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Retiring at 35 (Without Giving up Everything)

Posted on September 6th, 2022
Retiring at 35

There are certain things that I would never give up. I’m talking about things like a delicious In-N-Out burger or my Netflix subscription. Okay, maybe I would give up Netflix. I mean, something’s gotta be up with the streaming service if it lost almost a million subscribers in the second quarter of 2022.

However, when it comes to financial independence, you often hear people say that you have to give up certain things. And this is especially true if you’re trying to retire early. After all, these are the same people saving something like 97% of their income. Obviously, that means it’s not in their budget to spend money on going out to eat or streaming services.

But what if I told you that you can still retire early, specifically in your 30s, without sacrificing everything? While it may sound too good to be true, it’s definitely possible with a bit of patience and dedication.

Be clear about your future plans — and stick to them

Your first step? Establishing an honest estimate of your needs. But how exactly can you figure out how big your nest egg should be? Well, you need to take into the following three factors.


News flash. We’re living longer.

As of 2022, the average life expectancy in the U.S. is 79.05 years. As such, if you’re planning on retiring at 35, you need to make sure that you can stretch your income for the next 35 years.


The next step is determining the lifestyle you would like to enjoy after leaving your job. To start, ask yourself the following questions after age 30:

  • Would you still be interested in pursuing your hobbies and passions?
  • Are you planning to travel, buy the latest gadgets, take classes, or do you think you’d like to do all these things?
  • How much mortgage or rent are you willing to pay, and what kind of insurance protection do you want?

Obviously, depending on your lifestyle vision, you will need to save a certain amount of money.

The actual numbers.

By the time you retire, Citizens Bank and Fidelity recommend saving 10 to 12 times your annual income. In other words, earning $100,000 per year, you should set aside $1 million to $1.2 million for retirement. However, your withdrawal rate may determine your goal number.

Using your target withdrawal rate as a guide, divide your retirement spending by your yearly retirement spending. For example, if you plan to spend $40,000 after taxes every year and withdraw 2%, you would need $2 million ($40,000/.02) to retire. Obviously, inflation needs to be adjusted annually to the number you come up with.

Creating a pre-retirement and post-retirement budget makes sense. A budget before retirement will keep you on track to reach your savings goal. But, a budget after retirement can help prevent you from running out of cash.

Regarding budgeting, I suggest organizing it by needs and wants. Groceries, for instance, are essential. But, a delicious burger every week is a need. And although it may also be more necessary than desirable, make sure you have an emergency fund.

Make a lifestyle change

Retiring at 35 (Without Giving up Everything)
Retiring at 35 (Without Giving up Everything)

Controlling your expenses is the key to making changes, Steve Adcock, who achieved financial independence by 35 told me. “That means it’s like never going out to eat or very rarely. I think we gave ourselves like 50 bucks a month or something to go out to eat. I love going out to eat,” he adds. “For me, that was like the biggest, I guess, drawback or negative or sacrifice, or however you want to call it, to this whole business of retiring early.”

“But we tracked our expenses so closely, that for a couple of years, we could have told you how much we spent on sweet potatoes, every single year.” Not just that, but everything else as well. It is not necessary to be as detailed as that. “But I would say that’s probably not required for everybody.”

“What is required is knowing where you’re spending money,” Steve continues. Why? “Because it is impossible to cut your expenses if you have no idea where your money’s going anyway.

How to keep your spending in check.

The first step is so difficult, Steve warns. “Because you have to go through your credit card statements and bank statements and just understand where the heck your money is going.” Maybe you pay $150 a month for cable TV that you never watch.

“But if you don’t check that bill and understand where that money is, you have no idea that you’re spending it because it’s all automated,” he says. The money is just taken out of your bank account without you thinking about it. “So those things are tough, it’s a tough habit, a tough pattern to get into.”

“Once you do start making that progress, that snowball begins to build and becomes bigger, bigger and bigger,” says Steve. “And it becomes easier for you to realize what’s an expense that’s legitimate or what might be an expense that you can certainly cut out.”

