Wednesday, February 22, 2012
It's all about the savings rate!
If you are interested in early retirement you may be surprised to know a couple things. First of all, it doesn't matter how much you make!
You may be shocked to hear that, but it's true. Literally the only thing that matters is how much you save as a percentage of your earnings. I know I have said this before, but it bears repeating, as nothing else controls when you will be able to retire more than your savings rate.In my opinion the above image is the most powerful message you offer when it comes to early retirement.
You may be saving 50,000 a year, but if you are taking home $250K then it will still take you 37 YEARS to retire and still be able to pay all the same bills!
Or you may only be making 25k a year, but if you save 13K then you can retire in just over 15 years!
So work on getting that savings rate up! You can do it by raising income, or by slashing spending. Or better yet, by doing both! That is what I am doing. My goal for the year is a 50% savings rate for the year as a whole. I have had a bad month as far as spending too much, but it still looks like I will be able to save 50%. I will do a post at the end of the month detailing my spending and income. But for now, just remember, it's all about the savings rate!
-The Money Monk