- $27,878.10 remaining
Mizz, under what circumstances does a person making $33k/year pay over $5k in taxes? I think you've miscalculated.
By my math, $33,246 in taxable income would at bare minimum get the $12k standard deduction and then pay $2700 in the 10% and the 15% bracket, assuming a worst case scenarios (single filer, no kids, no credits, etc). You're math is off by approximately a factor of 2.
In reality, this person could easily get their tax burden to zero by increasing their savings rate in their 401k, which is conveniently how you get to retire early anyway. It just so happens to work out that the problems you see magically disappear when you follow the advice of this forum.
I did forget the standard deduction, but I counted back in the FICA taxes, because those still count as income too. So yeah, you are right it's closer to $24k being taxable on both state and federal. So it's about $3.7k in taxes instead of the $5.5k I estimated. So, sorry $29.5k it still doesn't really change my math. Perhaps they can save an extra $100/month under the new estimate, which essentially drops the needed CAGR over the 9 years by less than 0.5%.
So you think you could squeeze it to work in 9 years? Like I said if they max out their 401k that's $18.5k/yr. They'd still pay approximately $1.8k/yr in federal and state taxes and another $3.4k/yr in FICA. So they are up at $5.2k. So that leaves them with $21.3k/yr in spending. Let's say of that they are really good with money and can save another 3k/yr. Bringing their total savings to $21.5k/yr. You'd need a 17.5% CAGR and again need to be able to make that income consistently from 20-29. So again, show me how it's "FIRE in your 20s no sweat"
How would someone max out their 401k when they only make 33k...?
I make under 30k ($29,640), $5,328 goes to SS, Medicare, Federal, State, City taxes, $24,312 left. $1,006 for health insurance, $23,306 left. $1,480 gas to and from work and car insurance, $21,826 left. $1,819 a month left for housing, home repairs, car repairs, utilities, food.
This year I purchased a used vehicle for $4,400, spent $3,000 on car repairs, $2,500 in medical bills, that leaves $11,926 for housing, home repairs, utilities, food.
I am pretty much saving $0.00, this is without eating out, not buying anything that's not needed, buying everything I can used or on sale. I spent 30 dollars for a pair of shoes this year, my SO bought me socks and underwear for my birthday, that's the extent of my clothing purchases. I fill up 4 - 5 gallon gas cans when I have fuel points at Kroger.
There was a time my expenses were less, I had a paid off house in a "LCOL" area, had a roommate, was single. I'm not saying it's impossible to save thousands a year only making 30k a year, but my situation has changed and right now I have more expenses than I used to. I might be able to save a few thousand, but it's laughable to suggest I can save 18.5K a year.