Aspiration & Struggle
On a Quest for Financial Independence: One Couple’s Plan to Retire by Age 33
Sitting at a desk and staring at a computer monitor all day can be enough to make anyone dream about retirement. It’s hard not to fantasize about going off the grid, especially when you’re on vacation and you receive work emails asking you to please just take care of this one thing. These feelings of suffocation from the daily grind have sparked a new movement of young people seeking to become financially independent and, subsequently, retire early.
Financial Independence 101
“Financial independence is a state in which your assets provide enough income such that you’re not forced to work a traditional job to cover your expenses,” explains a 31-year-old communications manager who goes by the moniker Mrs. Frugalwoods on her financial independence blog.
Mrs. Frugalwoods and her husband, Mr. Frugalwoods, a 31-year-old software engineer, are working toward their plan to retire in just two years, by the age of 33.
“We realized a few years ago that we’re spending most of our lives—and the bulk of our creative and intellectual energy—on our jobs, which leaves scant time left over to truly live,” says Mrs. Frugalwoods. This realization inspired the couple to get serious about becoming financially independent.
How to Retire in Your 30s
The Frugalwoodses are self-proclaimed “frugal weirdos” who are preparing to retire by saving and investing more than 70 percent of their take-home pay and by maxing out their 401(k) plans.
“Frugality is an integral aspect of financial independence. If you don’t need a lot of money to live on, you don’t need a large amount of money saved to reach a state of financial independence,” says Mrs. Frugalwoods.
Early retirement doesn’t mean you’ll stop bringing in money entirely, according to the Frugalwoodses. It simply affords you the opportunity to walk away from reliance on a company paycheck; you’ll have enough to cover your necessities.
The couple currently lives in Cambridge, Massachusetts, but they plan to purchase a homestead on 20-plus acres of wooded land in Vermont and build cabins on the land to rent. They also plan to grow vegetables, plant fruit trees, and create hiking trails. Mrs. Frugalwoods will continue freelancing. Mr. Frugalwoods will pursue his interests in welding and building furniture.
Early Retirement Isn’t the Right Fit for Everyone
“Retiring early can be your reality when you save more than half of your income, when you enjoy living the frugal life, and when you have interests that extend beyond your 9-to-5,” says Mrs. Frugalwoods. “It’s about creating the life you want to live, not the life you think you’re supposed to live.”
Ideal Places to Retire
The Frugalwoodses are retiring to Vermont because of its wooded land, progressive values, culture, and proximity to major cities including New York and Boston.
Vermont certainly isn’t a state with low taxes, but in their evaluation of where to move, the Frugalwoodses noticed that states with high income taxes tend to charge lower property and sales taxes. Because the frugal couple plans to live primarily off their savings, they don’t see income tax as a major factor. Still, the Save Taxes by Moving calculator reveals that leaving Boston for Vermont will save the Frugalwoodses money on taxes anyway.
Wyoming is another ideal state for retirement. Between 1992 and 2011, the state gained wealth from California, Connecticut, Nebraska, Pennsylvania, and Michigan, according to “How Money Walks.” There is no state income tax and general sales tax falls at 4 percent, which is below the national average of 5.95 percent. Wyoming also doesn’t charge an inheritance or estate tax, an important consideration for early retirees thinking about their future.