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What stops you from retiring early?
Old 09-15-2003, 04:41 PM   #1
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What stops you from retiring early?

On this board, and in my life I talk to quite a few frugal people in their 20s and 30s who have the goal of early retirement. *It is easy to make a few simple assumptions and conclude that these people should be retiring in 10 or 20 years. *For example if you make the simplistic (but not outrageous) assumption of 5% investment return, and retirement when assets reach 20 times spending, then if you pay 20% of your income in taxes and start saving at age 25, then you can retire at the following times:

% Save *Retire at
40 * * * * *39
35 * * * * *41
30 * * * * *45
25 * * ** **48
20 * * * * *53
15 * * * * *59
10 * * * * *67

Yet, there are very very few people in their 40s and early 50s who are retired. *I suspect that in 10 to 20 years very few of my friends will be retired either. *What gets in the way? *I call on the collective wisdom of the ER community, what should we watch out for? *What will keep me from retiring when I hit 45?
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Re: What stops you from retiring early?
Old 09-15-2003, 05:09 PM   #2
 
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Re: What stops you from retiring early?

I'll say change. *People work for 20-30 years and get into certain habits. Work becomes one of those habits and it's hard to quit.

Also, you cannot have too much money when you retire, so this may keep you working a bit longer. I have been ER'd for 2 years and am currently 52, but I have to admit if my boss had not made my life uncomfortable, I may still be working. It helped me take the plunge!

Now that I have been ER'd for 2 years though, it would be tough going back - again Change!

Another item are the luxuries that money can buy you. As Americans, we see and taste these everyday. In reality most of the world could probably get by just fine with 5 years of aggresive savings of American wages. The question you have to ask yourself, is what standard of living do you want? - A house that is 100 g's or 500 g's, the choice is yours.
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Re: What stops you from retiring early?
Old 09-17-2003, 07:24 AM   #3
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Re: What stops you from retiring early?

I'm only 32, but...

I didn't start saving at high rates until fairly recently. Chalk it up to a salary that wasn't particularly high, spending that was, and not thinking about ER. We also had a fantastic economy back then, and it seems like money was raining from the sky; what rainy day?

Recently I've hiked up the savings rate (though it's mainly going into cash; as I've talked about on another thread here, I'm in an industry that's 'high-risk' for sailing offshore.) This issue is now important to me - it's not just ER but FI, financial independence.

Maybe I'll make up for it. Maybe I'll be in the situation where at 40 I'll have enough cash to be able to live in a cheap place, or quit the full-time job life and just do some part-time work for spending money. Or maybe I'll be po' and living with my parents. Can't predict the future, but I can prepare as best I can.
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Re: What stops you from retiring early?
Old 09-17-2003, 12:53 PM   #4
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Re: What stops you from retiring early?

Bongo2,

I have always approached my ER goal with a "retire when comfortable" attitude. I think I know what figure will make me comfortable. Over the last 14 years the number has crept up slightly even after adjusting for inflation. I imagine that the goal will continue to creap slowly higher even as I reach my desired RE age goal. I think it is just human nature. Folks think 'I can do another year and have this or that'. I see this in the older workers where I work. They say that knowing you can go changes the attitude a bit. I imagine that it does. Sometimes these goals sound reasonable to me. Sometimes I think - retire you fool.

Then, most folks just don't save, others save a good amount, and a very few save a big percentage of their earnings. I put myself somewhere between the saving a good amount and saving a big percentage of my earnings. There is a threshold of 'pain' that slows folks from saving greater percentages of their salary. Then there is always the thought that if I get run flat by a bus, I want to make sure I enjoy some of the hard earned cash now...

Just some thoughts.

Cheers,

Chris
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Re: What stops you from retiring early?
Old 09-18-2003, 06:47 AM   #5
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Re: What stops you from retiring early?

The emotional mindset for people varies - but it's a biggie. Ten years ago I was unemployed when ER hit me. Even then I took a temp job after a two year break for 'big money' and every once in a while the temp bug hits. But once you are in ER its hard to look at work with the same mindset. Although the early years were enjoyable, I was the only ER I knew and usually told people I was unemployed. When I finally reached 'old age (55)' and took my pension, then I achieved 'offical retiree' staus.
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Re: What stops you from retiring early?
Old 09-18-2003, 08:17 AM   #6
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Re: What stops you from retiring early?

