Retire by 35? Am I crazy?

[bigmarley4]

Thanks again for all the great comments and feedback. Yes, I realize divorce is a possibility and it would certainly wreck these plans. As would a serious health issue. Also, $750K was really just a stretch goal for us to get to in the next 5 years. No reason I picked that other than if we really live well below our means we can get there in that timeframe.

Nords: Yes, it's on the list.

Meekie: You might be thinking of these guys: 13 months
SO and I have done a lot of traveling and have set up our own travel blog just for fun and to hopefully generate some add'l income down the line: TwoTraveling.com

Sunsnow: That is a great perspective. I was hoping to hear if folks had tried something similar. I am also afraid of getting some crappy part time job I hate and then just wishing I had stuck with my 9-to-5.

Panhead: Good points. I guess my big decision is if we want to get true FI. Then we can come up with a better-defined $$ amount for our goal. Working part-time could be just as annoying as my real job now.

Donheff: Yes, fiance is 100% in. She may even be more into than I am because I've had a chance to live abroad and see more than she has. Luckily she is very financially responsible which is one of the reasons I am marrying her. I'd certainly rather not work at all, and maybe that's what I need to think more about. And I'm definitely open to changing my plan.

Rescueme: Thanks for sharing your sad story. I'm at the age where friends' parents are passing and its making me realize how little I have done outside of work for the last 10 years. It's a tradeoff I suppose.

[Tyro]

Quote:

Originally Posted by GrayHare My initial reaction is your plan could work if everything goes right as in no major health problems, no unexpected surprises, but rarely does everything go right.

+1. Those unexpected surprises, losing dear friends/loved ones, and possibilities you can't even conceive of (not necessarily bad) are collectively... life.

We've had several "plans" since we were your age; usually always involving cashing out as early as possible. But we found that we're not the same people we were then, despite how sure we were that we'd never change. In many ways, we are still the same (in our heads) but in others, we've definitely matured mellowed changed... We're the same, but different. You've probably already noticed this yourselves just from the life you have experienced -- not the same in your 20s as in your teens, not the same in your 30 as in your 20s. It keeps happening.

Having this plan -- whatever it is and/or entails is great. I envy you in many ways. Having a backup plan (or several) is even better. We've always had a plan B in our back pocket, and the times when it's been implemented, we've had plan C waiting in the wings. Anyway, my point is: avoid becomming married to "the plan". "Life" seems to love (or have an affinity for) throwing monkey wrenches into "plans" (as you may already be aware). By the time "the time" rolls around, you may well find that what you thought would be enough way back when (now) isn't enough for the future "you" (collectively). $1.7 in twenty years, in todays dollars, may only be the equivalent of ~$500K, depending on economy, inflation, and whatever life throws at you.

Keep "the plan" flexible, re-evaluate it at least annually, and be prepared to chuck the whole thing and come up with a different plan depending on the people you become. Life happens.

Best wishes,

Tyro

[Mulligan]

I retired at 45, and like most things in life, I played the middle. I didn't retire as early as I wanted to, but didn't quite stay as long as I should have since my retirement is pension/years based. Glad I didn't go out when I wanted too, as I would be a slave to a part time job with no pressure that I "romanticized" about. I have continued to work part time to build a "doom and gloom" nest egg, though I live very comfortably on my monthly pension cash flow.
I would give strong consideration to what Moorebonds and others have said about staying in a little longer and not to overly romanticize the part time job. Concerning part time jobs in ER, I would want to consider them only because I want to, not because I have to.
You also need to be cognizant of how your mind may think after you quit your job. Mine caught me off guard. When I was working, I had little opportunity to save a lot of money, so I never really had much. But, I always knew I would have a nice pension with cola, so I never really worried. Now, that I am "retired", I worry about "do I have enough" long term way more than I did when working even though I am saving WAY more in retirement than I did while working my full time job.

[FUEGO]

Hey big marley. I'm about the same age as you and hope to be financially independent (and probably quit working) around age 35 like you. Where we differ is our tiny household income about half yours and a net worth about double yours.

