The other day our Stacking Benjamins podcast roundtable team was discussing an article on a popular mainstream financial website about how to retire early. I especially loved the story’s first recommendation: “Start saving as early as you can.”
Brilliant!
Let’s face it: For many people, early retirement is the holy grail of personal finance goals. To be sure, it certainly has an allure that most folks find irresistible.
Frankly, I find the entire concept to be a bit, well … squishy. For example, if you’re relying on a time-consuming side hustle – or constantly picking up odd jobs – in order to ensure you won’t outlast your nest egg, well … that doesn’t count as being “retired” in my book. But that’s just me.
Semantics aside, there are a host of other debatable issues that many twentysomethings and other young folks should consider when evaluating early versus delayed retirement. For example, one of the biggest is that the longer timelines associated with early retirement introduce additional planning uncertainties. Of course, that means increased financial risk.
That being said, for those of you who simply can’t get the romantic notion of early retirement off your mind, I’ve cobbled together my own list of brilliant tips that will, hopefully, help your dream become reality:
- Minimize your debt. (I know — but I’m just getting warmed up.)
- Gain the skills to get a well-paying job; after all, it’s harder for fry cooks to quickly build a retirement nest egg than doctors, dentists, lawyers, accountants, engineers and investment bankers.
- Maximize your 401(k) contributions from the very first day of employment; in 2015 it’s $18,000.
- Learn to appreciate the joys of a used car. Then buy one to get around — but only if truly necessary.
- Marry a spouse who not only works, but also has the same retirement goals as you do.
- Don’t have any kids.
- Work lots of overtime.
- Create passive income streams.
- Make sure your spouse is a doctor, dentist, lawyer, accountant, engineer or investment banker.
- Never get married.
- Get super-chummy with a rich old relative.
- Develop an impeccable sense of market timing.
- Learn to live on $40,000 per year — but preferably less. Much less. (And be happy doing it.)
- Fix your plumbing: Get a vasectomy … or your tubes tied.
- Keep yourself gainfully employed.
- Develop a strong aversion to luxury cars — and avoid cohabitating with anyone who insists on owning one.
- Use a bicycle to get around town and funnel the gas money you save into your retirement accounts.
- Be willing to live somewhere that has a relatively low cost of living — because it’s easier to retire early in Salina, Kansas, than New York City.
- Buy low and sell high. Every time.
- Never loan money to anybody.
- Remember: condoms and birth control pills are your friends.
- Pray for a long bull market uninterrupted by any catastrophic market crashes.
- Never get sick or injured.
- Make friends with the Federal Reserve Bank chair and then encourage her to artificially boost market returns with lots of cheap money.
- Contribute the maximum amount into your traditional or Roth IRA; in 2015 it’s $5500.
- Get a second job — or three.
- Don’t even think about having kids.
- Do your best to emulate your suburban next door millionaire neighbor.
- Win the lottery — just don’t play too often.
- Avoid any and all bad luck that life will indubitably toss your way.
- Ensure your favorite charity is you.
- Always live below your means.
- One word: abstinence.
- Find at least a few low-cost hobbies you truly enjoy — because after you retire early, you’re going to quickly discover that life is really really long.
Then again, if you were truly forward-thinking, you could simply strive from the onset to earn a living doing what you love to do.
Of course, that would make any quest for “early retirement” moot, wouldn’t it?
Photo Credit: stevendepolo
Honestly, our plan to “retire” in our 30s comes down to 2 things:
* Aggressively managing our careers and hopping jobs to get significant boosts in salary.
* Living very frugally in a high cost of living location that allows our high salaries.
If we made less money we could still retire early, it would just take a couple more years of saving.
That’s a very good plan. I haven’t quite gotten down the job hopping thing, but then, I have kids. Strike two!
Good plan, Mr. F. Of course, it’s not rocket science; just good common sense.
I hope everyone understands that this is tongue in cheek. Lol, entirely focused on early retirement, and ignoring things like happiness and love.
If you want to retire early and nothing else – become a Dr or Lawyer, never marry or have children. Drive an older car, or ride a bicycle. Win the lottery. I didn’t see “never ever take a vacation”.
