RETIRE AT 35 AND STILL HIT $11m IN NET WORTH
My new life goal – freedom to choose
So, June 2021 – everywhere is opening back up, we are slowly coming out of the long slumber period confined to our homes for so long.
I actually feel like a bear coming out of hibernation!
So it’s the perfect time to reevaluate my financial life goals as we start a new chapter post-pandemic (fingers crossed those vaccination rates keep rising).
Why financial freedom?
Well I’ve really thought long and hard about this, primarily since the age of 27. When I left my birthplace (Ireland) and moved to Canada.
What triggered it was the first 6 months in a new job (Strategy Consulting) in a new city.
It was a tough road. I was working twelve to sixteen hour days, constantly having to prove myself to new colleagues and clients.
The pressure and deadlines was overwhelming. Don’t get me wrong, I built some really great qualities after coming through this phase, like resilience – but it is not something I want to repeat.
Every morning during that period of time, after putting on my suit and leaving my downtown condo for my 20 minute commute to work I thought about quitting and how I couldn’t keep going.
All the typical scenarios flashed through my head, like would it look terrible on my CV only staying in a job for only a few months, or would I be seen as a failure from my family and friends perspective, or would I have enough money to pay my bills if I didn’t find another job fast.
I began to realize that the fundamental reason that was causing this stress was the fact that I didn’t have the monetary freedom to just leave.
I couldn’t say no and leave a $170k (now $200k) per annum job. At this time in my life I had very little savings and because of the lack of a safety net I was stuck until I could find an alternative option. I felt trapped.
So I decided to put a plan into action. The goal of which was to ultimately achieve financial freedom. I would start consistently saving and investing every week, month and year until I no longer needed to worry about money. With the aim of saving/investing as high as 70% of my take home pay.
I could then follow a personal passion if I wanted, the important thing was having the option.
Whether it is becoming a woodwork teacher (passion of mine in school), or working outdoors, or even blogging full time – I wanted that freedom to choose and explore that option. That should be the way life is, right?
I am 30 years of age, with a current net worth of just over $260k (has since grown to over $350k), and I am on a mission to Financial Freedom.
What I mean by Financial Freedom, is having the ability to do what I want, where I want and how I want, without the worry of having enough money to pay for common life expenses (e.g. rent/food/transport/insurance cost etc.).
It’s not about never working again, rather the power that comes with having the choice and freedom to spend your time in areas you actually genuinely enjoy and are passionate about.
Without having to factor in how much it pays as the biggest deciding factor on whether you pursue it.
Sounds like a millennial pipe dream right?
“What I mean by Financial Freedom, is having the ability to do what I want, where I want and how I want!”
So 3 years in, how am I doing?
As noted above, I recently crossed the quarter of a million mark – a pretty awesome milestone for me! What I’ve noticed is my net worth started to really take off when I hit $100k.
This motivated me even more to keep going as I saw the returns and dividends start to become a material amount every month/quarter.
I will write a future post as to why (e.g. snowball effect from compound interest) so make sure to sign up to my newsletter here to stay notified.
I know my salary is very high, and at the moment I don’t have kids – but the truth is you don’t need such a high salary to follow this path.
What you do need is the commitment, persistence and perseverance to contribute every week to your savings, while investing in risk averse assets such as stock market index funds such as Vanguards VTI or VOOV and holding for a long period of time (no panic selling!) to take account of an average annual growth rate of 7%.
Investing should be simple for the average passive investor, don’t try and time the market and pick specific individual stocks – especially early on. This is the strategy I am following, and it’s working.
Where to next?
Okay, the target is to have over a million dollars by age 35 (preferably $1.5M).
So how do I get there, and how long will it take?
Using a simple compound annual growth rate calculator such as here. I plugged in the following numbers.
I currently contribute about $8k per month to my pre-tax (retirement accounts) and post-tax accounts (brokerage).
I haven’t assumed any growth over the 5 year term in these contributions, for example additional pay rises, or factored in any bonus contributions.
These would be quite significant for me, bonuses are typically 10-15% of my base salary, and annual salary increases are typically 5-10%.
So I am being conservative here. I’ve also assumed a return of 8% per year which also includes dividend reinvestments, which I plan on reinvesting all of.
So what are the results? After 5 years, my starting balance of $265k will have grown to over a million dollars!
