Money Tips Network

You don’t need a high income to achieve Financial Independence.

Making more money helps, sure, but if you’re diligent about cutting costs, it’s possible to reach financial freedom on even an average salary.

I want you to meet my friend, John. John is an 81-year-old retired shop teacher. He’s a millionaire — but you’d never know it.

John started life as a carpenter. In his thirties, he went back to school to become a teacher. He spent the next twenty years teaching shop at a junior high school in a poor part of town. He retired to financial freedom at age 58. He never had a huge income and he didn’t inherit a fortune.

So, how’d he get rich? He pinched his pennies and doted on his dollars. John achieved Financial Independence by ruthlessly cutting costs.

Did you know that you’re allowed to make IRA contributions for last year all the way up until this year’s tax filing deadline?

That’s right. You can make IRA contributions all the way until April 17, 2018 and mark them as 2017 contributions. You can even use the refund you receive from filing your tax return to make those contributions, which may be the best way to put that money to good use.

Whether you simply forgot to make your 2017 contributions or you only now have the money available, this post will explain why you’re still allowed to make those contributions, why it’s a good idea, and how to do it.

Quick Primer: What Is an IRA?

Before getting into the logistics, let’s take a step back and remind ourselves what exactly an IRA is.

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While your private student loan seemed like a good idea when you were pursuing a degree, now it might feel like an unbearable weight — especially if you didn't get the job or paycheck you were hoping for after graduation.

Do you think it's possible to retire on $1 million?

CNBC doesn't think so:

A cool $1 million has long been considered the gold standard of retirement savings. These days, it's only a fraction of what you will really need.

For instance, a 67-year-old baby boomer retiring now with $1 million in the bank will generate $40,000 a year to live on adjusted for inflation and assuming a sustainable withdrawal rate of 4 percent, said Mark Avallone, president of Potomac Wealth Advisors and author of "Countdown to Financial Freedom."

It's worse for a 42-year-old Gen Xer, whose $1 million at retirement will only generate an inflation-adjusted $19,000 a year when all is said and done. And a 32-year-old millennial planning to retire at 67 with $1 million would live below the poverty line.

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While perusing the financial blogosphere on a lazy Sunday, I came across a unique chart called “The Early Retirement Grid.”

The grid’s main purpose is to show long it will take you to retire given various changes in your income and spending levels. It assumes that you start at a net worth of zero, that your investments earn a 5% return, and that you’ll withdraw 4% of your money each year in retirement to pay for your yearly expenses. Take a look:

About a year ago, I learned that an old colleague of mine had retired and become something of a “hermit.” He was living apparently completely off the grid and was building a cabin for himself on a piece of secluded land.

This gradually progressed into a conversation with another old colleague about that “hermit” and about how people can approach life in a very different way, so different that it feels almost alien.

I made the point that, in some ways, I appreciated the hermit’s life choices, and my friend responded by pointing out that I’m already halfway there. He’s aware, of course, that Sarah and I live far below our means and are aiming to retire when our youngest child leaves the nest (thereabouts).

JPMorgan Chase puts out a card for the generation that ‘doesn’t want to buy stuff.’

The takeaways

• JPMorgan Chase offers the Chase Sapphire Reserve℠ for people who just want to experience the world
• Greater emphasis is placed on earning rewards you can actually use for trips, events, and more
• If you want to fill your life with experiences instead of just possessions, this might be the card for you

As a millennial (right on the cusp, no less) I’ve heard it all about “the lost generation,” especially, when it comes to money. Being part of the generation that doesn’t aspire to dive headlong into debt, I’ve witnessed the cultural disconnect experienced in a world driven by credit histories.