Early Retirement?

[crisi]

I want for nothing (other than an occasional maid service when the house is a pit). The thing my husband and I laugh about is the more money we get, the less stuff we want. I can't explain why. We upgraded our house (with cash) last year. For the most part we are finding the 4 bedroom 2600 square foot house to be too big for us. As long as the market keeps climbing in the area, I would not be surprised if we downsize to a smaller house in the next couple of years.

We live on more than you do, but have a similar savings philosophy - we are a bit older and have made more money than you have. But this is very true - once you are able to splurge, it seems like the need to splurge really isn't there. When we had little money, all I wanted was nice cherry cabinets and granite countertops - I've been able to afford them for years, and still have my builder stock cabinets and laminate.

I do spend more on clothes and vacations though. Well, I used to spend more on clothes - since I went on sabbatical I don't think I've bought more than a sports bra and a pair of on sale yoga pants for myself.

 

[akcire]

We live on more than you do, but have a similar savings philosophy - we are a bit older and have made more money than you have. But this is very true - once you are able to splurge, it seems like the need to splurge really isn't there. When we had little money, all I wanted was nice cherry cabinets and granite countertops - I've been able to afford them for years, and still have my builder stock cabinets and laminate.

I do spend more on clothes and vacations though. Well, I used to spend more on clothes - since I went on sabbatical I don't think I've bought more than a sports bra and a pair of on sale yoga pants for myself.

Assumptions provide great amusement. Even on the internet it's like a one up.

 

[smcabee]

Unless I hit the powerball or megamillions, There will be no early retirement for me. Unless there is a huge market crash like 2008 that I fail to act on or some health care issue that prevents me from working, I "should" have enough to retire and be comfortable at age 59. But I think I would be bored not working and having just enough to be comfortable. If I wasnt working, I would want to be spending, spending, spending which would leave me not so comfortable in a short period of time. I do enjoy being a RN however and even as I get older I plan to continue working even if its just part time on weekends or going back to travel nursing and working 6 months a year.

 

[tvguy]

As I read more and more I am finding that I may have misspoke by using the word "retire". What I mean is financially independent meaning I don't have to work doing X because I need to pay the bills. I can work when I want doing what I want because I don't need money to pay my bills... ya know. Maybe I'll work part of the time but how much I'm paid isn't as important as doing something I enjoy. Making money doing it is a bonus.

I think right now it is hard for anyone who is not on Medicare (read that as being over 65) to say with complete certainty that they are in that position just because of the changing world of health insurance. DW and I hope to retire in 5 years at 62, and everything is locked in for us to have more income than we do now working, HOWEVER, and it is a HUGE however.......the final decision will be based on what health insurance before we qualify for Medicare will cost. Of course, I don't know what a Medicare supplement is cost then either, 100% coverage last year ran my mom $90 a month

 

[Dakota731]

My husband would like to but he's not a teacher, cop or government worker so we have to count on our 401k. How much would you have to have saved to be able to retire before social security kicks in?? The scary part for me would be the health care issue - I would not be confident hearing the prices people are having to pay nowadays with all this new legislation.

 

[crisi]

Assumptions provide great amusement. Even on the internet it's like a one up.

I didn't mean to one up. My apologies. And it is an assumption, but its a pretty good one.. We've amassed more wealth with higher spending over a longer period of time. Not meant as a one up - simply as agreement that while we all have a different baseline - there does seem to be a point where once you CAN have it, you sort of discover you don't WANT it.

 

[mslhb]

I read the Mr. Money Mustache site periodically. I find it somewhat fascinating but have no plans for a super early retirement. I feel fortunate that I have been able to maintain a good work-life balance so as of now early retirement isn't my prime objective.

 

[arminnie]

the final decision will be based on what health insurance before we qualify for Medicare will cost. Of course, I don't know what a Medicare supplement is cost then either, 100% coverage last year ran my mom $90 a month

The cost of Medicare supplements varies greatly by state. So that might influence someone on choosing a retirement state.

Since I have homes in 2 states I compared the two varieties of supplements offered. One year Arkansas had the best. This year it is Louisiana.

 

[tvguy]

The cost of Medicare supplements varies greatly by state. So that might influence someone on choosing a retirement state.

Since I have homes in 2 states I compared the two varieties of supplements offered. One year Arkansas had the best. This year it is Louisiana.

Also, if you have the option of opting out of Medicare into an HMO Medicare Advantage plan, you may get better benefits. My mom did that, and with an additional $90 a month got medical, dental, vision and prescription drug coverage.

