How I Saved $33K for Retirement in Four Years (Without Making More Than $50K)


I remember the first time I heard the term “IRA.” It was September 2014, and I was 25, walking down the street with a college friend, who informed me she’d just opened one. “That’s great!” I responded—then Googled the term when I got home. (IRA stands for Individual Retirement Account, if you’re like me, circa 2014).

Fast-forward to the end of 2018, and not only did I have $33,000 invested for retirement, but I’d also paid off $18,000 of student loans—all on a salary that never exceeded $50,000.

Starting From Scratch at 25

At 25, retirement seemed so far away, and I figured I had more pressing financial problems, like the $25,000 of student loans I’d graduated with in 2011. I spent my first three years out of college earning between $15,000 and $18,000 as a waitress and caterer in Texas. My loans ate up the bulk of that income, and everything else went to bills and the occasional night out. (I did live at home with my parents for free for part of this time, which helped a lot.) There wasn’t much left over for retirement, so I wasn’t saving anything.

Turns out, this is more common than you’d think. According to one ValuePenguin survey, just 31 percent of Americans are consistently investing for retirement.

Still, my friend was already investing; shouldn’t I? I decided it was time to get my finances in order, and I’d start by tackling my debt. (Looking back, I wish I’d started investing while paying off debt. I know now that investing as early as possible is one of the best things you can do for your money.) I started by researching how to pay off student loans quickly and stumbled upon the world of personal finance bloggers. I learned everything I could from them and applied their lessons to my life.

That October, I made a goal to be debt-free in 18 months, meaning I’d need to pay off $1,000 a month, or an extra $650 above the minimums I was already paying. It was aggressive, but I was committed. I ruthlessly cut my spending. No more eating or getting drinks out, no vacations or new clothes. I walked everywhere possible to save gas money and ate almost exclusively vegetarian to cut costs.

But you can only cut so much on an $18,423 income (my 2014 earnings), so I picked up extra catering shifts and asked for a raise. I also nannied, freelanced as a social media manager, writer and fundraiser and coached high school lacrosse.

The extra jobs meant I was really busy, but they also helped me exceed my goal—contributing as much as $4,000 toward my debt one month. By June 2015, I was debt-free, just nine months after I set my goal! Next, I turned my attention to my (non-existent) retirement savings. I was excited about having paid off my debt, but I still had a net worth of zero and was ready to change that.

How I Started Investing

I continued to work multiple jobs and used certain streams for living expenses—for example, my catering money went toward rent and utilities—and others for investing. In August 2015, I opened a traditional IRA, where I started funneling freelance writing money. By the end of that year, my income had risen to $32,000, and I’d maxed out my IRA with $5,500 of contributions.

In 2016, I’d maxed out my IRA by April and gotten my annual income up to $40,000. I spent the rest of the year focusing on building up an emergency fund. In 2017, after maxing out my IRA again, I was ready to invest more. While I didn’t have access to a workplace retirement plan, like a regular 401(k), I realized my freelancing career qualified me to open a solo 401(k). By the end of 2017, I’d contributed $10,000 to the solo 401(k)—for a total of $15,500 invested. My income continued to increase, hitting $50,000, as I grew my client list and increased my rates.

The year 2018 was the final year of my twenties, further motivating me to keep investing. I maxed out my IRA and added another $1,000 to my solo 401(k). (I also spent some money on traveling and started saving up for a home down payment.) By the end of the year, I crunched the numbers: In just four years, I’d invested $33,000—and seen some healthy investment gains, too—and increased my income more than $30,000!

As I look into my 30s now, I’m motivated to continue growing my income, and I’ve set my sights on hitting $100,000 in my retirement accounts as soon as I can. Seeing what I’ve accomplished already in a relatively short amount of time gives me all the confidence I need to get there.