Mathematically you are well situated to accumulate a large investment portfolio over the next 5 years. What that amount will be is fairly open ended given the vagaries of the labor and stock markets.

I assume you are saving a huge proportion of your income since your core expenses are running $42000 per year, but based on your net worth to date, you have only been doing so for a few years? Can you keep up the savings momentum longer term?

I don't think your plan is crazy at all, as I used to think about the semi-ER lifestyle a number of years ago. Now that we are closer to being outright FI, the appeal of continuing to work much longer, even part time, is low compared to the appeal of just finishing out strong the next few years and hanging it all up. And we may get caught in the "just one more year" trap for a couple years after we are FI just to make extra double certain that we have plenty of money. But once you get close to FI you realize that the importance of your day job is pretty low compared to your other interests, and the damage done by losing it would be relatively small (at least in my case this is what happened). So it makes it a little harder to take the job seriously (as in you can laugh off BS that others take pretty hard).

So as for family plans, no kids in the future? That might change your mobility and priorities a lot, but doesn't necessarily have to. I used to fancy the perpetual traveler lifestyle, but now the reality of kids has convinced me that it will be much easier to stay put in our "low cost of living" urban/suburban single family house while the kids are in school, and maybe take 2-3 week vacations to wild and crazy places when we can fit it in.

The good thing about focusing on the plan as you have laid it out is that you can always change your mind in 4-5 years and just stick it out a few more years to get to the totally FI point. I'm not sure where you are right now professionally, but I'm in that sweet spot of enough autonomy, decent working environment (nice office with a view and lots of windows, good enough coworkers, boss is rarely around), and ok pay with great tax treatment of most of it. Hard to give that up when it isn't that stressful, just to know you're facing many more years of part time work for probably less pay, less respect, and lower on the totem pole.

In any event, you're on the right track by saving and investing hard core right now. And you're able to squeeze in a ton of travel today. So good luck!

[bigmarley4]

Quote:

Originally Posted by FUEGO Hey big marley. I'm about the same age as you ...So good luck!

I live in a very high COL area, and our HHI has hockey sticked over the last 2-3 years. So I wasn't able to save that much until then. And like most people in early-to-mid 20's I wasn't as focused on saving as I could have been, although I have always been very frugal. Now I am obsessed with saving! As far as keeping it up, we should only be able to save more and more. My fiance and I are focused on the idea of a "super cheap year" after our wedding, but really this would be as many years as we need to get to our target $$ amount. We'd stay in our current rent-controlled apartment but would eliminate all nonsense spend like going out, big vacations, etc.

I plan for our plans to change, if that makes sense. At 35 we might say wow we really want kids. Then the whole scenario is different.

Professionally, I feel very good. I like what I do, and should continue to have opportunities to accelerate my income growth. So it could make for less years to FI.

[Sarah in SC]

I think Fuego gave you some good advice. My opinion is for you to stick it out long enough to save enough that you'll have fully funded your retirement plans and that way, if something does come up, you'll be prepared, and if you find that elusive perfect part time job, it will be gravy. You can travel cheaply, as you know, so the money in the kitty for retirement will continue to grow unimpeeded. That's the whole point of FI.

Our story is that my DH will take a sabbatical next year and maybe go back to work, maybe not, but I'll keep working until I'm comfortable with our "number". After you've been in the savings mode for a long long time, you get to a point of flexibility about how your plans can adjust to things that come up. We've taken hits to our long term goal of retirement in order to fulfill some short term goals/opportunities that came up and we're glad we did.

But at any rate, good luck to you both and congrats on the pending nuptials!

[FIREd]

Hi bigbarley4,


Is your plan crazy? not at all. Is it riskier than what many here have done? I think it is, because your plan relies heavily on future market returns for success. Most "experts" believe that market returns will probably be disappointing for the next decade or more. If that's the case, your ability to retire fully might slip away. Thats' why I think it's more important to rely on what you can save now rather than what your portfolio can earn in the future in order to achieve your goal. In that respect, with an income as high as yours is today, you have an excellent saving capacity. I think you should enjoy that terrific advantage until you are closer to FI.

