Making An Early Retirement Work

Some people are so obsessed with their work that they can never envision chucking everything to begin a life of leisure, while others have spent most of their work lives counting the days until they no longer have to clock in. If you opt to jump the gun and call it a career before you hit your golden years, you’re taking a calculated risk, hoping to make your savings stretch out longer rather than spending more time to build it up before you take the plunge.

A post penned by an early retiree on Financial Samurai explains how he’s made the lifestyle choice work, despite seeing half his stock portfolio slashed in 2008.

Here’s an excerpt:

We dialed back our spending for a year or two, continued to rent out the un-sellable house, and I even made a point of doing some extra work so I could afford to buy some of the stocks that had been beaten down to bargain levels.

Eventually, the economy recovered. Stocks rebounded, my rental income went up and I started working less again. Meanwhile, my little boy has made it to six years old now, and hanging out and learning with him continues to be my biggest job by far, just as it has been since he was born.

Many retirees will tell you that retirement is a temporary status. You may have to go back to work now and then, but if you dedicate yourself to hitting your savings goals, you have a decent shot at attaining your dreams of travel, daiquiris and shuffleboard in middle age.

Early Retirement: It’s Not As Risky As You Might Think [Financial Samurai]

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  1. Hoss says:

    Working for the purpose of buying depressed stock isn’t exactly the smartest financial move. Good luck with that idea

    • unpolloloco says:

      Risky, yes, but relatively smart if you can afford the risk

    • Blueskylaw says:

      At what price level would you care to buy stocks? At the top?

      • Hoss says:

        If you were an investor in 1960, you would have needed to wait until 1985 to see a true upswing. That was the US market. Ask the Japanese how long true recovery takes. And recovery is a relative word since one could make a strong argument that the current market is not depressed but that the former market was way too inflated.

        • Blueskylaw says:

          If you were investing in stocks, irrelevent of the timeframe,
          would you rather have bought in 1960 (lows) or 1985 (highs)?

  2. crispyduck13 says:

    Just out last night with some friends in their late twenties/early thirties, all professionals with full time jobs and college debt. Every single person at the table said they believe they won’t be able to retire and will have to work until they die. I share this sentiment.

    It’s a sad fucking world we are living in today.

    • dolemite says:

      I don’t plan on doing that. I intend to live reasonably, pay down all my debts, save, etc.

      I may not be able to totally retire until 72 or something, but I don’t plan on working 45-50 hours a week while being on-call 24/7 either. Once house, student loans, cars, credit cards etc are paid off, I don’t see a reason to live so miserably.

      • belsonc says:

        The “corporate” expectation for the retailer I’m at right now is 50-55 hours a week, and my position kind of necessitates I do at least 55 – but with no effective work life balance (to the point where people I know are concerned for my health), I’d rather hand in that TPS report a day late and catch the flak for it than miss a dinner with someone that I get to see maybe once a month otherwise. I’m not rich by any stretch, but fortunately for me, it’s not about the money – it’s about being able to live. I’m going to retire when it’s prudent for me to do so, whether that’s 30 years from now* or 50 years from now. (* – I’m 31.)

    • Sneeje says:

      Yeah, having access to potable water, education, not being threatened by violence on a daily basis, an actual job market (albeit challenging), food at the supermarket, cellphones, TV, etc. is pretty sad. I sure do envy those 25,000 that die every day of hunger or hunger-related causes.

      I know this is a d-ck response, but given the way you worded it, I couldn’t resist. If you live in America and went to college, its a lock that there are billions more worse off than you.

      • crispyduck13 says:

        Did you want a cookie for typing all those correct facts or something? I’m fully aware that I have it good compared to an assload of people on this planet. That knowledge does not pay my bills, it does not contribute to my 401k, it certainly does not help me sleep better at night. That the problem seems insurmountable to many younger people is nothing to laugh at. Who the hell is going to be paying our medical bills when WE are old and can’t work and there is no social security??

