Retiring in 15 years is a challenging but achievable goal, requiring dedicated saving, strategic investments, and a willingness to embrace a minimalist lifestyle. A couple who successfully retired in their 40s shares their 15-year plan, offering valuable insights for those seeking early retirement.
Key Takeaways:
- Debt elimination: Prioritize paying off debt within the first five years to create a solid financial foundation.
- Passive income generation: Explore income streams beyond your 9-to-5 job, such as rental properties or online businesses.
- Invest wisely: Maximize retirement account contributions and invest in a diversified portfolio for long-term growth.
- Embrace minimalism: Adapt to a lifestyle that prioritizes experiences and relationships over material possessions.
- Plan for the unexpected: Be prepared for unforeseen events that could impact your retirement plans.
The 15-Year Plan:
Years 1-5: Debt Elimination
- Focus on aggressive debt repayment using strategies like the snowball or avalanche method.
- Celebrate milestones to maintain motivation and a minimalist lifestyle.
- Redefine your concept of wealth, shifting from excess to appreciating what you already have.
Years 6-10: Creating Income Streams
- Explore passive income sources like rental properties or online businesses.
- Maximize retirement account contributions (401(k), IRA, HSA).
- Invest in a diversified portfolio, primarily index funds, and manage your investments independently.
- Consider sharing your financial knowledge and passion with others to generate income.
Years 11-15: Decoupling from Your Full-Time Job
- Develop habits of maximizing retirement contributions, making them second nature.
- Identify enjoyable ways to earn money beyond your full-time job.
- Determine your ideal retirement lifestyle and financial needs.
- Leave your job when you have sufficient passive income and financial security.
Remember:
- There’s no one-size-fits-all approach to early retirement.
- Adapting to a minimalist lifestyle is crucial for success.
- Unexpected events can impact your plans, so be prepared to adjust accordingly.
Additional Resources:
- SmartAsset: How to Retire In 10 Years with No Savings
- Business Insider: How to Retire in 15 Years, From a Couple Who Retired in Their 40s
By following this 15-year plan and embracing the principles of dedicated saving, smart investing, and a minimalist lifestyle, you can increase your chances of achieving early retirement and living a fulfilling life on your own terms.
Quieting the Early Retirement Naysayers
This is the first and most obvious comment, which almost every reader will have to see after reading these two examples. It’s something like, Todd, but I can’t even make ends meet on 10% of my income. The concept of living on 30% of 2020 is a pitiful joke; your article is complete and useless. %E2%80%9D
(Come on… own up to it. That was what the small voice in your head was trying to tell you. Right?).
Heres the rub. Thats only true for the people making those lifestyle choices. Its not “the truth”.
Many people have made the decision to live extremely frugal lives because they don’t want to work for pay for longer than is absolutely necessary. They would rather forgo the luxuries that some people consider necessities than incur the cost of working for all that stuff.
Its an expression of personal values.
To save costs as much as possible, some people choose to live in motorhomes, travel by bicycle or public transportation, shop exclusively at thrift stores, cultivate their own food, and so forth.
It can be done. Its possible if thats your choice.
On the other hand, surviving on 30% to 40% of your income doesn’t necessarily require extreme frugal living. Try calculating the same amounts using an income of $250K or $300K.
It leaves plenty of spending money for lifestyle today. Although it is undoubtedly much less than you could afford at that income level, it is still your decision.
In actuality, I used this exact formula to build my wealth at first. It totally works.
I just paid off my house, increased my income to an extremely high level, and never indulged in frivolous things. I never needed to use a large portion of my fat income since I carefully considered my values when choosing what to buy (personal development, reading, research, outdoor sports, adventure, and recreation).
The bulk went to savings with little effort or discipline. Presto! Instant financial freedom.
So anyway, it does work, and its do-able. People do it every day.
Other people could challenge the 3% spending limit or the 8% return on investment. My answer is save your breath.
Three percent spending is easy to sustain in perpetuity because a portfolio of high-quality dividend stocks would pay that amount and probably more while expanding to account for inflation and without ever touching principal. Its easily do-able.
Similar to this, the 8% growth observed in this example during the 2010 years is manageable through the use of investment strategies that I teach my students and coaching clients in my courses, such as Expectancy Wealth Planning.
Related: 5 Costly Financial Planning Errors (and What to Avoid) Presented in 5 Free Video Courses
Even if you don’t agree with me on this point, the argument is moot because the compound return only accounts for a small portion of the assets that have accumulated over this brief period of time. The percentage savings rate, not the growth rate, is what matters in the math. It helps, but it isnt critical.
There simply isn’t enough time to have a significant impact. Save your time and energy debating specifics; the savings rate is what matters most.
Observe that I left out Social Security, pensions, and everything else. This is basic, straightforward arithmetic that makes a single, obvious point.
Ive done it, lots of other people have done it, and there are many entire web communities of people trying to walk the talk like the one run by Jacob at EarlyRetirementExtreme.com.
If you are a skeptic, then be honest with yourself and acknowledge that your negativity stems from a lifestyle decision rather than the strategy’s likelihood of success.
Having said that, the truth is that very few people will ever be successful using this strategy. Lets look at why.
Anyone Can Retire Early, But Few Succeed. Here’s Why…
- The easy math that anyone can use to reach financial independence and an early retirement
- Why you don’t need to be an exceptionally skilled investor to retire in ten years or less
- The key action steps you must take today.
Surprisingly, early retirement is not that hard.
It’s not necessary to win the lottery or get a windfall from old Aunt Myrtle.
In a similar vein, retiring early does not require you to become an expert investor or possess any unique skills.
Science that can be repeated and predicted produces effective strategies; luck is not a factor.
Actually, the science behind early retirement is so straightforward that anyone can implement it.
Nevertheless, the problem is that very few people are willing to undertake it.
Let’s begin by using mathematics to demonstrate the theory, then we’ll discuss why so few people succeed and the actions you need to take to make sure the plan will work for you.
Can You Save for Retirement in 15 Years?
FAQ
What is the 15 retirement rule?
Is it possible to retire in 10 years?
Can I retire in 20 years?
What is a realistic age to retire?
Should you retire in 15 years or less?
Turner added that if you’re looking to retire in 15 years or less, that is about the time to you’ll want to change your investments to make them less volatile. 3. Eliminate debt Financial planner Colin Exelby said it is essential to eliminate debt because debt is something that can hinder your net worth for years, even decades.
How to save enough for retirement in 15 years?
To save enough for retirement in 15 years, you need to be a determined saver, and some good fortune doesn’t hurt. For example, the higher your earnings, the easier it is to save a substantial amount. Good health is also helpful, as it allows you to keep working long enough to continue your saving.
Can you retire if you have no savings?
Even With No Savings, a Comfortable Retirement Is Possible Learn how you can go from broke to comfortably retired in 10 years or less, through learning new habits and by taking it one year at a time.
How much money can you make over 45 years of retirement?
That could translate into about $1,222 a month in income over 45 years of retirement. Keep in mind that this is an overly simplified example. It assumes a 7% annualized return for the 15 years before you retire, and then equal monthly withdrawals for the next 45 years.