Size Matters: Savings Edition

Want to retire early? Then keep reading. I basically outlined a lot of this in my 12/10 Would Try And Become A Millionaire post, but here I am going to focus on the % of money you save and not necessarily dollar amounts. If you can avoid lifestyle creep (wanting to spend more when you make more), then it doesn’t matter how much you make in order to retire early. It really only matters how much you spend and save. Confused? Me too. Read below to become unconfused.

I’m going to show you three examples:

  1. Family A: Brings home $100,000, saves 10%, spends 90%
  2. Family B: Brings home $100,000, saves 25%, spends 75%
  3. Family C: Brings home $75,000, saves 33%, spends 67%

In my fancy chart below, I assume that you are will withdraw 4% of your portfolio during retirement and your investments will grow at 5%:


Family A Family B Family C
Take Home Pay  $      100,000  $    100,000  $      75,000
Savings Rate                10%              25%              33%
Amount Saved per year  $        10,000  $      25,000  $      24,750
Amount Spent per year  $        90,000  $      75,000  $      50,250
Amount needed in retirement  $   2,250,000  $ 1,875,000  $ 1,256,250
Interest in Investments 5% 5% 5%
Years To Reach Amount Needed 51.35 31.94 25.90


As you can see, it’s not about how much you make, it’s about how much you save/spend. 


Unfortunately, typical advice in most money blogs is to save 10%. If you were to do that, you would have to work for another 51.35 years. Yikes. Now, all of this information is only helpful if you want to be able to retire early. If you want to enjoy your money while you have it, go for it. Just know, your savings rate directly correlates with how many years you have to work.

You might be thinking to yourself “self, what happens if I save more than 33% of my income?” How long will it take me to retire comfortably then? Great question. Que fancy chart:


% of Savings Years Until Retirement
5%            65.77
10%            51.35
15%            42.83
20%            36.72
25%            31.94
33%            25.90
50%            16.62
67%              9.83
75%              7.14
80%              5.57
90%              2.67


If that doesn’t answer your question, I don’t know what will. At the end of the day, learning to save more and spend less increases your chances of financial independence. You didn’t need this blog to state the obvious, but I did anyways.

Additionally, it is worth noting that all of this assumes you spend the same amount each year and only withdraw 4% from your portfolio during retirement. As with most things, the assumptions used drive the results. So, take it with a grain of salt.

So, for the next month try to spend less and save more. Do things such as: save 1 dollar for every dollar spent on alcohol, eat out 1 less time, or have a picnic for date night instead of Applebee’s (lol, please don’t have date night at Applebee’s). Then, once you saved money, invest it.

Now that I have laid out how to retire early I have one caveat to say. I am not actively trying to retire early. My wife and I are learning how to enjoy life now while also saving for the future. It’s a work in process but we understand that something could happen to us at any moment and we don’t want to regret any choices we make. Are we irresponsible with our money? Sometimes. But we learn from those mistakes. We try our very best to balance the present with the future. Keep reading future posts on how we do that. In conclusion, be conscious of your savings rate. Cheers to saving more money and retiring early if you want to!

Shameless plug: If you like this post/blog/me please follow and share. I’d like you a lot if you did. If not, I still like you a lot. But please? Thanks in advance.





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