Start at 20, Retire by 30 (How to do it)

Isaiah McCall

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Why Retiring in Your 30s is Possible

Retirement isn’t defined by age. It’s defined by spending (much) less and investing more. It’s that easy, and that hard.

According to the Financial Independence, Retire Early (FIRE) movement, starting with a net worth of zero, you can retire in less than 10 years if you save and invest 70 to 90% of your annual income.

Stop and read that sentence again.

This strategy assumes two things: that you make 6 to 10% returns on the market each year (which is on the low-end of ROIs) and the second is that you live off of the “4% safe withdrawal rate” after retirement. This means you’d live off of an annual 4% withdrawal from your portfolio for expenses without chipping away at your principal investment.

The 🔑 to Early Retirement

FIRE recommends investing 30X of your annual expenses before retiring. That might sound like a lot, but in reality, the key to early retirement is spending much less than you do now.

For instance —

If your annual expenses are $20,000 you’d need to save $600,000 to retire off of passive investments. However, if your annual expenses are $35,000 you’d need to save more than one million dollars to retire off those same investments.

Because the average American spends around $60,000 per year we’re expected to retire in our 50s, not our 30s. So the mere act of working towards the FIRE movement — and trying to retire in your 30s — will add years, maybe decades to your financial freedom. Read that sentence again, too.

And these are the details of how you would go about doing all this—

This is The Number You Want to Aim For

Some things are worth hanging to a wall or pinning on your bulletin board. For us that will be our “crossover” point, or the amount needed to live off of investments alone.

Once you reach your crossover point you will make as much money sleeping as you need to pay your bills each month. You won’t be Bruce Wayne, but you’ll have enough passive income to never work another day in your life.

To find this number you will do this simple formula: Annual Expenses X 30

This is the number you want to save and invest towards to reach early retirement. Interestingly enough, every $100 you spend per month is an additional $36,000 you need to add towards your final retirement fund.

To track all of this consider using “budget apps” like Mint, PocketGuard or You Need a Budget (YNAB). The last of which requires you to make a plan for every dollar you earn.

Simple Ways to 100X Your Savings

You do not want to save as much as the average American. In fact, being better than average is not enough either.

Today, a middle-class family with 60k take-home pay who saves 10% of their income ($6k) is “better than average.” They, however, will retire after 50 years of painstaking work. The breadwinner of this family isn’t Bruce Wayne; they’re Bob the Builder.

Most Americans on average have $5,000 or less in savings, while nearly half have $1,000 or less.

It doesn’t matter if this is you. It was me only a year ago and now my net worth is halfway towards my first $100,000. It doesn’t matter where you are today but where you are tomorrow. Aim to be 1% better every single day.

These bulletproof savings tips will ensure that happens —

Beat Inflation: The inflation rate is around 1 to 2% but is expected to get much, MUCH worse. This means if your money is sitting around in a traditional savings account you are losing money every day. So, start investing in the stock market, precious metals, cryptocurrency, or at the most basic level, into your own financial literacy.

Learn How to Cook: I’m not very good at cooking. So I boiled my meals down to peanut butter and jellies, oatmeal, fruit, protein shakes, and dollar bags of frozen vegetables. I know — Gordan Ramsey would skin me alive. But man cannot live on bread alone as Christ once said. We need dolla dolla bills too (though he didn’t add that bit). And if you think my meals are too bland, you should check out these $5 per day meal plans from Reddit.

Reimagine Transportation: Donating my car was the best decision I made in 2021. On average Americans spend close to $10,000 a year on their cars, gas, and other public transportation. Instead, I bought a longboard for $200 and skate to my destinations. Fortunately, I also live in an area with a $2 monorail as well. However, in your case, invest in a bike, use public transportation or pray that work from home continues.

Reimagine Healthcare: When I first quit my 9 to 5 I debated between abandoning healthcare entirely or enrolling in Obamacare. Speaking as someone in great shape, I chose the former, as it's much cheaper. However, choosing to ignore health insurance may result in a fine from your state government. Thankfully there is a loophole. If you donate $78 per month to Christian Healthcare Ministries you get decent healthcare at the lowest cost I could find; moreover, it may also beat out your state’s annual penalties.

