This is the second post in my Personal Finance Series. If you haven’t gotten a chance, please go back and read the first installation: Personal Finance 101!

Early retirement?

Wait, Chi… did you like.. skip the whole section of retirement?

Yeah, yeah I hear you. It might seem crazy to talk about “early retirement” before even talking in depth about retirement generally, but I just wanted to talk about the third principle (check out Principles #1 and 2 in the previous post) that also rocked my world and dramatically changed how I approached my own personal finances. I promise, we’ll get to Retirement 101 in later posts. ;)

But first, here are some very important disclaimers:

  1. I am not a financial advisor. Everything I say on finance in these series are MY OWN personal experiences and thoughts, NOT advice for you and your own situation. For advice, please reach out to a financial advisor!

  2. My situation is not the same as yours. There are certain circumstances that are unique to my own situation. I’ll try my best to ID all of these beforehand so you can better figure out how to apply what I’m talking about to your own unique situation.


Lesson 3: Early Retirement

TL;DR: You have to pay attention to the PERCENTAGE of your income you are spending. This is the biggest indicator of how long you will have until you can RETIRE or BE financially independent.

But here’s the rest of the post in case you want to understand WHY:

Early Retirement. Raise your hand if you laugh at these words.

HAHAHA. Yeah right, Chi.

I get it. My first job out of undergrad was at an environmental nonprofit in Washington, DC. I had a full day job, and then I worked as a part time server… just to be able to afford living in the city. I thought, there was NO WAY in hell I would ever have enough money to retire, let alone early. That’s stuff for people with trust funds or folks who win the lottery. Right!?

I get you, don’t worry!

But then I read a post from a finance blog called Mr. Money Mustache about how this dude retired at AGE 30. What. That’s LITERALLY 35 years early. HOW DID HE DO IT. I was VEEEERY skeptical.

The basic premise is this:

Your time to reach retirement depends on only one factor: Your savings rate, as a percentage of your take-home pay.


Your savings rate is determined ENTIRELY by these two things:

How much money you take home each year

How much you can live on


NOTE that the most important part here is how these two things relate to one another. It is not about making more and more money (so that you can spend more and more). It’s about managing the percentage of your income that you spend. There are many examples of teachers (a notoriously underpaid and overworked bunch) who retire early because their savings rate is high.

Make sense?

The hard part is figuring out how to apply this principle to YOUR life. I admit, this is where my own personal situation is fortuitous (remember when I said I’d point out parts of my own situation that are unique?). For example:

  • I don’t have student loans (yay scholarships, financial aid, work study, and being a residential advisor!)

  • I don’t have any kids / pets

  • I don’t have a partner

  • I don’t have to pay for my parent’s healthcare, housing, etc

Which means that for me, the question of HOW MUCH CAN I LIVE ON is pretty simple to calculate. I don’t need much…. just enough to pay for housing, food, car/home insurance, phone bills, my own medical care, etc. The rest is just technically extra (that I funnel into savings for various things like houses, travel, etc. More on that to come in a later post, don’t worry!). I realize that I’m quite privileged to have these circumstance and that not everyone is in the same boat. But whether or not you’re juggling to pay for student/car/credit card debts, I think understanding this principle can really help shift your mindset.

So, what does this ACTUALLY mean for you?

In other words, you have to pay attention to the PERCENTAGE of your income you are spending. This proportion DIRECTLY impacts the time you need to save for (Although this relationship is not linear. More to come on that later). Here’s a quote from Mr. Money Mustache:

“If you are spending 100% (or more) of your income, you will never be prepared to retire, unless someone else is doing the saving for you (wealthy parents, social security, pension fund, etc.). So your work career will be Infinite.

If you are spending 0% of your income (you live for free somehow), and can maintain this after retirement, you can retire right now. So your working career can be Zero.”

But when you start saving something in the middle — that’s when the interesting stuff happens. It’s not a linear relationship, but rather exponential due to things like interest.

Take a look at this graph:

If you save 10% of your salary, it will take you approximately 55 years from now to retire.

But if you double that to 20% of your salary, it will take you less than 40 years.

The greater your savings rate, the less time you need to save for. That makes sense, right?

There are some important assumptions to outline:

  • This assumes about a 5% return on investment for your savings (which is industry standard)

  • You don’t exceed the “4% safe withdrawal rate” after retirement

  • You will only be withdrawing from the gains (from interest), since this income may be sustaining you for seventy years or so (if you’re retiring early).

  • Your standard of living and expenses remain relatively stable (this allows for some extenuating circumstances, such as recessions or illnesses) and will not see a huge increase once you’re retired (aka no flying to the grocery stores in a private chopper).