I am certainly a "different breed of cat". Never really
intentionally saved/invested for ER or R for that matter.
Type A workaholic for my entire career, and then just
decided I'd rather do something else. Went through a nasty divorce, moved about 5 times and ERed, all
between 1993 and 1998. ER for me was never a
question I had to struggle with. Once I saw the
writing on the wall it was a done deal. A case of ready or not, here I come. I suspect the key for me was my
outsized ego and self confidence. A lot of people find this difficult to deal with. But, it's a huge
advantage to really believe you can overcome any
sort of challenge or adversity. For example, in my life I was unemployed several
times and a few were a result of being fired. I never
suffered any anxiety whatsoever due to not having a
job. In fact, I always enjoyed being unemployed as it was a
chance to recharge (almost like a vacation) and take time to look at new options.
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Re: What stops you from retiring early?
Old 10-20-2003, 11:01 AM   #7
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Re: What stops you from retiring early?

:P I'm replying in response to some of the other members!! What stops me and I believe everyone is with me on this one is SIMPLE "MONEY"!!! Isant it?
Lets face it as Long as we work for someone were never going to get rich!! Thats just the way it is. Unless you work 7 Days a week & never go anywhere never see your children if you even have any and maybe just maybe you might have a little cash, thats assuming that
you have the right investments and you don't just blow the whole wad! I'm in my early fortys and would love nothing more than to retire "TODAY" RIGHT NOW!! DAMMITT!! I/m tryin to find a part time gig ultimatly working out of the house, then possibly quitting my full time gig here at the office. no bosses, no political bullshit...no commuting every frickin morning etc... etc...you know the drill. Things just aren't like they used to be
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Re: What stops you from retiring early?
Old 10-20-2003, 05:22 PM   #8
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Re: What stops you from retiring early?

This is interesting! I stopped working for others in
1987 (I was the President of a small co. but did not
have control). From 1987 until I semiretired in 1993,
I worked for myself in companies that I either started or bought. After I semiretired in 1993, I worked for others
again, but only part time, or on a short term contract basis.
In my case, I doubt I would be retired now without
the 6 years when I was 100% on my own. It made
that much difference in my financial situation. I will
confess that I might have done it without those 6 years, and with a very strong savings/thrift program and a cooperative
spouse. Alas, I had neither. Still made it work though.
Looking back, it is kind of a miracle that I was able to work for others as long as I did. Once you go out on your own, it is very difficult to go back.
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Re: What stops you from retiring early?
Old 10-20-2003, 05:40 PM   #9
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Re: What stops you from retiring early?

And another thing .

Another way I am atypical is that I never gave much thought to early retirement or serious saving until
I was about 48. Then, I could see 50 years coming
down the road and probably had my mid-life crisis
at about the same time. So..............after 30+
years of complete workaholism, I made the decision
to jump ship and was gone just short of my 50th
birthday. After I shut down my small company I met
a good friend at the country club (yes, I belonged
back then). He was shocked to hear I was quitting. He said, "I knew you were talking
about it but I didn't think you meant right away!"
What turned me on to ER was finally looking at what I was doing with my time and where it was taking me.
Once you come to realize that you only have so much time (and an unknown quantity at that), the ER
decision is pretty easy. At least it was for me.
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Re: What stops you from retiring early?
Old 10-20-2003, 06:28 PM   #10
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Re: What stops you from retiring early?

Bongo2,

We didn't start saving until I was about 38. We had very little at the time. My wife and I just decided we wanted out - work interfered with life. We saved over 50% of our gross income and now I'm less than a year from ER at age 51. We never made all that much - we're earning about $65,000/yr. now - so it was either save a large percentage or make a lot more money. The math dictates what one must do. Last year we saved 55% of our gross, for example. The annuity value of my small pension (what it would cost me to buy it on the market), when combined with our savings recently topped a million. That includes an inheritance of $175,000, but the other $850,000 we did ourselves. Looking back I'd say these things were key:

1. We lived in a small rural community where you can buy a modest, but decent home for $75,000 today. Most things are cheap here. I'm literally five minutes from work, for example.
2. We drove cheap cars.
3. We maxed retirement plans (between us we'll add $33,000 in 2003).
4. We kept investment costs VERY low.
5. We made few mistakes investing - there was some luck in that, for sure. But we were in the right places at the right times, for the most part.
6. We didn't use financial planners or brokers - we learned the ropes ourselves.
7. We got a real charge out of saving for our future, and once we saw it piling up quickly, we were hooked.
8. My wife and I truly enjoy being together. We have never felt the need for a lot of expensive stuff. In a way, we've never really "grown up". We're much like we were in college - just happy to be together, enjoying family, a few close friends, and the simple things. We never could have saved like we did if we had tried to keep up with our peers.

