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How to Retire in Under Ten Years

Are you on FIRE?! I’m referring to the acronym FIRE (financial independence retire early) and not the literal definition (I hope that goes without saying).

If you’re on FIRE (again, referring to acronym) - yaayyyyy!!! One of the best things about FIRE is the freedom you have to spend more time with your family and friends, to explore your hobbies, to focus on your health, to travel, to do . . . whatever it is that you want to do!

Amon and I achieved FIRE in eight years - two years earlier than we expected! At the ages of 39 and 41, we quit our government jobs, retired, and moved to Portugal. Most people are shocked when we tell them we retired so young. Even more people are shocked when we tell them we were able to retire in less than ten years after devising our retirement plan. In general, I think the shock comes from a lack of understanding. Who really understands how to retire in less than ten years anyways?! Well, we do!!! And . . .

It all begins with . . . Savings Rates!

The key to retiring in less than ten years is all about increasing your savings rates. Your savings rate is the amount of money you make minus the amount of money you spend. Simple, right? Even better - there are two tried and true methods for increasing your savings rate: 1) making more money while keeping your expenses the same; and 2) decreasing your expenses, thereby saving more. Technically, there’s also a third way - making more AND saving more! Whatever method you choose, the goal should be to increase your savings rate by as much as possible. When you do this, you can invest more, and when you can invest more, you can grow your wealth more.

If your plan is to grow your wealth in the stock market (which is what Amon and I did), you’ll want to grow your stock portfolio to twenty-five times your annual expenses. This equation comes from the 4% Rule. The 4% Rule is “all the talk” in the FIRE community. The rule became popular from the Trinity Study.

Not familiar with the Trinity Study? Quick break down:

It’s a study conducted by a group of finance professors at Trinity University in Texas. The study calculated retirement portfolio success rates with various monthly withdrawal rate assumptions and various portfolio asset allocations. In other words, it looked at portfolios that had a mix between stocks and bonds and it looked at different withdrawal rates - at 3%, at 4%, at 5% and so on. And it looked at the success rate of people withdrawing that money and being able to withdraw that money throughout a 30-year retirement. The success rate was based on whether money remained in the investment portfolio throughout the life of the portfolio. Based on the numbers, the study concluded that someone with a retirement portfolio of 100% stocks could safely withdraw 4% from their investment account (adjusting for inflation) each year and not run out of money over the course of 30 years. The study also showed a 100% success rate for an investment portfolio that consisted of 75% stocks and 25% bonds with a withdrawal rate of 4%. BUT, when a portfolio was more heavily weighted in bonds, the study concluded that the success rate for the portfolio decreased.

So, what does the Trinity Study mean for you if you want to retire in less than ten years?

Assuming you want to grow your wealth in the stock market, it means you need to grow your stock portfolio to twenty-five times your projected annual expenses in retirement so that you can safely withdraw four percent from your portfolio.

Let’s work with some numbers to better illustrate my point. The average American family makes $60,000 a year. Let’s say that your projected annual expenses in early retirement are $60,000. Based on the 4% Rule, you would need an investment portfolio of $1.5 million ($60,000 x 25) before you could safely retire with a high likelihood of never running out of money during retirement. This is because, historically, the average stock market return has been about 8%. If you only pull 4% from your stock portfolio, even adjusting for inflation (about 3%), you would only be pulling the interest from your portfolio. In other words, you wouldn’t have to touch your principal balance!

Mathematically, the 4% rule makes sense. But, how can you grow a stock portfolio to twenty-five times your projected annual expenses in retirement? It all goes back to a high savings rate AND compound interest. Another illustration with numbers:

Let’s look at two families - Family A and Family B.

Both families make $60,000 a year. Family A is the average American family making $60K a year. They spend the typical 30% of their income on housing, 20% of their income goes to food, 10% goes to clothing, 15% goes towards transportation, 12% goes to medical expenses, 3% is spent on entertainment and other expenses, and 10% goes to savings (only $500 a month!). In total, Family A spends 90% of its income and saves 10%. Let’s assume that this family’s expected expenses in retirement remain the same (90% of $60K, or $54K). This means that this family would need $1.35 million dollars to retire ($54,000 x 25). With a monthly savings of $500 invested at a return rate of 8%, it would take this family more than 50 years to retire.

Fifty years just sounds . . . (insert sad face emoji!). BUT, there’s a better way - Let’s look at Family B. Family B also makes $60,000 a year. But, Family B house hacks, so they spend 0% of their income on housing. They also eat out less, so they only spend 10% of their income on food. They practice minimalism, so they only spend 3% on clothing. They drive a used car, so they only spend 5% on transportation. Their medical bills are the same (12%) as Family A. But, Family B spends only 3% on entertainment. The big difference between these two families is that Family B has managed to save a whopping 67% ($3,350) each month. In total, Family B spends 33% of its income and saves 67%. Assuming that Family B’s expected expenses in retirement remain the same (33% of $60K, or $19.8K). This means that this family would need $494K dollars to retire ($19,800 x 25). With a monthly savings of $3,350 invested at a return rate of 8%, it would take this family less than ten years to retire!

Less than ten years - it’s possible!

Maybe you’re not like Family A or B. That’s not the point. The point is that by increasing your savings rate, you are propelling yourself closer to FIRE. And isn’t that the end goal? Let me rephrase my rhetorical question. That is the end goal!!! So do yourself a favor - increase your savings rate and get closer to FIRE. Your future self will thank you!


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Hello, We’re Amon & Christina

We’re former federal government employees that focused on saving, making, and investing money so that we could grow enough wealth in our investments to never have to work again.

And, guess what? We did it! At the age of 39, we reached financial independence, quit our jobs, and . . . we retired!

So, if you’re interested in learning how to save, make and invest money on the road to financial independence and retiring early (i.e., F.I.R.E.) - this site is for you!

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F.I.R.E. Master Class

Our comprehensive course on reaching financial independence and retiring early.

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Stock Market Investing for F.I.R.E. Course

Everything you need to know about investing in the stock market for financial independence & retiring early (F.I.R.E.)

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How to Move to Portugal Course

A Step-By-Step Course to Relocating and Living in Portugal. 

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The F.I.R.E. Workbook

Create your own Financial Independence Plan with our Financial Independence Retire Early (FIRE) Workbook. Available in three formats:  MS Excel, Google Sheets and PDF.


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