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How to Retire in Ten Years, Regardless of Your Age

The following is a guest post. If you would like to submit a guest post, please read my policy and contact me.

If given the chance, most people wouldn’t work for a living. Almost everyone would agree with at least one of the following propositions:

  1. Work sucks, I don’t like walking into the building everyday.
  2. Work is great, but I’d like the option to quit and not worry about money.
  3. Work is tolerable, but I’d rather do something else with my time.

There is nothing inherently bad with working for a living. It just stops us doing what we want when we want to. It normally ties us to one physical location and is stressful because there is the constant fear of unemployment.

Most people recognize financial independence as being an objectively good end goal – passive income exceeding expenses is always a great situation to have. This leaves the obvious question:

Why aren’t more people aiming to be financially independent?

If humans acted in a purely rational and logical fashion, we would all be fit, we would all have perfect finances and would all be perfectly organized. Life gets in the way, priorities shift and we lose sight of what is really important.

The real reason most people aren’t trying to be financially independent is that most people think it’s out of reach and a goal that only people who are already rich can worry about, or perhaps those with very high incomes. I want to strip away some of these misconceptions so that you can see how easy an early retirement in ten years or less could be – if you want it badly enough.

The simple plan to retire in ten years

  1. Become a frugal machine and live on 25% of your income
  2. Invest the 75%
  3. Wait until your investment income exceeds your expenses
  4. Retire early, baby!

This plan will work with smaller savings rate, and it is perfectly fine to aim for a 50% savings rate or even higher – you just have to factor in a longer wait time before you will be able to reach financial independence.

Consider a 50% savings rate. Each year that you save this amount, you have saved an entire year’s worth of living expenses. If you had a flexible workplace, or a job that can be picked up after a break – after only a year you would have earned a years worth of financial independence.

Early retirement case study: Jane

Jane is single and earns $64,000 after tax. She manages to save 75% of her wage by living extremely frugally. Each year she does this, she socks away three years of living expenses for her early retirement.

Jane invests her savings in a US shares index fund which returns 7% (an approximation of the long term historical average) and puts away her savings each month. After ten years she has a nest egg worth a whopping $692,339.23!

She uses Firecalc and determines that her nest egg means that she has well and truly reached financial independence if she continues to spend at the same rate. The calculator allows for an increase in spending due to inflation. It uses over a century of historical share market information to test her nest egg against various historical periods (the great depression and all!) and sees how it would have fared.

In her case the Firecalc simulation tells us:

FIRECalc looked at the 111 possible 30 year periods in the available data, starting with a portfolio of $692,339 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 111 cycles. The lowest and highest portfolio balance throughout your retirement was $692,339 to $4,991,062, with an average of $2,179,896. (Note: values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 0 cycles failed, for a success rate of 100.0%.

Firecalc simulation Click to enlarge

The various lines are each of the different outcomes for her portfolio, using the historical data from the US share market.

This is all well and good, but how do I live on 25% of my income?

I’m not going to pretend this is easy. For some people, it’s just impossible. If you are a family with children with only one average income, or unemployed, a student, or at the very beginning of your career, then living on 25% of your salary isn’t going to be possible.

For the vast majority of people earning a full time income, or couples with two incomes, this is a difficult, but real possibility. There are sacrifices that have to be made, and I’m not going to pretend that you can drive around in a brand new BMW and still achieve this type of financial outcome. There aren’t any shortcuts or get rich quick schemes here.

It comes down to the question – how badly do you want to be free from work? Or free from the requirement to work?

I have managed to live on less than 25% of my income since starting my journey to early retirement, and I have an average income and started with consumer debt. When you factor in my partner’s income we have been going a bit above our 25% target, but should achieve a yearly 25% savings target in 2013.

Our financial independence journey since July 2012:

Final word on financial independence

If you want it badly enough you can make it happen. We tie ourselves to work because we spend all of the money that comes into our possession. If we can drastically lower the rate at which we spend our money on gadgets, expensive food, transport and accommodation we can swap all of those temporary things for something much greater: permanent freedom from work.

James is a 27 year old getting ready to retire. He blogs about how to retire in ten years, frugality, investing and anti-consumerism. You can follow him on Twitter here.

Kim’s Comments: While it would be difficult to live on 25% of your earnings while all of your colleagues are buying the latest and greatest, it must be very gratifying to know you will be free of having to work for a paycheck after such a short time. 

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. I would love to be able to live off 25% of our income, but unfortunately living in London is SO expensive. Our fixed expenses account for approximately 65% of our total take-home and we do our best to save a large portion of what is left!

    • It can be really difficult as I mentioned – saving any amount is a great start and better than most. The trick is to know that higher savings rates lead to freedom earlier, so that you can make an informed decision about spending. There is no right and wrong, and ultimately you’ve got to do what makes you happy. I moved from an expensive area to a less expensive area that was closer to work to make my rate possible. There have been several sacrifices I’ve made to make it possible, and they have all been worth it so far.

