A viral TikTok video from real estate agent and content creator Freddie Smith is making a bold promise: Follow his five-year plan starting in your teens, and you could retire with $4 to $5 million in the bank - all without going to college (1).

The plan is built around one key principle: Save and invest early, then let compound interest do the rest. But does it work?

Smith outlines two phases to his plan:

First, between ages 16 and 18, the teen gets a part-time job making around $1,200 a month, and the parents co-sign on a reliable used car (between $10,000 and $12,000). The teenager uses $500 a month to pay off the vehicle before graduating from high school, while keeping $600 to $700 a month to spend on whatever they want.

Second, between ages 18 and 21, they work full-time or take on multiple jobs to earn around $35,000 a year while continuing to live at home rent-free, with parents covering basic living expenses. Of that income, $10,000 is for personal use, but a substantial $25,000 is invested in the stock market each year.

If all goes according to plan, the young adult will have $75,000 in investments by the time they reach age 21. And, according to Smith, if they never contribute another dollar to retirement, that $75,000 could grow to $4 to $5 million by their late 60s, thanks to the power of compound interest.

Smith admits this plan won't work for everyone, but it's still an interesting concept. But does the math work? If you invest $75,000 and let it sit for 45 years (to age 66), at a 10% annual return, you'll have $5.5 million. So, yes, that part checks out.

However, if you dig deeper, the numbers start to break down. What about that $500 car payment? For a $12,000 car financed for 60 months (five years) at a 10% interest rate (which is on the low side, but not bad if the parents have good credit), you can expect to pay around $315 a month. Add in insurance costs, and $500 may be a close estimate.

Now, let's discuss the average salary after high school of $35,000. According to data from Indeed, the average Canadian between the ages of 16 and 24 earns about $17,300 per year (2) - much less than what Smith suggests. By 25-34, this salary climbs to $46,900, but this factors in the many Canadians who will have completed post secondary by age 25.

The math kind of checks out on paper. If you invest $75,000 at a 10% return and let it sit for 45 years, yes, you could see millions. But that assumes:

• Finding a high-paying job in high school or working a lot of hours, which may not be sustainable.
• Consistent investment returns over nearly 50 years, which requires a very balanced portfolio - index funds could help here.
• No withdrawals from the account, which requires a lot of discipline.
• Living at home rent-free until 21, which may not be realistic or healthy for some.
• Minimal to no emergencies - Smith's plan doesn't account for an emergency fund, or any kind of abnormal spending.

The plan also assumes a level playing field, but not all teens have equal access to jobs or parental support. Youth unemployment has also risen in Canada over the past year. According to Statistics Canada (3), as of 2024, the unemployment rate among those aged 15 to 24 hit 12.8%, the highest unemployment rate for this age group since July 2016 (excluding during the pandemic).

And even when jobs are available, they're often low-wage, part-time, or seasonal, making that $35,000 year target even more ambitious.

There's also a socioeconomic divide. Teens from lower-income families are more likely to need to contribute to household expenses or care for younger siblings, making the idea of working full-time and saving $25,000 per year a stretch.

Smith's advice presents a compelling thought experiment: What if we treated saving for retirement with the same urgency as saving for college? The concept of front-loading investments for retirement is a powerful one. However, it also depends on a rare combination of parental support, personal discipline and financial stability that many families lack.

Families considering this approach need to be realistic and weigh the costs of skipping college, factor in real-world expenses like taxes and insurance, and remember that investing always involves risk.

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TikTok: How a young Gen Z could retire with 4+ million dollars by @fmsmith319 (1 ); Inded: What Is the Average Canadian Salary By Age Group? By Indeed Editorial Team (2 ); Statistics Canada: A snapshot of employment among youth in Canada (3 )

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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