The 6 Craziest Ways Millennials Can Save Money To Retire Early (2024)

Financial independence, retire early.

It sounds like the dream. But it takes a lot of work to be part of the elite group of Americans in the so-called FIRE movement.While their counterparts were splurging at bars, they committed to save money from their corporate jobs...or even take on side hustles to build their income.

Inspired in part bythe personal finance tome, "Your Money or Your Life" by Vicki Robin and Joe Dominguez, these millennials are pinching pennies in order tobuild up big nest eggs. The goal is to then live off their investments.

And while the end sounds nice - who doesn’t want a break from the office - the road there can be tough, with millennials in the FIRE movement saving anywhere from 60% - 90% of their paychecks.

From keeping a car from 2006 to saying no to out-of-state weddings, here are six resolutions for 2020 for some of the leaders in the financial independent, retire early movement. While some ideas might be a bit zany for you – like sharing your personal finance history with a friend – it’s helpful to see what the experts recommend.

Even if your goal isn’t to retire by 40, there’s something to be said about being frugal going into this new decade. Here’s some of the craziest ways FIRE leaders jumpstarted their savings.

Kiersten and Julien Saundersare co-creators of the award-winning blog,rich & REGULAR. On their platform, they document their journey through parenting, work life, entrepreneurship, real estate investing and their pursuit of financial independence. They can also be seen in the 2019 documentary, “Playing WithFire."

Give yourself an allowance.

We stopped thinking of savings as leftovers. It’s a bit of a brain hack, but the idea is that most people do their budget and then use the leftovers as their baseline savings rate. This approach assumes thateverything is savings until you spend it.

This is saving, but in the affirmative. So you’re starting with a 100% savings rate and any time you spend money you subtract a %. It helps you easily identify the areas of life you need to change to meet your goal. If your goal is a 50% savings rate but the moment you pay your car note, your 100% starting point drops to 60%, then you know the car is an impediment to the goal.

Julie Berninger is a 30-year-old new mom, blogger, and Etsy-seller living in Seattle, WA. Julie and her husband paid off over $100,000 of debt and are now saving towards financial independence. She blogs at Millennial Boss, interviews early retirees on her podcast, Fire Drill, and teaches others how to blog and sell printables for profit at Gold City Ventures.

Say no to out-of-state weddings.

I stopped saying 'yes' to out-of-state weddings and expensive events associated with weddings such as destination bachelorette parties.We sent a nice note and a gift instead. We prioritized the events where we were closer with the couples but avoided spending hundreds of dollars on weekend trips.We’ve not attended at least three out of state weddings since making this decision and I did not attend a destination bachelorette. I estimate that saved us a few thousand dollars total.

Tanja Hester, author ofWORK OPTIONAL: Retire Early the Non-Penny-Pinching Way, is a former political communications consultant. Since retiring early from formal employment at the age of 38 along with her husband Mark Bunge, she devotes all her time to fun and purpose: writing her award-winning financial independence blogOur Next Life, podcasting onThe Fairer Cents, gathering women together to talk about financial independence atCents Positiveretreats, volunteering in her community, traveling the world, and skiing, hiking, biking, paddling, and climbing around her home in North Lake Tahoe, California. Basically: living the dream.

Set up your paycheck to auto deposit into savings.

Back when I was in debt and struggled to save any money at all, I decided to do new payroll paperwork at work so that part of my paycheck went straight to savings instead of checking, so I’d never feel like I had that money to spend. I started with $50 a paycheck, but you can do any amount. Especially if you get a raise at the start of the year, challenge yourself to live on what you earned last year and save as much of your new money as possible.

Sam startedFinancial Samuraiin 2009 to help people achieve financial freedom sooner, rather than later. In 2012, after spending 13 years in investment banking, Sam decided to retire at the age of 34. He spends his free time writing, playing tennis, and taking care of his two young children.

Talk about your financial habits.

One of the best ways to learn is to teach. Therefore, of the best ways to elucidate your financial weak spots is explain your financial habits to someone close to you. Not only will you better understand your spending and savings habits, the person listening may also offer some constructive criticism. Get rid of complacency. Seek criticism to improve your financial health!

Mabel A. Nunez is the founder and Chief Investment Officer of Girl$ on The Money - a stock market investing education company targeted to women, minorities, and individuals that are underrepresented in the world of investing. Through courses and resources, she empowers women to take action towards wealth creation and to take control of their lives.

Live frugally and keep your old car.

In 2006, as I got started in my career after undergrad, I paid full price (less than $5,000) and bought myself a high quality used car to take me to work and back. My commute totaled more than 1.5 hours both ways, Monday through Friday. I am not ashamed to share that I drive the same car to this day. I am confident that this key decision allowed me to save and invest thousands of dollars over the years.

Kristyis a world-traveling, early retiree. She and her husband Bryce used to live in one of the most expensive cities in Canada, but instead of drowning in debt, they rejected home ownership. What resulted was a 7-figure portfolio, which has allowed them to retire in their 30s and travel the world. They now spend time helping people with their finances and realizing their travel dreams ontheir blog millennial revolution. Their also wrote a bestselling book "Quit Like a Millionaire."