Yes, I would officially become a millionaire by age 35 – wow that seems so far off, but now I know what it takes to get there, and the best part is it’s achievable.
Again commitment, persistence and perseverance need to be in place for me to reach this goal.
If I tweak the inputs such as pushing out retirement by another 2 years to age 37 which is still a very young age – my net worth would grow to $1.5million.
This is my ultimate target number. At this point, I could live off the withdrawals/dividends of 4% per year without ever touching the principal amount.
4% of $1.5M is $60k per year, more than enough for me to personally live on. In fact it’s more that I spend annually right now, so I can still enjoy my life – go on the odd vacation, eat out, enjoy drinks with my buddies, and who knows, maybe even support a family in the future.
The Power of Compounding!
Okay great, so all going well and assuming I don’t lose my job or any one of a million other things that could throw this plan out of whack.
What would I be worth if I didn’t touch the principal and the money continued to grow until the typical retirement age of 65.
How much would I be worth if at age 35?, even if I didn’t contribute a single dime more from the age of 35 on, and simply just let compound interest take its powerful hold!
Well over that 30 years, that amount of $1m by age 35 would have grown to ~$11M dollars by retirement age. $11 MILLION!!!
All without contributing a single extra dollar past the age of 35. Once you see this, I think you may look to alter your approach to saving and investing too, the earlier you start the better.
The more you can let compound interest take effect the better, put in the grind and hard work early on so you can reap the rewards later in life when you have a family and it becomes harder and harder to make big life alterations.
Try it yourself!
Trust me, plug in your own inputs and see where you land – whatever your age, job, savings. The first step is understanding where you are, and what you could achieve based on your earnings.
This will motivate you to stay the course and ultimately achieve financial freedom. Your future self will thank you.
Once you get in a rhythm it doesn’t have to be a painful habit, become smarter – at the very least you will improve your finances and best case you can shave 20 years off your retirement age.
Use that time instead to follow your passion and spend more time with your loved ones.
It opens up a whole world of job opportunities that normally you would never dream of:
- Freelancer? I have friends who make up to $100k a year working 20 hours per week
- Part time tutor? Online learning is exploding
- Full-time MeTheMillennial.com blogger? One can dream
- Coffee Barista? Why not! You have the power now!
Disregard the common advice of contributing 20% of your income to savings – I say aim far higher, at least over 50%.
Especially if you are younger with no dependents, take advantage of compound growth.
Good luck on your journey, starting will be difficult and require sacrifice, but remember the earlier you begin the better.
Make sure to reward yourself along the way too, treat yourself to dinner out or a holiday once you hit a certain savings threshold. T
his really helped me continue, when I hit 100k, I booked a trip to the Canary Islands – which was amazing by the way.
Sun, sea and sunset cocktails!
Financial freedom shouldn’t be without enjoying life too.
Both can be achieved.
Enjoy the successes as they come your way, making sure to celebrate the milestones.
As always, I hope you find some of these areas helpful in your own journey to whatever your goal is. Make sure to follow along on my journey on how this thing called life and my goal of financial freedom works out.
I keep my net worth updated here.
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Catch you soon,
6 thoughts on ““RETIRE” at age 35 and still reach $11 million dollars in net worth”
Glad to see the update!
Would like to see a post around your monthly budget. It would be very helpful.
Hey Ryan, yes good suggestion – I will provide a monthly breakdown as part of my next net worth update. Make sure to subscribe to the newsletter to stay notified as I post.
You make USD200k a year and save USD8,500 per month. Jesus wept, I would be retired by 35 on that kind of coin too! Not to mention, in my country after earning 200k, I’d barely be left with 8,500/month after tax.
It did take nearly a decade to work up to this salary, the main thing I have done to save this amount of my post tax income is:
– Max out tax advantages accounts (e.g. Retirements Accounts)
– Take advantage of discounted stock options in current company
– Kept my expenses low (e.g. no car, split rent on condo, cook at home etc. etc.)
– Moved country
It can definitely be done on a smaller salary too – there are many examples out there on people who FIRE’d earning much less (e.g. teachers).
Taxes aren’t great in Canada either, but through maxing out tax advantaged accounts you can bring down your overall tax rate.
You could actually consider moving country if that is an option to accelerate your journey, this is something I did – not only lowered my tax rate but also increased my income for the same comparable job. This explains: