From my calculations, I should be able to retire somewhere between the ages of 29-31. I’ve thought about this a lot, and been questioned about it a lot. To “retire” that young doesn’t sound realistic to a lot of people. Even my friends who are knee-deep in student loans are incredulous at how this could be possible.
In that sense, I do feel a little guilty, because I make what feels like a ton of money, especially for my age group. My friends who count themselves lucky are in the $50-60k group. Meanwhile I’m making almost triple that. I realize that this alone means that retirement is a lot closer for me than most, and for that I am grateful. But there are a few things I’d like to mention with that in mind.
If my earning level sounds crazy to you, keep in mind that you may not have maxed out yours. There’s a lot of money to make out there in a capitalist economy, and I’ve had to fight like a dog for every raise I’ve received. I started out earning $80k (a lot more than many people, but I still negotiated hard), and now less than 3 years later I’m making over $140k. Take the time to familiarize yourself with what you’re worth, then shoot for a little extra. Learn how to negotiate. No one is going to just hand money to you, you need to demand it. Also learn how to recognize when you’re not being appreciated, and when it’s time to walk away. It’s also good to read inspirational material like Sheryl Sandberg’s Lean In.
There are definitely limits to how much you can earn in certain fields, but you can train yourself to recognize opportunity. This can come either in the form of taking on new projects, stepping into manager positions, or obtaining a certification in a different field with more earning potential. As Sheryl puts it, your career isn’t a ladder, it’s a jungle gym. You can move in all different directions, leading to more chances to earn more.
The second factor in retiring early is increasing how much you save. For the people I know making around $50k and even less, there are still ways to stop the cash bleeding. Even if you don’t have a six-figure salary, you can stop shooting yourself in the financial foot by spending money you don’t yet have. Every time you take out a loan for something you want now, you are spending more of your after-tax dollars than what that item actually costs. If instead of paying that loan interest you waited until you had the full amount to purchase what you wanted, you’d still have your luxury item, and more cash to your name (by growing your money, and letting compound interest work for YOU instead of letting it work for the loan issuer). This is part of practicing delayed gratification; which even through its difficulty, humans are the best species at.
The other thing besides such blatant financial mistakes such as getting tangled in loans, car leases with terrible terms, and indulging in excessive luxury purchases (aka: lifestyle inflation), is that you need to figure out what your means are and live within them. Even better yet, live far below them, by practicing frugality. A lot of people shudder at that word, or feel nauseous when I tell that that I’m living in an expensive city on only $20k per year. But the truth is, it sounds way more extreme than it is. Many a financial blogger has touted this same line before, but I’m willing to say it again, since I’ve even surprised myself with how feasible it is. What it really comes down to, is prioritizing what matters to you.
For example, if you feel that living on less would really be that terrible, that your current lifestyle is fully satisfying, and that all your purchases are necessary to your happiness, by all means, continue doing exactly what you’re doing! Conversely you are saying that financial independence doesn’t appeal all that much to you, and you’re fine working until social security kicks in, or even later. And if that’s true, that’s totally fine. You do you. Who am I to tell you to stop living the life that makes you happy?
But assuming you’re reading this blog for a reason, all I’m doing here is imploring you to have an open mind. Maybe there’s a different way than what you’re currently doing. Maybe you’re not really all that happy. Maybe your life is lacking something, and you want to find out what it is. Let me tell you one last thing: having money in the bank is a great feeling. And it’s more than just being miserly for those about to accuse me of that. It’s freedom. And by not spending it, I hold onto that freedom. If a time comes when I need to dip into the bank, I don’t have to stress that it’s my last dollar there. I’m not sure what luxury exists that I’d be willing to sacrifice that for. If you can think of one, then more power to you. But like I said, this is all a game of prioritization.
Are you earning enough? Saving enough? Let me know in the comments below.