Embrace minimalism.

I grew up poor so hoarding was a big problem of mine. I wouldn't even throw out empty CD cases (remember CDs?) just in case I might need them again. Luckily, before our one bedroom apartment turned into an episode of "Hoarders", I realized how much money we'd be wasting by moving to a bigger apartment (our rent would have increased by 50%), so I started donating and de-cluttering our belongings, while making a pledgenot to buy anythingthat wasn't an absolute necessity.

This saved us a lot of rent – probably about $550 a month or around $6,600 by not upgrading to a two bedroom.

The 6 Craziest Ways Millennials Can Save Money To Retire Early (2024)

FAQs

How much does the average millennial have in retirement? ›

To date, however, millennials have amassed only $62,600 in average retirement savings. That leaves a retirement “gap” of more than $1.5 million. Financing a comfortable retirement in America means using some combination of Social Security, savings and other sources to replace lost wages in the final years of life.

Why are millennials not saving for retirement? ›

By some measures, millennials lag on retirement preparedness and net worth relative to older generations such as Gen X and baby boomers. There are many reasons for this, such as a shift away from pensions toward 401(k) plans and high student debt burdens.

What are the money habits to retire early? ›

Okay folks, start by investing 15% of your income into tax-advantaged retirement savings accounts, like 401(k)s and Roth IRAs. Be sure to invest your retirement money in mutual funds with a great track record. The key is to get into a regular habit of saving and investing every single month.

What is the FIRE money method? ›

Financial Independence, Retire Early (FIRE) is a financial movement defined by frugality, extreme savings, and investment. By saving up to 70% of their annual income, FIRE proponents aim to retire early and live off small withdrawals from their accumulated funds.

How many Americans have $1,000,000 in retirement savings? ›

If you have more than $1 million saved in retirement accounts, you are in the top 3% of retirees. According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.

How many Americans have 100k in savings? ›

14% of Americans Have $100,000 Saved for Retirement

Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.

At what age should you have 100k saved? ›

“By the time you hit 33 years old, you should have $100,000 saved somewhere,” he said, urging viewers that they can accomplish this goal. “Save 20 percent of your paycheck and let the market grow at 5% to 7% per year,” O'Leary said in the video.

Will social security run out for millennials? ›

Millennials still have decades to save for their retirement, plus if they wait until age 70 to take Social Security benefits, they can take advantage of a fairly sizable bump in benefits work credits because the benefit pool will likely continue to exist.

How many millennials have 100k saved? ›

Gauging from the survey results, 85.6% of younger millennials have less than $100,000 set aside for retirement. This is similar to the situation with older millennials, of which 83.95% have saved up less than $100,000 for retirement.

What is the $1000 a month rule for retirement? ›

The $1,000-a-month retirement rule says that you should save $240,000 for every $1,000 of monthly income you'll need in retirement. So, if you anticipate a $4,000 monthly budget when you retire, you should save $960,000 ($240,000 * 4).

What is the 3 rule in retirement? ›

A 3 percent withdrawal rate works better with larger portfolios. For instance, using the above numbers, a 3 percent rule would mean withdrawing just $22,500 per year. In this case, you may need additional income, such as Social Security, to supplement your retirement.

What is the 4 rule for early retirement? ›

One frequently used rule of thumb for retirement spending is known as the 4% rule. It's relatively simple: You add up all of your investments, and withdraw 4% of that total during your first year of retirement. In subsequent years, you adjust the dollar amount you withdraw to account for inflation.

What is the 25x rule for retirement? ›

The 25x rule entails saving 25 times an investor's planned annual expenses for retirement. Originating from the 4% rule, the 25x rule simplifies retirement planning by focusing on portfolio size.

How to retire early with no money? ›

If you determine you need more than Social Security income to meet your retirement needs, consider these options:
  1. Set a detailed budget to minimize expenses. ...
  2. Downsize your home. ...
  3. Continue working. ...
  4. Take advantage of tax-advantaged retirement plans. ...
  5. Open a traditional or Roth IRA.
Jan 31, 2024

What is the average wealth of a millennial? ›

The average millennial under age 35 has a net worth of about $76,000; those over age 35 stand at over $400,000. Members of Generation X have average net worths between $400,000 and $833,000, and older generations including baby boomers and the Silent Generation have average net worths of over $1 million.

How much cash does the average millennial have? ›

The average net worth of millennials has surged from $62,758 to $127,793 since the start of the pandemic. Much of this growth is from real estate; as of 2022, more than half of millennials had become homeowners. The average millennial makes between $52,156 and $62,244 per year.

What percentage of retirees have $3 million dollars? ›

Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.

How much will the average millennial inherit? ›

As such, it is estimated that some millennials and Gen Zers stand to inherit roughly $320,000, which is actually lower than the cost of the average home in the U.S. of $431,000 (according to U.S. Census Bureau and U.S. Department of Housing and Urban Development data for the third quarter of 2023).

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