How I Plan to Retire in 10 Years (and how you can, too)!

I joined the FIRE (financial independence, retire early) community several years ago, and I remember my initial excitement fading when the paths presented didn’t seem attainable for me — a relatively high-maintenance single girl with a psychology degree. There are a good number of early retirement bloggers, and many of them had extremely high salaries as investment bankers or engineers or were extremely frugal, making the road to early retirement feel as if it was only feasible for a select few of us.

Still, I was determined to make it work for me, without giving up my love of lattes, manicures or resorting to drastic frugality measures like eating beans and rice for every meal, or becoming an extreme couponer. I was thrilled to find that basic math supports this goal, even if you make an average salary. Even if you’re in a stereotypically low-paying white-collar career, like a teacher. And there are no gimmicks required — no time-consuming real estate rehabbing and flipping, no trading, no scammy get rich quick schemes — just discipline and patience. If you begin planning at 25, even at a modest salary with student loan debt, retirement before 40 is not an extreme, or even unrealistic goal.

Why?

Because your savings rate is more important than your income.

Here’s an example of how two married teachers can retire in 15 years. First, a few assumptions:

They both make $40,000/yr.

There are no raises, promotions, or extra income.

They both have average student loan debt of $20,000.

They invest in pre-retirement brokerage accounts, and invest primarily in index funds.

After taxes, they’ll bring home $5,000/month.

They’ll adopt a 50% post-tax savings rate, allocating $2,500/month to living and $2,500/month to investing

Below is a sample budget, assuming a modest lifestyle. Now, we can make a lot of adjustments to this (lower than average rent, a paid-off car using the “How to Never Pay for a Car Ever Again in Life” Method, higher rent but walkability to work, no loans, etc.) but the core idea is that if you don’t saddle yourself with a bunch of debt through auto loans and credit, your monthly bills become substantially lower. Less bills = greater cash flow to invest regularly. I personally don’t even have 5 monthly bills (I currently have 2).

• $1,000 to rent
• $400 to loans
• $200 to utilities and internet
• $200 to transit monthly passes
• $300 to groceries
• $400 to entertainment

After 15 years of steady investing, with 9.7% annual returns, they’d have: $1,021,000. Assuming a 4% withdrawal rate, they’d have enough to generate $40,800 annually, or $3,400 monthly (more than they had been living on) without ever having to touch the principal.

This isn’t even impressive. At Happy, Healthy and Almost Wealthy, I detail how they can maximize their investments by maxing out tax-advantaged accounts and strategies, increase their income to build a much larger nest, cut the time needed to save by retiring in low-cost areas, and increase their fun spending by ruthlessly cutting at living expenses.

In fact, I’ve already written about how you can use remote work to retire even earlier — you can download “Work from Anywhere” to get three sustainable strategies to take your work on the road so you can 10x your savings.

by Elle from www.happyhealthyandalmostwealthy.com