29-year-old saves $380,000 for retirement

29-year old saves $380,000 for retirement

Tanner Firl, 29, from Minnesota, appeared on CNBC Make It to discuss how he has saved the equivalent of £305,000 in his pension pot. The software programmer discussed why his savings prowess is part of his plan to retire by the age of 25.

Mr Firl and his family are a part of the financial movement known as FIRE (Financial Independence, Retire Early).

Through frugal cost-cutting tactics, those who are part of the movement make significant contributions to their retirement savings.

Examples of what FIRE savers do to cut costs include thrift shopping, couponing and contributing more of their paychecks to their 401(k)s and savings accounts.

The Minneapolis native is currently on a $135,000 (£108,633.15) salary but has been able to save nearly triple that since leaving university in 2015.

He said: “I plan to retire at the age of 35 and I’ve saved $380,000 (£305,827.80) for retirement.

“If I had to guess I would say in terms of the entire population I’d probably be in like the top one percent of most people FIRE people.

“I don’t really like to buy anything. It kind of makes me anxious. Every year or two, I’ll buy a new pair of running shoes. The last time I bought running shoes was a used pair.

“We decided to invest in maybe cheaper hobbies than most people, Board home meetups led me to meet a few folks that I really enjoy spending time with and so we get together regularly to play.

“I don’t really feel like we’re missing out on anything. We have everything we need in order to generally be really happy.”

As the primary breadwinner, Mr Firl has been the main income generator for his family while his wife makes money on the side through various hobbies.

Within the wider FIRE community, he hopes to retire early by the age of 25 by achieving “Lean Fire”.

This is the term to used to describe a subset of people that would like to retire earlier by saving at a higher rate than most people, even though they are part of FIRE.

The saver added: “I’d estimate we put about 50 percent or so of our paycheck maybe a little bit more towards savings.

“My personal brokerage account has $221,000 (£177,836.49) in it. My Roth IRA has $57,000 (£45,867.33). My health savings account has $26,000 (£20,921.94) in it. My 401k has $75,000 (£60351.75).”

Despite his retirement plans being set in stone, Mr Firl acknowledged his goals will be different to many other pension savers.

The low-ball figure he wants to have saved is $625,000 (£502,931.25) as he estimates he will need around $25,000 (£20,117.25) annually to live on.”

Mr Firl explained: “So, $25,000 sounds really low and it is for a lot of people depending on where you live and what your risk tolerance is. That might not be completely possible.

“Your life changes over time and you never know exactly what to expect, and so there’s a fair amount of variability.”

On why he wants to retire early, he shared that saving money for him means “essentially buying freedom”.

Those interested in following more savings and retirement tips can follow the CNBC YouTube channel.

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