Next, he said, take the retirement budget and divide that by your 3% or 4% retirement rate to get your magic number. “But if you’re retiring early you should think about 3.5% and if you’re retiring in your 30s or 40s you may take an even more conservative number.” “The 4% rule is great if you’re retiring at age 65,” said McCurry. Next you need to determine your withdrawal rate, or how much you will pull out each year from your portfolio to live on in retirement. Maybe it is less because you plan to move out of an expensive city or even abroad to a cheaper place.” “Maybe it is more because you’re going to be traveling. “Maybe you want to live on the same amount you live on now,” he said. How much do I need to save for retirement?
(Photo by Robert Alexander/Getty Images) Robert Alexander/Getty Images To find it, first determine the annual budget you plan to live on in retirement, McCurry said.Īn elderly couple walk hand-in-hand in San Antonio, Texas. The road to early retirement begins with your “FIRE number”– the amount of money you need to have saved up to live the lifestyle you want after you stop working.
#RETIREMENT MAGIC NUMBER HOW TO#
Here’s how to start working toward your financial independence. Start saving now instead of next month or next year.” “Even if you don’t have the all math worked out. “One of the biggest principles is just to start saving. While there are fundamental principles for getting there, everyone will have their own variables depending on their income, lifestyle and risk tolerance. But for the vast majority of college grads it is in within reach, even for people who earn less than $100,000.”īeing financially independent means that income from your investments alone is enough to cover all your expenses. “If you’re only making double the minimum wage, it is a lot harder. “Financial independence is well within reach of an average college graduate,” he said. While some people use high salaries in technology, finance or medicine to launch them toward financial independence, McCurry, a former civil engineer, said his income topped out at around $70,000 before he retired. “It is going to take a decade or two to reach FIRE.” “It is a long-term mindset,” McCurry said. He also bought a condo that he rented out and eventually sold for a profit. By attending an affordable state school and graduating early while working at the same time, he was able to leave college with a healthy chunk of savings. McCurry, who writes about FIRE strategy and offers early retirement consulting on his website Root of Good, focused on reducing his debts and started saving money in college. But it took him years of careful planning and saving to get there.
McCurry saved $1.3 million and retired nine years ago when he was 33 so he could spend more time traveling with his wife and three kids. Rather than planning to retire in their 60’s, they turbo-charge savings, pare down spending and optimize investments to become financially independent and retire early – a process known as FIRE.įor Justin McCurry retirement came more than 30 years early. But some people have found ways to do the hard work faster. There is no shortcut for saving money for retirement.
0 kommentar(er)
