When Did You Know

[tgotch]

I am currently 45. The thought of early retirement never really crossed my mind until about 3 years ago. I just figured one saved $$ in a 401K, and worked until one could collect SS.

I changed jobs about 4 years ago. About a year into my job, a new colleague was hired. He was about 60, and re-entering the workforce. We developed a friendship, and I soon found out, he had retired in his early 50's, since he had saved over $1 million. Unfortunately he ran out of money and was forced back to work, because as he claims, his broker was illegally trading his money in high risk investments. These investments ended up failing. He sued the broker but only ended up with pennies on the dollar, thus forcing him back to work.

Anyway, his story got me thinking about early retirement, and how I could do it conservatively and self-direct my money...

Which brings me to my question, when/how did you find out/know you could retire early?

 

[bizlady]

I'll start by saying we have 14 months until retirment, mostly because we get a very good deal on health insurance if DH works until age 55.

But it has been a goal since early 40's. We have always saved a substantial amount, and LBYM. Housing was bought as if we needed to stay on one income, and we did not take a lot of big vacations.

We calculated years ago what we thought we needed, and the myraid of online planners have confirmed that we are good to go. We have lived comfortably the last 2 years on the same amount of money we expect to live on in retirement, and have planned extra for insurance. Have some put aside for new vehicles down the road, a big retirement trip, and we have a lake home that we spend most weekends at, and will spend much of our retirement time there too.

We had just one child which helped (but was not planned that way to accomodate retirement), we paid extra on our mortgage and timed that to be paid off when she got out of high school, with the goal of using that money to pay her college expenses. That worked for us.

We live confortably, but still modestly, and can't wait until April 2011! We've planned, tested, and know we are ready. For us, continuing our lifestyle this way is worth getting out early.

Using the financial planners available online, saving what we needed, and living within that amount for 2 years and again this year is what gave us the confidence in our plan.

 

[Midpack]

I'd give a long answer, but the answer is unique to each of us. IMO all that we have in common is, you'll know when:

a) your desire to quit working, overcomes
b) your desire for greater financial security.
​

Not unlike supply vs demand. The long answer is all that goes into a) and b) for you - and only you can know what works for you.

You will know when it's time, guaranteed. And if you're wrong and have to go back to work, it's not the end of the world...

If someone gives you a formulaic answer - 50/50 chance it will work for you.

 

[Ed_The_Gypsy]

In my mid-50's. Too late for ER. Just trying to make it to any kind of retirement safely now.

 

[ziggy29]

I figured it out by my mid to late 20s. I started saving like crazy after that. Maybe a better move would have been to leave that j*b at that age (early/mid '90s) and look for another job with a secure and generous pension while I was young enough to be set for life by it, but coulda, shoulda, woulda...

 

[tgotch]

Maybe I phrased my question wrong.

What I meant to say was, when did you start thinking (or planning) about early retirement. Did something "click" in your head (like it did for me with a colleague living it), or was it something else?

 

[ziggy29]

What I meant to say was, when did you start thinking (or planning) about early retirement. Did something "click" in your head (like it did for me with a colleague living it), or was it something else?

Interesting, because I thought it was clear. Probably by the time I was 27 or 28 I *knew* there was no way I wanted to be forced to w*rk until 65, let alone 67 when "full" Social Security kicks in for folks my age.

 

[Maurice]

I maxed out my 401k from my mid 20s but I didn't start thinking about early retirement until I was in my early 30s and had a windfall from an IPO. That's also when I read Bernstein and started index investing. That was in 2002 or so.

 

[utrecht]

I knew at a very young age that I wanted to be a cop. I watched every cop show on TV. Its all I really wanted to do. A couple years after high school, I joined the Army because I was smart enough to know that I needed to be toughened up a bit to survive in a big city. When I had a year left in the Army I sent letters (I was in Germany) off to police departments all over the country asking for brochures about their departments (probably 15 different depts. scattered east, south, north and west). Even though I was only 24, I was smart enough to look for a large department in a large city with the best benefits (ie: pension). Pay was important but I was more concerned with the having a top of the line pension because I knew I wanted to retire early.

At that time, Dallas and Portland looked to be fit my requirements the best and I was already from the Dallas area so I chose to stay near my family and came home to Dallas.

Dallas' pension would allow me to retire at 50 with a standard of living pretty close to the same as when I was working. In 1993, a "personal finance" class was being given in the police academy by a police sergeant who was also an attorney and savvy investor. When I took the class, I honestly did not even know what a mutual fund was. I was hooked and became hell bent on immersing myself in anything and everything related to personal finance and investing.

I began maxing out my 457b (similar to a 401k). A few years later I got married and we both began maxing out. I studied and learned along the way. I saved more and more outside my 457b as I got raises along the way. I found this board and learned about asset allocation and diversification. We are now set to retire in 5 years (I'll be 50 and my wife 46) and thanks to some smart people around me, my being smart enough to listen to them and my own relentless disclipline, I will retire with take home pay about 3 times what I currently spend.

