How to retire in 10 years: Debunking traditional financial planning with Mister Money Mustache

My senior year of college, I began preparing for a life of financial independence. I got a job, made a budget, and set aside some savings like anyone educated would do. After graduation, I checked the next most obvious boxes by building an emergency fund, paying back my student loans, and contributing to my company’s 401k. I was feeling pretty on top of my game.

But then, I thought to myself, what’s next? I knew my short-term saving was for the long-term goal of retiring, but it wasn’t clear what I needed to do to get there. So I started searching for answers…

Approach #1: Traditional Financial Planning

At the beginning of this process, I had one question top of mind.

How much should I save each year to set myself up for retirement?

Answering this seemed important to me, because it felt like the kind of behavior-constraining fact that could abstract away the need to think about retirement altogether. This number would give me the flexibility to spend how I pleased on a monthly basis, with the confidence that one day I’d be able to retire.

Half an hour into my research, I came to some obvious conclusions:

  1. You can’t calculate how much you need to save this year without deciding how much you want to spend when you retire.
  2. You can’t calculate how much you need to save this year without deciding when you want to retire.
  3. You can’t calculate how much you need to save this year without making a bunch of assumptions about your future. The top ones I identified were: income growth, life expectancy, interest rates, inflation, and the safe withdrawal rate (SWR).

So, I started by trying to make good assumptions. I went back to the Interwebs, and discovered my mean life expectancy is 82, and then tossed that out the window and figured I’d likely live to 95 (I’ll probably live longer than the average, obese American, but 95 is totally random). I found my income will likely grow at 4%, post-inflation interest rates are generally about 5%, inflation is generally ~3.5%, and you’ll probably be safe forever with a SWR of 4%.

Then, I thought about how I wanted to live. I decided a pre-tax income of ~$85k would cover my expenses (see below for details). And I decided I’d want to be able to retire by age 70. NOTE: I have no idea why I thought I’d want to retire so late…

And I ended up with this: $17,300, growing proportional to my income at 4% a year (see below).

Until recently, this is the approach I’ve been using, saving diligently to hit this number each year. Following this plan, I’ve seldom thought and never worried about retiring happily.

Approach #2: Abnormal strategy, abnormal outcome

Okay, so what’s wrong with this approach? It presumes the objective of retirement planning is to minimize my annual savings. If we remind ourselves why I got a job in the first place though, we see that minimizing savings is not our objective. Financial independence is!

My brother was the first person to point this out, so I followed his recommendation and took a look into Mister Money Mustache, a blogger who preaches a path to early retirement by means of aggressive saving. If I had to summarize MMM’s main teachings, they’d be:

1. You can retire as soon as your savings are worth 25* your living expenses.
2. Income is not a part of the equation, you can only retire sooner by increasing your % savings relative to your take-home pay.
3. To maximize savings, focus on happiness. You can live better and retire sooner by not “focusing on convenience, luxury, or following the lead of the financially illiterate…TV-ad-absorbing Middle Class of the United States”

What’s intriguing about this philosophy is how quickly one can retire by following this approach. Here is the corresponding number of years until retirement based on different tiers of savings:

Notice that I can retire by age 33 if I live on 30% of my earnings. Take a moment to think about that. Most people can’t imagine retiring before 60, 50, or even 40. If I chose to live a different lifestyle, I could be retiring in my mid-30s!

This presents a very interesting question for me and working professionals alike. Are the things I spend money on worth the extra years of work they implicitly require?

The nicer apartment? The vacations to the opposite sides of the world? Eating out frequently, and ordering expensive drinks at trendy bars? Buying designer clothes? Taking lots of taxis? And just generally having an attitude about spending money that promotes convenience over efficiency.

Is it worth it?


One of the things you’ll inevitably find yourself doing when planning for retirement is fudging the numbers a bit. It happens ever so subtly…

  1. I can cut my rent down to $800, right?
  2. What if I retired just a few years later?
  3. I’m smart — I can get better returns than the market index funds.

The problem with this is, we underestimate the pains of sacrifice, which lead us to planning for an overly-optimistic outcome. This is my primary concern in adopting a plan to simplify my lifestyle and become a “Mustachian”.

It’s not that I don’t believe I could save 70% of my income and retire in 10 years. It’s more I’m not sure I believe my quality of life will be as good as it is now. What experiences might I miss out on? What places might I not see? I know money doesn’t buy happiness, but it’s hard for me to believe I could be just as happy on half of what I spend now.

Despite this skepticism, I feel like I owe it to myself to find out. If the Mustachian life really is at parity, who wouldn’t want to retire 20 years early? Given this, I’m going to try out the Mustachian way for one whole year. I’ll start this once my lease runs out in September, a change I’ll need to tighten my spending. At this point, I’ll try and live off just 45% of earnings, a rate that will have me I retire in my late 30s (~39).

Until then, I’m going to try some impactful, but less-extreme means of cost-cutting. I’ll live off just 65% of my earnings, starting this June (I’ve already planned a big trip in May). At this rate, I’d be on track to retire in my late 40s (~49), a respectable time by any calculation.

I’ll report back on how things are going for me once I start.