The 10-Step Guide to Early Retirement and Financial Independence on a Low Income

retirement15-year Plan to Buy Land, a New Car, Build a Home, and Retire While Making $8 to $10.75 Per Hour

Financial independence and early retirement are within reach of anyone earning just above minimum wage and who is willing to work for 15 years and follow this 10-step early retirement plan. Buy land, build a home, buy a new car, retire early and comfortably. Read below to learn how.

Created upon request, this article is being written at the insistence of readers of this column’s previous “Retire Early” articles who have requested an easy step-by-step guideline toward becoming financially independent and retiring early.

This easy-to-follow 10-step process is a complete guide that enables the low income wage earner (between $8 and $10.75 per hour, full time) to become financially independent and retire in only 15 years**. Two wage earners can work together to execute the below 15-year early retirement plan, each making $10.75 per hour, or one person making $21.50 per hour. If the wages are less than $21.50 per hour (2 people combined or one single worker), early retirement and financial independence are achieved at a slightly slower pace** (table below).

The table at the end of this article shows how much to invest monthly to build a retirement fund (about $400,000) which provides an annual retirement income of over $31,000 for varying amounts of hourly wages ($8 through $10.75). With total monthly living expenses under $500 (detailed below), the $31,000 retirement provides a very comfortable lifestyle with sufficient cash for travel, entertainment, giving, and sharing. It is far easier to live in a new home on $31,000 in an area of low taxes and low cost of living than it is to live on $80,000 near a metropolis where the cost of living is high. This is explained below in detail.

The 5 Prerequisites:

Prior to starting the below steps toward financial independence and early retirement, some prerequisites must be met. Do not attempt to execute the below 10-step early retirement plan if any one of the prerequisites is not met.

1. To retire in 15 years, annual earnings of $44,720 are required. Lower earnings will require more time (see table** below). This can be accomplished if two people work together, each making $10.75 per hour ($21.50 per hour combined) for an average of 40 hours per week. If 2 workers make $8 per hour ($16 combined, or $33,280 annually), they can retire in 21 years. Review the table at the end of this article for varying amounts of hourly earnings.

2. One wage earner must have financial credit sound enough to qualify for a $50,000 loan (detailed below).

3. The wage earner(s) executing this 15-year early retirement plan must be free of unhealthy and expensive habits and must be in good health in order to keep both medical and food expenses to a minimum. This means that the wage earner(s) follow a healthy, inexpensive diet found at and the wage earner(s) are not obese, which can be determined by answering 2 confidential questions at

4. The wage earner(s) must be able to adhere to a strict budget (below) and have the ability to live frugally for 15 years while building the capital investment that will make early retirement and financial independence possible.

5. A low-income worker living in an area with a high cost of living cannot save enough money to become financially independent. Thus, the wage earner(s) must be willing to relocate to a state with zero personal income tax, low local taxes, low land prices, and low cost of living. This article suggests buying land in (or near) Brandon, South Dakota where the climate is milder than most other parts of that state, crime is nearly non-existent, unemployment for those 25 and older is nearly zero, land prices are low, and taxes are low. These topics, and more about Brandon, South Dakota, are discussed in detail at Yahoo Voices

Once the above prerequisites are met, follow the below 10 steps to retire early and become financially independent:

The 10-Step Guide to Retiring Early and Becoming Financially Independent:

1. Move and rent. Relocate to a low-tax, low-cost area where the wage earner(s) will live, work, buy a new car, and build a new home. Step #5 above suggests Brandon, South Dakota (or nearby). Rent (one-year lease) an inexpensive apartment for one year to establish residence, make connections, and build local credibility.

2. Work, save, and become car-debt free. Get a job, open a checking account, and start saving. During the one-year apartment lease period, trade in any old cars and buy an inexpensive, fuel-efficient new automobile (i.e., new Nissan for $11,900 [1]). Living frugally, an $11,900 new car can easily be paid off in a year with a monthly take-home pay of $3,014 [2]. This will eliminate most automotive costs during the 10-step early retirement plan below.

3. Healthcare insurance. Since most employers provide healthcare, the below plan does not require the wage earner(s) to carry a personal, individual plan. However, on the outside chance that the employer does not provide medical healthcare insurance, cheap individual insurance (for healthy, non-obese persons) can be purchased for about $140 per month [3]. If this becomes necessary, the wage earner(s) must make an additional 67 cents per hour to pay for the private personal healthcare plan.

4. Land. Before the apartment’s one-year lease has expired (discussed in step #1 above), select a 4-acre parcel of land on which to build a small new home (described and pictured below). This land will be purchased with a loan described in step #7 below. Buy partially or mostly wooded land in order that a wood-burning stove can provide most of the heat during cold months to keep utility costs low. The price for the 4 acres in (or near) Brandon, South Dakota, should run $2,800 or less ( Obtain some type of price and promise (in writing) from the owner, which will be needed to secure the loan for this purchase in step #7 below. A deposit may be requested by the land owner.

