This is not a "get-rich-quick" scheme, I did not grow up with money (pretty impossible when you have 8 siblings!) and no, I didn't forgo lattes, avocado toast or a rich life of fun and travel.
12 years ago I graduated college with student debt and an abysmal understanding of personal finance. Thankfully with my engineering degree, I was able to land a good paying job upon graduation. I immediately set up a personal finance system (thanks to I Will Teach You to be Rich/IWT by Ramit Sethi) which helped me save enough money to reach my retirement goal. Then through Mr. Money Mustache's simple but logical formula, I was able to determine how much money I needed for retirement. And then I actually retired when I hit that number; this might actually be the hardest step!
I Will Teach You to Be Rich by Ramit Sethi
Upon graduation, I knew very little about how to manage money. In fact, I opened my first credit card during my senior year of college and then promptly forgot to make payments on it. I ended up accruing a bunch of interest, paying off the credit card and then closing the account out of fear. Don't ask me how I paid my bills throughout college; it's a miracle I didn't completely ruin my credit.
Growing up money was a source of worry and confusion. A part of me felt like I was doomed to continue down that path, however I was determined to do what I could to not let that happen. One of the first things I did after graduating was drive to Barnes & Noble and search their personal finance section for anything that would help me. (You guys remember book stores right?) I bought 3 books on personal finance, one of them being IWT. I think the others were by Suze Orman and Dave Ramsey (the classics of course!) I devoured all of them, but IWT really spoke to me. Ramit's honesty and humor when describing why so many people are bad with money was so relatable; I felt like he was talking to me. On top of that, IWT gave me a very straightforward action plan on how to set up a personal finance system that I still utilize today. After completing the IWT program, I finally felt confident that I was capable of managing my finances and that money would no longer be a source of anxiety for me.
Because I set up this system immediately once I started my big girl engineering job (and did not wait!), is why my retirement funds blossomed the way they did. There's no need for me to get into specifics because everyone's financial situation is different, but "save early and often" is a good rule. To be more specific, save as much as you can early in your career. Then invest that savings wisely. Compound interest is your friend, not just something you learn about in that boring statistics class.
I Mustache You What Your # Is
Last year, after working as an engineer in oil and gas for 11 years, I retired. I hung up my hat and said "Suck it! (not really, that would have been rude.) I quit because I didn't feel fulfilled by what I was doing and frankly, I just needed a break. (Read: i was dead inside.) Thankfully, I felt completely at ease with quitting because I had hit my financial goal for retirement.
This is where Mr. Money Mustache comes in. As do most good things in my life, I heard about this guy from one of Tim Ferriss's podcasts. "Holy shit!" I thought to myself while I was listening to Tim's podcast on my morning walk. "It can't be that simple, can it?" This mustache man was proposing a very simple formula for retirement planning that flew in the face of every tv ad and boring retirement planning lecture I had sat through. I couldn't wait to get home and determine what my magic retirement number was and how close I was to getting there. Lo and behold, I realized that if I sold my money pit of a condo and kept my current cost of living where it was, I could retire TODAY! I couldn't believe it. I was elated, staring at the screen in disbelief. How did this happen?
Make the Decision
That's when I made the decision. I'm going to retire. As soon as I can sell my condo, I'm quitting. Unfortunately it took alot longer to sell my condo than I ever thought possible, even in 2021's red hot housing market. (Turns out no one wants a 1 BR condo in a major city! Who knew?) But I finally did it! I sold my condo and then quit my job with no future job lined up.
Why am I emphasizing the actual quitting part? Because most people don't; even when they know how much money they need to retire and then they meet that goal, they don't retire. They hem and haw, make excuses and keep on working a job they don't like. For some, it's because of fear i.e. the fear of the unknown, the fear of running out of money in retirement, the fear of being bored, etc. It's also human nature. The more money you make, the more money you want to make in the future. "If only I could make $50k!" quickly turns into $70k and then $100k. Similar with retirement: if your goal is to save $500k for retirement, once you hit that goal, you immediately start thinking how nice it would be to have $600k and so on . . . #momoneymoproblems. It's really difficult to make the decision and then act on it. (Thanks to the Science of Well-Being course that I took last year for helping me understand this.) Fortunately (or unfortunately) for me, I found my current job to be quite unbearable and no future prospects looked that promising. I had to leave. There was little room for discussion.
So You Actually Retired?
I use the term "retirement" loosely. It means I've acquired financial freedom; I now have the freedom to work how I want, if I want. I have an amount of money saved up that's in between "I no longer have to work another day in my life" and "Fuck YOU money." Ya dig? It means I no longer have to stay in a career that I just fell into because it paid the best, and I was tired of being a broke college student. (Can we normalize accepting a job offer because we want to afford to buy a couch one day?) And that right there is the ultimate freedom IMO.
Now if you actually love your job/career, you may never want to stop working. That's awesome! But if you're like I was, it's great to know how and when you can retire. Knowledge is power and in this case, this is some of the most powerful knowledge you can have.
Personal Finance is Personal
One thing to note is that I do not have kids. If you do have kids or other dependents, your saving vs. spending rate might look drastically different than mine, and it may take you longer to get where I got. Alternatively, I'm also not married. Read: no one is supporting me. Having someone who supports you financially could also drastically change your situation in comparison to mine and allow you to retire much sooner than I did. Hooray! I would also be remiss to mention that I am an able-bodied white cis-female working in the US, which also comes with certain privileges.
Personal finance is personal. Everyone's situation is different. The point is to set yourself up for the most financial success that's possible, given your unique situation, figure out when you can retire and go for it!
Buck the System
Most people go through life never knowing when they can retire; they just assume that everyone has to work until 65 (except for those crazy FIRE people who live on an insanely low budget (I love the FIRE community; please don't come after me!)) In fact, every retirement planning session I have sat through made it clear that no one could retire until they're 60. Exhibit A: the penalties you incur if you withdraw from your IRA or 401k before 59.5. It's to the advantage of the businesses and government for you to keep working until you're physically incapable. I know I'm sounding a little extreme here but it's to illustrate a point. There is no one path to retirement or really one definition of what that means! Yes, it's easier to use one model and one definition for everyone, however we all know one size does not fit all. Retire when you got it like that, secured the bag, whatever phrase you want to use. . . whether it's at age 35 or 75!
Furthermore you don't have to stay in the same career or industry for your entire life. Most retirement planning assumes you will continue making your same or higher income from now until you retire, meaning you won't take a break from work ever. Forget maternity/paternity leave or sabbaticals. Heaven forbid you leave work to go back to school or take a pay cut to work at a non-profit. Maybe you slug it out an IT job for 10 years making average $125k/year that you secretly hate and then decide to become an artist and make $30k for the rest of your life? Cool!
I've said all this to say, question the system. You do not have to follow the script when it comes to career progression and retirement. Besides, I think we threw out the script during the COVID-19 pandemic. Lit it on fire and buried it somewhere. #Fuckthescript