That book is $$+ on amazon (it’s on my wish list in case it ever drops in price). If we say that consumer inflation is roughly 3%, today’s prices would by 180k, 360k, and 720k. With 2% it’s 150k, 300k, and 600k. I’m too lazy to check the real CPI numbers.

Bravo, Elizabeth! Your plan (and actions) are quite similar to my own in my 30s. I retired at 39 after working 10 years at a pre-tax inflation-adjusted average income of less than $45,000 annually. I saved about 70% of my gross (not net) and I’ve lived on an after-tax inflation-adjusted $12,000 or less annually for the last 30+ years (with one exception). Except for the trip to India I never got around to, I’ve never “done without” any of my dreams or desires. My only real regrets have been that so many of the people I know and care about are still locked into “work and spend” and they can’t come out and play. The only substantial difference between your plan and mine — and my sole exceptional “spending spree”: having lived for years as a renter in a major metropolitan area, at retirement I moved to a small university town and bought my own house — for cash. (The move gave me a place to store my “stuff” — mostly books, music, movies and some furniture — and the death of rent eased my fixed cash flow demands allowing me to afford private health insurance, so I think it was the right decision for me.) Good luck to you!

Go go go! I’m rootin’ for ya!

I’m wondering: Are you planning to get married? If so, take a look at what “married filing jointly” can do for your tax situation.

For my husband and I, filing jointly meant we were in the .15 tax bracket rather than the .25 or .28 or whatever the next higher one was.

BTW…I definitely did not marry my husband for the money benefits! I married him because we love each other and want to spend the rest of our lives together. Lol I just wanted to mention that.

I think of it this way: It’s all my money. My entire portfolio (401(k), IRA, Roth, savings accounts, etc.) supports all my goals.

Suppose you retire at 35 with enough total assets that your investment income would support your lifestyle, but a fraction of those assets are in tax-deferred investments that you’d rather not tap into. You can spend down the money outside the tax-deferred accounts faster than they produced income, while letting income in the tax-deferred accounts accumulate.

As long as you don’t run out of money in the regular accounts before you want to start withdrawing from the 401(k), you’re fine.

It’s possible to do some calculations, based on assumed investment returns and spending rates, and figure out what fraction of your money can go into a 401(k) and still leave enough outside to support you from age 35 to age 59-and-a-half.

The tax advantage can be substantial, especially if your taxable earnings while you’re employed are much higher than your investment earnings after retirement will be.

Wow, Elizabeth, I did a double-take here for a minute. You sound exactly like me at 27 (except that my goal was to retire at 45). I’m retiring in 4 days (a year early at 44!)

I just wanted to tell you you are not crazy, you WILL do it.

(The part about tracking when you hit round numbers in your calendar made me laugh so hard, I did EXACTLY that. Were we separated at birth or something? Oh yeah, separated by 17 years, I guess not. . . )

I look forward to following your path on your blog.

It’s all about career and lifestyle choice. Unfortunately, some people just made the wrong career choice and will never achieve financial independence. Others will not plan appropriately for the expenses associated with children.

My wife and I are both 27 and pharmacists. She makes $108,000 and I make $111,500. We’ve been out of school for three years and we each started at $100,000 (plus, we each received a $30,000 sign-on bonus).

We plan to have no children. We will both be financially independent at 33. That is, we’ll have paid off our only current debt which is our mortgage and have saved $1 million. At that point, we both plan to work as floating pharmacists; working only 20 hours or so a week.

Reducing your expenses helps, but in order to really achieve financial success you need to make the right career and lifestyle choice.

Hey Joe, you’re absolutely right about medical costs–

Elizabeth, have you considered how you will be able to finance a good health insurance policy? Individual policies are available through the Blues (Blue Cross and Blue Shield) as well as through other companies. One uninsured medical emergency and you could be financially wiped out. A catastrophic health ins. plan could prevent a serious depletion of your principal.

Best of luck with achieving your goals!!!

