Wouldn’t it be wonderful to retire in your 30s (or maybe even at a younger age!) and saying goodbye to the corporate rat race once and for all? Wouldn’t it be great to be financially secure, not having a boss, and being in total control of your time?

Of course, it would. Who wouldn’t like to sleep in in the morning, travel wherever you want to, make your own business decisions etc. The big question is: How do you achieve financial independence or “early retirement” in your 30s?

I have some good news for you here, and some bad news.

The good news: Everybody can become financially independent in their 30s if you prioritize saving and investing money over spending money. Everybody can do it. I have achieved financial independence at about 32/33, and I am not someone with an Ivy League college degree, a rich family or impressive business relationships I could feed off of. I don’t even consider myself to be above-average in terms of intelligence, frankly, even though I have somehow managed to convince my university to give me a university degree…

The bad news – so to speak – is that if you are looking for a quick fix or a magic formula to achieve financial independence, you will be disappointed. There are no shortcuts. There is no “system” that does the work for you. Anyone who promises you a “system”, or says that achieving financial independence is easy, is lying to you. Think about it: If someone had a sure “system” of making money easily, why would they want to share it? Wouldn’t it much better for this person’s own financial interest to maintain this market inefficiency and exploit the system to the max?

Of course, it would. It makes perfect sense. If I found a system that I can milk for maximum financial gain, why share it and give my profit source away? That doesn’t make any sense. As a matter of fact, most of the systems out there that promise people easy money via “options trading”, “forex trading”, “sports betting”, “multi-level marketing businesses”, are scams and schemes that enrich people only at the top…and at the expense of everybody else. Don’t fall for them.

Anybody who tells you that making money and creating passive income streams is not hard work and requires dedication and self-discipline, is usually hiding the truth.

You want to know how I managed to retire in my early 30s? I saved money my whole life. And not just a little bit. I saved and invested (!) my income from various jobs since I was 16 (I started to buy shares in a European bakery chain in the late nineties). When I graduated from university in 2006 and started to work as a financial analyst, I immediately saved at least 50 percent of my monthly income. I got my paycheck, I immediately put the 50 percent into my investment account. And I forced myself to live what was left after saving.

In the words of Warren Buffett, the famous investor and one of the richest people in the world, I spent what was left after saving, while the majority of people save what’s left after spending (which is typically nothing).

According to a recent study, more than 20 percent of people have saved nothing for retirement. Another 10 percent apparently have little, but surely not enough to even think about early retirement. Read the following paragraph from a related CNBC piece discussing retirement savings:

“Of course, some people are more prepared: A quarter report having $200,000 or more stashed away, while 16 percent have between $75,000 and $199,999. But overall, Northwestern Mutual found that Americans with retirement savings have an average of $84,821 saved, which is far from enough. Experts typically recommend trying to accumulate at least $1 million.”

This begs the question: Why do people not save more money for retirement?

Here are a couple of reasons why people aren’t stashing away more money.

However, more often than not, people just don’t save (enough) money because nobody ever told them why they should save, and how they do it. Most people simply have never formed the habit of saving money. And if you never learn the habit of saving money, how can you possibly hope to retire early or being financially secure?


A Case Study In Saving And Compounding Money

One of the most distressing realizations – if you think about it – is that most people simply don’t know and understand the power of saving and compounding money over long periods of time.

Let me show you the power of saving (and reinvesting) money from an impressive chart from J.P. Morgan. Here’s a chart from J.P. Morgan’s 2018 retirement guide that nicely illustrates the power of saving/investing/compounding money over long periods of time.

I highly recommend you to read through JP Morgan’s entire Retirement Guide which has lots of useful information for people wanting to up their financial IQ.

Chloe, for instance, starts to save and invest money early and consistently, and as a result dramatically outperforms Lyla, Quincy and Noah. In fact, the difference is so astounding that I wonder sometimes why not more people prioritize saving/investing over spending/consuming. It’s a no-brainer.

Chloe’s investment portfolio at age 65 is worth nearly twice as much as Lyla’s and more than twice as much as Quincy’s just because she started to save and invest money early. The ability to outperform over the long-term due to reinvesting dividends/interest/bond income is called the “power of compounding”. It’s when your dividend income – which you reinvest – also starts to earn dividend income, which then will also earn dividend income in the future. The key here, I dare to say it again, is to start to save money early and regularly.

And it doesn’t matter how much you save. Even if it’s only $5 or $20 each month. The point is to get you to learn the habit of saving. Start small with what you have, and you can take it from there.

That’s what I did. I saved money day-in and day-out, never owned a car, never owned furniture. In fact, I lived in furnished studio apartments most of my young adult life. Why? I preferred putting the money into an investment fund earning money for me while I was sleeping over making payments on a car or some other nonsense. Some people take issue with this approach to life and believe that they “must really live and enjoy their lives”. My response to this is always the same: “So you just chain yourself to a job and a life you don’t really like just because you want people you don’t know to think you can afford a high-end car? Where is the logic in that?”

It’s a silly argument, really. And it is especially silly now that I realize that most of the people that laughed at me for being obsessed with investing, go to the exact same jobs every day they used to go to 10 years ago while I am living off my investment income. I guess, I don’t really look silly to them now, probably more like “lucky”.

Have You Saved Enough Money To Retire Yet?

Here’s a quick way to find out.

According to Fidelity Investments, employees should have saved a multiple of their current annual salary in order to allow for a smooth retirement.

For example, if you earn $50,000 a year and you are 50 years old, you should have ~$200,000 (4x your current annual salary) stashed away in a combination of savings, investment and retirement accounts.

Looking at that table, if you don’t have saved enough money, maybe it is time for you to take a hard look in the mirror and get your priorities straight.

A Question Of Priorities

At the end of the day, it all comes down to priorities.

What are your priorities?

Are your priorities to be “cool” and “trying to be accepted by others?” Or are your priorities to forgo short-term consumption for long-term financial benefit? It’s you who decides. You want to be approved by others and live a debt-financed lifestyle, feel free to do so if that’s what you really want. If you want to live your life on your own terms, start by building the habit of saving money.

When people ask my what my priorities are, I never talk about money. Because, as a matter of fact, it’s not really about money itself, it’s about the freedom that comes with it. Imagine waking up every day whenever you want, nobody telling you what to do, and you are in total control of your time. Those are the real benefits of retiring early: You’re the boss.


To Sum Up

  • Retiring in your 30s is entirely possible for average people (I have done it) as long as you prioritize saving and investing over consumption;
  • Start to save money earl: The younger you are, the more time the money has to compound. The sooner you start the better, and it is never too late to start;
  • Save money consistently either through automated savings plans or regularly transfer money into your investment account;
  • Reinvest dividends and interest into new income-producing assets;

Ignore people that ridicule your ambitions. You will be laughing sooner than you think.