Maybe more than you wanted to know, bongo2, but that's what worked for us in a nutshell. Looking back we are incredibly glad we did it. We had to pass on some of the luxuries, and we don't have any regrets.

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Re: What stops you from retiring early?
Old 02-01-2004, 01:18 AM   #11
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Re: What stops you from retiring early?

Stigma. Although this could simply be a scapegoat from pursuing ER, it is what I've identified as my inability to take the plunge. My wife and I have approx $4 M in retirement assets with a much smaller portion in regular savings. I certainly could 72T it, however I haven't been able to get over the "need to go to work and make a living" mentality. We're in our early 40's. She's a teacher. I'm recently layed off and working in a new job that is certainly NOT what I want to do. I would love to be able to be with her and the kids during summer break and all of their other "school" vacations.

So, whereas one may certainly look at the extent of their portfolio and use that as their excuse to not retire, I have the means but am not "brave" enough to take the plunge into ER. Certainly a better situation to be in than most people, however when one reaches stable financial levels social factors regarding work are certainly a concern and can be an excuse to continue working.
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Re: What stops you from retiring early?
Old 02-01-2004, 05:57 AM   #12
 
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Re: What stops you from retiring early?

Quote:
haven't been able to get over the "need to go to work and make a living" mentality.
Well, it will never get any easier. My advice, with your assets is to get out now!

I'm not sure what you do for a living, but if it was anything like me - when looking back, I spent 30 years helping other people make more money that they didn't need anyway! - Pretty much a waste of time! - I was a software hooker that turned tricks for Millionaries!

If you really want to help society out and make a difference, get a volunteer job and help those that truly need it.

The sooner that you quit, the easier it will be, and you can get on with a meaningful life!

My guess is that you are also helping someone make more money that does not need it!
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Re: What stops you from retiring early?
Old 02-01-2004, 06:00 AM   #13
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Re: What stops you from retiring early?

Last_to_go,

Interesting. Was ER/FI your goal or was it just good fiscal management that helped you to accumulate such a stash? If ER was your goal, I need help in understanding what the "Stigma" is. If ER wasn't your goal, are you considering ER now that you have the resources to do so, but are concerned about peer pressure on the "need" to go to work?

BTW: I'm 36 and plan on ER by age 50.

Chris
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Re: What stops you from retiring early?
Old 02-01-2004, 07:00 AM   #14
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Re: What stops you from retiring early?

Quote:
when one reaches stable financial levels social factors regarding work are certainly a concern and can be an excuse to continue working.
Is it just social stigma, or is it also your own need to feel productive? I had twinges of both, but they didn't stop me from leaving the rat race.

Start your own business doing what you love. Put as little or as much time into it as you want. Design it to give yourself complete flexibility. You even have the freedom to make it slightly unprofitable if you want, but a little profit is always nice.

It'll give you that ever coveted "entreprenuer" social status. It'll give your young kids something to say when asked "what does daddy do." And it'll let you scratch your productivity itch as often as you want, but also give you the freedom to take those long summer vacations that ended after you got out of college.
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Re: What stops you from retiring early?
Old 02-01-2004, 08:06 AM   #15
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Re: What stops you from retiring early?

Quote:
If you really want to help society out and make a difference, get a volunteer job and those that turly need it.
This is something I thought about doing if I ever ER'd in case I ever got bored. I'd rather volunteer at the local animal rescue for free rather than go back to the paid grind. If I could do it now I would!

last-to-go: I wouldn't let any stigma control your happiness. When it's all said and done and you're on your death bed what is going to matter? How people felt about you because you retired early or the fun you had doing it?

