Retire by 35? Am I crazy?

[bigmarley4]

Hello!

First, thank you to all the great posters on this site. I am a lurker but have been a member for a few years now and read a ton. I would love your input on my situation and plan. I'll be posting this on a few different forums to see the different reactions I get, then compile the overall feedback and report back.

Current state:
-Engaged to be married in Fall 2013. We are both in our early 30's.
-HHI: ~ $270K, probably will increase 5-10%/year for foreseeable future.
-HH Net worth: $400K (have 6 months emergency cash. 70% index funds in tax advantaged accounts, the rest in brokerage accounts, trying to follow the principles of tax efficient fund placement)
-I've got ~$25K student loan debt @ 3% that is reflected in NW above. No other debt of any kind for us.
-I've got some equity of undeterminable value, so I'm counting it as zero for now, but count be worth high 5 / low 6 figures in the most rosy scenario.
-Rent+groceries/utils/cable/internet/phones= $3500 month
-Neither of us wants children or a house. Or "stuff" for that matter. We love a lot of new experiences.

Here's my very rough plan to semi-retire by 35:
-Work for next few years, maximizing income wherever possible (changing companies if need be).
-Get to $750K saved, then "retire" from our current jobs
-Pay off loans
-Use wedding money and use miles/points to travel for 6 months-year after our "retirement date".
-After that, find jobs that we enjoy to pay the rent+expenses+healthcare and live in a low COL area. Or if we can find contract work in our current lines of work, travel continuously and work 10-20 hours/week remotely.
-Don't touch any of the money in our retirement accounts until we fully retire.
-Assuming a 5% return, this will grow to about $1.7mm in 20 years, at which point we could fully retire. Or if we are doing something we love and it generates income, continue to do that until we can't. We've both worked long enough to collect some SS, but I don't even know if it will be the same program in 20 years. Not counting on it.

I've read a lot about early retirement, but not so much on the idea of early "semi" retirement. Our goal is really to not spend our the rest of our 30's and our 40's working for the man saving up tons of money for some huge retirement. We don't want a big house in the burbs with 3 kids and beamers in the driveway. We want to experience the world!

Again, all feedback is appreciated. Thanks in advance for your comments!

 

[LOL!]

Uh, since when is "find jobs that we enjoy to pay the rent+expenses+healthcare and live in a low COL area" retiring? That's working. Otherwise, I've been retired since I was born.

Anyways, I don't see anything wrong with your plans. Lots of folks do that, but are also able to add in kids, beamers, McMansions, etc while working in jobs they enjoy.

 

[bigmarley4]

Uh, since when is "find jobs that we enjoy to pay the rent+expenses+healthcare and live in a low COL area" retiring? That's working. Otherwise, I've been retired since I was born.

Anyways, I don't see anything wrong with your plans. Lots of folks do that, but are also able to add in kids, beamers, McMansions, etc while working in jobs they enjoy.

Thanks. The key word is enjoy. I have a great job now that I certainly don't hate, but I wouldn't choose to do it unless it paid well. Basically I want to work a lot less hours at something I'd enjoy to pay the bills but not worry about saving.

 

[Meadbh]

Umm....what you plan to do is take a career break and make a career change to something with a better work-life balance. Many people do that successfully, but it's not the same as retiring.

 

[bigmarley4]

My original title was semi-retire, which is a better description.

We want to work the absolute bare minimum to pay the bills... hence the "semi". But sure if I was totally in love with a new job I wouldn't mind working more. But the goal is to work as little as possible, not necessarily find a new different job.

 

[BreathFree]

Thanks. The key word is enjoy. I have a great job now that I certainly don't hate, but I wouldn't choose to do it unless it paid well. Basically I want to work a lot less hours at something I'd enjoy to pay the bills but not worry about saving.

Try using FI(financial independence) without the RE(retire early). There are a lot of people that are sensitive to the words retirement and w*rk being used in the same sentence.



That being said I am trying the same thing you are. I like my j*b but it requires a lot of travel and I am unable to have a normal life due to the traveling. I plan to continue to w*rk at my j*b until I save up enough where I am financially independent but will still choose to w*rk at my small business which I love and requires no travel. I am planning to save up 1,000,000 dollars that I also will not touch and hopefully double it over the following 20 years. My current expenses are about 2000 a month and my biggest concern is future inflation. Good luck on your quest.

 

[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.

 

[plex]

I estimate you need a few more years than you have currently planned to hit just FI (leaving retirement out of it, that is just how you spend your time once you hit FI). You would only be at the somewhere in the 4.5-5.5% SWR range by my estimations by mid 30's.

The key question to ask yourself is, would I be in deep trouble if we both lost our ability to earn incomes? If the answer is anywhere near yes, you aren't FI.

You can also hit FI under your current plan as well, but you really won't hit it until somewhere around mid 40's under that scenario.

 

[growing_older]

It's an interesting idea and has some emotional appeal, but I always get stuck at the difference between work a few more years at something I kind of like, but is fantastically well paid - then do anything even for free, vs work for many more years at a lower paid job I think I will love, but can't be sure because I haven't done it yet.