That being said, I am happy to have given up my career while in my 30's (but not before reaching FI) and I can understand your desire to do the same. It doesn't matter how old you are, time on this earth is too precious to waste.

[meekie]

Quote:

Originally Posted by bigmarley4 My fiance and I are focused on the idea of a "super cheap year" after our wedding, but really this would be as many years as we need to get to our target $$ amount. We'd stay in our current rent-controlled apartment but would eliminate all nonsense spend like going out, big vacations, etc.

As much as I dislike my job at some points, I'm glad I haven't given up vacations now for retiring a year or two earlier. We also just moved to a more expensive house in an exciting neighborhood with bars, restaurants and parks within walking distance instead of in suburbia, so that we could have more fun on a daily basis.

I was spending a lot of time working overtime, and putting my job first. I only made it to one out of the 6 chemo treatments my mom had. It wasn't a huge deal, and she's better now, but it's something I regret, and is the exact kind of thing I don't want to regret.

Life can be short. No matter if you're going to retire at 65, 55, or 35, don't wait till you retire to start living it.

[ShortInSeattle]

This is interesting because DH and I are having a similar discussion. Until recently, we assumed we would work exhaustively until we hit "our number" and then collapse in a heap on the floor and recover. We each work about 55-60 hours per week, and make close to 225K combined.

Lately though, we've talked about downshifting. (We don't think of it as retirement)

1. Saving enough so that our nest egg can continue to grow on it's own until we hit 59.5 and can access those funds.

2. Paying off our condo, and streamlining our budget further. Healthcare costs remain the big wildcard, and so we're curious to see what rates look like in 2014 when the exchanges are up.

3. Downshifting our careers in about five years time. For me this simply means taking on fewer projects, since I'm already self-employed. For him it means shifting from a high pressure megacorp tech job to doing project-based work through one of the local agencies that loans out techies for 6-9 months at a time. It may take some time to hit on the right balance of work and play, but we estimate we can live comfortably on 30% of our current income, lower our tax rate, and enjoy more work/life balance while that nest egg continues to compound in the background.

A great idea, right? We've got close to 800K in retirement/savings, so we can conceivably pull this off within five years. But there are many scary considerations.

1) "Working less" is probably harder than it sounds. If I take fewer projects, I may lose some of my presence with my customers. Also, the "tech projects" for my husband could dry up if the market goes wonky.

2) Hubby's job is steady, great healthcare, and pays very well. Yet if he leaves, we don't know that he could get back in at that level again. So we may be saying goodbye to the goose who lays the golden eggs, forever.

3) We work a ton, and haven't figured out what we'll do with our spare time. What if we hate it? (Unlikely, but you never know. We're a bit type A.)

4) We have assumed 2.5 mill is appropriate for full retirement at age 59.5. But that is more than 20 years from now. Will inflation make our number way too small?

5) Shouldn't we just suck it up and work for another 15 years at least, to guarantee financial independence?

So in short, we really want to downshift. But we also know it's a bit of a risky move. We're giving up security and taking on risk. We are the typical mid-thirties exhausted couple with not much of a life outside of work. We're not sure that waiting another 20 years is right either. Life is uncertain.

So yeah, confusing. Appreciate any thoughts from others who waged the same inner battle.

SIS

[haha]

Quote:

Originally Posted by ShortInSeattle This is interesting because DH and I are having a similar discussion. Until recently, we assumed we would work exhaustively until we hit "our number" and then collapse in a heap on the floor and recover. We each work about 55-60 hours per week, and make close to 225K combined.

Quote:

Originally Posted by ShortInSeattle 4) We have assumed 2.5 mill is appropriate for full retirement at age 59.5. But that is more than 20 years from now. Will inflation make our number way too small?

You list of concerns is excellent, and as you pointed out, although the questions are good, there can be no answers as it involves a far off future. A comment on your #4 above-

If you mean equivalent purchasing power of $2.5 mil today, but the nominal amount scaled up to whenever you start withdrawing, very likely OK. If you mean today's nominal $2.5mil unadjusted for inflation, but accessed 20 years from now, it would be a total crap shoot and very likely not OK.

