How Can I Retire Young with Financial Independence?

1. Make a million dollars in your 20s and 30s. This sounds like a lot, but it's not that crazy a number. Let's say you get a job at 21 with a salary of 35K. If you can get a 5% raise each year, either through the company or by seeking out higher salaries, you should be making 50-60K a year when you're in your early 30s. If you don't have any debt and keep minimal expenses, a significant portion of that income can go into an investment account that continues to compound your earnings. As long as you invest in quality stocks and bonds, turning a modest salary into a million dollars isn't that far fetched. Why a million? Because that's usually the number for the FIRE model of living. If you can make more, feel free to do so.

2. Avoid most luxury buys. If you have an inheritance and can get a good deal on a house, that might help with your retirement plans down the road. Otherwise, leaving the workforce early usually means renting cheaply or living nomadically for the foreseeable future. A lot of people use the international house-sitting sites, going where the wind takes them and living for free. You probably won't be living in a gated community and playing golf every day of your retirement, but that's usually not the goal for people who ditch their jobs while still relatively young.

3. Weather the storms. The rule of thumb for this lifestyle is living of 4% of your portfolio amount. That means you have more money when your assets increase in value, and less money when the markets are struggling. If you have a million-dollar portfolio, you have $40,000 a year to live off. This math shows how feasible an early retirement might be, but the variables of healthcare, having a family and unexpected expenses still loom large. If you commit to a jobless life at the age of 40, you will be closely monitoring your money for the rest of time.