How to Retire 35 Years Early

10 years ago

Wall Street Journal's Market Watch did a feature on Mr. Money Mustache, a man that retired when 30. It polarized and sparked some interesting comments from readers. He still works some but only on his terms.

http://www.marketwatch.com/story/how-to-retire-early-35-years-early-2014-01-17

He gets into more detail on his blog here http://www.mrmoneymustache.com/

I guess the main take away for me was you can pare your costs significantly once you differentiate between your "needs" and your "wants".

Featured Answer

grandmamaloy

10 years ago

I read some of this but think common sense...from a VERY young age is the difference maker! Start setting goals even before you go to work and live smart. YES, differentiating between your wants and needs is vital! And then making smart financial decisions, like saving, investing, taking out a 15 year mortgage as opposed to a 30 year, paying HUGE attention to your credit score and paying cash for everything that you possibly can. Life is definitely not getting any easier...the cost of living continues to rise and the temptation for non-stop spending can be hard to ignore. We are bombarded with WHY we need WHAT! I told my daughter once to curb her impulse buying...don't just put it in the cart. Walk around the store and distract yourself...if at the end of your shopping trip this is a must-have, then get it...otherwise you don't need it. It works even better if you can leave the store and plan to go back the next day. Makes you think before spending. You can apply this to a great many financial challenges!

And no....I'm not young nor ready to retire...because I did all of this wrong. This is advice I've learned, too late in life to capitalize on it, but before I'm forced to live on a fixed income. :) Good luck to all!

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Comments (14)

joyfulguy
10 years ago
On "Canadian MoneySaver" magazine there's a frequent contributor who retired at 34 or 35 ... wrote a book on "How to Stop Working".

I don't know whether you might be able to catch some of his articles if you go to www.canadianmoneysaver.ca and search for "derek foster".

The mag isn't slick and glitzy, carries no ads, is mainly articles and at the end of many of them there's a contact message: if one writes a message that's not somewhat frivolous, often the writers will reply.

Entirely subscriber-driven, they asked what the subscribers wanted and have put on seminars with the authours in a number of locations, plus in about 45 locations in Canada there are regular meetings of the local subscribers: I've attended the one in London monthly for something over ten years.

