Money

How one couple saved more than $1 million in 10 years to retire in their 30s

The typical American retires at age 62. Justin McCurry, a father of three based in Raleigh, North Carolina, cut that number nearly in half when he quit his engineering job in 2013 and retired at age 33.

His wife, Kaisorn, joined him in early retirement in 2016 at age 38.

"Neither of us ever reached a six figure salary, with my salary topping out at $69,000 and [Kaisorn's] at $74,000," Justin writes on his blog, Root of Good, which explains how he saved more than $1 million in 10 years to retire early.

"No winning lottery tickets or inheritances, either," he continues. "Just steady saving and investing in our low cost index fund portfolio year after year."

The McCurry family
Courtesy of Root of Good
The McCurry family

Their journey to early retirement began in 2004, when Justin graduated from law school and landed a job at an engineering consulting firm. Kaisorn was still in law school, meaning their combined annual income was Justin's $48,000 salary.

To be fair, the McCurrys didn't start from scratch in 2004: Between the two of them, they had about $49,000 from investments that had accumulated during college and grad school.

"By the end of 2004, we maxed out our IRAs, I contributed what my company allowed to a 401(k), and we added to our taxable accounts," Justin writes on his blog. "In total we added about $15,000 to our investment portfolio in 2004, bringing the portfolio balance to $64,000."

Over the next decade, thanks to incremental raises and careful saving and investing, their portfolio would grow to more than $1.3 million, which was enough to support their modest lifestyle in retirement. You can see a detailed breakdown of how their money grew from 2004 to 2014 on their blog.

Justin McCurry with family on vacation in Mexico.
Source: Justin McCurry
Justin McCurry with family on vacation in Mexico.

Here's how the couple got to more than $1 million in 10 years and retired in their 30s:

They changed their mindset

"When I was in college, the focus was saving money and getting a job that pays well enough to be able to save even more money," Justin tells CNBC.

A few years out of college, he stumbled upon the online early retirement community and started reading blogs such as earlyretirement.org, mrmoneymustache.com and retireby40.org.

After reading about so many people who had successfully fast-tracked their retirement, he changed his goals: "By age 25, I had shifted my focus from just building wealth for no other reason than to be wealthy, to being financially independent and retiring early one day."

They figured out exactly how much they needed to retire comfortably

The couple started by analyzing their spending habits. After all, "in order to answer the question, 'How much do I need to save for early retirement?' you have to determine what you plan on spending in early retirement," writes Justin. That number is different for everyone. "It all depends on what kind of lifestyle makes you content and how long you want to work in order to gather enough assets to fund your desired lifestyle."

Justin looked at his family's average spending from the last three years and determined that they spend about $24,000 a year on "core expenses." He defines those as expenses that will continue into retirement, such as housing, cars, groceries, clothes and entertainment. That number does not include temporary expenses, such as student loans, child care and their mortgage at the time (which they paid off in 2015), since those expenses would be irrelevant in the future.

He then projected how his family's expenses would change in retirement and added an extra $8,000 to cover costs like health care and travel, bringing the bottom line retirement budget to $32,000 a year, which the McCurry's stuck to in 2014 and 2015.

Justin is a fan of Vanguard mutual funds
Courtesy of Root of Good
Justin is a fan of Vanguard mutual funds

The budget isn't set in stone. In fact, in 2016, the McCurrys revisited their portfolio and realized they could increase their retirement budget to $40,000 a year. On the flip side, they can "always trim back on spending in some areas if our investment portfolio performed really poorly or we had an unexpected expense in one category," Justin notes.

For now, their retirement budget is $40,000 a year. You can read more about how they made that work as a family of five in 2016 here.

Justin uses the "4 percent rule" — the slightly controversial adage that's used to help you determine the amount you can withdraw from your retirement savings each year without running out.

For example, the McCurrys had about $1.15 million in their investment portfolio at the start of 2016. Justin explains: "Applying our magical four percent variable withdrawal rate to the $1,150,000 current value gives us an annual withdrawal of $46,000. Add to that an estimate of $20,000 in Root of Good, freelancing, and consulting income for 2016, and we could spend up to $66,000 in 2016."

And, of course, just because they can spend that much doesn't mean they will.

They lived "like college students" long after college and stashed away more than 50% of their income

"In terms of lifestyle, we kept living like we did when we were graduating from college," Justin says. "We stayed in our first starter home, we kept the cars that we bought brand-new in college for 16 years and just replaced them last year and we made sure to bank any raises we got."

By carefully tracking their expenses and living frugally in Raleigh, "every year we saved more than half of our income," says Justin. At the couple's peak earning period, when they were making a combined $138,000, they were saving up to 70% of their income, Justin tells CNBC.

The aftermath of a good deal on toilet paper from Amazon
Courtesy of Root of Good
The aftermath of a good deal on toilet paper from Amazon

They maintained a high savings rate even after they started having kids in 2005 by taking advantage of the benefits offered by their companies, having family help out with child care and using hand-me-downs. "We had good health insurance, so we weren't paying a lot out-of-pocket for the child delivery," says Justin. "We had Grandma watch the kids — we gave her some money, but it wasn't $20,000 per year — so we lucked out just by staying close to where we grew up."

"After childbirth, we didn't spend a whole lot," he continues. "We bought a mattress, crib and some child seats, so it was several hundred dollars, but not thousands and thousands. Having kids was kind of a blip on the radar in terms of spending."

Kaisorn McCurry with their youngest child
Courtesy of Root of Good
Kaisorn McCurry with their youngest child

They made smart investments and put their money to work

They didn't just save a ton of money — they put their money to work.

"We consistently pumped our savings into 401(k)'s, IRA's, HSA's, 529's, and regular brokerage accounts," Justin writes. "These investments grew enormously over roughly ten years and made us financially independent today."

In addition to maxing out their 401(k)s, IRAs, and an HSA, Justin notes that his company offered a 401(k) match and he contributed to his employee stock ownership plan.

Here's a look at how their earnings grew over a decade, which you can read about in detail on Justin's blog:

Want to fast-track your retirement? "You don't have to make $1 million per year to do it," says Justin. "Even if you're not a prolific saver putting away half your paycheck — if you're putting away nothing today, moving from nothing to 10% or 20% is going to make a huge impact on where you are in 10 or 20 years."

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