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10 Goals to Hit If You Want to Retire Early in 10 Years

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10 goals to hit if you want to retire early in 10 years

So you want to retire in 10 years (or less). That’s a terrific goal, no matter how old you are. I’m going to assume most readers are in their 40s and 50s because that’s the age you start to consider early retirement. However, I’ll also keep younger readers in mind because this is Retire by 40. We have many young readers who want to leave their careers behind and try something else. It is not easy to retire really early, but it is possible. I retired from my engineer career when I was 38 and my wife (Mrs. RB40) is going to join me in a couple of years. We’re all at different points in our journey and it’s hard to know if you’re on track to retire early. That’s why I’m giving you these 10 goals to hit if you want to retire in 10 years or less. Check them out and see how many you’ve achieved already.

Oh, you should keep score. You get a point for each of these goals you already hit. There are bonus points too, so look out for them. I’ll give you a grade at the end of the post. Please share this post with your friends if you enjoy it. I made it easy for you to share on social media, just click on the icon of your choice at the bottom of the screen.

1. Eliminate Consumer Debt

This first one is a no brainer. You should not have any consumer debt at all if you want to retire early.

These bad debts include, but are not limited to the following.

  • Payday loans
  • Credit card debts
  • Store credit debts
  • Auto loans
  • Medical debts
  • Student loan debts
  • Personal loans

All these debts are horrible and the interest will drag you down. Instead of investing and building wealth for your early retirement, your money will be diverted to pay down these bad debts. If you have any of these, you need to get rid of them as soon as possible. One point if you don’t have any consumer debt.

Bonus point: I don’t include the home mortgage in the bad debt category. I consider a mortgage to be a neutral debt. It’s not bad and it’s not good. We all need a place to live and I think being a homeowner is better than renting. You get a bonus point if your mortgage is paid off, though. That’s a great accomplishment and it’ll help limit your annual expenses in early retirement. Nice job!

2. Saving at least 25% of your income

The saving rate goal is a bit tough to set because it depends on your age and net worth. If you’re older and have been saving for a long time, then you might not need to save as much. Younger folks who want to retire early need to save much more aggressively because they haven’t worked as long. Well, we’ll just go with the minimum. If you want to retire early in 10 years, then you need to save at least 25% of your income. You really should try to save more, though.

To be clear, I’ll give a quick example. If you make $100,000 per year before taxes, then you should save at least $25,000. The easiest way to do this is to max out your 401k and Roth IRA contributions. For 2018, that’s $18,500 + $5,500 for people under 50. That will get you most of the way there. You can save the rest in an after-tax brokerage account.

Bonus point: 25% is just the minimum and you need to increase your saving rate as you get closer to early retirement. If your saving rate is more than 50%, then you’re killing it. Give yourself a bonus point and keep up the good work!

3. Have 10x your annual expense in net worth

We’re working backward with this one. According to the 4% Safe Withdrawal Rate, You need at least 25x your annual expense to retire early. 25x is just the minimum, though. If you want to retire in your 30s or 40s, then you will need some padding. You can learn more about the Safe Withdrawal Rate at Early Retirement Now. Big Ern’s SWR series already has 27 articles and it is still growing. This is required reading if you plan to depend on the SWR for early retirement.

For our purpose, we’ll just stick with 25x as the minimum requirement for early retirement. If you want to retire in 10 years, you should have 10x your annual cost of living right now. This is because it usually takes 6-7 years to double your investment. In 10 years, you should grow 10x annual expense to 25x.

This one takes more work. You need to track your expense and see how much you spend every year. If you don’t already do this, then you should start right away. Tracking your spending is a great way to become more serious about your finances. This is an essential step to figuring out if you can retire early.

Next, you need to figure out your net worth. This is everything you have that can be converted into money. I include our primary residence in our net worth, but it only makes up about 5% so it’s not a big deal. You can read more about our net worth here if you’re interested – RB40 Household Net Worth Breakdown.

Bonus point: Give yourself a bonus point if your net worth is more than 20x your annual expense. This means you’re very close to financial independence. You’re almost there!

4. Passive Income pays 25% of your COL

Passive income is the real ticket to early retirement. If your passive income surpasses your expenses consistently, then you’re set for life because your portfolio can grow without working. I call this the FI ratio and I track it religiously.

