You Have to Be Different If You Want to Retire Early

I just read a great article titled The Money Boss Budget by J.D. Roth.  J.D. dissected the Consumer Expenditure Survey and derived the Average American Budget:


The average American directs 8% of their after tax income to savings or debt reduction.

J.D. goes on to recommend two different versions of this chart.

The Balanced Money Formula directs 20% of after tax income to savings or debt reduction with 50% devoted to needs and 30% devoted to wants.  This is the recommendation for someone who desires the typical path–work until your mid-sixties and then retire.

The Money Boss Budget directs 50% of after tax income to savings or debt reduction with 30% devoted to needs and 20% devoted to wants.  This is J.D.’s recommendation if you want to be different–if you want to retire early, work mini-retirements or sabbaticals into your work life or if you want a less lucrative second career.

J.D. highlights that the problem with most American’s budgets is their needs.  We “need” a fancy car with a big payment, we “need” a huge home with a huge payment and correspondingly huge operating expenses.  We’ve turned luxuries into needs.  Now, I’m not bashing on people wanting nice things as long as it doesn’t keep you from meeting your goals.

I was curious about how my spending stacked up to the average American and to J.D.’s recommendations so I compiled my spending for the last three years and this is my chart:


I could provide about 14 footnotes to this chart–the key one is that I have no debt.

I’m actually surprised that my savings rate was this high.  Each year, I budgeted lower savings amounts but my income was higher and expenses were lower than my budget.  I didn’t feel like I was suffering; we took some nice trips and I had some expensive splurges.

I’m not the only oddball saving at this level.  Google “Financial Independence Early Retirement” and you’ll find lots of others–many with average incomes and families.,,, and are just a few of my favorites.

If you want to retire early, you can’t do what everyone else is doing–clearly an 8% savings rate won’t get you there.  You’ll need to be different. You’ll have to find the path that works for you.  I think Dave Ramsey says it best, you’ll need to “live like no one else so one day you can live like no one else”.  For me, it was worth it!

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Author: Ms. Liz

A CPA, I retired at 51 and I am helping people create their fantastic futures!

5 thoughts on “You Have to Be Different If You Want to Retire Early”

  1. Wow that’s an awesome savings rate! Ours is over 3Xs the average American at 35-40%/month (not including payments towards debt reduction), but I feel we could definitely be doing more to increase that number even more though. Thanks for sharing!

    1. 35 to 40% is an amazing savings rate – add in your debt reduction and it is really impressive! Take a moment for a well-deserved pat on your back! I found my savings rate improved as I got older–my earnings grew and my spending didn’t. So there’s one advantage to being middle-aged 🙂 Thanks so much for your comment!

  2. Ms. Liz I wish I had met you 10(ish) years ago when I was fresh out of college and just starting to make real money and real debt- I would be 10 years closer to my early retirement! My chore these next few days is going to be calculating my budget into these 3 categories- needs, wants and savings. I’ll be working hard to increase my savings rate.

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