        I am absolutely grateful about my lot in this life (so far), but that doesn’t mean I also can’t acknowledge the challenges. I put my previous comment up because it seemed extremely timely to post an actual conversation with an actual group of people “halfway” to retirement that occured in our current economy. This is what people like that are actually saying/thinking and your opinion on their gratefulness is not really the point.

        • Nigerian prince looking for business partner says:

          I think the entire notion of a middle class existence has changed considerably in my lifetime. It used to be somewhat of a given that going to college would lead to a job, that would provide a comfortable existence — Enough money to pay bills, have a couple of kids, have access to health care, go to the Jersey Shore each summer, and eventually retire for a few years before death.

          I think during the “good years”, we took a lot of things for granted but the prolonged, steady decline of the middle class hasn’t been easy, and will only get worse. In 20 or 30 years, when our country is saddled in debt, with one worker per retiree, I can’t imagine the quality of life for those too old to work, or those who are paying taxes to support them, will be very pleasant. Even today, it’s hard for me to believe that my old neighborhood (or even my current one) used to be predominately middle class, without the drug deals, burned down houses, and people stealing copper.

          I guess we should be grateful for having water from the faucet and not having to trade our humanitarian food packets for protection from local warlords, it’s just a shame that our standards have dropped so much.

          • VintageLydia says:

            Which is why it annoys the hell out of me when older generations look at mine and judge us with the same standards they had when the economy was much better and wages weren’t depressed and tuition wasn’t artificially high and a four-year degree wasn’t a requirement to becoming an office receptionist that still pays only $10-12 an hour (at least in DC!)

            • corridor7f says:

              I jUST started being able to think and act on a plan for retirement and I’m 29. I feel ya. I worked temporary / contract jobs for a good 2 years after I finished college and was floundering big time. I had to rely on credit to survive.

              Now that I’ve got a fairly secure job and I know how to scrimp, I plan on living within or below my means. I don’t have cable, I have the cheapest cell phone possible, I buy groceries and don’t eat out and I’ve banned myself from credit completely. If I can’t afford it right now, tough titties, I save for it.

              I don’t know how I’ll feel when I reach retirement age or how much I’ll have, but I’m trying. It’s actually made me appreciate non-material things a tonne more.. yeah, I occasionally get jealous of that friend who always gets to travel and buy stuff, but I picture them in a subsidized apartment full of roaches eating cat food and snap out of it.

          • Sneeje says:

            I think I tend to agree with you, but what standards are we talking about here? 3 televisions, an iPad, a Keurig coffee maker and two $30K cars?

            If by standards, you really meant expectations, then yes it is a shame. But it is also probably the only thing that can happen. In a world of limited resources, the only possible long-term outcome is to get used to living as though those resources can become unavailable at any moment. Believe me, I’m no posterchild for that–although I’m trying.

            • Nigerian prince looking for business partner says:

              I’m not really talking about stuff, we had electronics and toys 30+ years ago.

              I’m thinking more along the lines of affordable housing, health care, utilities, food, etc.

              • Sneeje says:

                That’s fair, but I still think some of what I said applies. What most people think of as affordable housing far exceeds what is truly necessary. The days of 3,000 square-foot homes needs to be over. We don’t need dining rooms and separate living rooms and huge basements.

                Regarding health care, we may also have to adjust our expectations. Today we invest billions in procedures to extend the lives of those at the extreme end of human life expectancy. None of us want to deny someone that opportunity, but if we choose that route we’re going to have to give up some other massive area of expectations.

        • Sneeje says:

          Send my cookie to the Child Rescue Center in Nigeria, please.

  3. Extended-Warranty says:

    Rented out an otherwise worthless home they were stuck with, gambled on unperforming stocks, and got another job. What a relaxing way to stress out your current life to still not even guarantee early retirement.

