How Anyone Can Retire In 10 Years (or Less)

Early Retirement Is Possible For Anyone – There’s No Special Knowledge Required – But Few Succeed.

Key Ideas

  1. The math that makes early retirement and financial independence possible for anyone.
  2. Why you don’t have to become a brilliant investor or possess any unusual skill to retire in 10 years or less.
  3. How to align your finances, your goals, and your values for financial success.

Surprisingly, it’s not that hard.

It doesn’t require hitting the lottery or inheriting a windfall from ol’ Aunt Myrtle. Similarly, you don’t have to become a brilliant investor or possess any unusual skill.

Also, the title claimed “anyone” can do it so the strategy has to be repeatable and predictable. We’re talking science – not random luck.

In a word, the answer is “frugality” – extreme frugality by most people’s standards – accompanied by basic investing.

Anyone can do it, but almost nobody will… and therein lies the rub.

Let’s start by proving the theory with mathematics, and then we’ll explore the rest of the strategy in greater depth…

How The Math of Saving Your Way to Early Retirement Works

How Anyone Can Retire In 10 Years (Or Less!)

Let’s play with some simple equations to illustrate the point.

We’ll assume $48,000 per year earned income to keep the taxes low and the math easy. Alternatively, you could just assume $48K after taxes and eliminate the tax complication from the equation. That works out to $4K per month spendable.

(By the way — the actual income level is irrelevant to the calculation as you will see below, so use whatever income works for you. The key is the percentage of income that is dedicated to savings.)

Using one of my handy retirement calculators, we’ll determine how long it takes to save your way to financial independence applying industry standard numbers like 8% for investment return, and 3% spendable retirement income to support living expenses.

If you saved 70% of your income, or $2,800 per month, at 8% return, you would have $515,000 at the end of 10 years.

Yes, I know that leaves you with only $14,400 per year to live on (I’ll address this issue later), but the fact is you’ll be financially independent in 10 years because 3% of $515K is $15,450 in spendable income. This would be $1,000 per year greater than what you had been living on.

(If that math went by a little too fast and you want more detail, read this ebook: How Much Money Do I Need To Retire. It explains everything in step-by-step detail… plus a whole lot more.)

If you’re really in a hurry to tell your boss what he can do with your job, and don’t mind extreme frugality, then try saving 80%. You could be financially independent in less than 7 years, because $3,200 per month at 8% results in a $361,000 savings balance, providing $10,830 of annual spendable income at 3%. This is greater than the $9,600 ($800 per month) you would be living on for this scenario.

Quieting the Naysayers

The first and most obvious comment nearly every reader will have to these two examples is something like, “Cute idea, Todd, but I can’t even get by on 100% of my income. The idea of living on 20-30% is a pathetic joke! Your article is complete rubbish!”

(Come on… own up to it. The little voice in your head was saying something like that. Right?)

Here’s the rub. That’s only true for the people making those lifestyle choices. It’s not “the truth”.

There are many people who have committed to extreme frugality as a lifestyle choice because they don’t want to spend any more of their life than absolutely necessary working for money. They would sooner live without the luxuries that others have claimed are necessities than pay the price of working to have all that stuff.

It’s an expression of personal values.

There are people who choose to live in motorhomes, use public transportation or their bicycle, shop only at thrift stores, grow their own food, and so on to keep expenses to a bare minimum.

It can be done. It’s possible if that’s your choice.

Alternatively, living on 20-30% of your income doesn’t have to equate to extreme frugality. Try running the same numbers with $250K or $300K in income.

It leaves plenty of spending money for lifestyle today. Sure, it’s far less than you could afford at that income level, but again, it’s a choice.

In fact, I initially built my wealth following this exact formula. It totally works.

I just raised my income to a very high level, paid my house off, and never got frivolous, but never suffered. I chose my spending consciously based on my values (personal growth, reading, research, outdoor sports, adventure, and recreation), and never needed to spend much of the fat income.

The bulk went to savings with little effort or discipline. Presto! Instant financial freedom.

So anyway, it does work, and it’s do-able. People do it every day.

Others might attack the 3% spending rule or the 8% return on investment. My answer is save your breath.

3% spending is easy to support in perpetuity because a portfolio of quality dividend stocks would pay that (and likely more) while growing to adjust for inflation, and without ever touching principal. It’s easily do-able.

Similarly, 8% growth during the 10 years in this example is supportable using investment strategies designed to safely support growth that I teach my financial coaching clients.

