By age 30 I'd saved $0 for retirement, but a strategic plan means I should be able to retire in 20 years

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Like a lot of millennials, I long assumed I'd never be able to retire, so I didn't bother saving for retirement. I also felt like I could barely make a dent in a savings account for most of my 20s anyway, as I was busy paying off debt and trying to find a decent-paying job.

However, as I approached 30, my mindset changed. I started to think more about what I wanted my future to look like, and not just a year or two in advance, but a decade or two. I also watched my dad and stepmom retire in their early 50s, more than a decade before most of their peers.

Suddenly, I wanted to be able to retire early. The only problem was that I felt way too far behind.

I started at age 30 with $0 saved for retirement

My savings account balance hovered around $0 for most of my 20s. The few times I managed to save up money, or contributed to my 401(k) for a few years, I just as quickly drained it to travel or move across the country.

At age 29, I finally paid off all my debt and started a small emergency savings fund. By the time I turned 30, I was debt-free, and I'd built up my emergency savings fund to cover a year's worth of basic living expenses. However, by my 30th birthday, I still had $0 saved for retirement.

I kept saving, though, and a few months into my 30th year I had enough extra money stashed away to invest in index funds with Vanguard. I opened an account and finally started my retirement fund with a $10,000 balance.

Making a 20-year savings plan to retire by age 50

I decided to set a goal for myself to retire by 50, despite having just started saving at age 30. That would give me 20 years to save and invest enough money to retire.

My dad's original goal was to retire by 50, so it seemed like a good age to me. Learning about the FIRE movement (financial independence, retire early) also inspired me to do this. It's all about changing up your lifestyle so you can increase your savings rate as much as possible, and then investing all of your savings until you have enough money invested that you can draw a salary from the dividends your investments earn.

Most members of this movement aim to retire much quicker, often within the next 10 years, or in their 30s and 40s. They do this by living frugally and saving at least 50% of their income, (a lot save 75%). In retirement, they often continue to live just as frugally.

To be honest, I'm not interested in living frugally, now or in retirement. So, I decided to meet the FIRE movement in the middle and give myself 20 years to save for retirement and achieve "financial independence," meaning I could live off my investments. To achieve this, you need to achieve a net worth that's 25 times your annual living expenses.

Using an early retirement calculator, I set my age to 30, my annual income to $80,000, my annual expenses to $45,000, and my current net worth to $10,000. These numbers gave me the magic age I was looking for: financial independence by 50.

With my savings rate at 44%, this plan is considered too spendy for most people in the early retirement movement. However, I felt that it was a reasonable compromise that would allow me to fully enjoy my life now while still achieving financial independence early on in life.

Under my current plan, my monthly expenses have to stay below $3,750 so that I can save $2,917 each month. If my income increases dramatically, I'll try to increase my savings rate along with it instead of falling prey to lifestyle inflation and spending all of that extra money. That way, I might retire even earlier, or I have an extra cushion in case my income ever takes a hit.

How I increased my savings rate

Switching to remote work and self-employment has, ironically, helped me save a lot of money. I have control over my income and can learn new, lucrative skills that allow me to demand higher rates and make more money. 

I can also work from anywhere in the world, allowing me to live in low cost-of-living areas while making a higher salary. I moved abroad where I can afford to live the lifestyle I want without going into debt.

My strategy for keeping my savings rate up is to focus on keeping my three biggest fixed costs to a minimum: housing, transportation, and food. To be fair, I don't always keep my food costs to a minimum. But I make up for it by finding places to rent that are extremely low cost, by either living outside of city centers or renting with roommates, and getting around on foot and by public transportation. I don't own a car.

This won't work for everyone. Your own preferences and needs will dictate where you can and can't cut costs. However, if you're willing to make some big changes to your current life, it's possible to retire a lot earlier than you think.

Talk to a financial planner today about retiring early. Use SmartAsset's free tool to connect with a qualified professional »

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