5. The home. Also, before the apartment’s one-year lease is up, select a small 16 x 24-square-foot, one-room home (with large loft). The starting price for such a home is typically around $15,000 at one of many “barn & shed” suppliers, an example of which is found at Weaver Storage Barns in Sugarcreek, Ohio. One couple did this in Ohio, and their story was featured in the Countryside Magazine with interior and exterior photos.

Keep the floor plan to one room (includes loft) to optimize on heating and cooling costs. However, for privacy, the bathroom can be walled in. Ask the manufacturer to install a ceiling fan in the highest part of the ceiling, which will force consistent climate control throughout the home. Additionally, request that the manufacturer handle (or sub-contract out) complete finishing of the foundation (or basement if possible within a $47,200 budget), interior (electric, water, etc.), septic, water well, and any related landscaping work, such as a gravel driveway. Such builders will also obtain any and all permits for the work. Inform the builder that there will be a wood-burning stove in the home, so that the builder will plan to install it. Obtain a firm, written quote from the manufacturer, because this quote will be needed for securing a loan. The final and complete price for the home construction and land purchase must be no more than $50,000.

6. Heating and air conditioning. Before construction begins, purchase a small, “energy-star” level (very efficient) wood-burning stove, appropriate for heating a 500 to 1,000 square foot area, and ask the builder to install it. For backup heating, purchase a portable electric heater powerful enough to heat a 500 square-foot indoor area in sub-zero conditions and safe enough to run continuously if needed. The wood-burning stove will suffice as long as someone is present to tend it; but being absent for a weekend in January with no backup electric heat could allow the internal house temperature to drop below freezing, causing extensive water damage from frozen pipes. If air conditioning is needed, a small high-efficiency window air conditioner will be sufficient, because the ceiling fan will adequately circulate the cooled air throughout both floors.

7. Get a loan. Obtain a 15-year $50,000 loan (from a bank or other financial-loaning institution) to pay for the land and the new home, as detailed above in steps 4 and 5. The bank will need to review the house plan (builder’s quote) and land purchase order or details. The monthly payments for such a loan are $373 for 15 years, according to the mortgage calculator at

8. Move. Coincide the timing of the new home construction with the expiration of the one-year apartment lease for a smooth transition.

9. Live. Enjoy your new home, and live as frugally as possible for the next 15 years on the budget below. Furnish the new home with second-hand furnishings for optimal savings.

10. And finally, build your retirement. During this 15-year period, follow the below budget plan to invest monthly** in the stock market to build your retirement, instructions below. If possible, invest more than the suggested amount, and retire with even more. See the table at the end of this article to determine how much to invest monthly for your particular hourly earnings. Increase your annual investment by $500 per year, which is 12 cents per hour for each of 2 workers ($20.83 per month per person). For example, if $10,000 is invested the first year, then invest $10,500 the second year, $11,000 the third, and so on, increasing by $500 each year. Essentially, if 2 people implement this 10-step early retirement plan, one of them builds the retirement fund and the other covers living expenses.

For people who are not stock-market experts, the easiest way to invest is to purchase ETFs (Exchange Traded Funds), explained below. These funds can be purchased by creating an account with an online broker such as who charges little to nothing for purchasing ETFs, and will walk you through the process for buying ETFs. In contrast, a “brick & mortar” broker will typically charge higher fees. Review the history of many stable and well-established ETFs to make your selection. The broker will assist (for free) upon request.

With the recovery of the U.S. economy as of 2014, an ETF can easily grow at an average rate of 8% or more annually, according to information in the ETF database at An ETF is a type of mutual fund without the steep administrative, buying and selling fees characteristic of most mutual funds. Usually, the only fee associated with an ETF is a small annual administrative fee, typically around one percent (check before buying). A web site that teaches users how to buy ETFs is This web site also allows readers to browse the ETF database, view the most popular ETFs, the cheapest, the largest, and the most traded ETFs. Readers can review the history of different ETFs in order to make an informed decision on which ETF(s) to purchase as a retirement investment. Buying the proper amount** of ETFs annually during a 15-year period (or longer) will provide the capital necessary to become financially independent and retire early. These ETFs will increase in value at a rate far above that achievable by any bank account, CD, savings bond, or other conservative investment.

Car and phone. The least expensive phone option is the prepaid cell phone, available at big-box stores for as little as $5 per month depending upon usage ( Also, remember there is no car payment (resolved in step #2 above). For this reason, these two items are not included in the below budget plan.

What if children are added to the picture?

If a child is born into the home, an extra $4,000 per year ($1.92 per hour) is required to stay on track with this 10-step guide toward early retirement and financial independence, according to the US Department of Health and Human Services in 2013.

The budget, guide for living and expenses:

Make a budget and stick to it (below). This 10-step early retirement plan is not for everyone. Discipline is absolutely necessary for the low-income wage earner to become financially independent. Here is a realistic monthly budget for 2 people, each one making $10.75 per hour (full time), living and working according to the above 10-step early retirement plan. For those earning less, use the table** at the end of this article to determine monthly investment amounts (and resultant years until retirement). Whether your hourly wage is $8 or $10.75, you will have uncommitted spending cash of $500 per month ($6,000 per year) left over for miscellaneous purposes.

