When you picture a retiree, they most likely have white hair, really high-waisted pants, and glasses that are thicker than Coke bottles, right? Well, let me tell you that retirement doesn’t depend on age, it depends on your cash reserves and your income (and often, your ability to pay down your mortgage – P.S. a mortgage calculator is your friend in these circumstances). What if you were able to save up nearly $2 million before you reached your fifties? You’d retire wouldn’t you?
One man did exactly that. He saved up a wad of cash and retired at age 30! The big question is, how did he do it?
How to Retire At Only 30 Years of Age
MSN Money conducted an interview with Mr. Money Mustache and came up with the following details.
Fresh out of college. Escaped without an ounce of debt and found a job that paid him $41,000 a year. Housing costs were only $350 a month since he shared the expenses with friends.
He worked like crazy and got a raise – he was now making $57,600 a year, and started contributing to his retirement fund as well (about $5,000 at this point). He still roomed with his buddies and paid out only $350 per month for housing. There was a foolish decision in this year though – he bought a nearly new Ford Probe which set him back $16,000.
Continued to work and stashed some cash. He now had his $5,000 retirement account, a $3,000 employee stock purchase, and $10,000 in cash.
Scored a new job and was now making $77,000/yr. He then saved up some cash and put $47,000 down on a new, $235,000 house. He now had a net worth of $67,000 ($47k in his home equity, $10k in the retirement account, and $10k in cash).
Got married (that’s an extra salary of $44,000/yr.) and got a new job again. He was now making a salary of $83,000. Together, they took some nice vacations, but they also put extra money toward the house mortgage, and they invested in their company retirement programs. Net Worth: $150,000.
Both of them got raises. He was now at $100,000/yr. and she earned her way up to $60,000/yr. They renovated the house, but still put quite a lot of money away into their retirement accounts and savings. Net Worth: $250,000.
Received a company bonus and his wife increased her salary to $65,000. They saved their money wisely again, living very modest lives and saving most of their income. New net worth after year 6: $365,000.
No bonuses or salary increases this year, but their investments were starting to take off. Net Worth: $490,000.
The wife’s income increased to $70,000/yr and Mr. MM actually decided to work only 4 days a week (a taste of early retirement). Income was still good though, and those investments increased in value by $40,000! Net worth: $600,000.
He quit his job and started a small house building company for his “semi-retirement income”. He earned about $50k that first year and his wife earned her regular income, but had to cut the year short on account of their first baby being born! Net Worth: $720,000.
She quit her job too! They decided to both be a stay-at-home mom and dad. They moved into a new house and rented out the old one, and they also picked up another rental property for some additional income (perhaps they got a buy to let mortgage for this one). He still works occasionally, but for the most part, both he and his wife are retired and loving life!
Can you see yourself following this plan? It doesn’t seem too difficult to me!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.