However, even if you disagree with me on this point, the argument is moot because the compound return represents very little of the asset accumulation over this short time period. The math is dependent on the percentage savings rate – not the growth rate. It helps, but it isn’t critical.

The time is just too short to make a big difference. Don’t waste your energy arguing details – it all boils down to the savings rate.

Also, notice that I didn’t include Social Security, pensions, or anything else. This is simple, stripped down math to make a minimalist point that is unarguably clear.

Anyone can retire and live with financial independence (but not freedom) in 10 years or less. It’s absolutely, 100% do-able.

I’ve done it, lots of other people have done it, and there’s a whole website community run by Jacob at of people trying to walk the talk.

If you’re a naysayer, then just be honest with yourself and realize your negativity is all about a lifestyle choice – not the viability of the strategy.

With that said, the reality is very few people will ever succeed with this approach. Let’s look at why.

Why So Few Succeed

You probably already guessed why so few people are able to follow this plan…

It takes the self-discipline of a celibate monk living in a brothel to survive on 20-30% of what most people earn in our current culture. I did it easily because my income was substantial while living the simple life as a single male.

It would have been much harder if I was married with kids on an average income.

Does that mean you can discount this article and throw the idea away? No!

The math is the math. I’m teaching you how saving your way to financial independence works.

This is one of three paths to financial independence (the other two are real estate and owning your own business), and the rules are inviolable. They are scripture in stone.

You can’t argue with them. It’s just math.

You can reduce the savings rate and lengthen the time, but you can’t change the math.

  • Staying with the example above, a 25% savings rate ($1,000 per month) compounds to roughly $1,149,000 in 27 years where it will finally replace the 75% of your earned income you’re spending. This example isn’t as rock-solid because the time period is much longer, meaning you have to start including inflation and other complicating factors to make it realistic; however, the principle demonstrated is consistent.
  • A 10% savings rate in our simplified example requires a traditional career duration of 40-45 years to make sense of the numbers. It’s the classic retirement savings formula most people are taught to follow – save 10-15% throughout a normal career duration to replace 80-90% of earned income – but few actually ever do it.

There are a couple of key principles you want to understand with this strategy…

  1. The critical factor to success is the percentage saved from earnings. Every 10% increase in spending adds a little more than 3+ years to the process, because it not only decreases how much you save, but it increases the threshold of spending your assets must overcome as well. It’s a double-edged sword.
  2. Investment return and inflation have very little effect when the time period is short (high savings rate). However, investment return and inflation have a huge compounded effect when the time period is long (low or traditional savings rate). You must plan accordingly.
  3. Almost nobody is motivated enough by financial independence to persist with a frugality discipline for 10 years and then survive on the same level of income for a lifetime. That’s why so few people ever achieve financial independence following this path.

Frankly, I question if it is even a worthwhile goal as stated in this post here.

The strategies you can use to retire in 10 years or less - really, anyone can do it!

Questioning Your Goal

All of this begs the question, “Is your goal financial freedom or financial independence?”

Surprisingly, they aren’t the same thing.

You can be financially independent on $15,000 per year in 10 years or less with the above example, but you’ll have to give up some freedom to achieve it.

Living low on the economic scale limits what you can buy and do with your life. These limitations are antithetical to freedom and cause what I call a “poverty mentality.”

Every corner must be cut, every dime squeezed for maximum blood. It creates an obsession with spending and money that doesn’t equate to happiness for most people.

Unless your values are inherently extremely frugal, you’ll constantly make concessions to save money as decisions are based on the right side of the menu of life (prices). Rather than work for money, you’ll spend a comparable amount of life energy working to save money through all the frugality strategies required to make ends meet.

This is not a right/wrong question – it’s just reality. It takes effort to figure out how to spend less and survive on less.

Money buys convenience, but that convenience comes at a price because you have to give your life energy in the form of work to earn it in the first place. It’s all just trade-offs. There’s no perfect answer.

For example, extreme frugality would limit my ability to take my family to France for a month (like I did last year), which honors my values for adventure and life experience. I wouldn’t be able to honor my values on education by paying for quality, private school for my kids.

I wouldn’t be able to honor my health values by paying for professional services like sports training, physical therapy, or expensive organic food. All these things would be luxuries in a world dominated by frugality thinking.

These would all be limitations to my freedom and would dishonor my values. In my personal experience, that’s antithetical to true wealth and personal freedom. Others would disagree, but that doesn’t make them wrong.

It’s all a question of values.

Integrate Your Plan with Your Values

Extreme frugality is not everyone’s cup of tea. It works fabulously for some people, and it’s a recipe for misery for others.