Mr. Money Mustache breaks the graph down into a even more basic table:

Screen Shot 2019-01-31 at 3.56.27 PM.png

Remember, this isn’t to say that you need to drop everything and start saving 90% of your income ASAP. How much you can save is completely up to you, your circumstances, and your goals. The idea is not that you need to sacrifice EVERYTHING. This is just to help you prioritize and budget according to your goals. If one of your goals is to retire earlier OR ensure that you will have enough in retirement, then you need to understand that your savings rate must be high.

The average savings rate in the United States is around 6-7%. That means you will need to work ~60-65 years before you retire.

For me personally, I want to retire early. I want to be able to have children in my mid-30s and spend as much time with them as I want (without having to worry about finances). I want to be able to travel the world while I’m still young and able-bodied (hike ALL those mountains in Switzerland). I want to be able to go visit my parents or family whenever I feel like. And I don’t want to wait to do all these things.

Because of that, I have an average savings rate of ~50%. At times, it has been as low as 30% (when I lived in DC), at times as high as 70% (most recently, when I lived in Denver). Right now, my (projected) savings rate is around 65% (when I finally move into San Francisco).

Some of you might be wondering… 65%?! HOW??

Here’s actually a recent example from my own life…

Example: What place should I live in?

So as most of y’all know, I recently moved from Denver, CO to San Francisco, CA… aka to the most expensive place to live in the United States. And finding an affordable place to live in the city is very challenging. If you want to live in a studio/apartment by yourself without roommates, expect to pay anywhere between $2500-4000. If you do have roommates, the average range I saw was between $800-1800.

However, in my search, I quickly learned that anything between $800-1400 were either located in the East Bay (too far a commute), converted living rooms (I wanted my own door, not a curtain), didn’t have a kitchen (big problem for me), or…were just plain shitholes LOL.

Eventually, I landed on two places:

  • Place A:

    • Great location (close to transportation to get to work/elsewhere in the city)

    • Apartment: 3 bd/1 ba (I would have one bedroom, 2 roommates) - Bedroom could fit queen bed, desk, etc

    • “Garden level” aka in the basement, but it did have a window

    • Smaller kitchen and common space

    • $1186/month

  • Place B:

    • Great location (close to transportation to get to work/elsewhere in the city)

    • Apartment: 3 bd/1 ba (I would have one bedroom, 2 roommates) - Bedroom could fit queen bed, desk, etc

    • HUGE space, 3rd level, HUGE windows and tons of natural light (objectively WAY nicer)

    • Super cute kitchen (new appliances) and beautiful living room area (perfect for exercise/yoga seshes, etc)

    • $1575/month

Technically, my budget could afford either option. However, obviously with Plan A, I would save close to $350/month, or $4,200 per year.

I struggled with this decision for a while. I made a pros/cons list. I cycled through:

“Yeah, but that natural sunlight was INCREDIBLE. I need it”

“Imagine what you could do with an extra $317 a month”

“You can’t really have people over in the bottom basement. Maybe it’s not even really pretty enough to show to people. Like, what if you’re embarrassed to have people over?”

“The more expensive one is just SO aesthetically pleasing.”

“You can’t change the rent, but you CAN change how you decorate the inside of a house.”

“You are a BOSS Chi. TREAT YOSELF”

Yeah, I’m serious with that last one. I did think, ‘fuck it. it’s time in my life to have nice things now’.

First pass at my pros/cons list

First pass at my pros/cons list

But ultimately I realized many things:

  • Most of my arguments for the more expensive one were around “It looks better”, which ultimately led to “when people see it, they will see that I am doing well”. How much did I really care about that?

  • I really can’t afford to spend a majority of my income on rent, especially since I need a big emergency fund for emergency repairs with my house back in Denver

  • I don’t actually know how much I’ll be home with the new job/new life.

  • You can ALWAYS decorate a space on the inside and completely transform it.

  • The more expensive apartment would dramatically decrease my savings rate. Was that worth it to me?

Long story long, I ended up choosing to live in the less expensive apartment. Who knows, in a couple months, I could totally hate it. But I go into my lease with confidence that (a) I thought things through and went with my gut, (b) it was the less expensive mistake to make, and (c) I can always move and adjust my budgets later if I need to.

You don’t have to get it “perfect”. That’s impossible.

Instead, I strive to continually monitor my decisions and ask myself:

Is this what I think is worth spending money on? If yes, then awesome. If no, how can I figure out ways to increase my savings rate?

It’s important to remember, most people live above their means. Whether it’s to keep up appearances or just poor financial foresight, this is not uncommon. If you want to be financially savvy, it’s about living below your means. Just because you can blow all your money on a private jet doesn’t mean you should. Instead, prioritize on what is important to you and spend accordingly.

And once you start saving more, then you’ll have more funds to go traveling :)

Some of my fave shots from Italia (2018)! :)

OKAY, there goes the second post! Check out the first one here. And please please, leave a comment with your thoughts/questions/concerns. I’d love to hear from you!