*FI ratio = passive income / expense

You can read more about our passive income at my Passive Income page. We have passive income from real estate crowdfunding, rental properties, dividend stocks, interest, and more. I update it every month so check it out.

Passive income is somewhat related to net worth. A bigger net worth means you can put more capital to work. However, you have to focus on passive income to grow it. We had very little passive income until early retirement became my goal. Previously, I concentrated on growing our net worth without considering income. However, you need passive income to pay the bills when you don’t work anymore. When I learned that, I had to switch my focus from building net worth to increasing passive income.

You get a point if your passive income covers at least 25% of your cost of living. This goal is set pretty low at 25%. You should increase it as much as you can before retiring. For this question, capital gains only count as passive income when you sell the investment.

5. Have a Side Hustle

To be totally honest, it’s brutally difficult to increase your FI ratio to 100%. We’re really struggling to get there by 2020.

Let’s go through a quick example here. An average American family spends about $57,000 per year (in 2016.) That’s about $4,750 per month and it sounds pretty reasonable. In fact, that’s just a little below our monthly budget of $4,800/month. How much money do you need to generate $57,000 of passive income annually?

One easy way is to invest in dividend stocks and get 3% of dividend income. The catch here is you’d need about $2 million. There are ways to get more ROI, but it might not be for everyone. Some people do much better with rental properties, but most of us don’t want to be a landlord. The bottom line is passive income is really tough to build.

Luckily, you don’t have to have 100% FI ratio to retire early. You can fill in the gap with side hustles and other alternative income. One of the reasons why I started blogging in 2010 was because I knew there was some income potential from this endeavor. I was hoping to generate $500/month to help fill the gap. If you think about it, making $500 from a side hustle (or a part-time job) isn’t very difficult. Any little bit of active income helps a ton in early retirement. That’s why you should figure out a side hustle that you enjoy. Lazy man has a dog sitting business and a blog. These micro businesses are generating alternative income to help fund his early retirement.

You get a point if you have a side hustle.

6. Know how to invest

Saving money is just the first step. You need to know how to invest to fund your retirement. It’s not enough to put money into a saving account because inflation will destroy your buying power. That’s why it is very important to start investing when you’re young. You need to learn to invest and figure out the best strategy for yourself.

It took me 20 years, but I finally settled on an investing strategy that I’m comfortable with.

  • All the money in our retirement accounts is invested in passive index funds.
  • Our taxable account is invested dividend stocks to help fund our early retirement.
  • We have 3 rental units.
  • I’m working to increase our investment in real estate crowdfunding to $100,000.

This is what works for us and it is still evolving. You’ll have to figure out your own investing strategy to have a chance at early retirement.

I think it is fine to hire a financial advisor to do this for you, but you still need to understand the basics. How will you know if the advisor is doing a good job or not? You need to be able to understand the statement and see if the advisor is worth the big fees you’re paying.

You get a point if you know how to invest. Even if you’re learning about investing, you still get this point. The important thing is to keep improving at investing.

7. Those big lumpy expenses

Most of us will have some lumpy expenses in the future. What happens if your car dies? Do you need to get a loan to replace your vehicle? Do you have kids? How will they pay for college? You need to plan for those big lumpy expenses.

For us, the biggest lumpy expense will be higher education. In 2029, four years at our alma mater (an in-state public university) will cost over $250,000. Of course, we’re hoping for some scholarships and financial aids but we’re also preparing to shell out a ton of cash too. Luckily, we only have one son and we are already saving for college with the 529 plan. Currently, the account is worth about $77,000. I’m hopeful that it will be enough to pay for college in 11 years. Of course, if he wants to go to a private school or get a Ph.D., he’d need to get some student loans to help pay for it. I’d encourage him to work part-time when he’s in college too.

What about you? Do you have a plan to cover those big lumpy expenses? You get a point if you do.

8. Stable family life

You get a point if you have a stable family life and don’t plan to change your current status. This means if you’re single, you’ll stay single. If you’re married, then you’ll stay married and don’t plan to have any more children. A drastic change in family life can alter the early retirement calculation greatly.

Kids are great, but they will increase your cost of living. For example, there is no way I could have retired in 2012 if we had 3 kids. I’d have to work many more years to shore up our finances. We’d need to move to a bigger home, buy a bigger vehicle, spend more on food, and plan for 3x college expenses. Our cost of living would have increased significantly and the early retirement equation wouldn’t have worked out as smoothly.

