Early Federal Retirement Case Study- One Man’s Frugal Journey to Wealth

By Sam •  Updated: 10/28/20 

I really love reading The Frugalwoods blog. While Liz (aka Mrs. Frugalwoods) and I write very differently, I feel like I can relate to so much of what she writes. In fact, The Frugalwoods were a major motivation behind my own desire to pursue financial independence and start my blog. Lately, The Frugalwoods have been publishing a lot of reader case studies. In these posts, Liz examines readers’ finances and helps them examine whether their financial goals are reasonable. Here I present my first early federal retirement case study.

Recently, I met “Juan” (a pseudonym) on the Reddit r/govfire forum for federal employees seeking financial independence. Juan asked if financial independence would ever be possible for him. This seemed like the perfect setup for a Frugalwoods case study, so I asked Juan to participate in one of my own. Read on to see my analysis of Juan’s chances of an early retirement and leave a comment to tell me what you think!

Disclaimer- I’m just a federal employee. Don’t mistake a random blog post for financial advice, sacred scripture, or a roadmap for your life. Also the post may contain affiliate links- if you click through these links and purchase the product/service I get a small amount of money at no additional cost to you (check out my disclaimers page for even more disclaimers).

Tell us a little bit about yourself and your federal career

My name’s Juan, I’m 32 years old and I live in Des Moines, IA. I’m currently single and have no kids, spouse, or pets. It has its ups and downs, but I do enjoy the bachelor life. A spouse and children is something that I do think about, but it’s not an immediate life goal of mine. Ask me next year though and I may have changed my mind by then!

greyhound in the kitchen
Now that I’ve written a reader case study, greyhounds aren’t the only thing I have in common with the Frugalwoods.

I am a federal employee and have been since 2010. I began interning with my agency summer 2010, interned another summer in 2011, and began working full time January of 2012 as a GS-7. A year into my career, I was promoted to a GS-9, then approximately a year after I got my grade increase, I applied for a GS-11 position within my agency, I got the job, and moved to California.

I was in California for a little over 4 years, applied for a GS-12 position in Kansas, got the job and was in Kansas for approximately a year and a half. I wasn’t very happy in Kansas with both where I was living and what I was doing, so I decided to change job series within my agency, applied for a GS-11 position, and now I’m a GS-11 Step 9 in Des Moines. I’m much happier where I am and with what I’m doing. I do believe that my diversified experience changing job series will be advantageous for me if/when I apply for positions GS-12+ positions in the future.

Tell us about your early federal retirement plans

I would like to retire in 2031 at the age of 43. 2031 because I can retain some retirement benefits with 20 years of government service (2011 is my official start year with my agency even though I began interning 2010). I would be able to defer my annuity to the age of 60 without any reduction.

From now until then, I want to prepare myself financially to be able to live financially independent; living off of savings, investments, dividends, etc.
I want to retire early because I’ve realized how much I value time with family and friends. I want to spend more time with them while I can before we all get old and especially for my older relatives, before they pass away.

My job isn’t terrible and thankfully my coworkers make my job enjoyable most days, but I’d really like to do something more fulfilling with my life such as philanthropic work. I haven’t figured out what specifically, but something involving helping those who need help. Those with disabilities is something I think of right off the top of my head.

When retiring, I’d move out of Des Moines and closer to family. I haven’t figured out which state yet, but that would depend on what would make the most financial sense (lower COLA preferably).

Wisconsin countryside in the fall
This is almost Iowa

What do your finances look like?

Current expenses:

Total: $2,033

Net income: $1875/Pay period

Assets and Liabilities

(Juan told me that he doesn’t track expenses, does not have a budget, and only makes sure that his credit card balance isn’t too high.)

Can you describe your current investing strategy?

I don’t really have a current investing strategy other than my TSP contributions, which currently all of my contributions are going into the C fund.

I’m very new to FIRE and would really like to know what my options are and if my goal is even possible. I acknowledge that my current financial status would not make it possible to FIRE, but I’ve been considering moving up in my agency to a GS-13 or 14 and helping with FIRE.

Overall thoughts about Juan’s early federal retirement position

The Good:

Although Juan has just discovered the FIRE movement, he is in a great spot to achieve early retirement. He has no debt and about $85,000 in assets saved up. He is planning on working for another 11 years. After “early retirement” Juan still plans on working for a while, so he does not need to replace 100% of his income. Also, by the time Juan retires, he will be able to take a deferred retirement with 20 years of service.