The key is to integrate your plan for financial freedom with your values. The two must be congruent because the goal isn’t just financial independence – the goal is true wealth and personal freedom.

For example, the spending level that honors my values as a 50 year-old, middle class, head-household, family of four, is much higher than when I was a single male straight out of college. It’s probably higher than it will be 10 years from now when my kids are grown.

You must design a financial plan to reflect whatever reality is true for you. That’s always the starting point when I begin working with coaching clients.

We co-design a wealth plan for financial freedom that integrates every aspect of their life: values, spending, life habits, skills, resources, interests and abilities.

We define their leverage points and competitive advantage into a plan specific to their needs.

Some clients save their way to wealth using the formulas discussed here. Others choose real estate and/or building a business to better leverage their passions and interests (this employs entirely different equations beyond the scope of this article).

Most use some combination of these three paths to wealth (I usually encourage two of the three paths).

One size does not fit all. Your wealth plan must fit you like a favorite pair of jeans in order for you to succeed with it. It must comfortably wrap every curve and unique attribute of your being, or it won’t feel right and you won’t stick with it long enough to succeed.

Getting your plan right is the first step to financial freedom on which all subsequent decisions and actions are built.

One Out of Three Paths to Wealth

In summary, the purpose of this article was to illustrate how the rules of frugality and saving your way to wealth can be applied within your wealth plan. It’s one of three potential paths to wealth.

Traditional savings strategies are usually the primary choice (coupled with real estate) for W2 employees who lack entrepreneurial dreams. Entrepreneurs will typically build wealth through their business, and park that wealth in paper assets or real estate.

There’s no such thing as one-size-fits-all when it comes to wealth planning. It’s a very personal choice.

How fast you want to achieve your wealth goals through savings (7 years? 40 years?) is purely a lifestyle choice and a statement of your personal values and priorities. The paths you choose to realize your financial dreams should reflect your life situation.

The thing to note about paper asset savings plans is they’re governed by specific mathematical rules and limitations. If you want to break out of those mathematical rules and get more creative, then you must include the other two asset categories – real estate and business.

… which is why they will be subjects of future articles, so stay tuned.

Finally, if building and implementing a customized wealth plan based on proven principles catches your interest, then the Seven Steps to Seven Figures Course is worth a look.

Let me know how I can help.

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You may not be able to argue with the math, but you also can't also argue that the federally defined poverty level income is about $12k for one person.  Even if we are talking about someone who doesn't plan to support a family, we are assuming that they are ok with basically a poverty level life style... for their entire life.  I don't know many people who would find that acceptable.


this method doesn't work because the cost of living  it will be greater ten years from now..... Your money will be worth less and you sacrifice so much for nothing...... I really suggest anyone one to try to invest your money step of only saving it so it dont lose it value


Ehh"am not suffering, through extreme frugality, integrate w value" ... this obsession for early retirement, especially from internet gurus, in their productive ages, esssntially what makes this country lost the spirits.. work to a minimum via internet marketing, sowhat value exactly? , please life is worth so much more than bragging about being frugal and wealth obsession, dont remember anything close to warren buffett's recipes to build wealth


We like the idea that how much you make does not matter only the plan!

Ellie Lann
Ellie Lann

I'm jealous of the taxes situation you have. My income is a little over 48K a year (gross), but I don't even bring home 2,800 per month (net), which is what you suggest I should be saving each month !  Earning 4K net a month would be a totally different game. I understand the whole point and I already live off 50% of my net income (obviously by keeping my expenses low as my income rises, the % of savings will increase), but it was a bit misleading for me at first. 

Chris Intl
Chris Intl

Hi Todd!  I stumbled on your website, emails, and podcasts about a year ago and ALWAYS LEARN SOMETHING NEW.  I am 32 years old and in the stage of building financial knowledge and simultaneously trying to get out of debt.  I find your advice really insightful and practical.  You are a great teacher because you unravel so much of the financial industry's tricks AND share your experience mentoring others with ALL OF US.

Thanks a ton, keep those emails coming!!

Financialmentor moderator

@Chris Intl I'm so glad the information is proving helpful. It's messages like yours that drive me to continue with this work. Thanks so much for sharing your supportive thoughts!


From what I have read I agree with most everything. Having just downsized our home to a mortgage free one, scaling back expenditures and reduced our debt to one car only, no credit cards . There is mention time and again of 7 to 8 percent returns in your articles, where? If we could achieve that we could retire tomorrow . Where are safe 7 to 8 percent investments?