-Jay
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Re: What stops you from retiring early?
Old 02-01-2004, 10:47 AM   #16
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Re: What stops you from retiring early?

last_to_go,

Maybe you are just not psychologically ready to "do it" yet. But knowing that you "can" just chuck it, should make the new job easier to take. At least I would think so.
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Re: What stops you from retiring early?
Old 02-01-2004, 12:58 PM   #17
 
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Re: What stops you from retiring early?

I divorced my wife of 32 years primarily because
I knew where I was going and I knew she wouldn't come along. How's that for being motivated?

John Galt
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Re: What stops you from retiring early?
Old 02-07-2004, 11:21 AM   #18
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Re: What stops you from retiring early?

All good advice. I really appreciate the input from everyone.

Here are my responses to some questions/comments that were posed:

* Our portfolio, in all honesty, is a result of 95% good fortune and 5% dedicated retirement investing. Since we began working after college, my wife and I diligently committed the maximum to our retirement funds whether they were self-directed IRA's or 401k or 403b accounts. Despite all of this, we were benefitted by my ill-advised commitment to a single company stock that over the past 12 years grew exponentially. Despite this run of good (dumb) luck, we still focused our early goals on sacrificing during our non-retiring years so that at some point we would have both a good nest egg to retire upon as well as some wealth leftover to pass on to our children. Had we not been so fortunate, we still would have kept to our dedicated investing.

* I have certainly considered taking the plunge into ER. This topic of conversation has been addressed with my financial advisor along with the implications. It's a big decision to make; one in which this web site seems to help guide members/guests to attain. When one commits to a 72T at an early age (42) it's not something that you can easily turn back from without incurring repercussions.

* Being a productive citizen is very important, as some of you have mentioned. Volunteering would be a great way to accomplish this and I have considered it. However, whether one likes it or not, being "employed" does have its stigma attached to it. Although my decision to venture into ER has yet to be made, I will more than likely go into partial ER and use the balance of my productive time volunteering and aiding my aging parents with their obstacles. My "issue" is where the bulk of my assets are located. The more I require to assist my parents the more I'll need to liquidate my retirement portfolio resulting in larger tax burdens. As a child of theirs, it would be good to "give back" some of my fortune/luck to them and see them age with fewer financial burdens.

* I'd be remiss in my response if I didn't inlcude the "pig" factor. I'm sure I'll get some strong responses to this, however, the desire to see the portfolio increase further also exists. The longer I can put off ER the more assets I'll accumulate that can be passed on to my heirs. This may run contrary to the principles of this web site but it is an honest, although possibly disagreeable, reason for not retiring early.

Last To Go
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Re: What stops you from retiring early?
Old 02-07-2004, 11:42 AM   #19
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Re: What stops you from retiring early?

I guess to resolve much of the emotional angst, you can do what I did. Simply note that you can ALWAYS go back to work. I figure that with one or two phonecalls I could be doing my old job again within a week or two. So far I havent had the desire for 3+ years to do that.

One unexpected impact was that a lot of my friends were work related and in the last few years the contact has dribbled down to a few emails now and then and seeing each other a few times a year. I *did* move about 45 minutes away from the area which definitely didnt help, but the tie that binded us -- work -- went away.

Another that I've heard from many retirees, not just ER's but havent experienced myself: relationship friction. Some relationships do great with weekend/evening exposure but turn frictional when you're spending a lot of time together. I read about one couple that ER'ed and started driving each other nuts. You know...the "stop...that...BREATHING" sort of nuts. They ended up creating an "office" for each of them where they (sorry) retired to at about 9 in the morning to read, research on the web, go off and do individual things, etc. They met for lunch most days if the "schedule" allowed and spent the evenings and weekends together. This worked out great for them.
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Re: What stops you from retiring early?
Old 02-07-2004, 11:57 AM   #20
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Re: What stops you from retiring early?

Quote:
The longer I can put off ER the more assets I'll accumulate that can be passed on to my heirs. This may run contrary to the principles of this web site but it is an honest, although possibly disagreeable, reason for not retiring early.
What makes you think ER precludes building wealth?

You've got $4M. If you can live off a measly $100K/year, after 40 years your portfolio will be worth over $50M (assuming you believe FIREcalc's assumptions and have 75% of your assets in the stock market). I know my kid would be happy to have $50M when I go.
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