ole joyful ... who retired at about double that age: 67 or so - 17 years ago
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I appreciate the responses. Celtic Moon - I should be eligible for two very small annuities at 60, one from my main employer (the bulk of retirement is 401K) and from the Air National guard. I'm assuming I can start using the 401K at that point but am not sure I should. The ANG medical kicks in at 60, I think I have to pay in but it should be more reasonable than just being out on my own. Of course that's assuming that all the benefits dont' change and it wouldn't surprise me if they did. I don't think we have any idea yet how much the war has cost but I think its going to be a huge shock. I doubt if those will be enough to live on but am wondering if I can maybe pick up something part time. Either way I would not longer be saving any money. -The bad luck with my portfolio was NOT from chasing profits but just leaving everything where I iniitally put it which was not good despite what everyone says about good times. Apparently. -I'm not sure how you want me to ride the slump out by not selling my house since I'm relocating 4 states away. Rent it? -Hunkering down in retirement would most likely be in a smaller city somewhere else. The rust belt city is where I'm moving for employment. That's not where I want to retire. Steve-o, normally I'd say my line of work is recession proof. However the war in Iraq is costing DoD so big and I think many many checks have been written that have not been cashed and won't be till after this administration. They are downsizing the Air Force, military and civilians to try to pay some of the shortfalls now, I can only assume it will get worse. No, I don't know what else I would do though I wouldn't want to stay in that city if I lost my job. If large cuts were to happens, the housing market in this city where the DoD is the largest employer will go from one of the higher foreclosure rates in the country now to worse. So if I do buy a house I would have a tough time selling. I would like to think though that while we make take some hits it won't be too bad. Very hard to predict and one of the reasons I was thinking of buying some little piece of crap. For say 130,000 or so I can buy a little 3 bedroom, 1 bath, 1 garage 1950's ranch in a slightly run down but safe neighborhood with a decent commute. Certainly suitable to my needs even if living in the burbs chafes. Not sure where these neighborhoods will be headed in 10 years but shouldn't become unsafe even if they slide downhill in terms of maintenance and cost. For plus or minus 100,000 I can buy a little 900 sq' older 2 bed bungalow almost anywhere. The plus or minus is based on location. And they are all painted white - why is that?:) They would keep the rain off my head just fine probably. Its not that important to have the deed in my hand - just whatever works best financially. The alternative is I've been looking for something in the country with a little wildlife and privacy. That's what I like, what I want but am wondering if I should suck it up, live in the burbs and try to work whatever extra money I have harder. Finda place in the country I like has been more difficult than I thought too since a lot of the houses in the country are surrounded by crop land, so even if its on a couple of acres or more there aren't many trees and you are fairly exposed and there's not much for wildlife. The prices are 230 to 300. If my house sells at anything close to asking I could do that with a mortgage. But should I? Rent? Buy? Buy small and cheap? Buy small and sort of cheap? Buy what I want and throw caution to the winds? The real estate market and all that is certainly part of it but I'm trying to look at that as part of this bigger picture am I'm just feeling lost.
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My husband thinks depending on rental income is unpredictable and that we should work longer...sigh... Anyway, still awaiting State consent from Malaysia pending a bumi release letter from the seller. In Malaysia, there are bumi houses which are cheaper and sold mostly to Malays only. If they cannot sell it to any Malay, then they will release it to Chinese buyers prob at a higher price....anyway, quite a tedious process buying a resale house...been waiting for state consent for months... Just found out can bring my Sg employed Filipino maid into Malaysia without applying for MM2H so that will save us some money... Was discussing with hubby last night our many options from retiring as soon as next year to many years later. If we retire next year, will only have about S$2300 to S$2800 passive income but as the exchange rate is 2.62 now, it translates to RM$6000 to RM$7300 which is higher than the average malaysian household income of RM$5000 so maybe we can still survive in Johor. Main thing is my hubby wants my children to continue schooling in Sg so that means we may have to keep our expensive Sg car. Hope to convince him to let them study in Johor international schools but the school fees are like S$700 compared to subsidised rate of about S$400 in Sg. And when my younger one attends primary school, it is only S$11.50 in Sg. Now his childcare fees are high... Actually, when I first decided to buy JB malaysia house, intention was to rent out for passive income and sell it 10 years later for capital gains to fund my childrens' university. But many pple ssid rental and resale was difficult so we thought of retiring there...but there are many stories of house breakins and robberies too so that also makes me a bit fearful of living there...sigh.... However, many Singaporeans and expats have moved there esp Nusajaya over the last few years to take advantage of the lower cost of living and that has driven property prices up sharply...
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You can get a statement from SS as to what your benefits will be when you retire. At 62 or at full term. I retired at 59 and took early SS at 62. I got and get only 1/2 of what I would have received if I had waited until 65 to take the SS. I think whatever you have built up stays in your account until you actually take the SS. It depends on whether you claim SS early or wait the full time. But give the office a call I found they were very helpful.