9. No bad habits that can derail your life

Do you have a bad habit that can derail your life? If you have one, you probably know it. Here is my list of vices to avoid.

  • Drugs, tobacco, and other addicting substances.
  • Using prescription drugs for nonmedical reasons.
  • Overindulging in alcohol.
  • Unhealthy eating – overeating, mindless eating, junk food, fast food, too much processed food, eating out too often, etc…
  • The house always wins in the long term so don’t waste your time gambling.
  • It will catch up to you and screw up your family life.
  • Too much pride. This can lead to keeping up with the Jones and more.
  • Not wearing your seat belt.
  • Not exercising. You can get by without exercise when you’re young, but it will catch up to you later.

Building a good life is about avoiding mistakes as much as making good decisions. Just one of two of these bad habits can ruin your life. Did I miss any bad habits here?

Give yourself a point if you don’t have any bad habits that can screw up your life.

10. Have FIRE plan

This one is the most important. The first 5 goals were all about numbers, but you don’t need to hit 100% on all these to retire early. I retired from my career way before our FI ratio hit 100%. Over the first couple of years, we relied on these to cover our cost of living.

It took a few years, but now we can cover our expenses with just our passive income and my online income. If things go well, we’ll be able to fund our early retirement with only the passive income in 2-4 years.

You can read more about my early retirement withdrawal strategy here.

The point is this – you need a FIRE plan. BTW, FIRE stands for Financial Independence and Retire Early. How will you build enough wealth to fund early retirement? Life doesn’t always follow the plan, but you still need one to guide your way.

Oh, it’s not all about the finance either. The hardest part of early retirement isn’t about money at all. A lot of people feel lost and anxious after retirement. You need to figure you want to do after retirement. It can be hard to live an unstructured lifestyle after a long time in the workforce. What’s your plan for life after early retirement? You can’t just focus on leisure activities because you’ll get bored eventually. You need a purpose or at least some way to keep busy.

I’m not a good data point for this one because the retirement transition was very easy for me. I became a stay-at-home-dad and that kept me super busy for a few years. Blogging filled up the rest of my day so I never had time to get bored.

What’s your score?

Whew, this one went a bit longer than I planned. I hope you kept track of your points because here is how you scored.

  • 1-4 points: Spectator. You’re not serious about early retirement yet. You have a lot of catching up to do if you want to retire in 10 years.
  • 5-7 points: Amateur. Not bad, but you’re still behind. You might be able to pull it off in 10 years if you give it your all.
  • 8-10 points: Professional. You’re in good shape and can probably retire in 5-10 years.
  • 10+ points: Elite. Wow, you’re awesome. You probably can retire in just a few years. Keep at it!

Poll 

What's your score? Can you retire early in 10 years or less?

View Results

Loading ... Loading ...

Here is another early retirement quiz if you’re really bored in your cubicle today – How serious are you about early retirement. 😉

Let me know what you think about this quiz in the comment section. How did you score and where are you in life?

We got 11 points. I’m 44 and I’m a stay-at-home-dad/blogger. Mrs. RB40 is still working full time, but plans to retire early soon. We have one kid.

Photo by Samuel Zeller and Jacques Perreault

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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.

Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.

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{ 71 comments… add one }
  • Mr. Tako August 13, 2018, 12:36 am

    Great goals Joe! I’m already early-retired, but back when I was saving for retirement I probably would have gotten most of these goals.

    I started saving back in highschool and even after college I saved something like 50% (or more) of my income. That plus a passion for investing put me on a path to early retirement long before personal finance blogs ever existed.

    • retirebyforty August 13, 2018, 9:24 am

      Saving 50% in your 20s is an amazing accomplishment. I’m pretty sure I didn’t get there until my 30s. Nice job.

  • Financially Free August 13, 2018, 12:48 am

    Good article Joe. It made me realize I need to focus more on exercising pre-FIRE. Lately I’ve been thinking it would be one of my focus point when I retire. But at that time, it might be too late.

    • retirebyforty August 13, 2018, 9:25 am

      Exactly. Everyone needs to exercise and keep healthy. If you look up the top causes of death in the US, you’ll see that most of them can be alleviated with exercise. Don’t put it off.

