Lauren Simpson
In 2019, at the age of 23, Lauren Simpson and her husband Ian decided to pursue an ambitious goal: retire by age 35.
Over the last five years, the Utah-based couple, now 29, has grown their net worth from less than $100,000 to roughly $1,095,000. Through a combination of savings, investments, and passive income via rental properties, they hope to be able to spend up to $150,000 a year in their retirement.
Simpson said the FIRE movement, which she first learned about in 2019, inspired her and Ian’s retirement goal. FIRE stands for “financial independence, retire early.”
“The way we see it, 50-year-olds panic that they have not yet saved enough and that they have only 10 to 15 years before retirement — they aggressively save and end up retiring,” Simpson said. “Rather than panicking at 50, we did it at 23.”
Many Americans are struggling to save for retirement, but the FIRE movement has offered some a blueprint for achieving financial security. The methods and goals of FIRE advocates vary widely, with some saving most of their income, taking on side hustles, or delaying costly life milestones like having kids. While the FIRE movement isn’t for everyone, financial experts say some of its general principles — like the benefits of saving and investing at a young age to take advantage of compounded investment returns — are applicable to a wide audience.
Simpson shared her and Ian’s top strategies for improving their finances and why one of their ultimate goals is to become “full-time parents.”
Have you used creative strategies to grow your income or net worth? Contact this reporter via email at [email protected].
‘House hacking’ has helped them grow their wealth
Simpson works in financial services as a chief marketing officer, and Ian works in IT as an asset manager — they both earn six figures annually. More than half of the couple’s net worth is from the equity they’ve built in the five properties they’ve purchased over roughly the last four years: one primary residence and four rental properties.
Between June 2024 and May, the couple’s equity in their properties increased 37%, to about $641,000 from $467,000, based on Zillow estimates of property values. Simpson said the increase in their real estate equity came from principal payments and growth in their property values. These properties also provide the couple with rental income that they put toward their savings.
In 2021, the couple, both of whom work remotely, moved from Florida to New Hampshire. Simpson said Florida’s lack of state income tax was a perk, but New Hampshire offered an even more appealing combination: no income or sales tax and an escape from Florida’s “way too hot” climate. Because the housing market was so competitive, they made an offer on a home sight unseen — their first time visiting New Hampshire was for the inspection. Despite New Hampshire’s tax benefits, the couple moved to Utah within the last year to be closer to family — buying a new home and turning their New Hampshire property into a rental. Unlike New Hampshire, Utah has both state income and sales taxes.
In addition to their primary residence in Utah, the couple owns four rental properties — two multi-family and two single-family homes — all of which they rent out with the assistance of a property manager. To afford their four rental properties — each of which is located in New Hampshire — Simpson said she and Ian have used a “house hacking” strategy to minimize their down payments.
When someone buys a second home or investment property, mortgage lenders often require a down payment of at least 10%. But when someone buys a property they plan to live in — known as an owner-occupied home — they can sometimes qualify for a down payment of 5% or lower. To qualify for a lower, owner-occupied down payment, the couple had to live in each property for at least one year. Once they met that requirement, they used the same strategy to buy and move into a new home — turning the previous one into a rental. This strategy required them to move three times in a three-year span.
“Moving was a necessary evil to get so many properties for so little down,” Simpson said.
While this strategy requires taking on a significant debt burden and can come with hefty private mortgage insurance costs, Simpson said the rental income from their properties and rising home values have helped make it profitable.
However, Simpson said their strategy has become harder to execute in recent years due to high mortgage rates. Last year, they didn’t find any properties they considered profitable, so they increased their 401(k) contributions and focused more on saving.
“That cash is there to be deployed if we do find a property that’s going to be profitable,” Simpson said.
They’re playing the ‘long game’ with the stock market
Roughly $438,000 of the couple’s net worth is in stock market investments, including retirement accounts like a 401(k) and Roth IRA. Between June 2024 and May, their investments grew by 22%. Simpson said around $78,000 of that increase came from new contributions, with the rest driven by market growth. The couple also had about $19,000 in cash savings.
While the stock market has been a roller coaster in recent months, this hasn’t stopped the couple from continuing to invest.
“When the stock market’s down, we just look at it as an opportunity — we look at it like everything’s on sale.” Simpson said, adding, “I know that we’re playing the long game.”
Simpson said their strategy is to invest in index funds with a roughly 90-10 allocation — 90% in stocks and 10% in bonds.
“I think trying to guess or bet on individual companies is just a losing game,” she said.
Retiring early would make it possible to become ‘full-time parents’
Despite their financial progress, the couple has encountered some changes to their lifestyles along the way. They had their first child in 2023, something that has put pressure on their savings. They’re expecting their second child this summer.
However, Simpson said one of the biggest reasons she and her husband want to retire early is so they can be “full-time parents.”
Growing up, she said her parents dedicated “all of their time” to her and her siblings. In comparison, Ian’s parents spent more time prioritizing their relationship. When the couple discussed the merits of both parenting styles, they decided they wanted to do both. By retiring early, they’d have enough time to dedicate to their children and each other.
“We see money as a means to build connections and foster family,” Simpson said. “Money isn’t meant to be buried under a mattress or hoarded like acorns.”
Editor’s note: This story was originally published in July 2024.
The post A millennial couple who grew their net worth to $1 million before turning 30 share the ‘house-hacking’ strategy that made it possible appeared first on Business Insider.