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I'm a teacher too, and I can give you some advice on some of these topics. I am 100% sure we're not in the same state because you make more money than I do (though I have 24 years experience). - First, you sound like you're doing very well for your age. You should pat yourself on the back for realizing the importance of saving and thinking about retirement well before most people your age. - I'll second the point about talking to your potential fiancée about finances ahead of time. Do not just assume it'll all work out. - Buying a house is a sound investment. I assume you'll sell your current paid-for house, so you'll have about 120K to put down on a new one -- excellent. Even if she brings little to the table for this project, the two of you should be able to knock out the borrowed 100K within five years (even if you have a baby soon). With no mortgage, you'll be amazed at how much easier it is to live comfortably and still save! - Do you have a savings account for a new car? Since yours is paid for, I suggest you begin paying a car payment into a savings account. Once you get yourself "a car ahead" (meaning that you're ready to buy a new car when you need it, so that you're not wasting money on interest), it's easy to STAY "a car ahead". - I have the impression she's a teacher too? If the two of you work at the same school, consider becoming a one-car family. We did it for several years (until I started teaching, and our schedules were completely incompatible), and it was a MONUMENTAL money saver for us. It was the single biggest thing that allowed us to get off to a good financial start in our 20s. - If you hate your job (I do at times, really, I do) but want to stay in the pension system, could you do something else within the school system? Could you be the tech guy? the athletic director? could you do something different as a state employee -- a possibility, if your pension systems are linked? - I don't think you need to think about life insurance at this moment. Not to be crass, but if you died today, would anyone be worse off financially? With no wife or children, probably not. Once you're married, you probably won't need it yet. If you were to die, your wife could use your pension pay-out and your other investments to pay off the modest house payment you anticipate taking out, and she'd still have her job to sustain her. You WILL need life insurance once you have a child. If you were to die and leave your wife with a toddler, she'd have years ahead of her in which she'd be a single parent, and although her salary would be enough to put food on the table and clothes on their backs, your life insurance would be there to educate the child in the future. The life insurance would also assure you that your wife would be able to take some time off work, and that she'd be able to put aside a good chunk for retirement. Remember, she too will need life insurance. If she left you with the toddler, you'd need the same help. - The two of you probably need disability insurance more than you need life insurance. Statistically, you are more likely to be disabled than to die young. And becoming disabled is the real nightmare scenario (from a financial standpoint). Consider: You're in an accident or you become sick. You cannot work, so your household income's slashed in half. Yet your medical bills are sky-high. Your wife is still working, but she's also doing ALL the housework and ALL the childcare AND is trying to help you with your physical therapy. She's burning through her sick days taking you to the doctor. THIS is the nightmare scenario: She's overworked, AND she can't take advantage of your life insurance. Avoid it by signing on for disability insurance. - Another thing you should do after you marry is to write wills. As a teacher, you probably have access to your an employee's credit union? They probably offer such services for a low price. - About your pension: Do you know the details for the pension in your state? In my state you're fully vested at 10 years (so, yeah, you'd be a fool to leave at 9.5 years), and you can collect a full pension at any age once you've put in 30 years. You can collect a reduced pension at 20 or 25 years, though the dollar amount is reduced, and you can't begin collecting until 65 (65?) if you don't put in the full 30 years. Once you find out the details for your own state, you can "run the numbers" and see when it makes sense for you to leave teaching. It might be sensible for you to aim for 20 years, then do something else -- but you have to get the facts, then do your homework. - How secure is your state's pension? This is public knowledge, so look into it. You do not want to put all your eggs into the "staying in teaching" basket, if your state's weak in the pension department. As the people in Detroit! - In my state the pension program (defined benefit program) is being exchanged for a defined contribution program. This has its pros and cons, but overall it means that the new, younger teachers aren't going to get a pension. Why does this matter to you? Because if you ever leave, then return to teaching, you'll come in under those new rules! - An above poster mentioned Social Security. In my state, teachers DO pay into SS, so I will collect an SS check one day. You seem rather financially savvy, so I assume you know whether you've been paying into this or not. - I disagree with the above poster who says you're essentially screwed if you choose to have children AND want to retire at a reasonable age. The key is that you have to choose to live FRUGALLY. My husband and I are 48 and 51, and we have two college students. When we married, we had between us $200, college degrees and jobs, one car, and a brand-new mortgage. We chose to be frugal from the very beginning: We maxed out our 401Ks, even though it meant we couldn't afford vacations. We built an emergency fund, then started a savings account, putting away 1/4 of our after-taxes paychecks, even thought it meant we rarely ate out or bought new clothes. When our savings account grew, we started investing, even though it meant we had to remain a one-car family. Today we live in a house that's paid for, have significant investments, and are easily able to pay for our two college students' expenses -- they will graduate debt-free. My same-aged friends who wail that they can't afford their kids' college tuition don't like to hear that we buy used clothing, drive an 8-year old car, etc. The key is knowing the difference between needs and wants -- and being self-disciplined enough to stick to a budget. - Finally, I think you're off to a good start. If you and your wife are both about 10 years into teaching, then 20 years from now the two of you can expect the following: 1. You'll be about 55 years old, and as a person who can "see 55 from where she's standing", it's not "old" -- at 48, my knees hurt sometimes, but I can still hike all day and can pretty much still do whatever I want. 2. You'll live in a house that's paid for. 3. You'll have two teacher pensions. 4. You'll have teacher health insurance in retirement. 5. You'll have two Social Security checks. 6. You'll have the investments you've already begun. 7. If you have a child soon after your marriage, that child will be finishing college (and beginning to support himself) about the time you retire. You'll be able to have all these benefits AND you can work part-time (or seasonally) so you can avoid dipping into your investments too early. Though you're not earning big bucks now (or ever), you'll be well prepared for retirement. If the two of you put in a total of 60 years of teaching to earn these benefits, you'll have WORKED for every penny, but you'll have a comfortable retirement.
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joyfulguy
10 years ago
About 15 members at the investment meeting last night (another similar meeting conflicted some) and when I announced that I had only about 4 hours left to enjoy being 84 ... they didn't even sing " Happy birthday ... ".