  • Ernie Zelinski August 13, 2018, 12:58 am

    A great article overall. I agree with practically all of it.

    Of course, my being lazy, and being 69 years old and having been semi-retired for around 30 years, I didn’t calculate any score.

    I likely have said this before many times. These are words of wisdom that have helped me achieve my financial goals, my financial independence, and my personal freedom.

    “The amount of money you make will always be in direct proportion to the demand for what you do, your ability to do it, and the difficulty of replacing you.”
    — Earl Nightingale

    “It’s better to do a sub-par job on the right project than an excellent job on the wrong project.”
    — Robert J. Ringer

    “In the arena of human life the honors and rewards fall to those who show their good qualities in action.”
    — Aristotle

    “It is cruel to discover one’s mediocrity only when it is too late.”
    — W. Somerset Maugham

    “Even at your Best, someone will always have something negative to say. Pursue Greatness anyway.”
    — Tony Gaskins

    “My courage always rises at every attempt to intimidate me.”
    — Jane Austin

    “Take a millionaire for lunch — and don’t cheap out!”
    — Mark Victor Hansen

    “The great creative individual . . . is capable of more wisdom and virtue than collective man ever can be.”
    — John Stuart Mill

    “When starting out, don’t worry about not having enough money. Limited funds are a blessing, not a curse. Nothing encourages creative thinking in quite the same way.”
    — H. Jackson Brown, Jr.

    “Empty pockets never held anyone back. Only empty heads and empty hearts can do that.”
    — Norman Vincent Peale

    “Extraordinary people survive under the most terrible circumstances and they become more extraordinary because of it.”
    — Robertson Davies

    For the record, on Wednesday evening I did an update on the number of books (mainly self-published) that I have sold worldwide and it came to 1,001,730 copies. It took almost 29 years but it’s a goal (a million copies sold) that 99 percent of writers will never achieve.

    • retirebyforty August 13, 2018, 9:30 am

      I like this one – “It is cruel to discover one’s mediocrity only when it is too late.”
      That’d be tough to find out when you’re old.
      Of course, this quiz is not the right fit for you. You’re a maverick and went your own way 30 years ago. I’m pretty sure your score was pretty low, but you still made it work. That goes to show that everyone needs to find their own path. Thanks for showing many of us the way.
      Congratulations on reaching the 1 million books milestone. That’s amazing!

  • Accidental FIRE August 13, 2018, 1:48 am

    I’m only a professional as I don’t have passive income that high enough to be elite. But I’m working on it!

  • Gentleman's Family Finances August 13, 2018, 1:52 am

    I think that number 8 Stable Family Life is very very important.
    The most miserable people that I know are the ones who are earning a lot of money to pay for new/old wives/girlfriends and kids. I’m talking middle aged engineers, earning well but jaded with life. Despite on paper earning over £100k, their lifestyle inflation and expensive partners/kids and often ex-partners and child support payments eat up a lot of their money – add on the executive cars and they are broke and unhappy.

    Another costly activity is finding a mate – you have to wine and dine, travel and buy presents for them and generally spend lots of money to impress them. Who would be interested in dating a Scrooge?
    If you find someone like minded who likes you for you – that’s the best investment you can make in life.

    • retirebyforty August 13, 2018, 9:32 am

      I agree. This is rarely talked about, but it is extremely important. You need a stable family so you can work as a team. A big change can really screw up the FIRE equation. A divorce is probably the worst example of this.

  • Half Life Theory August 13, 2018, 2:09 am

    I’m just an amateur 🙁
    Yeah this list is very legit, these aren’t super easy to hit metrics. It will definitely take sometime to work up to that 10/10 points. But i am working on it, and i’m well on my way. Awesome post Joe!

    • retirebyforty August 13, 2018, 9:33 am

      Keep working on it. You’re still very young and you have a ton of time. I’m sure you’ll be a pro by the time you’re 40. Actually, probably much earlier. Good luck!

  • beth August 13, 2018, 2:36 am

    I took the quiz and it says no early retirement for me. I had to do a full financial restart after a divorce and I am too far behind to catch up. Don’t you just love Mondays?

    • retirebyforty August 13, 2018, 9:34 am

      Sorry to hear that. This is why you need a stable family life while you’re shooting for FIRE. A divorce will set you back a long way.
      Just keep working on it. I’m sure you will surprise yourself. Don’t be discouraged.

