Grow Your Money

Want to Retire at 30? How One Average Guy is Making It Reality

June 6, 2014
by Heather van der Hoop
Senior Editor
Image: Retirement crown

Ever dream of retiring in your 30s?

Perhaps you’re keen to travel the world, or maybe you want to devote more time to charitable projects or hobbies. What could you do with your time if you didn’t have to work your 9-5 job?

Quitting your job and living off investment income IS possible — even for those of us without lottery winnings or family money.

Don’t believe it? Check out Brandon’s story: he plans to retire at age 32.

Here are a few of the strategies Brandon shares in this Business Insider story.

Figure out how much money you’ll need

Think about what retirement means to you. Where will you live and how will you spend your time? Calculate what this lifestyle will cost you each year. It might not be easy, but these calculations are essential for knowing how much money you’ll need.

Brandon’s goal is to build a portfolio worth at least 25 times his annual expenses. Based on historical data, it’s projected to return an inflation-adjusted 5% per year. If he withdraws less than that 5% for his annual expenses, he’ll never run out of money.

Calculate your basic expenses, and cut everything else

Minimize your expenses by considering your essentials, the things you truly want and need to spend money on, and the bonuses, those things that are nice, but not necessary. The less money you spend, the more you can add to your investment accounts — and the quicker you’ll hit your goal amount.

Brandon estimates that he socks away over 70% of his after-tax income. While that’s a huge target, choose a goal that works for you — and once you hit it, raise it by 10% the next month.

Strategize for tax advantages

Using tax-advantaged retirement accounts saves you lots of money, which boosts your nest egg.

Depending on your employer, you may have a 401(k), 401(a), 403(b) or another account. Max this out, and check into employer matches, which can add up to a 5% bonus to your savings.

Still have cash to invest? Try a Roth IRA.

Your Turn: What do you think? Do you want to retire early, or does Brandon’s plan sound crazy?

by Heather van der Hoop
Contributor for The Penny Hoarder

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