Financialmentor moderator

@Cgdream I explain the two paths to answering your question in this article  The do-it-yourself educational course should launch in early 2015, and the managed option offers both a newsletter and a managed account alternative depending on your preference. For purposes of full disclosure, I personally have a financial interest in the "done for you" option and have my own money managed under the exact same programs you would pick from - most specifically, The Perfect Portfolio. Hope that helps.






Financialmentor moderator

@diamdo Everything is explained in the article. Please read it carefully. You need a certain amount of assets in relation to your spending. The answer to your question is a function of how much you need to spend to support your lifestyle.


I’m 20 years away, but still realize that I need to save more.

Here is what I’m doing:

1. I now put away the maximum amount in my 401K (5% for me) that my employer will pay into the plan as a match.  It is free money and dumb not to do it.  It was basically a raise I gave myself.

2. After calculating my expenses, I found that driving was my biggest expense.  I fixed that by buying a fuel efficient car thats durable (Honda Civic), finding an affordable insurance policy for it ($25/month from 4AutoInsuranceQuote, yay!), and using apps like Gasbudy/Waze to save money at the tank.  I cut my transportation costs in half!

3.I cut way back on eating out.  I am having a year of putting away money hard, and food was a huge portion of my budget.  I save about an extra $100 a week now, and eat healthier and better.  Ditto for others if you spend a lot of money in bars.

4. I need life insurance to protect my 2 daughters, but I ditched a $275 a month whole life policy for a term policy and now I only spend $25 a month.  I save the difference to my Roth IRA.  If you are unfamiliar with this and want to learn more watch shows or read articles from Suzey Orman or Dave Ramsey sometime.  They are huge proponents. 

There really were no two ways about it. If I plan on having a full savings account (getting there) and a comfortable retirement (I will) I have to make good decisions with my money.



As the author states, it's all about life style. I'm currently saving 85% of my net income and my wife does the same. We're 27, hopefully in 5 years we will retire. It helps that we don't have debt, in top of that we don't have kids either.

Some people need to be reminded that the amount required to retire varies from state to state, and the variation is greater when you evaluate the possibilities of living in other countries.  For instance, you can do pretty well in some Latin American countries with far less than a million dollars in savings. 


I should add I am starting a new job and will make about $15,000 a year more than I am making now so will be able to save a lot more. Already on plan to pay off all debts in 7 years.



I find the information and comments very interesting and would like implement a savings plan to hopefully retire in 10 years or at least be in great financial shape. Not sure I can save the amount required as we are about $98,000 in debt with mortgage.

Wife and I have combined income of about $80K.  I can provide more details but looking at input if 10 year plan is doable. Is the basis of the plan being debt free to start?


Financialmentor moderator

@mtran2000 Paying off debt is obviously a part of the plan, but it is not a requirement to get started moving forward.


Todd, I really wished I knew about you and others like you earlier in my years.  I am 31 years old and know nothing about investing.  I have roughly $110,000 in my checking account just sitting there doing nothing.  I recently started listening to this radio show with Bob Brinker.  If I was to throw my 100k into an account I lose out on "dollar cost averaging"   Many folks just can't think about living below their means, but I have and I want to thank you on your services.


I will add that I do max out my 401K every year, so I do not count that money in my 110K, but I only started maxing my 401 about 2 years ago.  The rest of my life I spent paying off student debts.

Financialmentor moderator

@Barry1982 You have plenty of time and you are off to a great start. 110K plus your 401K at age 31 is a solid start and you have plenty of years ahead. You may be interested in an investing course I will be offering (hopefully) late 2013 that will take you from beginner investor to advanced in less than a year. Make sure you subscribe to the newsletter because it will be announced there. Should be fun. I've been teaching it to my one-on-one coaching clients for years and they love it so I'm looking forward to converting it into course format. Hope that helps.


@Financialmentor @Barry1982   Thanks Todd I will be on the look out for that course.  It really is ironic, how most people spend a life time on making money, but we spend so little on learning what to actually do with it.


You need at least $4 million in savings to retire Today..depending on location, $4 million invested at 3% will give you $120k a year, after taxes and insurance probably 70k a year...which is enough to save 20k a year of yourself put 5-10k for kids and pay mortgage on a matter what happens with inflation since you pile on 20k a year back in your savings you will be fine till you die a happy 80-100 year old and probably leave your nestegg or part of it for your kids


What about Taxes Sir? Is your 15k a year completely tax free? What about inflation? If you live to 80, what would that 15k be worth. Assuming you are 40 when you retire that 15k in returns from safe investment will probably be worth 5k in inflation adjusted dollars by the time you are 80.