  • My Passive Wage August 13, 2018, 3:58 am

    Really nice goals, I have about 6 goals here. Very happy with that for someone who is new to the investing side of things (2 years). Looking forward to more posts.

  • Buy, Hold Long August 13, 2018, 4:09 am

    Thanks for sharing. I believe that in perhaps 20 years or so I will be able to have more than enough passive income to cover most of my expenses. Still a long way to go but working on it all the time. Cheers

    • retirebyforty August 13, 2018, 3:14 pm

      Good luck! 20 years is a long time. I’m sure you can do it if you buy and hold long. 🙂

  • Marc @ Vital Dollar August 13, 2018, 5:01 am

    The stable family life is something that doesn’t really get a lot of attention but has a huge impact. My parents separated in their late 50’s and it totally changed everything for them in terms of finances and retirement. They were on track when they were together, separately they’re both struggling.

    • retirebyforty August 13, 2018, 3:15 pm

      I’m sorry to hear that. It’s much easier to work together as a team. I’m sure it’s a big adjustment for them.

  • Tom @ Dividends Diversify August 13, 2018, 5:54 am

    Great advice and analysis Joe. You touch on it in point 10, but I would emphasize if one has a post retirement plan, a plan to do something they love, it will provide so much motivation. It takes a unique person to just stop working and not do anything. Some of those folks just end up going back to work out of boredom. I thought and planned endlessly on point 10 for 25 years. And that’s what motivated me to work on points 1-9. Tom

    • retirebyforty August 13, 2018, 3:17 pm

      You’re right. I guess that one should really be another point. It’s very important, especially for an early retirement. I’d probably be restless too if I don’t have a blog and my son to keep my occupied.

  • Me AE August 13, 2018, 6:00 am

    Got 7 – we still don’t have 10x our expenses and our passive income is still pretty low. Need to let our nest egg grow awhile. I should also spend some time formalizing our FIRE plan.

    • retirebyforty August 13, 2018, 3:17 pm

      Just keep at it. You guys are still young so you have plenty of time. Good luck!

  • Mark @ retirementtrekkers.com August 13, 2018, 6:21 am

    Great goals!! I retired in June and often get asked how I did it. I usually point to the same goals you have here. But the biggest kicker for me was to save and invest 30%+ of my income in my 20s. Compounding works! I really believe I was able to do this because of how I was raised. My parents were (are) big savers and lived way below their means. So living frugally just seemed normal.

    Another big advantage was marrying someone with the same financial mindset. I have friends who have the FIRE mindset but will never get there because of their spouse.

    One last thing. It might seem contradictory but life isn’t all about socking it away for retirement. I’ve always had my one thing that I spend on. For me, the “Travel” budget line is protected. ?. I think it’s important to have “your thing” as long as it doesn’t prevent the other goals.

    • retirebyforty August 13, 2018, 4:07 pm

      Congratulations on your early retirement. That’s great!
      Having a high saving rate in your 20s helps a ton. I maxed out my 401k since 1996 and it worked out really well for us.
      Sure, we love to travel too. That’s why I want to go live in Thailand and explore Asia for a few years. We’ll do that after our son is done with school.

  • Max Your Freedom August 13, 2018, 6:29 am

    We’re at 10+ points, although it’s been a journey. The goal is to FIRE at 45, with the biggest focus to generate passive income that can cover COL + Fat Vacation Fund. Only 4 more years to go!

    • retirebyforty August 13, 2018, 4:08 pm

      Congratulations! That’s really great. Why can’t you retire now? 🙂

  • Mrs. 50 @ By50Journey August 13, 2018, 6:35 am

    Great post, Joe. It’s almost like you can read my mind. I’ve been wanting to read a post exactly like this. We want to be FI in 10 years, in 9 years to be exact. I’m 41 and have been wanted to be FIRE before 50.

    I’m surprised that I got 9 (felt like we had nothing to show for FI in 10 years). Got 0 score on #3 and #4 but a bonus point on #2. We’re only a professional as our net worth is so low plus no passive income. Working hard on that.

    Glad to hear that if you’re a professional then “You’re in good shape and can probably retire in 5-10 years.”

    • retirebyforty August 13, 2018, 4:10 pm

      9 is really good. I’m sure you can retire in 9 years. You just need to boost your saving rate a bit and build up your net worth. Good luck!