The biggest point I gained from this is that early retirement isn’t everything. You have to have balance in your life. Thanks for the smile, Len.
Dang … I really really REALLY should have included “Never take a vacation” in that list, Sassy. (How could I have forgotten that one!)
Hi Len, Sorry to say you also missed out, never having pets from your list… Double Dang!
Can’t agree with that one! Triple dang!!!
I know that you’re joking, Len, but oh man, do I take #6 seriously. I wish more financial bloggers would admit that a child is the biggest expense people will ever incur, and therefore, not something to take on lightly. I’d much rather spend my future wealth on other things, which is yet another reason among so many why I’ve decided to never have kids. Childfree is the way to be for me!
It used to be that people had as many kids as possible to help them with the farm and when they became older. As people have become wealthier, the need for kids has essentially disappeared — and many people see them not as a blessing, but as an outright burden.
I believe that we’ll soon be going back to the future — in other words, people will stop seeing kids as a financial burden and, instead, will once again be having kids as a necessity for financial and familial security. (No, really.)
My dad has always said,” Put it in when they are young and you can take it out when they are grown.” ( Used a cow as the example of getting milk later) They now fly free, stay at three different states for free (where we all live), have free attorney fees, have free dental car, chiropractic care, auto care, and even replaced two roofs over the years. I think they did pretty well. I didn’t have enough kids. I need in on their deal.
Hi Brynna! Yeah, your Dad knows what he’s talking about. If I thought I could afford it, I would have had four or five kids instead of two.
Completely agree on the cost of kids issue.
Even with all the gifts from friends and family and a hard core hand me down system in place, I can already see the expenses mounting.
At this point, my goal is being able to retire at all, let alone early, but at some point I’ll be too old to be considered in my high tech industry and be retired whether I like it or not.
Does Walmart need a greeter?
Despite their costs, I still think kids are well worth the joy they bring. We stopped at two for financial reasons; but if I could, I would have loved to have had three or four.
We stopped at three but ended up with four anyway. 🙂 I wouldn’t trade them for the world.
I agree with Sassymawmaw – you have to have balance in your life. Yes, early retirement sounds nice but no one is guaranteed tomorrow and you have to find a way of living your life to the fullest today – doing job you enjoy, finding time for hobbies, travel and relaxation today and not saving up all those great things for when you retire ’cause you may never see that day (sorry if I sound morbid).
Regarding kids and marriage – yes, they cost money but I’ve found since having kids I’m much more motivated to work hard and save than I ever was when I was single and carefree and when I spent pretty much everything I earned and didn’t give a damn about the future. I have done much better financially since getting married and having kids.
I’m with you, Mindimoo. I couldn’t imagine not going through life without my kids. The irony is, despite their high cost, I believe our lives are much poorer without them.
I was reading those early retirement blogs religiously. But then I came to the realization that even though the numbers work out that we could retire in X number of years, would we? I love work too much. There is something to be said for being gainfully employed. I still love reading those blogs though. I love your take on them Len.
I enjoy reading those blogs too, Doc. The point of this piece is that early retirement requires a lot of sacrifices for those who are fortunate enough to earn a good living early on in life; even tougher for those who don’t. Therefore, instead of focusing on retiring early, it may be better to start out life by putting your energy into figuring out a way to earn a living doing what you love.
Loved your article, and the list was great (and funny.) Since I’m 58 (cough!), early retirement is clearly out for me, and I couldn’t have afforded it anyway because we made some major money mistakes years before. For example, we had two kids.
But seriously, kids bring their own rewards — even monetary ones, as in, ours reward us with very nice Christmas, Mother’s Day, Father’s Day and birthday gifts and would help us financially in a heartbeat if needed.
Even better, they’ve given us grandchildren. We raised two kids on much less than the government tells us we should have, so they don’t have to be that ghastly expense people fear anyway, although kids aren’t cheap. But, neither is my darn dog.
Holding that newborn baby in my arms each time I gave birth, I cared nothing for what she was going to cost me as she grew; I knew I wouldn’t regret it and I didn’t; and holding that newborn grandchild in my arms each time we’ve been blessed with one — that reward is priceless!