 

[ceecee]

A lot depends on healthcare coverage. My husband carries our insurance and we are lucky to have an excellent plan that his employer pays most of. In my line of work (healthcare private office, oddly enough) insurance is rarely offered or very expensive. He is 9 yrs older than I, so we need that insurance for DD and I even though he will be eligible for medicare before I am.

 

[hollypoast]

Yes, health insurance is the big question. One of the sites suggested building up a health savings account over several years to use to supplement a high deductible health insurance plan. Another thing for me to research...

For those of you who don't feel the need to retire because you love your job, I'm envious. Although I certainly don't hate my job, give the choice (an $ not being an issue) I may choose something else-- that's all.

 

[eliza61]

I think right now it is hard for anyone who is not on Medicare (read that as being over 65) to say with complete certainty that they are in that position just because of the changing world of health insurance. DW and I hope to retire in 5 years at 62, and everything is locked in for us to have more income than we do now working, HOWEVER, and it is a HUGE however.......the final decision will be based on what health insurance before we qualify for Medicare will cost. Of course, I don't know what a Medicare supplement is cost then either, 100% coverage last year ran my mom $90 a month

That's the frustrating thing. I mean at this rate nobody will ever retire. You follow the gurus like MM, DR and Suzy. You save until you have a gabillon dollars and then the next day you read a report that it's not enough because now you need a Long term health plan, then it's not enough because the older you get the higher your risk for a debilitating disease. ON and On.

It is so absolutely frustrating. If I keep trying to do what all the pundits say it I'll be 88 before I retire and then not worth a darn to enjoy it. That's why I always say I'm off the treadmill. I've got a plan to retire in 6 years. Now I do want to do some thing because I'm not the sit at home type and I can't travel 24/7 but I absolutely refuse to work until I drop dead.

I seriously get the feeling that the only thing I'm working/savings for is for my kids to get a huge payoff when I croak.

 

[eyeheartgoofy]

Mr. Money Mustache is pretty much just "Your Money or Your Life" as far as philosophy - save as much as you can while your young and then live life on your own terms. I do like that idea.

 

[AquaDame]

It is so absolutely frustrating. If I keep trying to do what all the pundits say it I'll be 88 before I retire and then not worth a darn to enjoy it. That's why I always say I'm off the treadmill. I've got a plan to retire in 6 years. Now I do want to do some thing because I'm not the sit at home type and I can't travel 24/7 but I absolutely refuse to work until I drop dead.

I think more than anything this is what will ultimately delay our retirement until the "proper" age of 65 or so. We don't want to wait until retirement to see the world and have time to enjoy our hobbies because the littlest thing can change that plan. Either of us could get sick or die, or there could be another recession just before our retirement age or there could be some other change that delays us until we are just simply too old and infirm to do it. I'm not saying our outlook is "do all the things today!" but we definitely put more towards experiences and vacations than Suzy or Mr Mustache would probably deem prudent at this point in our life (after we meet our employer matching of course - we DO at least pay ourselves first for that "free" money!)

 

[Mickeyluver37]

That's the frustrating thing. I mean at this rate nobody will ever retire. You follow the gurus like MM, DR and Suzy. You save until you have a gabillon dollars and then the next day you read a report that it's not enough because now you need a Long term health plan, then it's not enough because the older you get the higher your risk for a debilitating disease. ON and On.

It is so absolutely frustrating. If I keep trying to do what all the pundits say it I'll be 88 before I retire and then not worth a darn to enjoy it. That's why I always say I'm off the treadmill. I've got a plan to retire in 6 years. Now I do want to do some thing because I'm not the sit at home type and I can't travel 24/7 but I absolutely refuse to work until I drop dead.

I seriously get the feeling that the only thing I'm working/savings for is for my kids to get a huge payoff when I croak.

Here's what I don't get....I'm told I need 75-80% of my current income to live on when I retire. Only with these 401k calculators, "current income" is based on what my projected raises are going to be for the next 30 years until I'm 65. When I log on to our retirement statements, it says DH and I are EACH recommended to have over 5 figures PER MONTH to live on when we retire. The kids will be out of the house, our student loans AND mortgage will be paid off. Why on earth, even with inflation would we need $20k+ PER MONTH to live on when we don't even make that now and are still paying all of the above? My dh is one of those people who claims to never want to retire because he loves his job. He can continue to carry the health care and I'll retire early.

 

[Gumbo4x4]

Health care is the big Q for me too. It's already WAY more than my mortgage and I'm still in my 40's.