  2. This is a really interesting theory, but I’m afraid I don’t know anyone (myself included) who would be able to stick with it for ten years. I agree with you that it is possible (and that has been proven by people who have actually completed the challenge) and if someone really wants to retire in ten years, I’d say go for it!

    Nice to see you guest posting.

    • It’s definitely not easy, I’m with you on that. I have found that living a very simple life with very low spending has made my partner and I much happier. I can’t fully explain why this is, but it’s true. She was always naturally frugal, so it suits her down to the ground, but for me I wasn’t expecting it to be so enjoyable until I tried it.

      I might not be able to keep up the 25% savings rate for that long, but the longer I try, the better my finances will be even if I don’t meet my goal. As our incomes rise, it should be more and more manageable.

      I wouldn’t be too disappointed if we only managed an average of 50% over that period, because we’d be so far ahead than how we were tracking before.

  3. We are definitely working on living on 25% of our income. I think right now we are at around 35 to 40%!

    • Congratulations Michelle, that’s awesome. It’s great to see more people trying to reach financial independence earlier than normal. If you try and fail, then you’ve improved your finances, if you succeed then you can potentially live work-free if that’s what you want!

      It’s a win-win situation.

  4. In contrast, I achieved financial independence in less than 8 years. I invested in income property while married with 2 children. My savings percentage was much lower and lived more reasonably.

    • Congratulations Krantcent. It’s certainly achievable in a number of different ways. We think we’re living a very reasonable way and don’t feel like we’re missing out on anything. We still socialize every week, go out for drinks and dinner with friends, but cut back in areas that don’t give us any real benefit. Not having children has helped, obviously.

  5. Impressive AND compelling argument for a worthy goal. Personally, I can’t see myself sacrificing so much to retire in 10 years….but that’s my goal. Financial independence is so different for so many people, that if someone wants to aggressively pursue this dream, this seems like a clear path to get there.

    • Hi Joe, believe it or not, we really don’t sacrifice that much to live on 25%. We try to optimize and frugalize (new word) every aspect of our spending, and really assess whether we can go without it. For example, we just don’t need an ipad or a new laptop. We can go without meat for most of the week and get much of our food from the garden.

      We don’t have any service like cable TV or the like unless we get really good value from it. It’s almost a game of prioritization rather than sacrifice.

      It’s worth doing up a 25% budget just to see what it would look like for you to see if it’s achievable.

  6. There’s no way I could, right now, live on 25% of our income. Though I graduated within the last 5 years and have a boatload of debt we need to get rid of first. Interesting though!

  7. I’ve read a number of real life examples in newspapers over the years of people doing exactly what you wrote about. They live on so little and now they are in their late 30s or early 40s and have enough money saved so that they can do whatever they want. Accomplishing that takes a lot of planning.

    • It definitely does. But it’s planning that’s so worth it in my view. I don’t feel like I’ve wasted any time by planning for my future or by running the numbers. Far from it. I feel liberated knowing I’m on a path that will get me away from the need to work and onto a lifetime of travel and time with my loved ones.

  8. Nice. I would definitely like to retire in ten years if possible. I don’t think I will ever retire 100%, but it would definitely be nice to quit my 9-5 job!

    • Absolutely. I don’t think I’ll ever stop working either in that I’ll probably always have a side project on the go that I can do from wherever I am. But being able to stop going back to one office and being tied to it is definitely on the cards.

  9. I’ve said it before and I’ll say it again. Being retired sounds a lot like being unemployed. And it’s a feeling I don’t like.

    • Far from it. Being retired at an early age with enough money behind you to not worry about money is much more liberating than unemployment. Unemployment is stressful and you have no safety net in place in case you ever want to change your mind.

      Getting to the point I could retire so I have the option is the point, rather than getting there and stopping work at all costs. I want to have the option, and if that means continuing to work then I’ll do that if it makes me happy. If not, I’ll quit and do something better with my time without worrying if that new pass time is profitable or not.

      It opens the door to unpaid work and unprofitable social projects, as well as leisure. But it doesn’t mean they are compulsory.

  10. We’re aiming for early financial freedom as well, and I think the biggest contributing factor is having a partner who buys into it. 1- it’s a lot easier living on 50% or less when you have economies of scale, and 2- it’s just not achievable if they’re fighting you on it and forcing you to be a martyr in your spending.

  11. Great post James. I agree with living lean and on 25% or the maximum % you can, although once you retire you should aim for a bit more money. I can forego going out, buying lots of clothes, etc. but once retired, I’d want to travel, eat well, and enjoy life in ways that will probably cost more than what I was living on before.

  12. I currently aim to save 50% of my income, up from 25-30% at my last job. This is made easier by the fact that I am well compensated. It is made more difficult by the fact that I live in a high cost of living area. I will say that I am sacrificing a lot to pull this off.

    One area that I’ve yet to reconcile with is the fact that my savings rate means that I do not live a lifestyle similar to other educated professionals. I have yet to fully work though the social ramifications of my decision, but it is kind of isolating.