I work @ a hospital. I see many people living the ends of their lives. People who have no children are usually miserable and lonely, as they are sick and lying in nursing homes or hospitals with noone in the world who cares about them. Maybe a nephew or neice who comes by once in a while.
Once you get sick and old, you will wish you had kids.
I have never heard an older patient at the end of their life say, “Man I wish I didn’t waste my life on those kids, I’d have so much more $ in my account right now.”
Puh-lease. Having kids is no guarantee you’ll be taken care of when you’re old. Plenty of parents rot away in hospitals and nursing homes without any visitors, so if you’re having kids as a form of insurance, then that’s a pretty terrible, and misguided, reason. Thanks for the negativity though! Just goes to show us childfree folks can’t feel confident with our lifestyle without someone trying to rain on our parade. How about to each their own?
You do understand the concept of generalities right? Like when people use the word “usually”. Usually people who are old and have no kids are lonely, certainly there are some who love being old and alone. I didn’t say having kids was a guaranteed form of insuring you would be taken care of. I was just passing on my observations of seeing many hundreds of people at the end stages of their lives. Is that being negative? I did not say the reason to have kids was to have this insurance, it is just one of the natural perks that comes along with a family. Why are you so defensive about your life style choices? I could care less what you do.
I also work at a hospital with lots of patients that have no kids or have kids that don’t have anything to do with them. Can’t count on family to take care of you in the end. Only a few have families that will actually do that. Or at least in my 20 years of working inpatient acute care that is the usual I see.
Oh! Retiring earlier than expected is my goal. I think one sure tactic is to have some investments, just make sure it’s continuously growing. I was just a bit shocked that having no kids could help. LOL. I wanna have kids for a more meaningful retirement in spite of it.
I’ve been fortunate to say I’ve retired although that just meant I’m working on things that I am passionate about majority of my time. There might be a bit of hustle in there and focus on income growth but overall I really do think it’s a mindset shift.
I love number 23. I will have to try really hard and use a lot of hand sanitizer!
One thing you forgot. If you get marry, marry the love of your life and DON’T divorce. Divorce delays any plan of early retirement.
As a CPA, I can’t recommend enough the necessity to max out your retirement savings account. Good article!
Nice tips! I love everything that you’ve mentioned above. As of now, I am starting to minimize my debt and learning new skills so that I could get more high paying job.
Hi Len,
The one important part missing from the article is health care costs and insurance as you age. This is a huge cost going into early retirement.
I’m in my 40s and have been working in the aerospace industry my whole life. I’ve have been lucky to work with older, wiser and well educated gentlemen that give great financial tips.
Once common trend I noticed, is they all were ready to retire between 55-60 since they had enough socked away, but still not enough to pay for health insurance until they were 65.
How do you get around the health care unpredictable cost to retire early? thanks.
Don, the only surefire answer I can think of is to simply be sure you sock away enough cash early in your career to try and account for the estimated cost of healthcare insurance in retirement.
I am fortunate that I have been in aerospace long enough that my healthcare insurance is greatly subsidized as part of my retirement benefits. Engineers hired after 2000 are not so lucky — at least at the company where I work.
Good Job!! These tips are very helpful for everyone. We work hard for money and maximizing its earning potential is probably high on our priority list.
You forgot, “Never shower”, and “Never use deodorant”. I worked with two people who believed in those.
You’re right – and haven’t we all?
Make that 36 financial tricks! 🙂
Having a paid off house is an important step. Yes, there are taxes, insurance and maintenance. However they are cheaper than paying rent. Have a modest house and do the yard work yourself. If you need money you can make the house pay: rent out garage for dead storage, have yard sales in the driveway, rent a room or the upper level of your house, plant a vegetable garden using preowned garden tools and raise some food, run a small business from the house like selling on FB Marketplace with porch pick up.
Odd how those with money angst over having even just one child, while those with modest means have no concerns about having multiple children….
Having semi-retired at 58 just a couple of months ago, I can identify with many things on your list, especially starting early. By starting early and investing consistently, I was able to overcome many of those problems on your list, including having two kids and a SAH wife.
One thing I would add to this list is the “One House and One Spouse” rule. As Leasi said, divorce is expensive and family court is a nightmare.