“For us, the majority of what we spent on, were expenses that we can cut out,” he adds. “We kept our gym membership because that was healthy.” Dining out cost us about $50 a month. Our biggest expenditures were food and our mortgage, of course.

In addition, we didn’t spend much on magazines or cable TV. “We kept the internet for obvious reasons, but we really streamlined for those few years.” This allowed Steve and his wife to save a lot of money.

Maximize your savings

While saving is important, you’re not going to become rich simply by saving money.

“Ordering water instead of soda or beer at restaurants might save you a few hundred dollars over the course of a year,” Steve wrote for CNBC. “But let’s face it: A few hundred bucks isn’t life-changing money,” he adds. “If ordering water were the Easy button to achieving early retirement, we’d all be retired and sipping margaritas in paradise.”

The concept of compound interest doesn’t just appear out of nowhere, he adds.

“Early retirement is enabled by household wealth. How much money you have, rather than how much you save.”

“It is true that saving money does not lead to wealth,” states Steve. “That said, there’s nothing wrong with saving some cash by changing up the spending habits you developed over the years.” It’s great to save money. And, it can help.

“It’s just not the secret sauce to early retirement.”

“Wealth comes from a very different source: Investments,” Steve explains. But, how exactly can you maximize your savings? Give the following a try:

  • Participate in your employer’s 401(k) match
  • Contribute as much as you can to your 401(k)
  • Consider money market and CD savings accounts that offer high-interest rates
  • Don’t miss out on cashback opportunities
  • Streamline your savings with automation
  • While you are still employed, try to negotiate a raise
  • Utilize credits and deductions to reduce your taxable income
  • Increase your savings rate on a regular basis
  • Save every dollar you earn from your second job or passive income

Instead of beating the market, participate in it

Speaking of investing, most FIRE followers opt for index funds over riskier, more volatile investments such as stocks or cryptocurrencies, notes CNBC. Generally, index funds are baskets of different stocks that aim to mimic the performance of a major stock index, such as the S&P 500. And, if you weren’t aware, is based on the market capitalization of 500 major U.S. companies.

“The best advice I have is the conventional wisdom in the financial independence community is that it’s better to participate in the market than to try to beat it,” says Ed Ditto of Early Retirement Dude. “And one of the best ways to do that is to buy low-cost index funds. You’ll find that the Vanguard S&P 500 ETF is the darling of the FIRE set.”

With index funds, you have access to stocks from a variety of industries. Because of this, investing in an index fund, which gives you a lot of diversification, puts you at less risk. The value of stocks from one industry might fall, but gains in another might offset it.

In the 50-year period from 1970 to 2020, the S&P 500 has averaged 10.83% annual returns, according to Investopedia. The returns vary from year to year, depending on whether it’s a bull or bear market. It’s also not guaranteed that past performance will repeat itself.

How to play the investing game.

A trading platform like Vanguard, E*TRADE, or TD Ameritrade is an excellent way to get started investing. Unlike other trading platforms, these platforms don’t charge commissions for executing trades.

Fees are charged by these platforms for the money you invest in funds, known as expense ratios. A passively managed fund has lower expense ratios than an actively managed one. In most cases, the expense ratio is expressed as a percentage. For every $1,000 you invest in a fund that charges a 0.15% expense ratio, you’ll pay $1.50.

A robo-advisor, like Wealthfront, Betterment, or Charles Schwab, might be a smart place to start when building your investment portfolio. The goal of robot advisors is to get an understanding of your finances and future goals and then invest accordingly.

Account fees are typically charged on top of fund expense ratios by robo-advisors. Don’t ignore the fine print when investing, so you know how much you’re paying.

In addition to index funds, some FIRE followers invest in other asset classes that require a greater level of experience and knowledge.

“As time goes along, and as your portfolio starts to build, you owe it to yourself to take new risks,” Kiersten Saunders of rich & REGULAR. “I think what people find when they get online is they start to see all of the hype and the buzz around crypto, NFTs, real estate, these types of asset classes that are either very risky or have high barriers to entry.”

