How to Retire Early: A 15-Year Plan to Go from $1,000 to FIRE

23:37So some of the tips we have there are around self-education. I think I will challenge you. Come back. Email me at scott at biggerpocketsmoney.com or mindy at biggerpocketsmoney.com. If you read 25 finance, business, or self-development books over the course of 2026 or the next 12 months after you watch this video, and your income does not grow at least 10 % in the next two years, call me out. Tell me I'm wrong. I do not believe that will happen. And I believe that that kind of self-education and training will help you find that next opportunity, grow your skill set, earn that next promotion at work, or set the stage for some kind of entrepreneurial pursuit, some kind of side hustle that will help you make more money.

24:21I believe it to the core of my being. I think it's a fundamental thing that many people who want to get ahead of life can do for free or very low cost.

24:29Mindy Jensen:But Scott, I also think that those people who are reading the 25 books in one year are not going to stop with your self-education. They're going to move on to the next one, which is networking. Meeting, learning from, and helping other people in related or adjacent fields helps you grow your network. And it might not seem at age 25 that having a network is really important. Having a network is super important. It allows you to get a leg up on a lot of opportunities that may not be available to you without that same network. When you want to go and earn more income, we introduce the element of luck and chance.

25:10And we have to do a number of things to increase the opportunities, the luck and chance that affords you that chance to earn more income. Those start with self-education. It comes with networking. The more hard skills in the areas that you're looking to develop in, that you can develop, will help you out with that. The fact that you know how much you ought to be paid, what is your market value and you are revisiting that with your boss, you are willing and able to test the market and get a new job on there. And you have some kind of written performance plan and understanding of what it takes for you to get to the next level to earn your raise or your bonus for this year.

25:49Those are all things that are within your control that can drastically increase the likelihood of you earning that next raise or getting that next job that will boost your income. but it's not guaranteed. It's all chance. One other non-intuitive way to grow your income is to take a job that offers upside. This seems very obvious, but the catch is that a lot of people, let's say you're making 80 ,000 bucks a year and you spend$75 ,000 a year. If you wanted that job with upside, you might have to take a job that only pays$60 ,000 a year, but offers a 100 % bonus potential or offers commissions potential that could carry you well into the six figures, but it's not guaranteed.

26:32The person spending$75 ,000 a year can't take that job because they'll be running out of money. They'll be depleting their cash position because they spend more than that base salary. The person who spends$50 ,000 a year, however, will see that job for the opportunity it is to get ahead. And so that's another powerful dynamic and why we start with spending less on the journey to financial independence. It just opens up so many opportunities, makes the whole game of finance that much easier.

27:01Mindy Jensen:Okay, Scott, let's talk about accumulation. When we say invest, we're not saying take the money that you're not spending and put it in a savings account. When we invest, we want to generate real returns in advance of inflation that propel us along the journey to early financial independence. We want to get the best returns that are reasonably accessible to us, that we can have reasonable odds from a historical point of view and helping us propel us to that journey. And this is going to call for two different investing. There's going to be two different investing approaches we're going to use on the journey to financial independence.

27:34In phase one, which is the bulk of the journey for the bulk of people in the FIRE community, the accumulation phase, we're going to invest very aggressively. That might look like a 100 % stock portfolio, a small amount of cash and savings, and maybe some creative plays in the side, like a house hack where I'm going to move into a duplex, put 5 % down, rent out the other units, and use that to cover my housing expenses. It might look like a rental property investment that's leveraged there. We're going to make aggressive plays that are designed to grow our portfolio. We're going to have an indefinite time horizon as we think about those.

28:11We're going to be investing as if it's for the very, very long term indefinitely because that allows us to take historical averages and get a chance to ride those. But we know that at some point, we're going to want to switch to a more diversified portfolio. The time for that switch is going to come when we are within five years or 80 % of the way to our financial independence number. At that point, we're going to flip or begin the process of flipping to a more diversified portfolio that has research tied to it and is diversified with uncorrelated assets so we protect our wealth. Financial independence is about building enough and then ensuring that we keep enough, not growing forever in perpetuity.

28:52Mindy, do you want to tell us about some of the principles and rules of thumb here in the accumulation phase and the decumulation phase?