  • Lazy Man and Money August 13, 2018, 6:37 am

    Thanks for linking to my article. I know I’m not the target audience (yay 10+), but I’m a sucker for quizzes like this. Just don’t tell anyone about my subscription to Cosmo ;-).

    I’m going to count auto loans at less than bank interest not counting as consumer debt. We could pay it off, but there’s no reason to. My friend has some student loans from 15 years ago that he said he’d never pay off. I’m on the fence of differentiating between student loans and mortgage loans. They both fit in “neutral debt” in my view. There are bad examples of each, but I’d say that student loans are closer to mortgage loans than they are to payday loans. If RB40jr gets students loans for a “big lumpy eductation expense” does he lose a point here?

    I think we save 25% of our income, but I’ve actually never calculated it. For many people it is easy math, but for our varying income and savings (real estate equity). I’ll assume another point there, because I think we nail that one, give or take good expenses like solar panel loans.

    The part about stable family life also seems like it can be dissected so that getting married isn’t necessarily considered a negative financial thing.

    • retirebyforty August 13, 2018, 4:14 pm

      I enjoy these quizzes too. They are fun. I don’t know that much about student loans, but I heard they are not good. You have to pay back no matter what and the rate is not great. Yes, if RB40Jr gets student loans, then he’ll lose a point there. He’s so young, though. FI won’t matter for a long time.
      I’m not sure if getting married is good or bad. It just depends on the couple. It will probably make FIRE tougher, though. Most people don’t know about FIRE or don’t believe in it. It’ll be tough to convince your new spouse to get onboard.

  • Ms. Frugal Asian Finance August 13, 2018, 6:44 am

    This is such a great guide to FIRE! It should be packaged as a must-read for everyone who wants to retire early!

    I think I’m on track with #1 and #2 and still need to work on the rest. Uhm about #8, what if we are single and meet someone with a high earning potential, is frugal, also wants to FIRE, and wants to take care of us for the rest of our lives? :p

    • retirebyforty August 13, 2018, 4:15 pm

      Thanks! I should make it a clickable quiz and put it on the top page.
      Well, good luck with #8. That’s a rare person and you need to love that person too. It’s like panning for gold. You’ll have to discard a ton of pebbles. 😀

  • Xrayvsn August 13, 2018, 7:02 am

    I think I gave myself 9 points. Got dinged for the stable family life (although maybe I should get a point even though I am now single) and not really having a side hustle.

    This is a great checklist for someone making sure they are prepared for early retirement and I do like the point system.

    I think for me my biggest point making me confident in not running out of money is having an ever increasing passive income stream. My goal is to keep funneling it into passive income generating investments and hopefully one day not even need to touch the capital.

    • retirebyforty August 13, 2018, 4:17 pm

      Great job! You have a high income so you’re already ahead of the game. I’m sure you’ll be able to FIRE if you put your mind to it. I’m working on our passive income too. It’s tough to grow.

  • Angela @ Tread Lightly Retire Early August 13, 2018, 7:05 am

    8 points for us! Our net worth is getting verrrry close to that 10x number, though a good chunk of that was good timing with our house + another real estate investment so it feels artificially high 🙂 -1 for no side hustle, but that’s because I purposefully quit mine a year an a half ago and am fighting hard against turning this blog into one because I just don’t have the time.

    • retirebyforty August 13, 2018, 4:19 pm

      Oh wow, nice job! Maybe you’ll get back into side hustle after you retire early?

  • Richard August 13, 2018, 7:13 am

    Considering #4 and #5 I will never be able to afford retire so I’ll just spend everything that I’ve saved so far $30k.
    Thanks for the insight rb40…if you can’t do it, just give up and join the crowd !

    • retirebyforty August 13, 2018, 4:20 pm

      I’d keep saving and investing. Even if you can’t retire early,saving now will enable you to retire somewhat on time. Don’t be one of those people who needs to work until they die. It rarely works out well. Good luck!

  • Doc G August 13, 2018, 7:58 am

    Great inclusive checklist. Based on your system, I’m ready to retire in 10 years. Or now!

  • Mr. Groovy August 13, 2018, 8:02 am

    Haha! At least I’m elite in something. I love it, Joe. Great list. For me, the keys to financial independence in 10 years were outright homeownership and a great spouse. Do homeownership and marriage right and nothing can stop you.