Juan’s goal is closer to a “Coast FIRE”, where after amassing enough wealth to retire, you “retire” to another, more fulfilling job to pay the bills. Depending on how much Juan saves, he could also draw-down some of his wealth during his early retirement- many people would call this “Barista FIRE”. This could be defined as being not wealthy enough to live the life you want by withdrawing your portfolio but any small amount of income on the side would make your dreams feasible. (If these “slow FIRE” definitions sound good to you- check out my friend Jessica’s blog who has a “slow FIRE” series; note- I contributed to one!)

Juan currently only needs $24,000 per year. This is a pretty low amount of funds needed. My friend Purple lives on $20,000 per year and just retired with $500,000 at age 30. If Juan can keep his spending near his current level,

(We’ll be doing a lot of math with inflation and other assumptions later on, so hold tight if you don’t agree with that number).

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The Less Good:

Savings rate

From what I can tell, Juan is only saving 5% of his income currently. Luckily, this is matched 5% by the government in his TSP. However, most people pursuing FIRE have a savings rate of at least 50%.

Savings rate is important for two reasons. The first is that Juan needs to save money if he wants to retire early. The second is that he needs to reduce his expenses. While Juan listed basic expenses of ~$2,400 per month, he doesn’t know where his money is going and can’t account for the other $1,350 a month he brings in (i.e. the difference between his monthly net income and listed expenses). Can Juan really live on $2,400 per month? Or are there hidden necessities in this $1,350


Juan currently does not track his expenses. Tracking expenses is a key step along the path to FIRE. Not only can recording your expenses help you find wasteful spending, but it also lets you know exactly how much money you need to live on. If Juan plans to leave the workforce, I want him to have a very good handle on how much money he needs each month.

I use CountAbout to help me track my expenses. While there are many budgeting apps out there, CountAbout is the only app that allows you to attach receipts within the app. This is great for keeping track of receipts if you have a health savings account (HSA) or a small business. If that sounds interesting to you, you can get a 15 day free trial through this link.


Juan gave me a lot of details about his life but there are still a lot of unknowns at this point. Because he is so new to FIRE, Juan doesn’t have a feel yet for what his true expenses are and what his savings rate could be. I think the $1,875 net pay is after taxes, TSP contribution, and health insurance. Given Juan’s grade and location, I estimate he is currently saving $155 per pay period in his TSP. If Juan saved half of the unaccounted for $1350 per month, he could more than triple his savings rate. (Saving approximately $1,000 per month total).

Another big unknown is health insurance. Right now, Juan is guaranteed access to his FEHB. And keeping FEHB is a major reason to work until your minimum retirement age. It’s hard to say what will eventually happen with the Affordable Care Act and how easy it will be to get health insurance outside of your employment.

Luckily Juan has 11 years to watch what happens to the health insurance marketplace. At that time, he can make a decision based upon the current landscape. Trying to create a plan for health insurance 11 years in the future seems crazy. That doesn’t mean it won’t be a key part of Juan’s early federal retirement plans. It just means we need to couch the argument being contingent on health insurance.

Is an early federal retirement possible?

Before splitting hairs and running simulations in cFIREsim, let’s do some back of the envelope math to see if FIRE is possible.

If Juan upped his savings rate to $1,000 per month, he would have about $560,000 in 2031 (I assumed a 7% growth rate). At first glance, this seems like he’s pretty close to the $600,000 I said he’d need to sustain his current lifestyle forever (assuming that his expenses are correct). However, this analysis doesn’t include inflation.

To get an idea about whether Juan’s FIRE dreams seem realistic, we should also take into account inflation. $24,000 won’t have the same purchasing power in 10 years as they do today. We should also take into account the size of his deferred retirement pension, both when he separates from the government and when can access it at age 60.


I think it’s important to take a look at inflation when looking at both the size of the projected expenses and the pension. I put together this graph to help us visualize what’s going on (assumes 2% rate of inflation).

Juan's expenses vs. his pension
Juan’s pension remains frozen at 20% of his final salary. But his purchasing power decreases because of inflation.

Inflation affects both Juan’s level of expenses and the size of his pension. In the “pension” column of the spreadsheet, I looked at 20% of a GS 11, Step 10’s salary. I assume that his salary keeps pace with inflation until he separates from the government. So you can see that his expected pension increases from $16,600 to about $20,500.