28:58Mindy Jensen:Scott, in the accumulation phase, this is where you want your money to grow. So you are a little riskier than you would be later down the road. So this is a 100 % stock portfolio instead of the, what you referred to earlier, the Bill Bengen mix of 60-40 stocks bonds. This is leveraged real estate portfolios where you are putting a small amount of money down and getting a loan for the rest so you can continue to grow your real estate portfolio. Private business opportunities. These can be a little bit riskier. Speculative investments. You're looking for something that is going to grow and grow at a rate that you're comfortable with.

29:42Mindy Jensen:A high risk has the opportunity for high reward. And this is where you're at in the accumulation phase. You have a longer time horizon, like you said, so you can be a little riskier, especially in the beginning. As you move towards the decumulation phase, your goal isn't to continue to grow it. Your goal is to preserve the amount that's there so you can continue to withdraw from it. We are going to diversify our holdings coming from 100 % stocks into more diversification, something like the golden ratio portfolio, which is instead of 100 % stocks, Now we're at 42 % stocks, 26 % bonds, 16 % alternatives like gold, 10 % managed futures, which is just investing in trends, and 6 % international stocks split between growth and value.

30:42Mindy Jensen:Both the 42 % domestic stocks and the 6 % international stocks should be split 50-50 between growth and value to help preserve the wealth that you have accumulated. Yeah. And just for the record, none of this is investment advice. We're not telling you to invest 100 % stocks. We're not telling you to invest in a golden ratio portfolio. We are providing examples that are common in the financial independence community of where people invest in the accumulation phase and where they invest in the deaccumulation phase. And the theme is invest for growth. Invest the way that you think will propel your net worth forward in the accumulation phase.

31:19When we get to the deaccumulation phase, constructing these portfolios, moving assets around, reallocation decisions, those can have fairly substantial tax consequences. And that's when I think a growing number of people in the financial independence community want that extra eye, that professional eye, and begin to talk to financial planners. If you decide to talk to a financial planner, Mindy and I recommend you talk to a flat fee financial planner, somebody who does not charge you for assets under management or someone who does not, certainly does not charge or does not make money selling commissioned financial products like permanent life insurance products.

31:57Talk to somebody you're going to pay by the hour for advice only or based on with a flat fee model. Both are viable. So we've talked about this accumulation and decumulation phase in terms of what we're going to be investing in and how we're going to think about our investments. Mechanically, what is a good order of operations? Like how do I think about, I'm going to invest in maybe a total market index fund. Maybe I've read the book from JL Collins called The Simple Path to Wealth, and I like his VTSAX or its ETF equivalent VTI suggestion. And I'm going to be investing in that, but I can invest in my 401k or my HSA, or I can invest after tax.

32:35How do I think about that? What's a good order of operations that is efficient for helping me avoid taxes or pay the least amount of lifetime taxes on my journey to financial independence?

32:45Mindy Jensen:Okay. Assuming that you are starting from scratch, I want you to build a$1 ,000 cash buffer. You want to be able to weather an emergency and this$1 ,000 will help you start. Next up, I want you to pay off all your bad debt. I don't personally consider a mortgage to be bad debt. Everything else, anything with a 7 % or higher interest rate, credit cards, car loans, things like that, Let's pay those off. The only thing I would suggest keeping is something with a 6 % or lower interest rate that is, and if like 2 % or 3%, no brainer, don't pay those off. But you want to get rid of the high interest credit card debts and the high interest debts that aren't doing you any favors by holding on to them.

33:38Mindy Jensen:Next up is the 401k contributions to the match that your company gives you, if any. That is literally free money that your company says, hey, if you put some money into your 401k, I'll match it. Let them match it for you. Next up is to take any other free money that your company gives you, like the employee stock purchase plan. After that has all been satisfied, I want you to build and maintain a six-month emergency fund. And by six months, I mean six months of your expenses in an account, in a high-yield savings account, not in the stock market, ready to access just in case something happens to your job.

34:20Mindy Jensen:After your emergency fund is fully funded, I want you to max out your HSA. Then I want you to max out your 401k, followed by your Roth IRA, and then anything left over goes into your after-tax brokerage account. Okay, Scott, that was the accumulation phase. What about decumulation phase? Yep. So there's an order of operations for getting money into your accounts, and there's another order of operations for getting money out of the accounts. Deaccumulation is a really interesting concept that we are really starting to dive into. There's a lot of considerations for the early retiree about how to think about this, right?

