Finance

The Goal: Financial Independence

I always assumed I’d work until I was 62 years old.  That’s what we’re told growing up and when we begin our careers, right?  Even then, we were told that there’s no guarantee we’d have enough money to retire and Social Security might not be around. We may even have to work until 70!  This is exactly what I believed until just a couple years ago.

My parents gave me a great financial start. They’ve always been good with money and are fantastic role models – I couldn’t be more fortunate.  For my 18th birthday, they bought stock in my name. For Christmas and future birthdays, they’d buy more stock for me.  This got me interested in the stock market and investing, even though I didn’t know much about it.

I’ve always contributed to a 401k and put money into a Roth IRA when I was able. I also participated in the employee stock purchase plan while working for one employer, allowing me to buy company stock at a 15% discount.  As my financial situation improved (i.e. higher income, less debt) I’d invest and save as much as I could.

It wasn’t until I stumbled onto the Mr. Money Mustache website that I realized that, not only was retirement a reality, but early retirement was a possibility. He does a great job of explaining the math behind early retirement and using the 4% safe withdrawal rate to determine just how much money is needed to retire.

Looking at the balances in my investment accounts and calculating the “magic” number (25 times my annual expenses), I realized I’m much closer to financial independence and early retirement than I ever would have guessed. This is actually doable. Who would have guessed?

The key is to keep my living expenses low so that the amount needed for retirement stays low as well. It’s much easier to finance a cheaper lifestyle than an extravagant one, especially over 40 years of retirement instead of the usual 25.

This isn’t to say that I’ll be living the life of a miser. I actually live like a queen: I live alone in a 3 bedroom house, take at least one trip each year, and go out with friends often. My life certainly isn’t lacking and I see value in spending money on the things that are important to me.

My goal is to be able to fully retire when I’m 50 years old (in 2026).  While I expect to hit financial independence a few years prior to that, I’d like to add a cushion so I can travel as much as I’d like once I take the leap into retirement.  By saving aggressively now and reaching FI in my 40’s, it also gives me the option to semi-retire at that point and work only enough to cover my living expenses, without saving another cent for retirement and also not drawing on those funds until I’m 50 and/or fully retired.

I’m excited to take this journey. Who doesn’t dream of having the freedom to choose how to spend their days, rather than have it dictated by an employer?