I’m in my 20s and thinking about whether early retirement is realistic, and if so, what age might be reasonable. I currently have about $37k saved (not including my emergency fund, Roth IRA, which I’ve maxed out for the past 4 years, or my 401(k)) and no debts.
I earn about $45k/year after taxes and insurance. I am also planning ahead for long-term care, and based on what I’ve read, it seems that around $240k might be needed for a future nursing home or retirement community.
Besides a high-yield savings account, which I will be opening, What are good ways to use this money? Should I focus on investing and/or consider passive income strategies? And if so, which investments or specific passive income streams make sense? Are there any other avenues to look into? I'm still young and want to enjoy my life so I don't want to completely restrict myself but I also want to make thoughtful choices now while I (mostly) have time on my side.
In my 20s with almost 40K saved — Is early retirement in the cards for me and what is the best way to use my money?
byu/Old-Relief2355 inpersonalfinance
Posted by Old-Relief2355
5 Comments
Honestly you’re crushing it for your age but early retirement on 45k might be tough unless you can seriously boost that income or live super minimally
For the 37k I’d dump most of it into index funds (VTI/VTSAX) since you’re young and can ride out the volatility. Maybe keep like 5-10k liquid for opportunities or emergencies beyond your main e-fund
The 240k nursing home estimate seems way low btw, that’s like today’s prices and you’re probably 40+ years out from needing it
Start planning your retirement by 30
your doing good. You should keep an emergency fund in a HYSA and then use the prime directive to tell you how to invest the rest.
Maybe? Can we get your actual age and retirement acct balances? You’re way too vague here.
Just put it in etfs like VTI or VOO plus a few individual stocks you like, keep contributing to your Roth, and you’ll be fine in your 50s. Worry about retirement homes and elder care when you’re ready to retire, you’re way to young to be worrying about that. That’s 40 years from now, things will be completely different then so there’s no point in trying to prepare for that right now.
If you want to retire earlier than that you need to focus on increasing your income. You didn’t specify if you’re in your early or late 20s so there’s a big gap in how much potential compounding interest you can take advantage using your $40,000.