A friend asked a while ago whether my employer-related pension had some indexing, and I said that in about the most recent ten years, usually there's been some increase, usually from about a quarter of one per cent to, occasionally, something like three per cent.

Also some minor increases in the government-provided ones, the non-contributory one (there's length of residence requirement) and the required contributory one that started in 1966.

Being somewhat frugal, by choice rather than necessity, I live within my pensions ... the investment is more or less "play money" ... until I may need it for medical-related treatments above those covered by our single-payer universal health care service.

Some say that it's "free" ... but, as you all know, health care isn't "free" wherever one receives it: there are insurance fees, taxes, or whatever to pay the costs.

Or I may well need to enter a residential or nursing facility as I become more infirm.

Thankful that I have quite good health, now ... apart from not being able to remember stuff.

Hope you all have a great year.

ole joyful
jrb451
Original Author
10 years ago
Happy Birthday joyful!
joyfulguy
10 years ago
Thanks, jrb451.

When I first invited son and his partner to pizza and movie night at church (he's an atheist, of the rather militant variety), when he asked what the movie would be, I told him that they had three, and when everyone signed in (paying their $5.00), they got to pick their favourite ... and he rather bridled at not knowing ahead what he'd be seeing.

We had another last Saturday and he came (his second visit) and afterwards he, his partner and her mom, sat around a table and talked until they started turning out the lights. The movie was "I Walk the Line", about Johnny Cash.

ole joyfuelled ... with a bit o' help from pizza (plus salad and ice cream), that night
sherwoodva
10 years ago
Hey, Ole Joyful! Belated Happy Birthday! Sorry I missed it.

I think retiring early only works if you have things you want to do and the health to do them. I have depression if I stay home too much, so I've been working 20 hours/week for a former (wonderful) boss. It gets me out of the house and feeling like I am contributing something, but also gives me Mondays and Fridays to socialize or schedule appointments. So far, it is working. (My husband can't retire until 2020 if he wants a decent pension.)
concretenprimroses
10 years ago
I am figuring out how to work 32 hours per week now that I'm in my late 50s and have an elderly mother to help out. I have a husband with income too fortunately. I have to work at least that to get my health insurance paid for. I then pay for his out of pre tax dollars.
I am now working 36 hr and hope to go down to 32 this summer. I am also lucky that we have a business I can do some extra work in (for a higher hourly rate than my job) if I really need extra money. But yes, I will need to be very frugal to even pull that off. Especially since I pay for Mom's cell phone and her garbage removal and may need to do more as time passes.
Good luck all. I'm going to check out those articles.
Kathy
joyfulguy
9 years ago
Hi colorcrazy,

What is it about "freedom" that you find disconcerting?

Quite a few folks, having been retired for a while, say that they couldn't go to work - that they couldn't find the time to fit it into their busy schedule.

It's a big, old world out there - filled with a great variety of interesting things and projects, just waiting for you to get involved, along with lots of others.

ole joyful
joyfulguy
9 years ago
A young fellow wrote an article in "Canadian MoneySaver" magazine a little over ten years ago, telling of a book he'd written, "Stop working - here's how ... I retired at 34".