If I had good, transferable, well paying professional skills, I would strongly consider not losing them. This is not what I did, but what I wish I had done. My retirement looks pretty secure, but I believe that likely more than any time since the 1930s, it is hard to get visibility into business and even political and social conditions going forward.
We have positive thinking threads, retirees are actually well off threads, and the media loves negative threads, but in my opinion the media stays completely silent about the major threats to business as usual.

#1 I believe, is that the world is running out of cheaply produced crude oil. The US will produce more crude for a while by formation fracturing and horizontal drilling in tight shale formations, but this is not going to be cheap. Similar conditions are facing many extractive industries, which are after all, finite, while our economics and political stability require continuous compound growth.

So, if retirement early in life is worth what I believe to be a real gamble, why not? Otherwise, consider carefully.

As you and anyone reading knows, these are my ideas only, and we may actually be on the threshold of a great leap forward.

Ha

[ShortInSeattle]

Good points haha, thanks. I think we all wish for certainty in retirement planning but what we are left with is semi-educated guesswork.

I definitely agree with not letting our skills erode. In our downshifting model, we still plan to be active in our (same) career fields 9 months out of the year, just at a lower intensity of hours.

What I think I need to do is go and subtract estimated inflation rates from my estimated annual rate of return, then re-do the numbers.

That will probably provide more realistic numbers. And I'm sure we'll have plenty of time to waffle back and forth on the idea over the next several years.

In the mean time I have a short term goal. Less stress next year and 10 fewer hours per week of overtime. We'll see how that goes.

SIS

[bigmarley4]

Quote:

Originally Posted by ShortInSeattle This is interesting because DH and I are having a similar discussion. ...we've talked about downshifting. (We don't think of it as retirement)...Appreciate any thoughts from others who waged the same inner battle. SIS

Downshifting is a great word for it. That's kind of how I consider it too -- although I think others have made really good points about part time work being just as annoying as a full-time gig IF you need to work for financial reasons.

I showed my fiance some of the posts here, and we agree we'd rather be FI than have to work. But we may be able to get a lower target number by living some in low COL countries/areas and "vagabonding" while traveling, which we are into anyways.

I still don't know how exactly to determine our target number... I've tried numerous calculators and such but at the end of the day you just have to go with your best estimated guess.

We're also going to try to save a lot more money. We made enough over the last 3 years that we could meet all expenses, max out 401K and IRAs, contribute some to our brokerage accounts and still have lots of fun, so we didn't feel "bad" about the fun part and didn't spend a lot of time analyzing expenses or have specific joint-saving targets. With some more discipline we should be able to increase our savings a ton and hopefully we can continue to grow incomes so we can reach FI soon! I'll continue to update everyone here as we try to make this happen.

[LeavingOhio]

Bigmarley4,

If I were you, since you don't HATE your job, I would plan to work full-time at that job until age 40. I'll use wild stats and say of the 270,000 you take home $175,000. I say you can live on $75,000 take home...that's $6,250 a month. You say you will get raises, but I won't even consider that.

Let's take your $400,000 and add $100,000 a year to it for 8 years (getting you from "early 30s" to 40). That's $1.2 million if your stuff earns nothing during that time. I'll give you a very conservative rate of return of 6% over that time, so that it's really worth $1,686,670.83. Even though you plan quit your high-paying job, simply because you are still young, I would keep that stuff invested aggressively...no need to be 40% bonds or something like that.

What if you took 3.5% of that beginning at age 40? $59,033. Can you live on that and explore the world? Likely not. Can you take that and then move to a very cheap area of the country and just relax there, not making any more income until you will get SOME Social Security later on? Yes. Doesn't sound like what you want to do though. I'd take that income, move to your cheap area of the country and then work part-time (or maybe full-time for part of the year) and THEN do the travel thing. Seems age 35 is too soon to me. Also, with your income, you and your new wife should be able to do a lot of traveling BEFORE you quit your jobs. Can't delay all the fun until after retiring.

Anyway, good luck.