What People Really Need To Do To Retire In Their 30s

The basics of the FIRE — i.e., the Financial Independence Retire Early — movement aren't a particularly new concept. People have been seeking to retire early for nearly as long as the idea of halting the daily activity of working for a living has been a part of cultural and social norms. But the FIRE strategy really took off as a thing young people were getting excited about in the early 2000s, when the terminology caught up with the concept.

People seeking to retire early have even come to the conclusion that it's possible to aggressively invest in "retirement assets" that can start funding a legitimate retirement lifestyle in their 30s (likely late 30s), not their 50s or 60s. However, there's a lot more to this story than a simple affirmation of the concept's ultimate viability. In truth, retirement isn't a binary feature of later life.

Workers seeking to enter retirement have to consider how their finances stack up at any give time, explore their ongoing savings performance to ensure they're on track to hit their goals, and then potentially delay retirement by additional months or years to expand the monthly financial stability they'll enjoy when they do leave the workforce. There's a lot to examine when considering a standard retirement strategy, so it's only natural that extremely early retirement would come with even more considerations to work through. Let's dive in.

First and foremost, retirement is a mathematics game in which you'll need to create sustainable, alternative wealth production that replaces your salary. Older Americans have spent decades in the workforce, slowly (or perhaps more quickly) building a reserve of capital that will pay for their endeavors later on without needing to continue working for a paycheck. Experts suggest that retirees need roughly 75% of their pre-retirement income to fund this lifestyle.

Taking that without additional constraints for the moment, the average earner in the U.S. in 2024 takes home $63,795, according to SoFi. That means a retiree would need roughly $48,000 in annual replacement income to fund an exit from the working life. Following the 4% rule, a retiree would need a war chest in the range of $1.2 million to make this happen.

For many, an entry into the workforce can begin at 16. To achieve that much capital accumulation, you'll need to find a job as soon as humanly possible. Assuming that's at 16, you'll have at most 24 years to accumulate this much wealth and retire in your 30s. This also gives you access to roughly three doubling events.

Estimating growth at 7% annually, a saver would need to invest $1,650 every month for 24 years to reach this target by the end of their 30s. Is it doable? In theory, sure, but the monthly investment target adds up to nearly 25 hours per week (97 hours at a teen worker's average earnings figure of $17.07/hour). That's a huge commitment that may not be attainable or sustainable.

The math shows a path to creating the number necessary to effectively quit the rat race. Is it practical? Not a chance. But achievable, sure; for the most dedicated among us who prioritize retirement above all else, it's entirely possible. Keep in mind, most workers won't be able to achieve this feat without significant help from parents or others, financially and otherwise. You certainly won't be going to college, because that sacrifices four years of prime earning potential. If that's something you want to do, you'll have to say sayonara to one of the life goals you have in mind for yourself.

More importantly, to retire this early you'll need to understand that you're committing to a modest lifestyle throughout your entire life. During your curtailed working years, a huge portion of your paycheck — likely 50% or more, especially in your teens — will have to go into savings. This means living with family or friends or renting whatever you can find for a dirt-cheap price tag. It also precludes you from things like vacations and fancy purchases like a new car or flashy clothing.

But retirement won't see you gaining a major lifestyle boost either. Even as a millionaire, the bulk of your money is going to spend most of its time working for you, giving you a comparatively small stipend to live on. The roughly $48,000 annual example noted above means you may have trouble buying a home and will still need to budget diligently around purchases like new vehicles and other big-ticket items. There's a key tradeoff here: You'll be rich in time, but modest in financial resources. (See frugal tips for saving money without sacrificing quality of lifestyle.)

Perhaps most importantly, savers hoping to leave the workforce in their prime "doing" years will need to get incredibly creative with the ways in which they save. A retiree at 40 can't take advantage of the tax-savings that come from distributions from a Roth IRA or 401(k) account. For that, savers need to wait until they're 59 ½. That means you'll need to store your retirement capital in some other vessel that allows for earlier withdrawals.

Interestingly, Brits have a slightly easier time of achieving this with the use of an ISA account. It's essentially bound by a similar set of rules as the American Roth IRA, showcasing tax-free withdrawals but existing without an age limit for when they can start. Americans aren't quite so lucky and have to make do with a standard brokerage account, bond holdings, and other savings tools that don't add in tax-burden protections. This means that your distributions later on will be counted as regular income, another key adjustment that plays a role in how much money you'll actually need to amass to leave behind the daily grind.

Another key factor to keep in mind is the Social Security benefits you'll eventually receive. They can't start until you're 62 at the earliest, so factoring them into the equation is a non-starter. Even when you do reach this threshold, at least 10 of your highest earning working years will be quite small – based entirely on your investment income distributions. This means that you may very well expect to see a small augmentation to your retirement income through Social Security.

One approach that may add unique viability to this effort is the use of real estate. Instead of investing your retirement capital in stocks or bonds, buying up real estate properties might serve you better. With median home sale prices at $420,400 in late 2024, according to the Federal Reserve Bank of St. Louis, this translates to roughly three individual real estate investments with your retirement capital. Average rental costs in the U.S., meanwhile, as of October 2024, were $1,609 for a typical apartment (per Rent.com), translating to over $4,800 per month in rental income (compared to the $4,000 needed to hit a $48,000 annual income figure).

More importantly, rent continues to rise in price, meaning your retirement income will be somewhat inflation-proofed, in comparison to stock assets that require a dedicated drawdown strategy that avoids stripping the portfolio of its underlying value. However, physical real estate is a far riskier investment. A tenant that refuses to pay rent will eat into your real-time budget, and repairs and other expenses can come without warning.

There's a lot to think about here, but the bottom line is that early retirement at this age is certainly possible, it will just take lots of hard work, dedication, and sacrifice. (Read about actions you need to take in early retirement to bridge the income gap.)