At your high income, maybe reaching true FI isn't a lot of years and might be a better choice, if you are actually okay with your high paying gig.

 

[MooreBonds]

It's an interesting idea and has some emotional appeal, but I always get stuck at the difference between work a few more years at something I kind of like, but is fantastically well paid - then do anything even for free, vs work for many more years at a lower paid job I think I will love, but can't be sure because I haven't done it yet.

At your high income, maybe reaching true FI isn't a lot of years and might be a better choice, if you are actually okay with your high paying gig.

+($)1,000,000

Thanks. The key word is enjoy. I have a great job now that I certainly don't hate, but I wouldn't choose to do it unless it paid well. Basically I want to work a lot less hours at something I'd enjoy to pay the bills but not worry about saving.

You didn't break down what you/your future spouse earns...but with a household income of $270k, you and/or fiance are well into the high end of "paying well".

Also, remember that only a few non-profits exist for reasons other than to maximize profits (and even non-profit hospitals keep a very close eye on the bottom line). Employers want to hire people to fulfill a need - they don't offer jobs in order to make you happy or in order to cater to whatever part-time schedule you feel like living because you don't really need the money that badly. Some employers need part-time people, but you might find it difficult to find a job that you both "love" and has the hours/conditions you want.

Oh, and about those benefits: even finding full-time positions that pay health insurance can be rarer these days - you might as well forget about part-time positions that pay all/most of your health insurance (much less ones in your "love the job" category).

If you're career isn't toxic or insanely stressful, AND it pays damn good money, I'd say you're a fool to quit at 35, when you and spouse can w*ork just 5 more years (with raises you project at 10%/year), save an extra $1,000,000 after taxes and after expenses, have over double the stash, and then truly do 'what you love'....whatever it may be. Then you don't have to worry one iota about a position you take - only to find out that your a$$hole coworkers really do a great job of killing the romanticizing aspect of the job that you thought would be so perfect - if it wasn't for the customers/coworkers/boss/home office CEO/sick building syndrome/etc.

I'd rather be 100% FIRE-proof by working till you're 40, rather than even more a prisoner to a part-time job than you are to your (pleasant) full-time job currently (because you need the PT job to pay health insurance and meet your expenses so you don't draw anything from the stash).

After all, although life is not guaranteed, will your quality of life really be that different between 35 vs 40? Now imagine being a part-time wage slave at 40, vs being fully independent at 40.

 

[BreathFree]

Why do retirees express contempt for working in retirement? I don't get it. Do retirees feel that their accomplishment is being diminished by others who claim retirement but still have income? Dictionary.com says “work” is defined as “Activity involving mental or physical effort done in order to achieve a purpose or result. “ By this definition grocery shopping, cleaning, home maintenance, and more are all forms of work. If we are only referring to work that provides compensation or profit then I argue that investment planning and investment research are a form of work for profit. Unless you have all of your income generated from a blind trust I say you are working too. I have investment properties so I guess I never get to “retire”.

 

[martyp]

Why do retirees express contempt for working in retirement?

We get the difference between w*rk and retirement from the dictionary.

People in the forum probably assign more equivalence between FI and retirement than any particular means of burning calories.

 

[bigmarley4]

MooreBonds:
Thanks for the frank response. Fiance and I are about equal in terms of income. I'm worried I'll constantly move the bar and never stop working because I'll keep justifying the need to earn as much as I can while I can. Yes, I know this is such a first world problem and not something I should be complaining about. I really try to not take my life situation for granted.

My best friend died when I was 25, another good friend a year later. We can go at any time and I want to experience the world a bit before I get there. But I may be trying to shortcut it a bit too much.

Plex:
Yeah, that's what I was afraid of. Might just need more in the bank.

Breathfree:
Glad to hear you are trying something similar. My job is OK but theres no intrinsic benefit of it, other than the pay.

 

[Nords]

I've read a lot about early retirement, but not so much on the idea of early "semi" retirement.
Again, all feedback is appreciated. Thanks in advance for your comments!

Bob Clyatt's "Work Less, Live More" (from the library) or MrMoneyMustache.com.

Why do retirees express contempt for working in retirement? I don't get it. Do retirees feel that their accomplishment is being diminished by others who claim retirement but still have income?

There's a number of reasons, mostly caused by the few bad apples who spoil it for all the happily working retirees. Not all reasons apply to all working retirees.
1. They claim they're working for fulfillment, but the real reason is they're running out of money (because their plan imploded) and they don't want to come clean about the failure of their much-vaunted investing strategies.
2. They can't be responsible for their own entertainment, they miss the external structure of the workplace environment, and they can't figure out what to do with themselves.
3. They miss being the boss with a staff responsible for making them happy. Their family refuses to fill those billets.
4. They've lost their workplace identity and feel they no longer have the respect or self-esteem.
5. They miss socializing with co-workers (who were trapped in the same cubicle farm with them) and haven't learned how to make friends without shared misery.

In general, the "bad apples" have no idea how to achieve self-actualization and have resorted to seeking external validation.

