The Shockingly Simple Math Behind Early Retirement, from Mr. Money Mustache
Starting from assumption of zero assets, starting today (+31)
Savings Rate - Years 'til Retirement
5% - 66 years (age 97)
6% my current plus 6% matching (matching doesn't count, it's bonus)
10% - 51 years (age 82)
15% - 43 years (age 74) Goal for 2015
20% - 37 years (age 68) Goal for 2016
25% - 32 years (age 63) Goal for 2017
30% - 28 years (age 59)
35% - 25 years (age 56)
40% - 22 years (age 53)
45% - 19 years (age 50)
50% - 17 years (age 48 - based on 5% pay raise every year and keeping current spending, I could afford to do 50% savings at age 43)
Now, I'm not starting at 0, but I might as well look at it that way if really want to kick things up a notch!
Spending Less is more important than earning more.
Oh man how I wish I knew this so many years ago when I was making good money and living exactly at my means. I don't have that many things I can reduce spending on, namely:
- Cell phone (planning to switch to Republic Wireless next month)
- Food (set a budget of $400, typically have been spending closer to $600-700/mo)
- Shopping (I don't always do a lot of shopping, some months more than others - looking at more DIY and also just a minimalism approach. I don't need more stuff!)
- Avoid Debt
- Live on less than you earn
- Invest the surplus
It's that simple.