How I Retired At 30
Can you imagine retiring in your 30s? One man in America did just that. Known to the outside world as ‘Mr Money Moustache’ (he wants to keep himself anonymous), he didn’t inherit a massive fortune, land a lottery win or work himself almost to death amassing a fortune in Wall St. Here’s how he managed it, and why he thinks you could too…
How he did it: So what’s his secret? Essentially, his astonishing financial freedom has not been achieved by making shed loads of money, but by spending much, MUCH less. Then he has invested what he saved, until he had sufficient investments to say ‘so long’ to his employer and live a similarly frugal life on the returns. “My wife and I studied engineering and computer science in Canada, then worked in standard tech-industry cubicle jobs in various locations throughout the late ’90s and early 2000s,” he explains. “Then we retired from real work way back in 2005 in order to start a family. This was achieved not through luck or amazing skill, but simply by living a lifestyle about 50% less expensive than most of our peers and investing the surplus”.
“As it turns out, spending much less than you earn is the way to get rich,” says the moustached one. “The ONLY way. And the effects are surprising; if you can save 50% of your take-home pay starting at age 20, you’ll be wealthy enough to retire by age 37. If you already have some assets now, you’re even closer than that. If you can save 75%, your working career is only seven years.” Of course, this would take a serious change in perspective. Super-early retirement is unlikely to be an option if you hanker after fast cars, big holidays and luxury designer products. “The bottom line is this: by focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing middle class of the United States today (and most of the other rich countries). Happiness comes from many sources, but none of these sources involve car or purse upgrades.”
How much money do you need?
Okay, all good, but how do you know when you have enough money to buy financial security, even if you’re prepared to live a far more frugal lifestyle? “If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever,” declares Mr Money Moustache. Via his blog he has written at length about the safest way to set limits on annual withdrawals from this fund, and what returns someone can realistically expect to make over their 60 year retirement. But for those just starting out his message is simple: “Don’t worry about the details – just do the saving for now, and watch as your lifestyle transforms and your worries about safety melt away.”
But what does he DO all day?
Early retirement is all well and good, but what does one DO all day? Without paid work or high levels of disposable income, how do you fill your time? After all, it’s not as if you are willing or able to dip into your savings and splurge on the latest gadgets, gizmos and games. Well, it turns out that this very early retiree fills his days with something that looks an awful lot like work… “I get accused of not being retired on the grounds of either carpentry or writing. But there’s a reason behind all of this work-like activity, and it’s not money… My best days are the ones where I accomplish something truly difficult, preferably in both mental and physical realms. And my worst days are those that I just spend sitting around. So I’ve learned that work is an incredibly powerful source of happiness. The key is that it must be creative, social and engaging work that brings you towards a purpose you believe in.
I have written about this guy before but it is worth repeating.
30 maybe unrealistic but 50? Contact me now…………