35:00And there's a couple of different schools of thought, right? There are ways for an early retiree who's not earning active income to stay in the 0 % tax bracket by, for example, basis recovery. Let's say you invest – let's say you have a million dollars in your after-tax brokerage account. But you invested$500 ,000 into that over your working years, and the other$500 ,000 is gains on those original investments. Well, you could extract some of that wealth, that money you put in by selling the stuff you put in last or tax loss harvesting or those types of things. And that can enable you to pay no taxes for a long time while you're just basically extracting wealth that you put in.

35:43There are ways to pay lots of taxes in retirement by, for example, withdrawing from your 401k early using some of the tools that we've talked about on BiggerPocketsMoney like the 72T or Substantially Equal Periodic Payments Rules that allow you to access that money early. You can also convert money in a 401k to a Roth IRA, and that is not subject to penalty, but it is subject to taxes at ordinary income rates. So there's a lot that goes into an optimal order of operations for decumulation, right? And it depends on the right answer to which accounts to withdraw from depends on where your money is, how it's invested, and what your long-term goals are and what your schools of thought are.

36:30So we are going to provide three options and encourage you to go read a book that came out in 2025 by two of our friends, Sean Mullaney and Cody Garrett, called tax planning to and through early retirement. Some of these schools of thought, though, on decommulation are, one, to basically minimize taxes now. That involves, generally speaking, prioritizing withdrawing from your taxable accounts in that basis recovery to keep your taxable income in the 0 % or very low income tax brackets. Then when those run out, to withdraw from your tax-deferred accounts. then to withdraw from your Roth accounts.

37:07The second order of operations is around the school of thought of never wasting the standard deduction or the 0 % long-term capital gains tax bracket, which can be up to like$96 ,000 for a married couple. In this second order of operations, I might withdraw from my 401k early using a 72T or substantially equal periodic payment rule, or I might do a Roth conversion with those funds up to the standard deduction, which for 2026 will be$32 ,200 for a married filing jointly couple. And then I might want to use my taxable accounts and withdraw basis or gain up there all the way up to the long-term capital gains.

37:49In 2026, the married filing jointly 0 % long-term capital gains tax bracket will be$98 ,900. So I want to use up the rest of that using my tax-deferred accounts and realize all of the gains I can up to that amount because I don't want to waste that 0 % tax bracket. So that's this school of thought. And then after, of course, I've run out of tax-deferred and or taxable accounts, then I would only then withdraw from my Roth accounts. The third order of operations is what we're going to call RMD suppression. When you turn 75, for the vast majority of people watching this particular video, the IRS will require you to begin distributing money from pre-tax retirement accounts like your 401k.

38:37And if you have a huge balance of retiring early and you don't really touch it because you work part-time or otherwise generate income in that early retirement, you don't really need to do these other strategies in order to optimize your retirement because you have other income sources. You may find yourself with a huge pile of money in your 401k. And if that's something that you're worried about or is realistic for you, you may want to conduct yourself or take a strategy that goes to additional lengths to get money out of your 401k and tax deferred accounts and into the Roth IRA early in life.

39:10And in that case, we're going to withdraw from our tax deferred accounts using our 72T or substantial equal periodic payment rules. And we're going to do Roth conversions on anything that we don't need up to a higher federal income tax bracket. So for example, a popular starting place for that discussion is to say, you know what, if I'm worried about, if most of my wealth's in my 401k, let's say I got like 2 million bucks in a 401k, and that's really most of my financial assets. I'm late 40s, and I really want to retire early. Well, maybe what we do is we actually convert our 401k over to a Roth IRA using a Roth conversion up to the end of the 12 % federal income tax bracket, which for 2026 will be up to$100 ,800.

40:01So those are the three schools of thought on decumulation order of operations. This gets complex. It's a pretty big model. There's some guesswork in here. It's going to depend on how returns go and what your spending patterns look like and all these other income sources. So again, this is a really great place. If you're approaching early retirement, it's probably worth it to spend a few thousand bucks talking to a professional financial planner on how to do this. Just avoid the trap of handing your money over to a financial advisor who charges an assets under management fee or that makes the bulk of their money selling commissioned life insurance products or other financial investment products.