Short answer to your question when did I find out I could retire early?.....at about 21.

 

[Meadbh]

I realized ER was a possibility for me after I received an inheritance at age 48. Then I joined this forum.

 

[skyvue]

I was around 35 when I grew sick of life in Corporate America and started planning on leaving as soon as possible. Just wish I had started at 25 instead and I might be checking out by now (42).

 

[Ed_The_Gypsy]

When I found John Greaney's website and read the Terhorst's book.

When I realized that I had overestimated returns on investment and that normal retirement was in jeopardy, then I discovered that had I planned better I could have been out of the game by then. In other words, I missed exit sign because I didn't have my eyes on the road.

 

[LOL!]

I was 26 years old. I knew that I could live off my investments when they reached a certain amount. I made a goal at that age to get my investments to that amount.

 

[Walt34]

It was always in the background, working for a police department. At the time I started I was 22 and normal retirement was 25 years. Also I kept hearing about people retiring on disability, service-connected or otherwise (i.e., back or heart conditions).

Although 40, 50, even 60 year careers are not uncommon in other occupations that is very rare in police work because of the physical fitness required. So from day one I expected to retire in my late 40's or early to mid 50's.

 

[Onward]

I started planning FIRE in fall of 2002. I was broke and ravaged by the IT depression. I knew then that I never wanted to be dependent on the whims of the labor market again.

So now I'm dependent on the whims of the capital markets. But it's an improvement.

BTW, I'm really impressed with you folks who started in your 20's. I was on another planet then.

 

[FIREd]

For us, it was in 2005, at the age of 31.

We started working in 2000 and, during the first 5 years of our careers, DW and I went through more than half a dozen rounds of corporate attrition and 2 corporate bankruptcies. In 2005, it dawned on us that the constant threat of job loss hanging over our heads was a great source of stress and we looked at ways to bring stability to our lives. We were good savers before but, starting in 2005, we took our saving to a whole new level. I started reading about financial independence but ER was not on our radar yet. Then I read "work less, live more" which introduced me to this forum and ER became an appealing option. But even today, financial independence is still far more important to us than ER.

But apparently, FIRE always was in my blood from an early age. Once, when I was a kid, my parents asked me what I wanted to be when I grew up. I answered "retired millionaire"... For years, people busted my chops about it. But I haven't heard many chuckles lately...

 

[Khan]

I ran across John Greaney's site when I was in my 40s. That was the first I thought about ER. From there read Your Money or Your Life and many other things. Was able to take an early retirement offer and keep health insurance at age 54.

 

[Chelhxi]

I can't remember ever thinking I would work until 65. I just don't like working that much and have always been frugal. Probably around mid 20s I started thinking more seriously about it. Discovered the simpleliving network, which had a lot of good ideas re: YMOYL etc.
However, I didn't have a definite way to actually retire early until I got married last year. Now between my husband and myself we should easily be able to retire permanently by 50. Barring unforeseen circumstances. And we may chose to work longer but on a part time basis. That's my current goal - to reduce working for others so I can do more things I want to do for myself. Though I plan to return to college first.
And I'd love my husband to be able to work less asap. We're 33 now.

 

[GusLevy]

Obviously there will likely be as many different perspectives to respond to this question as there are people. For me the question you ask is really a form of the Big Question: What is the meaning of life? I suspect the answer to that question also evolves and changes for different people at different speeds throughout the various stages of their lives as well.

In my case, I retired a few months ago at 39 after spending 17yrs as a bond trader. I love the financial markets and was fortunate enough to have worked at one large and successful firm throughout my career. For me, there was never a moment of epiphany such as yourself but rather a realization over the yrs that despite my passion for trading and the markets that eventually there had to be more to life for me to discover - probably a classic forming of the mid-life issues that most men develop in one shape or another. Anyway, an amalgam of different thoughts entered into the equation for me personally that ultimately gave me the conviction to pull the plug (i.e. noticing colleagues that were, though wealthy, much older in their 50s and 60s who had been in the biz for far longer than I gave me a picture of my own future that didn't seem worth the fight of staring at a screen for 10 straight hrs from 5am to 3pm for another 10-20yrs..a company that I worked for that became bigger and more successful brought along the corporate ugliness of getting bigger and more successful..etc etc).

If there is one thought that may qualify as an epiphany to me is the moment I reflected by taking myself into the future to the age of 60 and asked myself how much I would pay to return to the age of 38 or 39. My opportunity cost of retiring now versus retiring at 60 is prob >10mm but even now I smile when I know that the price I would pay in my aforementioned scenario is far higher than any opportunity cost that I could come up with.

"An inch of time is an inch of gold, but you can't buy an inch of time with an inch of gold..."