    • retirebyforty August 13, 2018, 4:25 pm

      That’s great. I plan to own our primary residence 100% at some point too. But I’m not in a big hurry. 🙂
      Having the right partner is probably the most important thing on this list. FIRE is much easier as a team.

  • Dan K August 13, 2018, 9:20 am

    I enjoyed this post and how you made a game of it with keeping score. It helped me realize that we are doing better than I thought and can reach that goal of retiring in about 10 years. Thanks!

  • Revanche @ A Gai Shan Life August 13, 2018, 1:29 pm

    Considering how recently we just shed our biggest financial burden and how many obstacles I had to overcome just to get to the starting line, I’m happy that we come in as high as Amateur! I just need to focus on a couple more areas to really get ourselves set up – passive income covering at least 25-50% of our COL (aim high!) and either pay off the mortgage entirely which drops our COL dramatically or refine our investing plan to maximize returns.

    • retirebyforty August 13, 2018, 4:26 pm

      It’s tough to start in a hole. You’re on your way now, though. Keep at it and don’t get discouraged. 🙂

  • Helen August 13, 2018, 5:12 pm

    Hi Joe, you covered it very well. Yeah, consumer debt is the top priority to work on. It’s the big burden that prevents many people from reaching FI. Good reminder about the big lumpy expense, as it’s usually not included in the expected regular expenses. A healthy lifestyle definitely helps to reduce the expenses, and enjoy life more.

  • Lily | The Frugal Gene August 13, 2018, 10:48 pm

    I’m a professional! But I dare to dream elite! The biggest one I’m missing is #10. My sleeping habits are really horrible and sporadic. I just noticed tonight how blue and brown my eye bags are today. Granted it is 11pm and I haven’t slept much but still. Busy people manage time better than I do. I’m a mess in that area!!

    • retirebyforty August 14, 2018, 8:06 am

      Yikes, that doesn’t sound good. Try to get more sleep. 🙂

  • Dr. McFrugal August 13, 2018, 11:39 pm

    Barely a professional. I scored myself an 8. We have an auto loan our Tesla and my wife still has law school student loans. We can easily pay these off, but we decided not to. The auto loan is only 3% APY and my wife’s student loans will be forgiven in 4 years due to PSLF. We also don’t have have more than 25% of passive income covering our cost of living. Pretty much all of our income is active at this point. We reinvest all of our dividends and we haven’t sold any investments. Also… having a side hustle is very general. I guess I could consider my blog a side hustle, but it doesn’t really make money. I have sold some of our unwanted goods online and credit card churn and travel hack so I guess that’s sort of a side hustle. I work extra shifts, maybe that counts? At any rate, I put myself as a +1 for side hustle (otherwise I would be a 7 and a high end amateur).

    I think I’m most solid on #8 and #9, which matters the most to me.

    Thanks again for a great read!

    • retirebyforty August 14, 2018, 8:07 am

      I think working extra shift should count. Can you keep working extra shifts after you retire? 🙂
      Keep at it!

  • Ms. Vine August 14, 2018, 10:59 am

    Fun post! We have a plan to be ready to retire early in about 6 years. According to our poll results, this is pretty ambitious. But we are really close to earning the points in a few categories.

    • retirebyforty August 15, 2018, 7:53 am

      I wouldn’t worry too much about the score. If you’re working it hard, you’ll get there. Good luck!

  • Independence Engineered August 14, 2018, 2:28 pm

    Easy to get a 11 if you wrote the test ;p (just teasing).

    Great advice overall.

    I’d say I’m at a 8 with my current life status (single no kids), but I have a feeling this would probably change once I get married and have kids and re-calibrate the calculations when I get there.

    • retirebyforty August 15, 2018, 7:54 am

      Ha! You’re right about that. If I took this test 10 years ago, we’d score much lower. It just depends on where you are in life. Good luck!

  • Dr. MB August 14, 2018, 5:39 pm

    I think I am a professional. I think I retired by forty although I might I unretire again since my youngest heading off to university. I never disliked Medicine, I just wanted to stay home with my kids for a bit.

    I read Ernie Zelinski when I was a young trainee in Medical school. I love his writings!! And to see him comment above is awesome.