Go where it’s cheap

I’m gonna be brutally honest. Unless you’ve inherited an insane amount of money or won the lottery, it’s going to be impossible to retire early and live in an expensive city. I’m talking about San Fran, NYC, Honolulu, or D.C. Instead, you’re probably gonna have to relocate.

For example, Steve moved out to the Arizona desert. People who retired early, such as Kristy Shen and Bryce Leung, also relocated to a more affordable location.

“We were spending nearly $3,000 a month on rent, and that was considered a good deal,” Scott Rieckens, who lived in Coronado, Calif., a beach resort across the bay from San Diego, told the New York Times. “We made something like $160,000 between the two of us, but we didn’t have a whole lot left over.”

Rieckens became enthused after listening to an interview with Pete Adeney, aka Mr. Money Mustache, who The New Yorker called “the Frugal Guru” (he retired at 30). It was time for Reickens and his wife to ditch their leased BMW and stop eating out several nights a week.

It’s all about “arbitrage”

In spite of those lifestyle cuts, the couple couldn’t substantially increase their savings rate. Why? Because they have to move to a cheaper neighborhood. FYI, this is a deleveraging technique known as “arbitrage.”

According to Adeney, the idea is “to reap the high salary” in a place such as Silicon Valley, “then take that nest egg out to any of the thousands of nice, affordable cities and towns we have in this country and begin the second stage of life on your own terms.”

“I never paid attention to the finances. I thought it will all work out,” said Rieckens. “After I had a baby, I had stress around how I could spend more time with her. I was almost a slave to my job because of the way we were living.”

After moving to Bend, Ore., in 2017, Rieckens and his family were able to buy a house since the state sales tax does not exist there. While Mr. Rieckens often rides his bike around town, gas for their used Honda CRV with 186,000 miles is a dollar-per-gallon cheaper than in San Diego.

Savings require enough income

Some people are able to retire early without making as many sacrifices as others. For example, someone might find great satisfaction riding a bike instead of driving a car to save money. But, a trade-off like this might not be possible for someone else.

It’s a given that you have to earn enough money to retire early. As such, make sure your income covers your basics, and then save and invest a chunk of it for retirement. Everyone can’t do this. Having frugal habits won’t make up for not earning enough money to save aggressively for early retirement.

If you aren’t earning enough to retire comfortably, then find ways to boost your income beyond your typical 9-to-5 job. According to the IRS, this type of work is called “material participation,” which means any work you do on a “regular, continuous and substantial basis.”

Material participation is determined by several factors, such as working over 500 hours on a project or job. In retirement, however, you would like to focus on something else. The only option left is passive income generation.

In terms of both asset allocation and income generated, make sure your portfolio’s fixed-income portion is adequate. Assets that generate passive income include:

  • Annuity plans
  • Dividends from securities
  • P2P lending
  • Rental Properties

Passive income can even come from side hustles like blogging or self-publishing an ebook.

Remember, personal finance is personal.

Retiring at 35 (Without Giving up Everything)
Retiring at 35 (Without Giving up Everything)

Although I like some of the Fire Movement’s ideas, I think people need to realize that personal finance is, well, personal. In other words, do whatever works best for you. And, for some, that doesn’t mean saving 70% of your income.

It’s more important for me to know if you think saving 10%, 5%, and getting that free match is enough. I’ve seen people nearing retirement and having the biggest regret of wishing they had started earlier or saved more.

It’s something I’ve heard countless times. Perhaps it isn’t 70%. But it must be more than five or 10% unless you just love the work and want to work until you’re 65.

There is a possibility that you have a pension, but it is less likely. After all, today, fewer than one-third (31%) of Americans retire with defined benefit pensions. And, putting all your trust in social security is a bad idea.

In short, make it happen for yourself by taking control.

Commit to your retirement plan but enjoy life too.

