A COUPLE in their 30s retired early with just $870,000 and created a unique method to help them save more than $1.2 million.
The duo, Steve and Courtney, decided they didn’t want to sit behind an office desk after years of working and moved to Pearce, Arizona, about 85 miles east of Tucson.
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They stopped working at ages 35 and 33, took the money they had and started making a plan to live the life they wanted.
“Since we don’t have full-time jobs, we can choose to do things on Wednesday or Tuesday, or whenever,” Courtney said. CNBC Do it.
“It’s about freedom, the freedom to plan your day, to do whatever you want…” Steve added.
Steve previously worked as an IT consultant earning around $125,000 a year, but “spent a lot of money” on cars and motorcycles before meeting Courtney.
She spent much less and also earned a fairly high salary of $110,000 per year as a systems engineer.
After deciding they wanted to retire very early, they created a plan that included a money-saving method to help them increase their net worth into the million-dollar range.
Courtney said it all started with a crucial choice to commit to the relatively minimalist lifestyle they already had, while also saving between $800,000 and $900,000.
They also moved into an Airstream mobile home, keeping monthly expenses to a minimum.
A big decision was to reduce eating out expenses to “$50 a month combined for anything outside the home,” according to Courtney.
She explained that they also monitored food costs, ended many subscription services, and generally decided that they valued retirement more than other material items and luxuries.
“For us, the payoff was worth it,” Steve said.
KEEPING TRACK
The couple managed to max out both their retirement accounts, as well as save more money than expected, a total of 70% of both their incomes, before stopping working entirely.
They used 401(k)s, Roth IRAs, and standard brokerage and savings accounts to pool the funds, and they used a relatively well-known 4% withdrawal rule on investments so as not to run out of money.
Steve and Courtney also have no outstanding debt and have paid off their house in full.
Steve and Courtney’s annual budget is $40,000 to $50,000 and a typical monthly budget for the pair is $2,502.
About $1,000 of that goes toward food and $500 toward health insurance.
Where to save retirement money
There are several different places you can put the money you have saved for retirement. Each has different tax advantages, but not all are available to everyone.
401(k) – an employer-sponsored retirement account. Contributions are made pre-tax and many employers will match a certain percentage of your contributions. Taxes are paid when funds are withdrawn in retirement.
Roth IRA – an individual retirement account. Contributions are made after taxes, but withdrawals in retirement are not taxed.
TSP (savings plan) – a retirement savings and investment plan for federal employees and members of the uniformed services. They work similarly to 401(k)s, but may have more limited investment options.
Pension – an employee benefit that obliges the employer to make payments to the employee upon retirement. Pensions are becoming increasingly rare.
The budget only changes and adjusts depending on whether they consider larger ticket purchases or whether they want to replenish their savings account, which is between $60,000 and $80,000.
Overall, Steve and Courtney say they live comfortably and love not having the “added pressure” of full-time work.
For more related content, check out The US Sun’s coverage of a couple who retired early with $4.3 million but have a “scarcity mentality.”
The US Sun also tells the story of a soon-to-be retiree who wants to stop working early on a budget of $6,000 a month.
This story originally appeared on The-sun.com read the full story
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