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This Guy Makes $30,000 a Year, and He’s Planning to Retire at 40. Here’s How

August 3, 2015
by Susan Shain
Senior Writer
early retirement

Ever wished you could retire early? Of course you have. But you probably assumed it was a pipe dream — one reserved for millionaires or heiresses.

One millennial is turning that idea on its head. Despite the fact Zack Shapiro only takes home about $30,000 per year, he plans to retire shortly after he turns 40.

“The gist of it is simple,” he writes in The Billfold. “Save half or more of your income, invest in low-cost index funds, and within 10-20 years you’ll be able to live off those investments forever.”

Unlike many other early retirees, Shapiro isn’t earning a huge salary, but he’s making it work: Over the past four years, he’s saved $26,000.

If he continues to save at that rate, he calculates he’ll have enough to retire in 14 years — at the ripe age of 40.

How to Retire Early on a Limited Income

Impressive, right? If you’d like to retire early, here’s how you can follow Shapiro’s lead.

“Starting when you’re young is critical,” he says. “Given enough time, compound interest will take over and do all the heavy lifting.”

“For instance, somebody stashing $1,000 a month for 20 years hits the $500k mark at the same time as somebody saving $3,000 a month who starts 10 years later.” (Assuming, he notes, a stock/bond portfolio with a 6.5% rate of return after inflation.)

That’s great and all — but how is he actually doing it? By doing what you know you should be doing, but aren’t: cutting back on his housing, transportation, food and alcohol costs.

“The difference between an early retiree and the average twentysomething, it turns out, is not much more than a long car commute and a strong brunch habit,” he writes.

“So yes, biking and used cars are essential. As is living with roommates, cooking at home, and drinking anywhere you can imagine that isn’t a bar.”

These ideas are simple, but for most of us, they’re tough to implement. (He’s got me on the brunch habit!)

And though Shapiro doesn’t mention student loans, which are a huge burden for many millennials, we believe anyone can use his strategies.

You may have to sacrifice a little more — and retire a little later — but saving and investing aggressively while you’re young will certainly pay off in the end.

Your Turn: Do you want to retire early? Could you save half your income?

Susan Shain (@Susan_Shain) is a freelance writer and travel blogger who is always seeking adventure on a budget.

by Susan Shain
Contributor for The Penny Hoarder

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