Your quality of life will keep on decreasing every year as inflation eats into your earning...

What about health insurance, if you aint working you gotta pay insurance out of pocket..what is that 2k a year, what does that increase by 7% a year, by the time you retire all you would effort is health insurance on your 15k

Also big assumption here is you have paid of your own house, how many on an income of 48k can save 28k and pay off a house in 10 freaking years???

The calculations do not add up at all, if you are renting you have to count rent inflation, if you are married are having kids you have think about thier college eduction. Tuitions go up by 7% a year

Yea if you want to live on the streets, with 15k a month for basic needs, do not worry about what your kids may need or sending them to college, your plan works out perfectly


I wished I was reading this kind of stuff when I was younger and realized life wouldn't always be sunshine and roses.I lost over 100k about 10 years ago and havn't been able to save since.

Now I am very worried about my wife's and my retirement years.

We are 52 years old and just became able to get serious about saving again. Given our current income and barring any unforseen heavy expenses we should be able to save about 280k over the next seven years. I'm thinking we would need about 40k minimum per year to retire maybe less.

It doesn't look good.


Todd, is your 3% withdrawal rate a "spending" rate - that is, money actually spent on goods and services - or is it a "wage replacement" rate, meaning taxes have to be paid out of the 3%?



I am making from 200k- 300k , spend around 20k in food since we rarely cook at home. The only other expense is gas, morgage which we are adding over 1k extra, plus planning to add a bonus at the end of the year, I go to the movies mostly every week, this year I have spend around 10k in vacation. I have other expenses that I dont even keep track of like health insurance, gifts etc..


Is this frugality, no..  Now I could do what I do with a $50k a year a lot easier to make more money with money in hand. This is why the more you have the more will will be keep making in the future.. I should increase my earnings to 500k within a year an half. My expenses may be about the same. Btw I bought the home 2 months ago for $230k I only owe 175k now.. like Ray TM I should pay it within 2-3 years.. I keep investing my money thats why I dont want to rush it. My wife and I are opening cellphone stores, we been on this business for over 3 years/ the first two we work 365 days a year, no 4th of july, no sundays off, but pays off because now we work whenever we want. I could just manage the stores and retire but, is a bad advice to retire from work completely. If everything goes according to plan we should have freedom by age 30, I am 24 right now.


My best advice to anyone is think of something you see yourself doing save up and invest in a business, is the only way to get rich other than having a high salary which takes years to reach plus education costs.( see how much can you do if you invested 20k or 100k in something)


I never thought of making this kind of money, you can dream about it but you feel different when you actually reach it. I know some of you know the feeling. ( is like I can think what I would do if I make 5 millions a year, but until I started making such amount I would never know.. ) or 100 million you name it..


Todd - I really appreciate this post.  I wrote something that references it and your book.  It should be on YoungCheapLiving soon.  Thanks for the great article.

Ray TM
Ray TM

I have read many of the articles with interest.

As you stated Todd you had a good income that helped you knock your debt off fast, and that is the key.

I am making close to a million a year, and had a 700K mortgage that is nearly paid off after 2 years.

This is great if you can afford it and I have saved hundreds of thousands on interest repayments doing this, but not all can...


I think you have to be realistic... note my income and the house value I could have brought a 2-3-4million home!! But then the bank would really own me. When I read people buying a 500K house and have a income of less than 50K a year, I must say I am shocked!!


People need to be realistic given their income levels, and not try to "keep up with the Jones"


Living below your means is something I strongly believe in so good article.


I live in NYC on less then 20k a year which was about 22% of last years gross income. Following your formula this means I'm on track to retire in just over 7 years. Unfortunately after I pay taxes I am only able to put 50% of that income in to savings which (following steve's post from below) means 17 years (or more depending on markets) until retirement. A little disheartening thought that.




Just shared this article on facebook. Simply fantastic. I'm trying to "walk the walk" too, and as a 22-year-old who doesn't have a college degree, if I can do it, anyone can. And yes, I'm absolutely on my way.I'm excited I found this site. You found yourself another subscriber. :) 



Great teachings. Now, for those readers who still doubt that Todd's teachings are doable, consider my personal example.

At age 22, graduated from college; Age 24, got married; age 25, bought our first home; age 27, first child; age 28, bought first income property; age 30, second child; age 31, bought second home, age 32, first retirement.

Drove my wife crazy at home ... you can only mow the lawn once a week and spend 1 hour per day on investments, if that much. So went and got a part time job. Age 34, moved back to the more expensive SF Bay Area; age 40, second retirement.