    • retirebyforty August 15, 2018, 7:56 am

      Ernie is great. He is such a rebel. 🙂
      Can you really unretire? I’ve been retired for 6 years and there is no way I can go back to engineering.
      Maybe a different career?

  • GYM August 14, 2018, 11:18 pm

    Great post as always Joe!

    I need to sleep better! I have over 20x my expenses in net worth but I don’t feel like I am close (I think maybe over 25x)… I think it’s because a lot of my net worth is tied down in my apartment. I would feel better if it was more liquid.

    • retirebyforty August 15, 2018, 7:56 am

      That’s a tough one. You’d have to be willing to move to a lower COL location to make it easier.
      I’d like more liquidity too.

  • Feiry Eclipse August 15, 2018, 5:20 am

    I’m not sure I believe passive income investments are all that different, or any better, than other investments. Right now dividends are mostly just increasing my tax burden and making it harder to save!

    But I had fun with the test! I’m not going to lie and say that Joe at Retireby40 calling me a professional doesn’t make me feel good. Because it does.

    Thanks for the fun post!

    • retirebyforty August 15, 2018, 7:59 am

      Passive income will come in really handy after you retire. If you’re making a good income now, it’s not great because of taxes.

  • Live Fi and Free August 15, 2018, 9:15 am

    We scored in the “Amateur” category. We are relatively young (28) and only came across Fi a few months ago. We’ve been tracking expenses for years and allocate savings before any expenses. But there has not been a focus on building net worth. After reading several books beginning with Rich Dad Poor Dad, we’ve been lazer focused on building assets. We’ve been consumer and student debt free for a few years now. In the last 3 months our net worth has skyrocketed from -$30k to just above zero last month. This month has been pretty flat so far, but its one of those fantastic 3 paycheck months. We’ve started a blog and e’re trying to figure out another side hustle to bring in more income. Another rental property is definitely in our future as well. Hope we can get to “Elite” status in no time!

    Thanks Joe, great article

  • Eric August 15, 2018, 1:30 pm

    Hi Joe,

    Great article! I’m glad you included the bad vices as well in this. Vices are a huge wasted expense and I’ve seen people consumed by their addictions to these awful things.

    Healthy body and healthy mind will do much for FIRE.

  • GreenDollarBills.com August 17, 2018, 12:01 pm

    Hey Joe, great piece. I like how you suggest that there are other side hustles other than personal finance blogging – we need more dog walkers out there! #microbusinesses!

  • Cubert August 18, 2018, 5:39 am

    Although I scored “elite” I often feel a heckuva lot less than elite on many days. It’s funny how this journey can twist you up in knots. Always looking for new angles and trying to outdo someone (yourself usually) or reach some new goal.
    Reminds me of my Millionaire Decade post from a few months back, but you did a much better job laying out the criteria. 🙂

  • TWL August 18, 2018, 7:21 am

    Great post!
    I got 10 points. I’m 39 and hoping to retire at 45.
    Agree with others–alignment with partner and having a post-retirement plan should be bonus points.

  • FIRECracker August 18, 2018, 7:25 am

    Nice list, Joe! Totally agree with the stability/minimal life changes point. Consistency is key. A lot of people think it’s a home run, but those are few and far between. You’re way more likely to succeed if you stay the course for the long term and don’t shoot yourself in the foot. And it’s not just true for FIRE, it’s true for side hustles as well. The dividends get paid out at the end after you’ve built in the hard work in the beginning, so if you keep changing your strategy or having unexpected life events, that will continue to derail you.

  • JoeHx August 20, 2018, 11:03 am

    I got score of six, maybe seven. I just did the math, and so far this year, my wife and I have only spent about 50% of our income, with the other 50% split between paying towards debt (mostly student loans) and saving. I think that’s pretty impressive considering we’ve had a new baby this year.

    • retirebyforty August 21, 2018, 8:27 am

      Great job! I hope your debt will be gone soon. You’ll be able to invest much more after that. Keep at it!

  • The Poor Swiss September 12, 2018, 7:06 am

    I’ve got 7 points on this. I plan to have children, I don’t have 10x my annual expenses and have next to no passive income. I counted my side hustle, but it’s not highly profitable right now. On the other hand, we plan to get to more than 50% savings rate. I am confident that we would still be able to reach FI with that score.

    Thanks for this nice post!

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