Securing an Early Retirement: The Blogosphere’s 7 Best Lessons

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At a time when many struggle to save enough for a comfortable retirement, there are a few people who can not only retire comfortably but can do so earlier than the expected 65 years old. As part of my job at Personal Capital, I have been lucky to get to know today’s top personal finance bloggers. The expertise and success that the most sought after ones have achieved has allowed them to do what some have deemed impossible – retire in their 30s. Not surprisingly, the rest of us regular folks follow their journeys to be inspired and learn. How did they do it?

Here are some of the most important lessons I’ve learned from a few of the top personal finance bloggers on how to fast track your retirement. (Many of them I know personally. So while they often have colorful pen names, I can assure you their stories are very real.)

1. Make a Plan

Justin from Root of Good retired at 33, and his wife retired just a few years later. They’ve got three “generally wonderful” children. What Justin hits home in his writing is the need to make a plan.

“We made an early retirement plan right after I started my post-college job. We had all this money coming in the door. Way more money than we had before. I knew back then that this was a powerful force that, if harnessed, could lead to something big one day,” he writes. He also encourages that plan to be flexible and to embrace the unknown: “There is always uncertainty. The best you can do is plan for it, and understand that flexibility will get you a lot further in uncertain times than rigidly holding to a plan.”

2. You’ve Got to Save A Lot

Sam Dogen’s pen name is the fearsome Financial Samurai. Despite living in San Francisco, the country’s most expensive city, the now-retired blogger managed to save 50-75% of his income every year. Working in finance made it possible for him to save so much, but he also didn’t give in to the temptation to spend as lavishly as his colleagues.

As he wrote, “If you don’t find it painful saving money, you’re not saving enough. If you’re not sweating at the gym and your muscles don’t feel sore the next day, you might as well go eat a double cheeseburger with a milkshake and fries because you’re just wasting your time. The same goes with saving.”

His directness and charts of ideal savings levels by age often make me feel far behind where I could/ should be. And that’s the point. I can always be saving more.

3. Start While You’re Young

Joe Udo retired from his engineering career to become a stay at home dad/blogger at age 38. He started saving aggressively early on. He outlines the “two huge benefits” of saving a huge chunk of your income: (a) you live on less because you don’t have as much disposable income and (b) you can turbo-charge your investments because they have a long time to compound. As he writes, “Every experienced investor wishes they invested more when they were young. Time is on your side when you’re young.”

One of the most popular personal finance bloggers, whose frugal lifestyle puts many of the other bloggers to shame, is Mr. Money Mustache. He advocates saving aggressively and investing in the markets, writing, “As soon as you start saving and investing your money, it starts earning money all by itself. Then the earnings on those earnings start earning their own money. It can quickly become a runaway exponential snowball of income.” So get to saving, kids!

4. Give Up As Little As Legally Possible in Taxes

I’ve spent some time with Brandon, the man behind the cleverly named Mad Fientist blog. Earlier this year, he retired early – at the age of only 34. Brandon saved a lot to reach that goal and the low cost-of-living in Vermont certainly didn’t hurt. He was smart about maximizing his use of tax-preferential savings vehicles. He’s keeping a lot more money in his pocket and away from Uncle Sam than the rest of us are – and he’s doing it legally.

Some of the things he discusses are using a Traditional IRA over a Roth IRA because you can always convert the Traditional IRA to a Roth IRA once you’ve reached financial independence, when it will be tax-free. He also shares that unassuming but powerful Health Savings Accounts are “the Clark Kent of retirement accounts” for those with high-deductible health insurance plans.

5. Passive Investing Is The Best

Like the rest of the bloggers I work with, Financial Samurai subscribes to a passive investing strategy for two reasons. First, you can’t outsmart the market. No one knows what the future will bring. And even the managers of active funds, who are paid to beat the market, often underperform. Second, passive investing is a whole lot cheaper. The fees brokers charge to “manage” your money for you can cost you hundreds of thousands of lost retirement funds, which means retiring a whole lot later.

6. You Need 25x Your Annual Expenses Saved

“You can retire safely when you have 25x your annual expenses invested in income generating assets,” writes J. Money, one of the more colorful and well-known personal finance bloggers. His mohawk is his most iconic trait. His blog, Budgets Are Sexy, advocates that you can safely assume a 4% withdrawal rate annually from your investments to live on.

So, if you need $40,000 to live on annually, you’d need $1,000,000 saved to be extremely confident you won’t run out of money. Increase your expenses to $50,000, and you’d want $1,250,000 before retiring. Want to spend more than that in retirement? Get ready to save a lot more.

Mr. and Mrs. Frugalwoods (aptly named because they are frugal and live in the woods) are financially independent and share their story of their move to 66 acres in central Vermont. Their lifestyle is picture perfect. They grow their own veggies! Like rhubarb! And similar to other personal finance bloggers, they ascribe to the 25x rule. But they recognize that it’s a very conservative metric. If the markets have a rough patch, you can always adjust your spending, eat into your principal, or make some extra money. Though they’ve given up their corporate urban jobs, they still make some side income from blogging and other pursuits. “A 4% Safe Withdrawal Rate doesn’t take into account any sort of side income.”