The budget. Monthly expenses are as follows:

$373 (15-year loan)
$351 (groceries for 2, healthy diet described at
$ 90 (utility costs for small 16 x 24 square-foot home [4])
$1700** (stock investment for early retirement, detailed in step #10 above)
$2,514 (total monthly living expenses)

Whether the wage earners make $8** or $10.75 per hour, the above budget builds a retirement capital of nearly $400,000, yielding an estimated 8% annual retirement income of over $31,000, yet still provides $6,000 per year in free, unallocated spending cash. In some cases, some of the $6,000 must be set aside for property taxes and home/auto insurance. It is absolutely imperative that any unspent money be placed into a free checking account for emergencies or unforeseen expenses.

After 15 years, what happens?

After 15 years**, the plan participant(s) have built a cash mountain of just under $400,000 which provides an estimated 8% annual income of over $31,000. The mortgage payment is gone ($4,476 yearly) and the large stock investments can be stopped. It is far easier to live on $31,000 in Brandon, South Dakota than it is to live on $80,000 in a metropolis with high living costs, especially since monthly living expenses have now plummeted to a mere $490 without a mortgage or further stock investments.

The retirees now have $23,336 annually in uncommitted spending cash after deducting Medicare & Social Security ($2,372, explained below), groceries ($4,242), and utilities ($1,080). That’s $1,945 each month in unallocated cash, after Medicare, Social Security, and living expenses have been paid for. Money must be set aside for an eventual new car, home maintenance, and other unforeseen expenses until the retirees are illegible for Social Security benefits, which will add to their retirement an estimated $15,000 to $22,000 annually, per person.

The wage earners can choose to retire and enjoy leisure, or start a home business, work part time, or continue their full-time jobs to increase their capital wealth even more. If the new retirees are not yet old enough to qualify for government healthcare, an inexpensive private healthcare plan ($140/month per person) is available for healthy, non-obese persons [3]. Additionally, if under 66 years of age, the retirees are responsible for Social Security and Medicare taxes on the $31,000+ retirement income, which calculates to $98.81 monthly [2] for each of 2 persons. The retirees, filing separately, are exempt from any federal taxes because their income falls below the level for national taxation [5].

If the workers continue with the plan, then after 5 more years of making $10.75 per hour (20 years), they will have $545,003 to provide an 8% retirement income of $43,600 annually. After 25 years, the wage earners will have have $714,563, yielding an annual retirement income of $57,165. After 33 years, they will be millionaires with $1,013,939, yielding an annual retirement income of $81,115.

How do I start collecting my retirement income?

To actually collect the 8% interest income annually, simply sell small amounts of the stocks (ETFs) as needed to cover living expenses. Do this from a computer or tablet after logging into your online ETF account. Your broker will assist for free, upon request. Never sell more than 8% of the total investment in any one year in order to protect the capital investment from shrinking. And if possible, live off even less than that to allow the capital to continue increasing in value to keep up with inflation.

** The following table accumulates the plan participant’s capital to nearly $400,000, yielding a retirement income of over $31,000 annually (8%) within the number of years shown. The table below shows how much to invest each month depending upon the combined hourly wages of 2 workers. These calculations allow for uncommitted miscellaneous spending cash of $6,000 per year ($500/mo) while adhering to the above budget. These figures were derived based on 2 wage earners, 0 federal withholding allowances, filing single, combining their take-home pay [2].

How much to invest each month using the combined hourly wages of 2 workers:
$10.75/hr ($21.50), invest $1,700/mo, retire in 15 yrs
$10.50/hr ($21.00), invest $1,625/mo, retire in 15.5 yrs
$10.00/hr ($20.00), invest $1,500/mo, retire in 16.5 yrs
$9.50/hr ($19.00), invest $1,350/mo, retire in 18 yrs
$9.00/hr ($18.00), invest $1,230/mo, retire in 19 yrs
$8.50/hr ($17.00), invest $1,100/mo, retire in 20 yrs
$8.00/hr ($16.00), invest $1,000/mo, retire in 21 yrs

Each year, increase the monthly contributions by $20.83 per person (12 cents per hour per person, or $500 per year, total). If this is not done, then the number of years until retirement increases by steep sliding scale. For the $10.75-per-hour workers, the plan-time is extended by 3.5 years, but for the $8-per-hour earners, 15 additional years. Thus, the less the individual earns, the more important it is to do the 12-cent-per-hour, per person, investment increases ($500 per year).

[1] New Nissan car, price and description at

[2] Paycheck Calculator using 0 exemptions for maximum federal withholding, FICA, etc. Thus, a tax refund to the wage earner is expected each year.

[3] Inexpensive healthcare insurance provided by for healthy non-obese individuals

[4] Heating provided by 500-sq-ft-capacity wood stove with backup electric. A/C provided by small, energy-star rated window model.

[5] IRS tax tables,

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