When J.P. Livingston retired in 2016, she was 28 years old with $2.25 million in savings.
It’s a feat few of us could replicate, but many of us can learn from.
Livingston was able to save so much money by such an early age in part because of the six-figure income she earned working in finance in New York City. She also had a calculated plan for attaining financial independence — hatched when she was a youth, CNN Money reported last year:
First, she focused on her income, then on building her savings, followed by investment growth. Now that she’s reached retirement, she’s focused on tax optimization.
But even if you don’t have a high income or an early start going for you, it’s not to say you can’t retire comfortably, or retire a little early. It will just take longer than the seven years in which Livingston pulled it off.
Start by learning from those of her tactics that can be applied to most anyone’s life. Here are three examples:
1. Speed through college
Livingston was fortunate enough to attend Harvard University and graduate without student loan debt. Scholarships and her family’s savings helped make that possible, but so did her choice to finish college in three years. She told CNN:
“I was very aware of how expensive Harvard was. I decided I should just get out early.”
In addition to enabling Livingston to avoid further college expenses, graduating one year early meant she started earning income one year early.
2. Choose a thrifty lifestyle
Livingston’s salary — which had reached the mid-six-figures by the time she quit her job — was perhaps the most important element of her financial independence and early retirement. But she also made many frugal lifestyle choices along the way.
She limited her spending to $30,000 a year, even as her salary increased, CNN reports.
After college, she moved into a third-floor walk-up and slept on a mattress on the floor to avoid sky-high New York City rent.
Livingston also lived without a car and took advantage of free furniture that wealthy New Yorkers left by the street as trash. She adapted her social life to her budget as well, such as by meeting friends only for brunch or beverages because they’re cheaper than dinners out. She told CNN:
“Incremental improvements that you build into your routine will pay out not just once, but it will pay off multifold, … paying off for you year after year.”
3. Invest shrewdly
Livingston had a leg up on the average saver when it came to investing because of her financial background. For example, CNN reports she invested in options — which is something that Money Talks News founder Stacy Johnson would recommend only to folks with specialized knowledge or tremendous luck.
But she also invested in what is arguably the best investment the average saver could choose: low-cost index funds.
Never mind retiring by a particular age or with a particular amount of money: If you want to retire comfortably, the combination of relatively high returns offered by stocks and relatively low fees offered by index mutual funds must be part of your retirement portfolio.
For more universal money lessons from shrewd millionaires, check out “The 10 Golden Rules of Becoming a Millionaire.”
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