When it comes down to it, the math behind saving, investing, and retirement is pretty simple. Retirement (a.k.a. financial independence) is simply the point where you are making enough money off of your investment assets to cover your expenses.

To get there, follow the below simple steps:

1. Build an “emergency fund” of cash. The general rule of thumb in the traditional financial planning industry is to have 3-6 months of living expenses in cash. Shoot for 3 months of expenses. Cash can be nice to have, but too much can be a drag. Once you have sizable investment assets, you can keep less cash on hand.

2. Contribute to employer sponsored retirement plans to take advantage of employer match (if your employer is kind enough to match). This is a 100% return on your money if you stay with the company long enough to get fully vested.

3. Pay off any debt with an interest rate over 6%* ASAP (Credit card debt is absolutely unacceptable).

4. Max out your employer sponsored retirement plans (401(k)/403(b)/SIMPLE IRA/457/etc.) This also includes HSA’s (Health Savings Accounts), if you have one.

5. Max out your Roth IRA (If possible). If you are over the contribution limits, then you can do a ‘back-door conversion’ every year (where you contribute to a non-deductible IRA and convert this IRA to a Roth IRA once per year). The backdoor conversion only works well if you do NOT have a traditional IRA with built-up gains.

6. Invest in taxable brokerage accounts. When combined, the amount invested here and in your tax-advantaged plans should be at least 20% of your net (after-tax) income. The higher the savings rate, the less time until you are financially independent. If you save and invest 50% of your net income and start at $0, you will be financially independent in roughly 15 years.

*6% is my personal rule. When paying down debt, you should think of the interest rate as a guaranteed rate of return (effective rate of return). The long term return of stocks averages around 10%. Stocks are not guaranteed to return this, and are volatile. I will take a “guaranteed” return of 6% by paying down debt before investing, but I would rather invest than pay a 4% or 5% loan down. What your number is depends on your risk tolerance and comfort level with debt.