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How to retire in 10 Years while making less than $100,000 per year

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The most popular article I’ve ever written was titled “Want to retire in 10 years? Here is what you need to do”. I don’t consider it my best work, not by a long shot. Given the amount of traffic this article continues to get, it is certainly a compelling headline. In this article, I’m going to dive deeper into this question and tell you how to retire in 10 years while making less than $100,000 per year.

How to retire in 10 years

In the original post, I did a simple reading of Mr. Money Mustache’s shockingly simple math that provides a direct relationship between your savings rate and how many years until you have reached Financial Independence and can choose to retire.

Reading the table below you can see if you save and invest at least 65% of your take-home pay, you would reach Financial Independence in just over 10 years.

Source: Mr. Money Moustache

Assumptions in the shockingly simple math

There are a few assumptions in the math behind Financial Independence, that you need to be aware of.

Assumption 1: Your investments earn 5% above inflation.

It’s hard to predict whether a 5% return net of inflation is realistic. Honestly, that is probably too high a number for me to be comfortable with but it is not completely unreasonable.

Assumption 2: You can live off the 4% safe withdrawal rate during retirement.

The second assumption is the one I take issue with. The 4% rule states that in the first year of retirement you can safely withdraw 4% of your portfolio. If you had $1 million saved, you could assume to be able to withdraw $40,000 in your first year of retirement.

Anyone who is considering early retirement should be aware that the 4% rule was originally based on an assumption of a 30-year retirement. So if you are retiring before 50 and expect to live well past 80, the 4% rule does not apply. Anyone retiring before 50 would need to pick a more conservative withdrawal rate such as 3%.

How to retire in 10 years with a five-figure income

One of the most common responses I get when I write about Financial Independence is that it is only possible for those with multiple six-figure salaries. This is simply not true.

The most important variable when it comes to Financial Independence is your savings rate. While it is true, that it is easier to achieve a high savings rate if you have a high income, anyone can increase their savings rate by pulling one of the two levers of Financial Independence.

  1. Making more money.
  2. Saving more of the money you have.

Anyone can reach Financial Independence if they are willing to pull both levers as hard as they possibly can. I’ll demonstrate with an example.

Meet Joe

Joe is single, 48 years old and makes $84,000 per year. Until recently, Joe had a conventional attitude towards money, meaning he did not value it.

  • Joe’s monthly take-home pay is $4,900
  • Every 4 years Joe buys a brand new car. Currently, he owes $12,000 on a car loan which is approximately equal to the current value of the car.
  • Joe has $2,000 in credit card debt.
  • Joe lives alone in a 3-bedroom, detached house.
  • The current value of the house is $400,000 and he has a mortgage of $315,000. This leaves Joe with $85,000 in equity in his home.
  • He contributes enough into his 401k to get the full employer match of 5% of his annual income. Other than that, he does not think about saving for retirement.
  • The current value of his 401k is $175,000

Here’s a snapshot of Joe’s budget.

Joe is spending 78% of his take-home pay on “the big 3” expenses; housing, transportation, and food. This barley leaves him with enough money to cover his other living expenses.

Currently, Joe is only making the minimum $30 payment on his credit card. Since he is only saving 10% of his income through his 401k, he is on pace to be working well into his 70’s.

Joe decides to change his circumstances

Joe began reading articles on Financial Independence and got inspired to make some serious changes. The first thing he did was set a goal to reach Financial Independence in 10 years, with $1 million saved for retirement.

  • The first thing Joe did was sell his 3-bedroom house and take the $85,000 he had in equity and invest it. He decided to rent a 2 bedroom apartment.
  • Joe realized his second-largest expense was his car. He sold the car for $12,000 and used the money to clear his car loan.
  • Next, he made a goal to pay off his $2,000 in credit debt in the next 2 years.
  • After crunching some numbers Joe realized that even with all of these moves he would still need to invest another $3,300 per month to reach his $1 million savings goal in 10 years.
  • Rather than giving up on his goal, Joe decided he would take on a side hustle that brought in an additional $1,200 per month.

Here’s a snapshot of Joe’s new budget.

By making some lifestyle changes and taking on a side hustle, Joe was able to create a budget that locked in his goal of retiring in 10 years.

Final thoughts

High-income earners indeed have a higher margin for error when it comes to saving and building wealth. However, that does not mean you need to make a six-figure salary to achieve financial independence.

Low to middle-income earners can still achieve Financial Independence but they have a lower margin for error.

Cut out all the noise and focus on the two levers of Financial Independence

  1. Earning more money.
  2. Saving more of the money you have.

Ideas to earn more money.

  • Working overtime hours.
  • Picking up a second job or side hustle.
  • Starting a business.

Ideas to save more of the money you have

  • Downsize your home.
  • House hacking.
  • Get rid of your car.
  • Tracking your spending to find and eliminate wasteful spending.

If you ever need ideas or inspiration, feel free to get in touch.


What changes do you think you should make to increase your savings rate? Let me know in the comments below.

Disclaimer: The information in this article is not intended to encourage any lifestyle changes without careful consideration and consultation with a qualified professional. This article is for reference purposes only, is generic in nature, is not intended as individual advice and is not financial or legal advice.

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About the Author

Ben Le Fort
Ben Le Fort
Here to write about personal finance, & economics. Editor of Making of a Millionaire and Impact Economics. Top writer in Investing, Finance, Economics, Government, Life Lessons.

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