So you see, it can be done; lots of peanut butter sandwiches, my wife cutting my hair, and hard work fixing property and researching the investment markets.

Joe Severa
Joe Severa

Geez guys, why not just pick a very conservative money mgr. or a simple conservative service & stick with them for 10yrs., why torture yourselves with these arcane ideas?

Dan Ferris, 12% Letter!

Mark Ford/Tom Dyson, The Palm Beach Letter

I'm willing to bet that both of these letters will outperform most of your ideas w/o all the sacrifice you guys have to endure over the same 10 years!

Compounding has always been the best way to grow your wealth. Plowing back all dividends will make the test even more lucrative, trust me, I've managed money during the '80's!


Anyone can do this.
What were you living on when you were in college?

It is 2011 and I am a junior in college in the US living on approximately 10,000 a year. No, my parents aren't supporting me, I pay for all my living costs including a car and college tuition is paid for by scholarships. I have zero debt and this isn't going to change. Why increase my expenditures just because I may get a higher paying job later on?
I am living perfectly fine now and I will continue to for many years. The only necessary increase in spending that I foresee will be increased cost of living/inflation (which I can only hope my income will keep pace with)

I can see myself retired by age 35.
Thanks for the great read!


@Shaun I can relate to your comments regarding student loans, and would like to share my personal story.

In 2000 at the age of 30, I decided to change careers and pursue my lifelong dream of becoming a professional pilot. I left my job and moved to New Mexico to attend flight school and took out some fairly hefty student loans. When I graduated in 2002 the job market had completely fell flat due to 9/11 and I was unable to get a job flying. My total debt load was $72k (including my truck loan and credit cards).

I did get a job at a commuter airline a year later where I worked until January of 2010. My first 3 years at the airline I made less than $25,000 for the year (I know shocking isn't it?) which caused my credit card balance to rise; it is hard to live off $1200 a month when your student loan payments are $500 a month. I somehow managed to pay off my truck, but unfortunately, it died and I needed a new car in 2007. I bought a used one, but had to take out a loan for $14k to do it.

I also started making decent money in 2007 when I "upgraded" to Captain. I first paid off my credit cards, then my car, and just last month finally paid off my student loans. Admittedly, I really only worked hard on the student loans starting in the fall of 2009, but was able to pay them off 1 month ahead of my plan.

Unknowingly, I used the same basic principal that is at the heart of the retirement plan presented here. I lived on roughly 25% of my income and used the other 75% to pay off debt. Now, I didn't plan this, but I did scrimp and scrap to maximize my payments every month. Its true, it can be fun and is very rewarding to do. Getting out of debt was paramount for me, and I learned how to be frugal in order to do it.

With the success I've had in paying off the debt I now have a lot more confidence moving forward and am saving the money that was used for debt. Not sure if I'll retire in 10 years, but its nice to know that I could if I continue living as I have for the last 10.

Good luck!


Hi, Todd. Great post, great discussion to which I would like to add:

I achieved financial independence the "old fashioned" way, but that road is closing as we speak.

I earned a Federal government pension with annual cost of living increases and health care for life. I also invested in Real Estate. As I neared the time I would begin drawing my pension I pared down the investment real estate to one paid-off property making me $1000 a month (net).

My monthly income is almost three times my monthly expenses and my only debt is a small mortgage (<$70,000) on my primary residence. My total cost of housing (PITI) is under $500 a month.

But none of that happened by accident; I made a plan and worked it. I have a considerable amount in cash but it superfluous in my case because of my monthly income. Still, it feels good somehow to know it is sitting there and readily accessible.

I also have a publishing business and do some coaching and conduct seminars which add even more income streams; again, all part of the plan.

But what I figured out a few years ago is that what most people are after is not total financial independence. The real issue for most of those unhappy with the daily grind of the five-day, forty-hour workweek is too much work.

The answer to that issue is not financial independence. I mean, it could be, but it is unnecessary. THE ANSWER IS LESS WORK. I have termed that answer to the less work issue the four-day weekend. But like achieving FI, the sticky wicket even when you are working three days a week remains health-care.

Although we have health insurance, we do not have dental insurance. The best answer is preventative care to avoid the typical expenses in that regard. But sometimes, you need a dentist, regardless. My family and I live close to Mexico and we have a dentist there in addition to our dentist here.

Our US policy does cover routine dental exams and two cleanings a year. For those, we go to our US dentist. When she told my wife she needed two wisdom teeth extracted, we first got an estimate from the US dentist she referred us to and then from our Mexican dentist.