High-Interest Loans: The faster you pay off these loans the more you save. It’s as simple as that. Anything with interest that exceeds 10% is a priority.

Realize the Trap in Sales: I love a good sale. Frugality pumps through my veins. But if your money, instead of feeling pressured to buy into a sale, you’ll save all of 100% of it from buying nothing at all. Constant spending is a societal pressure; one that you need not subscribe to.

The Ultimate Guide to Investing Conservatively

The FIRE movement is not concerned with beating the market. This group of people aren’t stock traders or professional investors. All they want is a guaranteed 5 to 7% ROI.

So, they invest in index funds like the Vanguard S&P 500 (VOO), SPDR S&P 500 ETF Trust (SPY) or ARK Innovation (ARKK)

These two index funds give you exposure to the 500 largest publicly traded companies in the world. Furthermore, they are much more lucrative than keeping your money trapped in a savings account.

Pretty please with extra cherries on top — don’t keep all your money in a savings or checking account.

Actionable steps

First, 401(k) matching is an excellent place to start. Invest up to your employer match and nothing more. This enables you free money from your job that will compound over time.

Second, HSAs are a much better investment than 401(ks), however, as they are triple-tax advantaged. This means you receive pre-tax advantages, tax-free interest, and tax-free payments for qualified medical expenses. It’s a better triple threat than Steph Curry.

Third, Invest in a tax-advantaged retirement account like a Roth IRA. This benefit can be accessed by anyone outside of a 9 to 5 job. Check out NerdWallet’s best 14 Roth IRAs to see which is a good fit for you.

Fourth, In combination with all these methods aim to save 15% of your pre-tax income. This is Fidelity’s rule of thumb as it indicates how much people generally spend in retirement.

The Ultimate Guide to Investing Aggressively

This is the part where people in the comments get mad at me or call me a cryptocurrency shill. Oh well. What can you do — these strategies work for me and they may work for you. That’s why I share them.

First, Research, study and educate yourself as much as possible about the companies or cryptocurrencies you want to invest in. If you chase hype trends like Dogecoin (DOGE) or GameStop (GME) you may make a lot of money, or you might lose it all and have to start over. Never invest emotionally (despite what Twitter might tell you),

Second, Invest in growth stocks like Tesla (TSLA), Coinbase (COIN), Scotts Miracle-Gro (SMG) or Roblox (RBLX), just to name a few. All of which come with more risk but can deliver much higher returns than index funds. Do your own research on what growth stocks to invest in.

Third, Invest in cryptocurrencies like Bitcoin or Ethereum which deliver higher returns than most growth stocks. Cryptocurrency is the future — as shown by China who created their own — and Bitcoin and Ethereum will always be major players.

Fourth, Learn about decentralized finance (DeFi) which offers crypto-based savings accounts that have 7 to 90% APY savings accounts. These accounts, however, aren’t FDIC insured so it’s important to choose them wisely.

You should mix both aggressive and conservative strategies into your life unless you’ve decided against one over the other. I personally use both.

The Takeaway

The other day one of my friends asked about the meaning of life.

The answer is simple: it’s the path you navigate to find it; not the answer itself. The same can be said about working towards retirement.

Simply working towards any of these goals whether it’s eating out less, investing more in retirement accounts, learning about cryptocurrency, or saving much more than you do now will cut years off your retirement age and teach you invaluable lessons about money.

I implore you, sacrifice now and your future self will thank you later.

Ever since I was a child it was my dream to become a financial advisor. Unfortunately, it never came true. Therefore I am not a financial advisor and you should do your own research and not just listen to random people on the internet. Nothing contained in this publication should be construed as investment advice.

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USA Today Reporter and Ultramarathoner. I write about Cryptocurrency, Fitness Hacks, and Greek Philosophy. Also a diehard Trekkie | mccallisaiah@gmail.com

Jersey City, NJ
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