 

[Planogirl]

Health care is what is keeping me in my job. I'm providing it for our family and even though DH could get it where he works, I've often been suspicious that his company tends to lay off people who take the insurance more often. Maybe I'm wrong but I'd rather play it safe.

 

[rockawaybeachgirl]

I agree that healthcare is the only thing stopping my plans for 'early' retirement. My husband left the workforce at 41 to be a full time SAHD and we have no plans for him to return to work. I have a fantastic job with great benefits that would allow me (complemented by other choices and investments we've made) to save enough/get enough to plan to retire at 55. However, my company's 'subsidized' healthcare (which is still $1000/month) kicks in when you are 60 + 20 years service, so I may need to stick around until then, especially since my son's special needs may require us to insure him as long as possible. However, since I do mostly consulting, I'm hoping to move to the Florida/snowbird lifestyle in my mid-50s and travel or work virtually when needed.

 

[sarahk0204]

I think more than anything this is what will ultimately delay our retirement until the "proper" age of 65 or so. We don't want to wait until retirement to see the world and have time to enjoy our hobbies because the littlest thing can change that plan. Either of us could get sick or die, or there could be another recession just before our retirement age or there could be some other change that delays us until we are just simply too old and infirm to do it. I'm not saying our outlook is "do all the things today!" but we definitely put more towards experiences and vacations than Suzy or Mr Mustache would probably deem prudent at this point in our life (after we meet our employer matching of course - we DO at least pay ourselves first for that "free" money!)

While we are shooting for age 60, this frames our expectations as well. DH and each have a parent who has died. DFIL died at 58. My in-laws had just gotten their youngest child through undergrad and had paid off their mortgage early. They were looking at the trip of a lifetime to Italy and him retiring in a year or 2. Instead, he died suddenly of a heart arrhythmia.

My DM retired early from her librarian job at 56. My DF retired from his manual labor job 2 years later at 66. Their house was paid off, and they had decent pensions/retirement savings. They enjoyed doing stuff together and spending time with their children and grandchildren. Then my mom died very quickly from metastatic endometrial cancer at age 66.

While we don't "do everything today" either, there is no doubt that what happened to our respective parents has colored our outlook. It is part of the reason we own DVC and that we are financing it. Suze and Dave R and the rest would say to not own it at all or save up and pay cash, etc.

Now, we're not total spendthrifts. We are still in our starter home, and we have refinanced twice to only lower the interest rate and shorten the term and not take out any equity. As it stands now, the house we be paid off when we are 55. By 60, we will have had 5 additional years to save, be mortgage and all other debt free, and have our 2 kids finished with undergrad. If healthcare is sorted out by then (over 15 years from now, so maybe? ), we should be on track.

 

[crisi]

Here's what I don't get....I'm told I need 75-80% of my current income to live on when I retire. Only with these 401k calculators, "current income" is based on what my projected raises are going to be for the next 30 years until I'm 65. When I log on to our retirement statements, it says DH and I are EACH recommended to have over 5 figures PER MONTH to live on when we retire. The kids will be out of the house, our student loans AND mortgage will be paid off. Why on earth, even with inflation would we need $20k+ PER MONTH to live on when we don't even make that now and are still paying all of the above? My dh is one of those people who claims to never want to retire because he loves his job. He can continue to carry the health care and I'll retire early.

One of the things an early retirement guru will point out is that you don't need 80% of your INCOME - you need 80% of your SPENDING (assuming your spending goes down when you wear yoga pants all the time and have time to mow your own lawn - but don't forget things like medical expenses). Let's say you take home $60k....if you can live off $30k, you can probably retire in about ten years if you save carefully.

Another thing they'll point out is that a lot of them have side hustles. They aren't fully retired at 40, they just don't hold a job any longer - they might sell a little real estate, or do a little consulting. A lot of them own rental property - and owning rental property is a job - unless you hire a property manager. They buy at garage sales and sell on eBay or Craigslist. Maybe they dog sit.

Finally, for these people the ACA has been a huge boon. Most of them are living off fairly significant savings - but the ACA is keyed off income, not wealth. So if you only take $30k in income a year, you qualify for subsidies on health care. Here in Minnesota, with our two kids, if we took $32k a year in income, we'd be on Medicaid and wouldn't pay for health care at all. And at $40k, our premiums would be less than $2k a year. If you've paid off your house, and are living a fairly small life - you can be pretty comfortable at $40k a year. And for us - with 2 dependents - that would be $40k pretty clear of taxes - there isn't social security taxes on investment income, and with our standard deductions, we'd pretty much pay no federal tax.