The US price? $600 per extraction. She had it done in Mexico instead: Total cost? $90. We do not live close to Mexico by accident; yet again, all part of the planning process. Keep up the good work!

Joe Bob
Joe Bob

I can do better than this. How about living in a cardboard box under the bridge and eating out of the local Taco Bell's tash bin. Heck, I could retire right now if I do that. What a useless article.


Hi Todd. Nice article. I've been reading Jacob's blog for years, and I find him inspirational, though I'm not pursuing extreme early retirement myself. (I don't hate my career as much as he did.) Jacob's blog is great for keeping me frugal: it reminds me that there's a LOT more room on the frugal end of the spectrum, even if it sometimes doesn't appear that way when I look at the people around me.

(FYI, I think you mean the argument is "moot", not "mute".)


Wow, I am reading a lot of doubt through these comments here. I believe that if you really want it, it can be done. Maybe it's 10yrs for one person, and 14yrs for another, but it can be done. I know that it's hard to stop being a consumer. Driving that new truck definitely feels good, and so does eating out several times a week. Who doesn't want to be waited on? But all that will prevent you from being free. I no longer want to be a slave to the lender.

I have already cut my cable down to $15/month, I have completely cut out my Internet service and land line, eating out is very rare, my son wears hand me downs, I buy my clothes at WalMart because I refuse to pay $15 for a sweater, my grocery bill is less than $100/week and yes we do eat about 90% fresh organic food, I assign a job to every dollar I bring home, and I use cash because it hurts more to spend and it's easier for me to track my spending, etc etc etc. Each small change you make will help.

I won't lie, it does take a lot of sacrifices. Our vehicles are paid off and the only debt we have is our mortgage. With these sacrifices I am hoping to be mortgage free in about 15yrs, or less. You can do it, but you have to want it really bad.

Jack O'Prandy
Jack O'Prandy

I can totally agree with this concept. I am 37, married, no kids, living in SE Asia. We have been out here about 5 years and am making a good salary and saving nearly all of it. Actual expenses here are $3k a month (we bought our condo in cash) and that is living pretty large. I make $270 - $350k (depends on the variable bonus) a year so am living on 10 - 12% of our pre-tax salary. After tax salary is about $180k - $240k so living expenses are 15 - 20% of take home pay.

The job is incredibly difficult and I'm finding it easy to burn out- manage a company of 700 people and am working 12-14 hours a day, with weekends generally off.

We have a net worth of $2.5 million, with $250k as the value of the condo, and $250k in 401k investments. The remaining $2 million is in different cash accounts earning between 0% - 1.5% interest a year.

Using your formula I think we can easily retire with a draw down of 3%. What I worry about is the following:

1. Losing principle if investing in stocks.
2. Losing principle if investing in bonds unless I hold them to maturity.
3. Seems good to keep cash handy to deploy it into an opportunity with some upside
4. Fear of losing my skills- a 55 year retirement is quite daunting
5. Fear of not having skills to earn a good salary while having inflation / market disruptions eating away at our principle.

Any advice would be appreciated.

Best regards,



I'm a new reader and little confused by how you can live indefinitely on 3% spendable interest with an inflation average of 3-4%. Even if they are both set at 3%, the cost of living (initially 15,000/yr, say) will outgrow the interest income because that first year it already eats up your interest income and from then on out it becomes more than your interest income. so at year 10, the living expenses are around 20k/year after rising 3% a year. your nest egg is already down to 490k and decreases exponentially down to 0 at year 35. (ie. after the first year your nest egg grew to 515k, but then you use 15450 of it). unless you are earning more interest than cost of living, isn't it a losing battle over the long haul?


Excellent article - actually, the tendencies of human behavior in general across most disciplines is reflected in your article. Losing weight, quitting smoking, anything that requires consistent discipline can be difficult for many people. I've followed ERE and the Early Retirement Board (started a long time ago when I read Terhorst's book). The math for short times is consistent, as you say. Most people are not willing to make the sacrifices - or are unwilling to find other ways to obtain the lifestyle for less money. The book "Your Money or Your Life" says it all - money is a way of quantifying your time in terms of 'banking' it for present or future needs/desires. If you are willing to trade having money with using your time, you can find ways to do things....however, you need to have the time. A simple example, I haven't purchased a book in a year. I use my library for books, DVDs, books-on-tape, CDs, etc. Sometimes I have to wait awhile for a 'newer' item, but that waiting allows me to enjoy that piece of entertainment for free (yes, I know, our taxes pay for it-therefore I don't pay for it twice when I use the library). There are many resources available that allow you to become creative with your time to gain lifestyle benefits.

