How to Really Retire by 30

If early retirement sounds appealing, there are crucial (and well worth it) steps you must take to get there.

Early retirement is officially more popular than ever. It’s also more attainable. This movement is most commonly called FIRE, which stands for “financial independence, retire early.” While retirement is certainly something earned with age, people are building their savings, quitting their jobs, and fully enjoying their financially independent lives younger and younger.

There’s never a wrong time to become more financially independent. Typically, that’s the goal of anyone looking to retire early. So instead of spending your most sprightly years bound to a desk in exchange for scheduled retirement someday, why not free yourself and take back full control of what you do with your money, your time, and the rest of your life?

If you’re ready to join this retirement movement, the first step is to hit the ground running. Here’s how to really retire by 30, according to money gurus and those who’ve pulled it off.

Is Retiring Early Realistic?

Financial experts and those who’ve retired early believe that the average person only needs to put in ten years of work to retire early. But the work put in is not for the faint of heart. Some who’ve retired by 30 said that it all came down to priorities. Instead of going out, they’d stay in. They spent money only when they had to and nine times out of ten, they found a lucrative side hustle and devoted their spare time to it.

Cutting back on spending and increasing income tend to be the winning combination for those who’ve retired around 30. Regardless of the unique way you carve out your own path to early retirement, frugality will be crucial from the start. You’ll also need to start investing, but more on that in a minute.

Before you can change your financial situation in a major way, you have to start by shifting your perspective when it comes to money.

Change How You Think About Money

If you’re ready to reclaim your time, it’s time to change how we look at money and the long-standing system of retirement as a whole. To be clear, early retirement doesn’t necessarily mean retiring completely and never working again. In fact, most who’ve retired by 30 continue working in some capacity, but they put the power back in their hands, often becoming their own boss. In other words, the “FIRE” movement is about working when you want to, not because you have to. And that makes all the difference.

By retiring early, you’ll be able to live a life that you’ve built, stabilized by the things that matter most to you. There is great value in working and early retirement isn’t about hoarding a giant pile of money to lay on. It’s about having enough money to feel financially free and make the most of that freedom with the time you have left.

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Don’t take what the retirement calculator says too seriously. It’ll likely say that to retire by 30, you need around 2 or 3 million. But those who’ve done it say you really only need about half of that. And remember, you don’t have to turn your back on working entirely.

Obviously, retiring early will involve building up your savings and allowing that nest egg time to grow. And the sooner you start putting money back with retirement in mind, the sooner it will go into something you can use. Not to mention, your savings will be able to keep growing once you’ve retired, setting you up for years to come.

Calculate What You’ll Need

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Per U.S. News, J.P. Livingston retired at the age of 28. At the time, he had more than $2.25 million in the bank. Today, Livingston blogs about how he managed to retire before turning 30 on TheMoneyHabit.com. His top suggestion for others hoping to do the same? He recommends early retirees target a safe 3 percent annual withdrawal rate. Some wealth strategists even say that retirees should aim for 2 percent.

Older retirees tend to use the 4% rule. According to Investopedia, the safe withdrawal rate (SWR) method is one key way that retirees are able to calculate how much money they will be able to withdraw from their savings accounts each year without running out of funds in the course of their lives.

This tried and true withdrawal rate method is a notably conservative approach. It involves attempting to balance having enough money in the bank to comfortably live on while not draining retirement savings too quickly. Still, only you can determine how much money you need to retire by the big 3-0. Start by dividing what you’ll spend every year in retirement by your target withdrawal rate. And seek professional assistance to make sure your math adds up.

Reduce Expenses

Starting now, think of every bit of money you don’t spend as money that goes towards early retirement. Depending on your retirement plans, you may not be planning to spend a ton when you’ve quit working. Still, the more you’re able to save starting this minute, the more likely you’ll be able to retire when you’ve envisioned.

For those who are serious about retiring by 30, money experts advise saving 50 percent of your after-tax money, at a minimum. At face value, this may sound like a lot. But those who’ve pulled it off say it’s not only possible but one of the most crucial factors contributing to their early retirement. So put money back more often than not. 

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Decreasing what you’re spending takes practice and it helps to have a sound budget. Look at where you’re money is going and decide where you can start cutting back. That money should then go straight into your retirement fund. Then leave it untouched. Start by looking at the three biggest spending categories to so where it’s possible to cut back (housing, transportation, and food.) Shaving off spending from these areas of your budget will likely have the greatest impact on what you’ll be able to save.

There are all sorts of cost-cutting strategies out there. So shop around and find the one that works best for you, your lifestyle, and your financial situation. For instance, maybe it’s time to start carpooling to work. If you live alone, maybe you should consider living with a roommate to split costs.

No matter how you cut expenses, the key is to make short-term sacrifices with retirement in mind. The sooner you do, the more likely you’ll be able to make what was once an unimaginable dream into a reality. And let’s not forget about the power of compounding, or earning money on your money.

In other words, your money will be working for you. The value of a dollar you’ve saved at 20 is worth more than a dollar you’ve saved at 30. The longer your money remains in the account, the more your money will grow, putting your retirement more within reach.

The Bucket Strategy

The Bucket Strategy remains a popular approach. Basically, you divide your retirement savings into three “buckets.” The first contains cash equal to two years of living expenses. The second consists of five years of living expenses via fixed-income investments. And the third is invested in stocks. The goal is to give yourself the comfort of having a few years of your life as a retiree covered. After all, sometimes the stock market crashes. You can’t rely on the ebb and flow of stocks to fully keep you afloat.

Start by paying yourself first. Those who swear by this method call it their “retirement paycheck.” Through this simple approach, you’ll be able to divvy your money accordingly and set yourself up for a few worry-free years.

Make More Money

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While cutting costs is important, you can only decrease your spending so much and maintain a healthy way of life. And you shouldn’t be so frugal that you are completely miserable. So in addition to spending less, it’s a wise idea to start making more. After all, cutting back what money goes out has its, but earning can potentially be limitless. You just have to be proactive.

One of the reasons retiring by 30 is more popular than ever is because it’s easier than ever to make money on your own terms. Whether you have a special skill, hobby, or closet full of resellable clothes, you’re likely sitting on a gold mine and you don’t even know it. Many who are making fortunes (and retiring early) have made the bulk of their income in entrepreneurial ways.

So instead of relying on someone else to set you up for financial freedom, rely on yourself and what resources you have to get there. Side hustles are a great way to build passive income and ultimately, retire when you want to, rather than when you’ve been told you can.

Read More: Side Hustles: Making Money on the Side Without Breaking a Sweat

Start Investing ASAP

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For anyone looking to retire, investing is an important piece of the money puzzle. And if you’re planning to retire early, it’s time to get serious about investing.

For maximum results, invest in a balanced portfolio that’s geared towards long-term growth. No matter how the stock market fluctuates (and it always does), the money you should put in should be left alone, and it should always be going in more than one place. Don’t let the timeline scare you. Because you have a shorter time to save, you might hesitate to take risks. But when it comes to investing, risk will always be necessary. And if you play your cards right, those risks will prove very well worth it in the near future.

Read More: Stock Basics to Know Before Investing

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