40:42Mindy Jensen:Scott, what is the number one question we get about early retirement? Health care. Health care. What do I do for health care? And there's a reason for this, right? Like I still think that even as much as health care is discussed in the financial independence community, people still don't really get what the problem with health care is for the early retiree. And I think if you're no longer working for an employer and you want health insurance, most people who are not super high income earners will want to purchase health care programs on the Obamacare exchange or the Affordable Care Act exchange.

41:17And these plan costs can vary dramatically based on where you live. If you're in Colorado, for example, we're going to have relatively lower cost health care premiums than a place like Vermont, at least for somebody who's my age in the 35-year-old age bracket. So that makes it relatively affordable. But in Vermont, that policy that cost me$1 ,200 or$1 ,000 to$1 ,200 for my family here in Colorado might cost $2 ,000 or more for my household in Vermont. And that can be a real problem. Luckily, or at least for now, parts of those premiums are subsidized for people who earn below a certain amount of income.

41:59Early retirees are able to control their income, and many early retirees will want to talk to their financial planner or be very cognizant of their modified adjusted gross income, their MAGI, to make sure that they qualify for subsidies for their health insurance. I personally believe this is a very bad thing to plan on. I'm not saying not to take the subsidies if they're available to you here, but I do not believe that your early retirement should depend on the American taxpayer paying for your health insurance premiums as a multimillionaire early retiree. Take them if they're there, but I believe you should plan on paying the full price for health insurance premiums in your spending model when you are thinking about early retirement.

42:52And you should note that those healthcare premiums that I mentioned that are a little lower in Colorado for a 35-year-old, they can go up a lot as I approach in my 60s, and I'm still not yet qualified for Medicare. Health insurers are allowed to scale those costs three to one. So they can charge a 60-year-old based on age. So they can charge a 60-year-old three times more, for example, than a 20-year-old, and they do in most states. Exceptions include Vermont and I think one other state, maybe New York, for that. So you really want to be cognizant of that because if your plan is, I'm going to spend this much on healthcare, I think you may have a risk of that going away to some extent in future years where those subsidies change or are diminished and you're not getting that same amount of subsidy that you were expecting for your healthcare.

43:44And if the unsubsidized healthcare is like 20 grand today and goes to 35 by the time you're 60 and you're getting subsidized, your out-of-pocket is only$5 ,000 or$6 ,000. And then that subsidies go away. That's a big difference in your spending per year. So I think the only rational approach here is to have enough margin of safety in your financial independence plan so that you could support yourself if you were required to pay the full price in inflation-adjusted dollars for health insurance today and then treat those subsidies as insurance against your overall plan. That's probably going to be a contentious topic.

44:23I would love your feedback in the comments here on YouTube. But I think that's the only sane way that you can approach this if you're retiring in your 30s here in America today.

44:32Mindy Jensen:Until we have a single payer health care system, health care is going to be a line item in your budget and it's going to be a fluctuating line item in your budget. My health insurance went up 25 % this year, 2025 to 2026. and that is with the full subsidies. I take the full subsidies during the year and then I pay them back at the end of the year when it's tax time because I don't actually qualify for them. But it reduces my month-to-month expenses and always hoping that maybe there's, like this is a good problem to have. This is a really good problem to have that I don't qualify for the ACA subsidies.

45:18Mindy Jensen:So even with subsidies, my health insurance went up 25%. I think that this is an area that we're gonna get much more advanced in over the course of 2026 here. And I think it's gonna be controversial. I think that politics begins to get involved here. Like you said, until we get a single payer system. I'm not sure we will ever get a single payer system here in the United States of America. I'm not sure if that's the right thing or not for the United States of America. But I do know that this is going to be a point of risk and discussion in the early retirement community for sure. And I think that if subsidies go away, we're going to see non-insurance alternatives like health shares, which I think make a lot of people like me a little uncomfortable with.