One of my college classmates comes from a background & military career similar to mine. He's still working, and if anything he's working harder than ever. However unlike me he's extroverted and has worked himself up high enough in his company to be one of the senior execs with lots of autonomy. He finds it very fulfilling and can't imagine why anyone would ever want to retire. To his credit, he's also supporting an orphanage to the tune of six figures annually.

 

[meekie]

I can't remember the name of the blog, but there's at least one couple who did something similar - packed up and just took off around the world. They do some travel blogging to make money, and if I remember right, pick up some odd jobs when possible to help pay for their stays.

I'm not sure why $750k is your magic number, but saving up a lot, paying off your loans, then taking some time to start some travel is a good start. I think you should think about some other options past that. You sound like the type of people who might be happy staying in another country for a few months at a time.

 

[sunsnow]

If you're career isn't toxic or insanely stressful, AND it pays damn good money, I'd say you're a fool to quit at 35, when you and spouse can w*ork just 5 more years (with raises you project at 10%/year), save an extra $1,000,000 after taxes and after expenses, have over double the stash, and then truly do 'what you love'....whatever it may be. Then you don't have to worry one iota about a position you take - only to find out that your a$$hole coworkers really do a great job of killing the romanticizing aspect of the job that you thought would be so perfect - if it wasn't for the customers/coworkers/boss/home office CEO/sick building syndrome/etc.

I'd rather be 100% FIRE-proof by working till you're 40, rather than even more a prisoner to a part-time job than you are to your (pleasant) full-time job currently (because you need the PT job to pay health insurance and meet your expenses so you don't draw anything from the stash).

After all, although life is not guaranteed, will your quality of life really be that different between 35 vs 40? Now imagine being a part-time wage slave at 40, vs being fully independent at 40.

+1

I am in the situation Moore Bonds describes, which is basically where you could be in just a few years. Like you, I felt I was missing out on experiencing important parts of life. I also had a good friend die very young. So, I left my cushy job, and I tried the "fulfillment" job thing for a couple years, but in the end that turned out to be more hassle and less fun than my old job. Sad, I know, but true. I went back to the high paying job, worked that for a few more years, and now am FI, but not RE quite yet. It's great to have the freedom to do what I want, and not to have to compete with a lot of very capable, hungry people for low-paying jobs. If I want to do something fun, I can do that for free and save myself a lot of grief. Having to get paid really takes the fun out of most things.

 

[panhead]

Here's my take:
1) You have a plan, this is more than almost everyone in your age group, this is awesome. I also had a plan at this age (and before), and it has changed alot over the years, so expect this.
2) You have a great combined income. If you could save enough to cover all of your necessary and some discretionary expenses with a 4% draw off of your taxable accounts only, you would be FI, then could work part time to fund your travel. This way if work totally sucks, you are still FI, and your retirement accounts are safe.
3) It's already been mentioned, but Bob Clyatt's, "Work Less, Live More" is a book you are going to want to read, it's about ESR...
4) Part time work is often romantacized. I thought it sounded great years ago as well, now I've changed my mind. If I HAD to work part time to pay the bills, I'd work longer at my higher paying job (as I'm doing now). That being said, I've also been paid pretty well for doing some pretty cool stuff, but it was usually a one-off kind of thing.
5) I hate to bring this up, but also keep in mind that 50+% of marriages end in divorce, what will this do to your plan?

Bottom line: Keep to your plan and work for your goals. When you reach it, pick up your head, look around, re-evaluate and see if it still makes sense.
-Pan-

 

[donheff]

I skimmed through and may have missed an essential component of this plan: is your fiance as invested in this concept as you? A second factor (may relate more to my conservative instincts) is how certain are you that the part time work will work out? By that I mean will it really be more satisfactory than full time? For myself, I wanted to be completely unshackled when I quit working. PT seems to carry many of the same negatives as FT - dependence on the job, hassles of unpredictable bosses, restrictions on travel and free time in general, ...

Would 45 get you to true financial independence? How about approaching the whole enterprise open to options?

 

[rescueme]

Why do retirees express contempt for working in retirement?

Because you are subject to the rules/hours of another (even if they are dictated by you - such as a home business).

I'm retired; DW is retired; we do what we choose to do, at the time we want to, without any time requirements or performance expectations by others, or requirements of a home business.

If you wish to "retire but still w*rk"? Fine. Then you (at the least) are semi-retired and probably FI.

That's no problem; just don't call it retirement.

It's a bit like being "slightly pregnant" ... There ain't no such thing; either you are, or you are not...

DW/I "earned" our status, and are proud of it. It's an exclusive club and we don't want "pretenders" to tarnish the term ...

 

[rescueme]

Retire by 35? Am I crazy?

If you would have asked this question a week ago, and me/DW being three decades older than you, I would have said yes, you are.

However, yesterday we attended a funeral for a nephew who had a massive stroke at his desk last week (at the age of 41) and never made it back. There were no known health conditions that contributed to the stroke.

He leaves a wife and two young childern to carry on.

Life does not last forever. DW/me retired earlier than planned (of course, not as young as you), but my personal feeling is that the sooner you can get out (assuming that you and your family are, and will continue to be financially stable), the better it is.

Just my simple POV.

 

[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]

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]

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.