Let’s discuss how long it takes to save for retirement. Or instead, how long to achieve financial independence since some don’t plan to ever retire.
How long would you guess that this takes?
With the average US retirement age of 67 years old…it would appear that 40+ years of working is required. And for the average American, that is true. However recent attention to the FIRE (financial independence, retire early) movement provides ample examples of people reaching retirement much faster and earlier – in their 50’s, 40’s and even 30’s – in many cases in less than half the time of the average American.
Obviously, the real answer to how long it takes to save for retirement or to achieve financial independence is…
The length of time required depends on:
- How much money you save, and
- How much money is required to fund your desired lifestyle
What about income?
Higher income is a catalyst to reach retirement sooner, but only if you manage to save more than you would otherwise and keep your lifestyle affordable. Without accomplishing both of these, even the highest imaginable incomes won’t matter in the race to retirement. Someone with a lower income can certainly out save or out thrift a high earner, like the tortoise and the hare.
Obviously, the answer to our question of how long it takes to save for retirement not only depends but is also wildly variable. It may take only ten years for the savviest savers exercising extreme frugality…while those unwilling to save will never get there.
Many can reach retirement ready wealth in 15-20 years of work, even without extreme frugality. Again, this is half the time of what it takes the average American.
In my case…
I graduated college with debt at the age of 22 and began working and saving right away. I wasn’t frugal, and in fact made some dumb and expensive purchases (yes plural…not just once) of new and expensive vehicles. However, I did this after first plugging away generously to my 401(k) and while keeping my housing costs reasonable. I was living comfortably yet prudently, although not necessarily frugally (for instance, I didn’t have a roommate). By the age of 40, I had saved what I needed in order to retire and discontinued contributions to my tax-advantaged retirement accounts. While this is technically 18 years, I call it 15 considering that the first years were spent working to get my savings to eclipse my student debt (in order to first bring my net worth to the starting line at $0).
In summary: I did a great job of saving and a reasonable job of not spending excessively. Had I agreed to live more frugally, I would have reached financial independence sooner. And I’m NOT sorry.
My mother achieved most of her retirement savings in about 20 years. As I explain in my TED talk: “Shifting Financial Gears”, she started her career later in life and at age 50 was handed proceeds of only $30K when her employer pension was terminated. At that point, she began saving and as much as she could in the 403(b)-plan offered by the hospital she worked for. Meanwhile, she maintained two used sports cars and a nice but affordable house to herself. She then retired at 67. Now, ten years later, her assets are still plentiful and she has an ample runway of support for her remaining retirement years.
In summary: My mom did amazing job of saving and also spent (and continues to spend) reasonably. She achieved financial independence quickly, even with a much later start.
How long will it take YOU to ready yourself for retirement?
How much are you willing to SAVE?
How little are you willing to SPEND?
The sooner you start, the sooner you will achieve it.
Giddy up! 🐎
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