46:07But they're going to have to be taken seriously if the alternative is a$20 ,000 increase per year in health insurance premiums. So we'll see how this goes. But this is a real risk in the healthcare community. And I think the way you do this is, hey, if you want financial independence is a lifetime of doing whatever the heck you want. And this is an expensive risk mitigation. This is an expensive and real risk to early retirement that I think you just got to plan for.

46:36Mindy Jensen:And it's just going to be a line item in your budget and make sure that you are being very conservative and guessing really high. Absolutely. Okay, Scott, we have talked about the beginning of journey, the middle of the journey, and approaching the end. Let's talk about the actual end of the journey. Yeah, well, the end of the journey is the beginning, right? I mean, this is where you wake up in your 30s or 40s, and in increasing numbers, people are actually doing this, and you're like, huh, I actually don't have to really earn money now. What do I want to do with the rest of my life? 50 plus years.

47:12It is a glorious problem. It is absolutely worth significant sacrifice in other areas of life. It is absolutely worth that grind, I believe. I think many more people should achieve this, but you got to begin to actually make the most of it because this is a wonderful opportunity afforded to few in all of human history to have this much opportunity and access and optionality in life this early in life. And once you have it, you got to have a plan and make the most of it. Really find that meaning in there. Maybe cast a vision for your life. figure out what you want to do, if you have a partner or family, what you want to do with them, and really maximize the most of this wonderful opportunity that you've built for yourself through the hard work and sacrifice of getting to financial independence.

47:55Mindy Jensen:And what you want to do is start thinking about this now, at whatever part of your journey you are at now. Now is when you start thinking about the end. You don't get all the way to the end and then start thinking, oh, what am I going to do now? Have something that you're thinking about, that you're retiring to, not just quitting your job. The bucket list is a great exercise. Sit down and think about all the things you wish you could do, but don't have time for. All the places you would want to see, all of the experiences you would want to have, but you can't do it right now because of work. You can't do it right now because of whatever time suck is happening that isn't allowing you to do whatever you want on your day.

48:39Mindy Jensen:And your bucket list should be a very fluid thing. You should always be adding and you should always be crossing things off. In 2026, Carl and I are starting our see a game in every NFL stadium bucket list. We're not going to finish it in 2026, but we are going to start it. And I'm super excited about that. But don't put your life on hold waiting to hit financial independence. Start living the life you want right now. Yeah. And I think that there's been the fire community in particular got a little bit of a bad rap for being so hardcore frugal that they were really sacrificing. And this is a small component, right?

49:22This is the straw man that various finfluencers like to attach to the entire fire community. But there's a real section of the fire community that went so hardcore into this that they made themselves miserable and missed out on life on there. And this is a straw man. You can achieve financial independence by controlling the big three expenses, housing, transportation, and food, spending a wonderful amount, even perhaps above the American average or well above the American average on other things that provide really great, meaningful experiences, and achieve financial independence early in life.

49:51And don't let people tell you that that's not possible. Don't let people tell you that financial independence and the option to retire early, whether you choose to continue working or not, is not obviously a good thing here. Don't let people tell you that money and building wealth does not produce happiness. Of course it does. It produces much, great, substantial amounts of happiness. There's lots of studies on this, and that happiness continues to grow as you accumulate more income and wealth in life, okay? Money is not this evil thing in society. It is a tool that allows you optionality in life.

50:27And financial independence is the ultimate form of that option optionality. You can do whatever you want when you get there. And again, it's about maximizing what that, what that means for Mindy. It's this bucket. It's, it's, it's that bucket list and making sure that there's a large number of life experiences. I'm more of a homebody and just enjoy my days here every day, building, you know, tinkering with things for early financial independence, playing some games, hiking, skiing, and hanging out with my, my little girls here.

50:54Mindy Jensen:I love that, Scott. My kids are no longer in the hangout with mom and dad phase. So my life's a little different. But either way, enjoy where you're at right now. This was super fun. But that wraps up this episode of the Bigger Pockets Money podcast. Happy New Year. Welcome to 2026. I am Mindy Jensen. He is Scott Trench saying out the door, dinosaur. sore. I'm skeptical of a lot of financial products, but life insurance isn't one of them, at least not term life. For the vast majority of you listening, term life is simply the right answer. And the smartest way to buy it isn't one big policy, it's a ladder.

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