  4. dork says:

    Now that there are no defined benefit pension plans, and we are all expecting Social Security to not be there when we retire, our retirement prospects are tied directly to the Stock Market. If the Stock Market doesn’t go up, we can’t ever retire.

    Oe could argue that the Stock Market is likely to go up over the long term, because all the young people are putting their retirement money into the market and leaving it there for a while. But if that’s the case, how exactly is that any different than the Ponzi scheme called Social Security?

  5. chizu says:

    My father is in his 70s and hasn’t retired. I have a feeling I won’t really be able to fully retire when I get to his age too. Not retiring is actually kind of a good thing for him (and for other elderly his age). 1.) Keeping him active. It keeps both his mind and his body busy. 2.) Everyday expenses and especially his medical bills — someone has to pay for all that.

    At this rate, unless I invest heavily and will be incredibly lucky with my investment, I’m not going to hit that “$1.5 million” retirement fund by the time I’m 65. So I doubt I’m going to ever get to retire fully, I might end up doing something else to supplement my income, but full on retirement? I wish.

    • Extended-Warranty says:

      Depending how old you are, 1.5 million at 65 might be the equivalent to something like $400,000 today. Probably not something you could live off of.

      • chizu says:

        Yeah, I’m pretty aware of that, which is why I think it’s going to be impossible for me to retire at 65 (or even 70), especially when hitting that $1.5m is not doable for me right now. Of course, it also depends on where I’ll be living, what my (and my family’s) medical condition would be like. I don’t have kids now, but by the time I’m 65 (or 70), will my future kids be independent/old enough to live on their own and pay for all their bills?

        I don’t expect a full-on retirement, but I would like to live fairly comfortably in my old age and be able to do “fun” things that I’ve always wanted to do. Or even be able to do light work that could supple my income. It’s a little early to think/wish for all that, but it’s never too early to start considering all these potential problems.

    • MaytagRepairman says:

      I’m in a similar situation to you. My parents are in their mid 60′s. My mother continues to work (Walmart and McDonalds type jobs) for a few extra bucks. My dad’s body is too far broken to work much of any kind of a job. They do own a trailer park (that they live in) but it pays very little. Most people who choose to live in a trailer park can barely pay their bills.

      In 1993 I worked out my retirement plan. I thought to myself $1 million dollars. It looked too easy on paper and I assumed there would be set backs now and then so I bumped it up to $2 million. Right now I just cannot see myself working that plan as the corporate, 9-5, long commute slave until I’m 65. I’m 44 and tired of that life right now.

      I tell my wife I don’t want to do it until I’m 65 but she works in the insurance industry and reminds me that we will probably have to just to have insurance. I see us paying off our house early and taking different kinds of 9-5 jobs for a few years that pay less but are closer to home and less stressful. After than maybe switching to part time jobs for 3-4 days a week until I finally call it quits for good.

    • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

      I hear you. I don’t make much money, in the scheme of things, and even if I would have saved every penny of my take home pay for the last 26 years, plus every penny for the next 21 years (until I’m 70), it would be a little over $1,000,000 if I remain employed.

      Combine that with the fact that the money I can save earns next to no interest, and the stock market fluctuates so much that my 401K just goes up and down, and doesn’t grow by leaps and bounds, I’m basiclly screwed. My hope is to join the Red Hat Ladies and be a greeter at WalMart.

  6. kranky says:

    The truth is that with people living to age 90, it’s not feasible to retire at 65, let alone “early”. I work with people right out of school who tell me they plan to retire at age 50. I ask them how they think they can work for 30 years but save enough to pay for 40 years of retirement. Only the 1%-ers can do that.

    People think it’s a great thing to live longer, but along with that comes the problem of how to live 20-30 years in retirement on no income. Realistically, it’s going to mean the vast majority of people can’t retire at 65.

    • loggg says:

      Why should you want to retire at 65, or at all? Because work sucks?

