When can you retire at your current income and spending levels?

Saving for retirement boils down to spending less than you make and saving the rest.  Thanks to this chart below from Four Pillar Freedom, you can both visualize and calculate your current path at a glance.

Early Retirement Chart from Fourpillarfreedom.com

Even someone making $100,000 a year, wouldn’t be able to retire for 62 years if they only saved 5% of their salary and spent 95% of it each year.  But, someone making $40,000 a year could retire in 16 years if they only spent half of their salary annually.  This is retiring 46 years sooner than someone that makes six figures!  Lets say you make $4ok and you want to retire as soon as possible.  Besides only spending half of your salary each year ($20k), you need to put away more money to retire sooner.  So, you find another way to make more money!  You get a couple side gigs: doing some odd jobs = $5k/year, consulting = $5k/year, doing some focus groups, product testing, random money making stuff = $5k/year.  You have now increased your annual income to $55,000!  At that income level you can now retire in just over ten years.  Boost your income even more or sell some of your old junk on eBay and Craigslist, save that money, and you’ll have enough retirement income even sooner.

Are you balking at the idea that anyone can live on $20k a year?  You shouldn’t be.  Tons of people actually do it. Take Mr. Money Mustache for example, his family of 3 spends exactly $25k a year… for three people.

Sure you’ll have to make a few sacrifices and it will take some work to make your finances as efficient as possible, but you can end up retiring much sooner than any of your peers.  🙂

You need a purpose: do what you want to do and make money at it.  Don’t do something just because you are trying to make money.  Eventually it will become a job and you will grow to hate it just like the job you have now.

Motivation: It should not be a problem staying motivated when you are doing something that you like.  It is very important to stay motivated.  Many people start out at full speed and become winded.  While this out of the gate excitement is paramount, slow and steady still wins the race.

Progress: Progress almost always trumps perfection contrary to some beliefs.  While quality is very important as you build your business, progress is even more important.  One of my mistakes has been analysis til paralysis.  Keep moving forward, you can always go back and tweak something later.

Listen: One of the biggest mistakes I feel people make is only hearing what they want to hear.  Of course they want to hear how they can make five figures a month.  What they often overlook is exactly how to do this, the guidelines, and knowledge that is available.  People fall into their own routine and while they listen to the experts to a certain extend, they take their own shortcuts and the only thing they are short-cutting is themselves.

I don’t know about you but I was sick and tired of saying “not bad” or “pretty good” or even “good” when people asked me how I was doing. I wanted to say “Great!” or “Living the dream!”. Before this point in my life there once was a time when I would say “Excellent” when people asked how I was doing. That time was when I was in high school. Young, naive, getting good grades, there was a world of opportunity out here and the world was my oyster. So many possibilities abound. But what happens to us? I have met many people that were on a great path, pursuing their dream and then I would see them a few years later working a dead end job. What happened?

Responsibilities, life, and the soul crushing task of going to a job you don’t love everyday. It wasn’t until I hit rock bottom that I realized what was important in life.

Who wants to spend the most able and vital years of their life working to make someone else rich? One of the more recent turning points in my life was at a retirement party for a co-worker. It was actually the first retirement party I had ever been to and more depressing than any funeral I have ever attended! I could not believe the impact this event had on me. Who would think merely attending a retirement party would have any impact whatsoever. This woman had spent the past 40 or so years of her life working for others and now she was free to spend her later years doing whatever she had the budget for. While picking out a card for this coworker, I was drawn to one particular card showing a beautiful tropical beach scene, one of my favorite things in the world. Inside the card read: “Congratulations on your retirement… You are now free to follow your dreams!” Follow your dreams?!?! You’re 65, what the hell have you been doing your whole life? I am a firm believer in better late than never and it is never too late to start, starting today is a lot better than next week, month, or year. You will be that much closer tomorrow than you were today.

You and I both came all this way; and we didn’t just come to watch!

Until Next Time,

-Jeff