you're an avid traveler, can you keep that up in retirement, or would it make more sense to scale back?

Calculating what I need for retirement

A variety of numbers are thrown around for how much you need to save for retirement, often in the millions. A retirement calculator can help you figure out your plan.

But Cannon noted that the amount you need in savings depends on your situation. "Folks that have a pension are able to retire at 55 and not have their income drop off," he said. Real estate and other assets are possible sources of income to fund an early retirement.

Cannon said most of his clients who are ready to retire around 60 push back their retirement date to take fuller advantage of government benefits like Social Security. Most people can start receiving Social Security at age 62, but the amount you receive per month goes up if you wait, maxing out for those who start claiming them at 70.

Health insurance is another consideration. "The majority of the people that are contemplating early retirement stay on until Medicare because of the cost of healthcare," Cannon said.

The 3-bucket plan

Cannon suggested making an emergency fund to deal with sudden expenses, like a medical event or a home or car repair, the foundation of your retirement plan. Keep at least three to six months of living expenses in a liquid investment so it will grow.

This prevents you from making an unplanned withdrawal from your investment account, which could come at a steep cost if you're forced to take out funds during a market downturn.

Beyond that, Cannon outlined a retirement plan that includes three buckets of investments. The first bucket is short-term investments, the money you'll spend in the next three years. It should be very liquid, without a lot of volatility. That bucket also won't have much growth.

The second bucket is mid-term investments, the money you'll draw down three to five years in the future. When you withdraw from your short-term bucket, you replenish it with money from the mid-term fund. These investments can carry somewhat more risk as well as higher potential returns.

The third bucket is the growth bucket. You can afford more risk and greater gains, because you won't tap these funds for at least five years. By rotating money through the three buckets, you can fund an early retirement.

When you must retire early

At times, early retirement isn't a choice. Injury, illness, or a poorly-timed job loss force many people into retirement before they're ready. That's the moment to formulate your retirement plan.

"You can't put your head in a hole and assume everything will be okay," Cannon said. "Having no plan is still a plan, just not a good one."

He noted that there are many ways to bring in extra income during retirement that weren't available even a decade ago, such as renting a spare room on Airbnb, renting a garage space, or selling through an online marketplace.

His final tip: Pay down your debt. Cannon said, "The people that are most successful enter retirement debt-free and have a budget and stick to it."

Find a Financial Advisor

Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three fiduciary financial advisors in your area in minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. Start your search now.