      There’s something wrong with the way we do work. Think we’ve made it much more painful, stressful, ugly, treacherous, humiliating, exhausting, and downright soul destroying than need be. No one should ever have gotten carpal tunnel syndrome. Dilbert and The Office got way too much traction. We expect too much of ourselves, and focus on the wrong things. Hardly anyone bats an eye when someone trashes coworkers behind their backs. Showing up 5 minutes late is a far more serious offense, since it’s so measurable.

      • dolemite says:

        I was having this conversation with an ex co-worker just last night. We work in direct mail. From the way people act, it’s a life or death business. I’ve known doctors, lawyers, nurses and policemen that aren’t 1/2 as unhappy or miserable as those in this industry. I’ve never worked at any company where every single person can’t wait to quit. People breaking down and crying on a daily basis. It’s simply insane…but it’s all because of the way people treat each other and stress each other out over the most inane things.

  7. Bodger says:

    OK, this may seem like rubbing it in but I retired on May 1, 1997, not yet 50 years of age, and despite having no great fortune saved up or invested. I’m still alive and kicking and have no debts. I am arguably more sane and healthy now than I was before retirement. It can be done. It isn’t necessarily easy and some people might not be flexible enough or of the right mindset to manage it, but it CAN be done.

    • dolemite says:

      I’d be interested in knowing the back story! Did you pay off your home, car, etc. then just decide to kick around?

      • Nigerian prince looking for business partner says:

        I’m curious too — It seems like just paying for health insurance and taxes would eat up a considerable sum of money.

        • plex says:

          Nothing an extra year of work won’t cure. It’s expensive, but if you are in good health, its not THAT bad with a high deductible policy.

      • Bodger says:

        In basic terms: Pay off all debts and know what your greatly-reduced income is and then live within your means. Move someplace with a lower cost of living. Make no new debts beyond a credit card balance that can be paid off every month. If you want something expensive (an occasional trip across the Atlantic in my case) save until you have enough to pay for it even if it means putting it off longer than you’d like. Budget for all known recurring expenses and put money aside to cover them (taxes, insurance, car expenses). Make things last — I retired with a six-year old car, having sold my other vehicle, and made it last for fifteen years before buying a replacement. Do not buy anything without having given due consideration — I don’t even buy small items from Amazon until they have aged on my wish list for a long time and after a couple of months I decide I don’t need half of what I just had to have previously. In other words, little things but little things which can be damned difficult to do. Flipping the mental switch from the “lots of money but little time” to the “lots of time but little money” position wasn’t easy and I made some (major) mistakes along the way but it was worth it.

    • Press1forDialTone says:

      I’m right there with you Bodger. I just retired after 30 years
      working in IT for a major public university.
      I have one of the last remaining state defined benefit (pension)
      plans and will start my benefit in May. Everything you said I am
      doing with some “get out of debt” help from a TIAA-CREF annuity
      that I took out some years ago for the purpose of getting me completely
      out of debt when I retired from my job. I am one of the believers that
      Social Security will get tweaked and toned up as long as we get and
      keep Democrats in Congress, Senate and Presidency. If the RepubliThugs(tm)
      succeed in destroying Medicare and Social Security you are gonna see some
      seriously angry baby-boomers of which I am one who will take advantage of
      the loose gun possession laws and completely insane “stand your ground”
      laws. I will be eligible for SS in 9 years. As it turns out, my pension combined
      with SS and what’s left of my annunity will net me more per month than I made
      working and with no debt that will be nice and I hope I live to see it. Have to take
      good care of yourself so healthcare doesn’t kill your dream.

      In other news I wish us both the best of luck and properity.
      No harm in doing a small job on the side

    • corridor7f says:

      When did you start your planning / saving? I’m impressed and curious…

  8. 333 (only half evil) says:

    This is the 2nd time this photo of my dog Ginger has been used on Consumerist. She’s going to get a big head. But she is cute.