Later he wrote another, called "The Idiot Millionare", and a couple of more, some of them making the Canadian best seller list.

He spoke at a recent investment forum in Toronto, making a report of his experience, ten years down the road. He's outgoing and vivacious, using body language, and looks at the audience while speaking.

He suggested that it's often a good idea to buy stock of companies dealing in consumer staples, as people buy toothpaste in good times and bad. He asked how many had brushed their teeth that morning ... and then how many hadn't. When only one hand went up (mine) he commented on that as being a bit unusual ... and I said "Not so surprising - no teeth"! And that brought forth a good laugh.

So ... don't worry too much if I threaten to bite you, O.K?

ole joyfuelled
joyfulguy
9 years ago
More on the matter of the guy who wrote the book, "Stop Working - here's how: I retired at 34!", which made the best seller list, as did another, "The Idiot Millionaire" and another of similar ilk, dealing with helping children learn how to manage money.

Recently I've thought that, when he asked at the seminar on investments how many hadn't brushed their teeth that morning, I should have put up my hand, and when he commented on it being unusual that there was only one, stood up, walked to the front of the room, and asked him how many people did he know that could touch their nose with their chin? Then showed him how it's done, saying that my last four teeth left work and took pension last year.

ole joyfuelled ... who must now cut his regular fuel into small pieces
Nicholas2014
9 years ago
I don't think as a Millionaire you should get retired that early, we have more fun to explore in our working life. I love to see my working colleagues everyday, it's part of my life.
joyfulguy
9 years ago
Hi Nicholas2014 ... and others ...

... but ... just think ...

... Suppose, that every hour ... of every working day... you didn't have someone telling you what to do ...

... but could do whatever you pleased???

What is it about freedom - that you find disconcerting?

ole joyfuelled
SaltiDawg
9 years ago
last modified: 9 years ago
I am a retired US Navy Submariner that served on active duty for 24 years. I retired from the Navy in 1984 at age 42. I then worked as a very well paid Defense Contractor supporting Submarine development for ten years - and then simply burned out!

I fully retired at age 52! After six months my wife told me to either get a hobby... or get a divorce. lol (I could not afford the divorce, so I turned my love for my (English) Bulldogs into an avocation.)

I started exhibiting Bulldogs and occasionally breeding them.

It is the best thing I ever did! My blood pressure went down, no stress nor bitterness about work, etc, etc.

I have been a quite successful investor all of my adult life, so money was not a consideration. Having the "perfect" wife was also nice. (A "perfect" wife is a wife that has a job AND enjoys it.)

Now twenty years later, my wife just retired and is at home with me. No more Bulldogs, however we recently adopted a 4-year old retired racing Greyhound from the track in Tampa FL, and we are considering adopting a second!

Life is good!!!!!!!
joyfulguy
9 years ago
last modified: 9 years ago
Hi, old navy dawg with the salty tongue,

How nice that you're both at home, following the good wife's retirement.

You'll find that the house isn't as much "yours" as you thought it was, when she left to go to work every day.

When you consider going to battle ... you'll be using "missives" instead of "missiles", no doubt.

I hope that you have many interesting and happy years to enjoy that retirement .... with the greyhounds.

__________________________________

I have referred several times here to the guy who wrote the book, "Stop Working: Here's how you can; I retired at 34" just over 10 years ago, and others, one being "The Idiot Millionaire" or something like that and including one on training kids how to use money well. Some have been on the Canadian best-seller lists.

I'd suggested that if people went to the www.canadianmoneysaver.ca magazine website, they might be able to read some of his articles, but doubt that to be possible, as I must use my subscriber codes to enter most of the site, including archives.

If some of you are interested, I could ask the magazine and him about copying one or some of his dozen or so articles, that go back to when he retired, something over 10 years ago, to send to you.

I've spoken approvingly of the magazine here on a number of occasions, so that might help me plead my case.

Or, I could send his contact address, and he'd likely share at least some of his ideas, likely could follow his blog.

Good wishes as you work toward more skillful use of money: learning how money works is an interesting hobby ... and it pays well! Taxes, too!

ole joyfuelled ... operating with more joy due to having no debt

How to Retire 35 Years Early

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