    One thing that I can say about trying to achieve early financial independence is that the math always works out beautifully. But once lifestyle and social considerations are added in, things get very messy very fast.

  13. It’s cool to think you could actually retire in the next 10 years however I know this is next to impossible for me. It would defiantly take one very disciplined person to make it happen.

    On the other hand I like to work but I fall into the number 3 section were my job is tolerable but I don’t love it. At the same time my job also gives me some great fringe benefits such as extra time off, which allows me to do other things, such as spend time with my family and run my finance blog.

  14. We always lived frugally.Paid off our house asap, then put that mortgage money into savings.Then we decided we wanted rental properties. We used equity from our house and started buying.In the span of 6 years we bought 40 units and retired. We still live frugally, but we split our time between canada and australia (summer all the time )We housesit for vacations.We pay off our debt as fast as possible, and eventually it will be gone. Not bad, we didn’t think . We were 44 & 48 at the time.

    • Wow, I’d love to hear more about your real estate deals sometime. Were those multi family units in a big complex or several smaller properties? I’d love summer all the time!

      • First property was a mobile home…we got a regular bank loan
        Second property was an 11 unit apt building- mortgage
        Third property- cheap house- mortgage
        Fourth property-cheap house-mortgage
        Fifth property-large house, which we renovated into 11 bachelor apts
        (we turned everyroom into a suite)- Vendor financed mortgage
        Sixth property- small mobile- bought with a credit card
        Seventh Property-Bought a 5 unit apt building (we live in one unit)-Vendor financed mortgage
        Eight property- our family home is now a rental
        Nineth Property-House + it had 4 mobiles set up on it- mortgage
        Tenth property- house- mortgage
        Eleventh property-mobile- Vendor sold it via installment payments
        Twelth property- mobile home-bought with credit card

  15. I enjoy calculators as much as anybody. It’s just important to keep the assumptions as conservative as possible and depend on no gains actually!

  16. Great post, James! My favorite line: “If you want it badly enough, you can make it happen.” There are many ways to reach our goals, whatever they are, as long as we remember how badly we want to do it. Thanks for the inspiring post!

  17. I think it would be nearly impossible for most people to live off of 25% of their income. The only way to really do so is to make a large sum of money (at least $150k/year).

    What this really brings into question is your job and whether or not you’re passionate about the work you do. While I personally wouldn’t mind “retiring” early, if you love the work that you do each day then there wouldn’t be that extreme desire to get away from the “work” that you do.

  18. James, I like your work here and I like your blog a lot. But unfortunately I do not advocate extreme frugal living. Just my opinion. I prefer to keep my expenses and instead concentrate on growing my income instead.

    • I agree 100% with My Money Design. Look, both spending less and earning more are hard work. But, only one can do more for others (on a bigger scale), and that’s earning more. For example, if I scrimp and save and deprive my family of life experiences only to leave them a bit of money after I retire, live, and die… I’ve failed as a provider in numerous ways (fewer memories, fewer experiences, and the lesson to be a cheapskate vs. a financial leader). However, if I show my family how to earn more, how to be fiscally smart, and how to provide value to society and scale that value… Then I will leave them with experiences and lessons that will fuel them, and their families, for generations in terms of both caring for others AND cash in the bank. Both spending less and earning more are not easy paths… might as well pick the one that can impact the most people for the longest amount of time! (btw, this is a great post, James)

      • I think it is much harder to scrimp and save if you have kids. There is certainly a balance between experiences and trying to save. You can only hope you show them the right way to do things.

  19. I thin more people could retire early but most don’t want to make the sacrifices that are necessary to do so. Therefore, they just keep working because they would rather keep their current standard of living instead of reducing it to be able to retire early.

    I also think that many people don’t know what they would do and therefore cannot picture what retirement really means to them.

  20. I’d like to see Jane’s monthly budget. Not sure how my family could live off 25% of our earnings. It would take a big income increase at this point. If you’re single, yes that would make it much easier.

  21. I think it is definitely possible to live on far less than we have become accustomed to in this country. A perfect example is how we accept 30 year mortgages without a thought. My father moved to Thailand 25 years ago and bought a house. The only kind of mortgage available was a 10 year mortgage. People adjust. They learn to live according social customs. That said, although I am a super saver, I doubt I would want to live on 25% of my income. You have to live a decent life. You know, go to the movies, go on vacation.

  22. I can do that, I need to work in Marin and live in Chico!

  23. I just started working in a new career so I haven’t thought about retiring early. Not that I would complain that if 10 years down the line I could hang up my uniform and just do other things I enjoy. I don’t dislike my job now in fact I like helping others. That could all change though lol. Great post!

  24. I’d like to see the hard #’s of their budget too and I’m curious re: whether or not they have kids. I’m guessing they don’t and if they do I’m guessing they’re not saving for those kids’ higher education. We just started living on 30% of our income and I’m already dreaming about rv’g in Alaska again, taking a cruise and traveling abroad – ha! We’ll see how long we can make this “delayed gratification” work. If we can do it solidly for 3 straight years we’re going to be very, very happy.

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