7. Once You’ve Got Enough, Stop Trying For More

One of the key tenets of the financial independence movement is that if you can retire, you should retire. Tell your boss you quit, leave the office, never look back, and go pursue your passions. Why would you waste the most precious asset you have? Time.

Jeremy and Winnie from Go Curry Cracker invested enough of their savings from their corporate jobs to quit the rat race and travel around the world. Their story is inspiring and fun to follow. Here’s Jeremy’s perspective on time and money: “Once you have enough saved and invested to fund your desired lifestyle, the relationship between time and money is completely transformed. More money changes life very little at that point, while time and freedom change everything. Economic concepts like opportunity cost become little more than philosophical musings, with the same price tag.”

Not all of us will be able to retire in our 30s. I’ve got many more years left before I’m ready to join a country club and play golf in the middle of the day, but these tips are going to get me there more quickly. If you want to meet these bloggers, join us at FinCon 2016 this week (Sept. 21-24) in San Diego. You’ll be inspired like I am.

This story originally appeared on the Huffington Post.

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Michael Ruderman

Michael Ruderman

Michael is Director of Marketing at Personal Capital. He oversees cross-functional growth and engagement projects for over 1 million Personal Capital users. He is also a regular contributor to the Huffington Post and holds an MBA from Stanford.

6 comments

  1. Ann H.

    Awesome tips! I hope more people understand the power they have in everyday choices and how easy it can be to shape the life they want.

    Reply
  2. Physician on FIRE

    I’m a FIRE blogger, twisted FIRE blogger, and I only follow steps 2, 4, and 5 (and 4 is very difficult to do well with a high salary).

    1. My only plan in the first ten years of my career was to spend on things that mattered to us (nice home, exotic, but not luxurious vacations, good beer) and save on things that were less important (cars, fancy clothes, etc…) I surpassed the FI milestone of 25x expenses before the 10-year mark, but I didn’t know what FI was until the 9th year.

    2. Yep, I saved a lot. By investing most of it, I now have a net worth that exceeds my cumulative take-home pay after these last ten years.

    3. I had a negative net worth at age 30, which is typical for doctors.

    4. I max out all tax deferred space, but you can’t get around paying “your fair share” on earned income.

    5. Yes. All Vanguard Index funds for me.

    6. 25x is a minimum, but I like the comfort and added layer of safety that comes with 33x or more for an early retiree. I’m willing to continue working a job I mostly enjoy to allow for potential lifestyle inflation or unexpected costs down the road.

    7. See #6

    Cheers!
    -Physician on FIRE

    Reply
  3. Rick

    Great advice! The other side of the coin is when you reach the 25x spending in your savings and investments, how to enjoy it. I am one of those folks that saved every tax refund, bonus, stock option sale and maximized my 401K/IRA. Now that I am 66, I have retired and now have to learn to spend the savings on things that will make my final semester on this earth enjoyable. It’s hard to break saving habits and being frugal but at the end, either you used your money to make your final quarter of life worthwhile or just give it to the kids. I think a discussion on retirement spending is as important as retirement saving. I’m 66 and my parents lived to the mid-90’s. I need to have enough savings in case I inherited their good genes but the final 10-15 years will be much less active than the first 15 years after retirement. I don’t think that the 4% rule really is a good barometer of spending based on my comments above. Thanks for listening.

    Reply
  4. Bill

    Lots of useful, practical advice. And even though it appears many of these examples were from people who were earning above average salaries when working it’s possible to achieve good results even if you’re not on the high end of the income spectrum. In general it helps to live somewhere with a lower than average cost of living (especially if you CAN get a job where the pay isn’t also ‘lower than average’), do whatever it takes to have money left over to save after all necessities are taken care of and don’t try to keep up with the Jones.

    Reply
  5. Gary

    I question rule #6.

    If you will have income generated from pensions, annuities, and social security, then you probably need less than 25 times your current annual expenses. At age 62, my income from my pension, annuity, and social security will be 85% of my current annual expenses.

    In addition, I have about $800K in cash, Roth, and 401K. So doesn’t rule #6 need to be also based on income from other sources than savings?

    Reply
  6. Financial Samurai

    Thanks for the shoutout! If anybody is wondering whether aggressive saving, side hustling, working long long hours, and living below your means is worth it, let me say it is ABSOLUTELY worth it!

    The sacrifices you make today set you up for an amazing life in the future on YOUR terms. The more you hate your life, the more you should sacrifice!

    And the real secret is, once you get to financial independence, you won’t even think what you did in the past was all that difficult because you are free. And freedom is what it is all about.

    Fight on!

    Sam

    Reply

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