With the above, one could argue that what you 'make' or spend in money in a year doesn't necessarily reflect your lifestyle - looks are deceiving.

Thanks for taking the time to write the article and the blog - I enjoy reading it.


I believe you mean to write "the argument is moot."

I find it ironic you dwell on the math without showing some simple plots (cost basis, future monthly income, etc. for a range of inflation and savings rates) and discussing the potentially catastrophic consequences of chance events. Not having a good buffer is costly; focusing on the mean is dangerous.


Nice article. I've been reading the extreme early retirement blog for a few months now. It is in alignment with my personal values. I'm 45, have two young kids and make around 55k a year. I'm approaching living off of 50% of my income living a middle-class lifestyle in Phoenix. I drive a car and own a home. I have student loans and health insurance as well as the responsibility of two young kids. It can be done if you are willing to get creative with your life. It even can become fun.

Regarding the health insurance issue, my personal belief is that the best health insurance is to be healthy. Few Americans take the time to eat right and work out enough to be really healthy. It takes time and discipline but little in the way of money. I have catastrophic health insurance for myself and my two kids that cost around $200 a month.


I have been reading this blog for quite some time now and I have noticed that the demographics of the followers seem to be in the middle to late stages of their careers looking for financial freedom. I might be incorrect on this but is my guess based upon most of the responses. I only bring this up because some of my considerations/hurdles to become financially free are quite different and are never mentioned on this site. This is due to education costs.

My generation is currently sitting with a lot of student debt and is probably the biggest obstacle to becoming financially free. I know people that are paying $1000/month for student loans and are struggling to make it. So trying to make it on 20% of your gross income is never going to happen because it does not even pay your student loan…let along living expenses. In my opinion this is going to be the next sub-prime mess in our country because the younger generation is going to just stop paying their student loans.

Hypothetically, imagine having $80k in student debt making $45k a year or imagine having another mortgage on top of your existing one. That is the kind of pressure that is placed on the younger generation.

Todd, I think this would be a suggestion for you next book in your other blog request for help.


Frugality, as you point out, this may not be for everyone. That said, there are at least some who can save 80 percent of pre tax income for over 20 years. I have a sibling who has done this on a middle six figure income.


Love the concept, but how the heck do you do this and still pay for health care in this country? Seems like most of the ERE folks are young and do one of two things: ignore it or live in a country that has socialized medicine. I've done the work, I've saved the money, but I'm unwilling to go "naked" with regards to health care. Sure there are high deductible policies, but how does one afford decent healthcare on 1200 a month?


Good article Todd, I enjoyed it.

For most people, the 'spend what you make' principle is 100% accurate - as incomes rise, so do their expenses, many times over the expenses - for the group with that mentality, the concepts presented in the article are unbelievable.

I have always believed people will find the money for what they really want (I was in sales for a short time and saw it firsthand) - likewise if you are 100% committed to early retirement, you will find a way to make it work.

I have a co-worker - never married, lives modestly (although not at the levels described above!) enjoys travel, etc. But he is ready to retire very comfortably right now at age 43!
I have a family and am not in his circumstance, but proves it is very do-able!


Thanks Todd for another great article. I wholeheartedly agree you can retire in 10 years (or less). The reason this does not seem possible for many is because most confuse "wants" with "needs". In other words, what we think we "need" is most often a "want". Basically, like you said, "lifestyle choices".

Pat S.
Pat S.

I like the idea. But it seems unrealistic. Unless you are fortunate enough to be in a dual income family with each member having a decent paycheck, or single with extremely low expenses, this seems darn right impossible.

You don't mention some very important considerations, such as inflation adjusted costs of living, and insurance (medical, dental, home, vehicle, life) costs. Also, I've never met anyone with a family that is able to live on 10-20% of their take home income, unless they are banking oodles more than everyone around them.

I absolutely endorse saving as much as possible, and understand that many people desperately want to leave the workaday world, the sooner the better. But I think creating an expectation of being able to live on so little may set your readers up for disappointment, unless, as I have said, their incomes and lifestyle are conducive to this type of extreme frugality, or they have a decent amount of economic outpatient care from friends and family.

Pat S.


An interesting number on that list is 50%. If you just started a family, that's how much you'd have to save if you want to retire when your kids head off to college.


Here are the results of my formula above:
Savings Years
10% 42
15% 37
20% 32
30% 26
40% 21
50% 17
60% 14
70% 10
80% 7