However, after Juan leaves the government, his pension is locked in at $21,500 as his expenses continue to increase. By the time Juan reaches age 60, his expenses will have risen from $24,000 per year until $41,800 per year.

What I think this analysis shows is that once Juan reaches age 60, his pension will cover about half of his expenses.

Early federal retirement target number

One way to think about the above analysis is that Juan will need at least $500,000 at age 60 once his pension kicks in. His savings will provide about $20,000 per year and his pension will provide the other half of his expenses. I’m not so worried about inflation after age 60. The 4% rule assumes that your withdrawals increase with inflation. The FERS pension also contains a cost of living adjustment.

Given this, we can then calculate the minimum amount of money Juan will need to leave the workforce at age 45. This isn’t a straightforward calculation. I assumed that Juan would earn 5% on his money after quitting at age 45 because he has shifted his assets to include more bonds. Here’s what my calculations look like:

Juan's asset draw down strategy showing portfolio and expenses during his early federal retirement.
Here is an inflation adjusted look at Juan’s finances until he can access his pension at age 60.

These calculations show that Juan will need about $615,000 to retire at age 43 without ever needing to work again.

Other factors to consider for early federal retirement

While the math suggests that Juan could in theory retire at age 45 and a portfolio of $615,000, there are a lot of other considerations that need to be taken into account.


What will Juan do for healthcare? These calculations assume that his health care expenses will not change after leaving the federal government.

Withdrawal rate

Depending on the stock market conditions when you retire, the 4% rule may not be ironclad. I believe that “Big Ern” at Early Retirement Now and Michael Kitces have written the best articles articulating when the 4% rule works and when it might have trouble.

Juan’s biggest risk will be sequence of return risk. (i.e. the stock market tanks right after he retires). The few cases where the 4% rule fails happen when you retire at a stock market peak. Based upon market conditions, you could either target at lower withdrawal rate, alter your portfolio strategy, develop a strategy to earn emergency income, or all three.

Juan’s backup plan

While we have no idea what the market conditions will be a decade from now, Juan does have several good things going for him.

Final thoughts about Juan’s early federal retirement plans

Juan is completely new to the FIRE movement and is far away from early federal retirement. I just performed some simple calculations to predict whether Juan could conceivably retire early. As Juan progresses through the journey, he will want to use more sophisticated tools to predict whether his portfolio is set for early federal retirement. He will also want to develop a portfolio and withdrawal strategy.

Based upon the numbers he provided, I think Juan could get close to meeting his goals if he saves half of the income he hasn’t accounted for. This doesn’t even account for an promotions (which would increase his pension and the amount of money he could save).

Here is the advice I’d give Juan.

Track your spending

Juan really needs to track his spending if he wants to retire early from federal service. I’d really like to make sure he can actually live on $24,000 per year before stating that FIRE is possible. While he might be able to live on the bare minimum of $24,000 per year for a few years, he might find he hates it after a few years. In that case maybe he’d decide he’d be happier spending more money and pushing back his early retirement timeline.

Why pay taxes?

Juan is contributing to his Roth TSP. That means he is contributing to his TSP after he has paid taxes on the money. Realistically, if Juan retires early, he is in the top tax bracket he will ever be in. It doesn’t make sense to pay tax on that money now. If Juan contributed to a traditional TSP instead, he could contribute more money today (by adding in the amount his paycheck increases after he switches types). He can then do a Roth IRA conversion ladder from the TSP. (Check out my post about withdrawing money from the TSP).

If Juan does this correctly, he would never have to pay tax on that money.

Plan your journey

Early retirement is a long, hard journey. If you want to make it to the end, you need to have a clear vision of what your new life will be like. My friend Darcy has a great post about why you need a financial dream. I’d like to see Juan visualizing exactly what early retirement from the federal government looks like. What will he do? Where he will live? How often will he travel?

The visualization serves two goals. The first is to help motivate him to achieve his dream. Secondly, having a very clear vision of his new life will help him prepare for his exact expenses and lifestyle.

What do you think? Can Juan achieve an early federal retirement?


Sam i.e. "Gov Worker" started working for the government at age 18 and loved it so much that he never left. He started GovernmentWorkerFI in 2019 to help fellow federal employees understand their benefits, take control of their finances, and live their best lives.

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