I like the plan! Would you still feel the same if you didn’t have the trust fun though?

At the risk of sounding like a killjoy, I have to agree with Joe about the health insurance issue.

If you marry your B/F and can gain coverage under his HI (if he has it), then you will solve that problem. (How does he fit into any shared living expenses?) Otherwise, an individual HI policy is expensive and its cost rises quickly, well above the general inflation rate.

I retired in 2008 at age 45 but I needed to find an affordable HI policy in order to make it work. Even then, for 2010 HI has now become my most costly expense, about $7.000 a year if you include my relatively small out-of-pocket dental costs.

My monthly expenses are about $1,800 and that includes a fully paid-off co-op apartment since 1998. I am single and have no kids. Speaking of which, it doesn’t appear that kids will be part of your ER equation, either. If they are, then you can forget about living on $1,200 a month. HI alone will cost you that much.

I have close to $700k in non-retirement mutual funds (mostly bonds) earning dividends which more than cover my $1,800 expenses, so if there is unexpectedly high inflation I will not have to dip into principal. I also have $300k in an IRA which is growing so I can tap into it when I turn 59.5.

I think you need to run a surplus for many years because it is likely your investment income will grow at a slower rate than your expenses. That is how I have planned my retirement budget.

The good thing about contributing to a 401(k) is that you can use pretax dollars which automatically boosts your ROI. This, along with any company match, gives you an even better rate of return.

Christmas suggestion. Our family does a white elephant exchange. We each bring something we no longer want- or is funny- and wrap it. We then pick from the pile one at a time- stealing from each other or just keeping what we got. It is LOADS of laughs. The one time someone bought something instead of purging – they were ousted from the game until the end. It makes for a stress free and fun Christmas evening!

Man I should have gone to pharmacy school…organic chemistry was a killer though…

@Steve Austin, Jacob: To a rough approximation, you can adjust Terhorst’s numbers to modern day by multiplying by 2. So, if he says $50k, think $100k in current numbers. It isn’t perfect, but it’s reasonably accurate, and makes reading the book easy.

Jacob, I’ll see if I can get my copy back from my sister and mail it out to you if you like. I paid $5 for it about a year ago, used of course. It’s a fun read, but I doubt you’ll learn much from it.

@Elizabeth, I say don’t be too discouraged by those who say that health insurance will ruin your dream. First, see Jacob’s posts on how he is managing to buy health insurance– I think he’s retired and around 35. Second, make sure you keep yourself healthy. Also, no one knows what the HI system will be like in 10-20 years, so ultimately you will adjust your plan when you get there. Lastly, realize that the overwhelming majority of humans live and die without the kind of health insurance that many in the developed world have decided is essential– you can have a great life without health insurance, you just have to figure out how.

Hi, I’m the original author and just realized this has been reposted. Kinda cool to get comments on something 2+ years old.

My expenses have changed a lot since this post, so even though I’m still progressing I don’t think I’ll hit the age 35 goal–see my blog for an update from a couple of days ago.

@michael: Nope, I didn’t die on my trip. Thanks for the concern, though. 🙂

@Daniele: Yes, I think I was counting on 5% investment growth, based on putting most of my money in stocks and an emergency fund in CDs. 5% is pretty reasonable for large US stocks over a long period of time. I haven’t hit that so far due to the recession, but my emerging markets investments are up a lot and the S&P isn’t a total disaster anymore so I still think it’s possible I might average 5% over the 8-year period 2008-2016.

@everyone who commented on health insurance: My BF (same as in 2008) has the “state pool” insurance, which I can’t get. Private insurance doesn’t seem too expensive for someone like me (young and healthy). And I am definitely hoping that the national insurance situation will change by the time I actually quit my job.

[…] A Plan To Retire Early Another guest post, A plan to financial independence at 35. I remember thinking that I wanted to retire at 35 when I was in high school. I’m 32 now so I […]

All the best with your plan. I’d never heard of the 72t rule; I’ll have to keep that in the back of my mind.