“You can’t live your life in a way where it feels like a sacrifice, because that’s just not going to work,” says Steve. “Nobody likes to live that way.”

“And what I like to do, is I like to encourage people to think of money as a representation of time,” he adds. “And this is especially true if you have a goal of early retirement.”

Suppose you want to retire at 40 or 50. Are you willing to spend that much time on that new car? “If you want a $50,000 car, depending on how much you make in salary, is that worth working another year, working in another two years, so you can afford to buy that car?” Steve asks. “If you think that it’s worth it, if you do, if you’re okay with working longer in order to fund your lifestyle, that’s fine.”

That’s perfectly fine. It’s just a matter of choosing.

“And that’s effectively how we got up to 70%, “ he says. “Because for me, I wanted to retire early, so bad that nothing, nothing was worth the extra time, for the most part.” Except for the gym and occasional restaurant trips. For Steve, there were exceptions, such as the gym or occasional restaurant trip. “And I think we had Netflix that we were paying for at the time.” The big expenses, however, weren’t worth it for Steve and his wife. “It wasn’t worth working longer.”

Frequently Asked Questions

1. Is it possible for you to retire early?

This question can be difficult to answer if you haven’t decided where you’ll live or how you’ll spend your retirement. The ideal situation is for you to either replace your current income or have sufficient savings to cover your current lifestyle or essentials.

If you have other retirement goals, your current budget may need to be adjusted. For example, maybe you never considered moving. But, to reach your goal of retiring early, you might have to move.

You should also consider all of the “what if” scenarios possible. After determining your long-term spending goals, you’ll be able to determine how many additional working years and savings could affect them.

2. How much money do I need to retire early?

There are a number of factors that influence an individual’s retirement income. Retirement age, monthly expenses, Social Security benefits, and life expectancy are taken into account. ‌To ensure a comfortable retirement, you should consult a financial advisor.

3. How is Social Security impacted by early retirement?

“Workers planning for their retirement should be aware that retirement benefits depend on age at retirement,” notes the Social Security Administration. “If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent.”

“Starting to receive benefits after normal retirement age may result in larger benefits,” explains the SSA. “With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.”

For each month before the normal retirement age, you lose 5/9 of one percent of your benefit. When the number of months over 36 is exceeded, the benefit is reduced by 5/12 of one percent per month.

“For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent,” adds the SSA. “This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent.”

4. When can I make penalty-free 401(k) withdrawals?

You can usually withdraw funds from your 401(k) after age 59 1/2 without incurring penalties. You are required to take the required minimum distributions by the time you turn 72 (or 70 1/2 if you were born before July 1, 1949). In the event of later retirement, you must take the required minimum distributions by April of the following year.

5. What are the drawbacks to early retirement?

Early retirement carries a lot of financial risks unless you have plenty of savings or multiple income sources. In fact, for some, early retirement can bankrupt your dreams before of the following:

  • Retirement often lasts longer than planned.
  • There may be a temptation to take social security benefits before the age of 70 when benefits peak.
  • You’re missing out on the power of compounding interest.
  • You’ll be in medical coverage limbo without a plan from an employer. Or, until you’re eligible for Medicare at 65.
  • Did you know that the average American has $90,460 in debt? Credit cards, personal loans, mortgages, and student loans all fall under consumer debt making early retirement a challenge.
  • You have less flexibility without a recurring income. And, it may be difficult to reenter the workforce.
  • Your savings may be insufficient. Plus, you may succumb to lifestyle creep or deal with market downturns.
  • Retirement comes with feelings or boredom and isolation.
Jeff Rose

Jeff Rose

Jeff Rose is an Iraqi Combat Veteran and founder of Good Financial Cents. He teaches people wealth hacking. He is a frequent on CNBC, Forbes, Nasdaq and many other publications. He is author of the book "Soldier of Finance: Take Charge of Your Money and Invest in your Future" where he teaches how he escaped from $20,000 in credit card debt to a life of wealth.

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