The two step plan to retire in 12 years

Two steps to retire in 12 years

FI/RE stands for Financial Independence/Retire Early. This is an example of what FI/RE can look like.
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Accomplishing this is not easy. And it’s likely not possible if you have a below average income or are still getting out of debt. But debt free, on an average or better US income and extraordinarily frugal living, it’s possible to pull this off!⁣
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The frugal living is the hard part. It’s eating at home. It’s driving a 15 year old car and biking to work to save gas. It’s figuring out how to keep your cell phone bill under $30/month. It’s date nights going for a walk at the park. Splurging is opening a bottle of two buck chuck. Living with roommates or building your own tiny home. Never borrowing money.⁣⁣⁣⁣
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Investing is the easy part. You dump massive amounts of money every month into a target date index fund. The US stock market has returned about 10% per year for the last hundred years. The math on this page assumes a 7% return which accounts for inflation.⁣
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Some of the money will go into an IRA or 401(k). But at this savings rate it’s likely you won’t be able to put it all in a tax advantaged account, so the rest is just invested in a normal brokerage account.⁣⁣⁣⁣
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Once you “retire” you simply start withdrawing 4% per year to live on and allow the remaining amount to grow at 10% indefinitely. The “Trinity Study” shows that with the volatility of the market, 4% is the “safe withdrawal rate” that you can take out annually forever and be very unlikely to go broke.⁣⁣⁣⁣
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As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.⁣

– Jeremy⁣

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