 

[CuppaJoe]

I had many friends (probably most of them) who were in effect retired, a few were semi-retired, in their 40s-50s, but never spoke of it. It never seemed counter-cultural to me. I spent many years working part-year, taking 3-4 months off at a pop but never thought of it as any kind of retirement, I had to work. Then I took a job I liked that had good bennies but not enough time off, stayed there for 16 years, accumulating. I seriously planned for real retirement when I had 29 times expenses but figuring in medical expenses brought it down to 25 x expenses. I retired 14 months later. In my experience there is as big a gulf between retirement and semi-retirement as there is between full-time full-year work and full retirement. I’ve been retired 18 months. YMMV

Now, after reading what others have said, I bought Terhorst’s book from a remainder bin--how’s that for LBYM, and kept it metaphorically under my pillow for 25 years; it’s still on the top shelf and I regret that the amusing price tag has finally lost its adhesive and gotten lost.

 

[Alan]

For me it was when I was 38. I'd always expected to retire in my mid to late 50's as that was when one came eligible in the Megacorp pension plans and I knew many colleagues in England that retired in their mid-50's, many of them continuing as contractors and consultants enjoying the freedom of working because they wanted to.

At 38 I switched companies and pension plans for the 3rd time and I realized that the chances of being this new company for the next 20 years or the pension plan still being available was actually quite small.

At that point, I got out the "weapons of math instruction" to calculate savings rates, projected net savings, estimated pension payments etc, and also started reading and educating myself on what it would take to retire at 55 which was when my current eligibility for ER was. (age + service = 80).

The next 17 years was spent executing the plan and I've been extremely lucky that I've kept my job and the pension plan has remained untouched.

 

[chemist]

I knew when I took my first job out of graduate school (age 26) that I wanted to retire at 55. I had a good role model - my Dad retired at 57. But he had a government COLA'd pension and fully paid health care.

I plan to retire this August one month after I turn 55. I have stayed with the same employer for 26 years due to their "rule of 80" and employer subsidized health care until Medicare eligible. Turned down many, many opportunities to make 20% more money elsewhere. Maxed out 401(k)'s and IRA's since day one of first job.

 

[scrabbler1]

A lot of things had to fall into place for me to retire in 2008 at age 45.

The first thing to happen (unknowingly) was that I did not want to ever have kids. I made that decision at age 20.

The next thing to happen was to pay off my mortgage in 1998 when I was 35. The greatly reduced my monthly expenses.

Next was my company switching from not-for-profit to for-profit in 1997 and the ESOP which would grow in value by a factor of 30 in 11 years. Once my ESOP's value reached the $300k mark in 2008, I knew I had enough to retire.

In 2007, I found a bond fund with a good yield to put the ESOP's proceeds into once I knew I would be able to retire a year or two later. This covers my monthly expenses with room to spare (and I have other funds generating dividends as well as an IRA and, in about 15 years, a pension).

In 2008, I found an affordable individual HI policy which fit into my budget.

In 2001, my company relocated from Manhattan to Jersey City, New Jersey, making an already barely tolerable commute into one I could not tolerate very long (even on a part-time basis). I grew more miserable with working, especially starting in late 2003 when I could no longer telecommute. This is the biggest reason I left my company and retired. The HI issue and ESOP were second and third.

So the pieces fell together at different times and for different reasons, mostly in the 10 years leading up to my retirement 15 months ago. From 2005/6 and later, though, is when the serious planning took place.

 

[bbbamI]

DH and I always believed/dreamed we would retire before the age of 60 even though it was not the norm (back in the day}. However way back when, we didn't know just how to go about reaching our goal. We worked, saved and took advantage of retirement accounts offered by our workplace.

It wasn't until about six years ago (when I was 46 and DH 49) that I started educating myself on investment directions, taxes and the SWR rule. Later, I found this forum and it opened my eyes on what we were doing right...and wrong. Changes were made and I continued (and continue) to educate myself.

Even though the workplace for my DH started to become toxic the last year he was at Megacorp, he stuck it out in order to receive a pension and medical benefits. We knew how important those benefits would be in order to live a relatively stress free retirement life.

Our dream came true.

 

[Midpack]

For me it was a series of events probably (hope I am closer to answering your original question this time);

• I have always been pretty frugal, definitely lived below my means with little debt. Always saved all I could. Got over the "desire for (material) things" by the time I was 30 (luckily).
• I'm an Engineer so I am very comfortable with numbers, investing was a fun/interesting challenge to me. However, I had no training from my family - Dad has COLA'd pension and lifetime health care (so he didn't have a clue).
• There were certainly others, but
  • First influential book, Walden - roughly my 20's.
  • Second, Your Money or Your Life - roughly my 30's.
  • Third, The Millionaire Next Door - roughly my 40's.
  • Fourth, The Four Pillars of Investing - late 40's.
  • Fifth influential read, learned about 4% SWR, and studied underlying work carefully.
• Realized I was already FI - with comfortably more than 25X expected retirement expenses.
• Started thinking about early retirement.
• I am 55 now, may keep working until 50X or may "retire" from my first career (33 yrs so far) in the next year or two, and work at something else that is more enjoyable, less stress and less money. Work has it's rewards beyond $ IMO, but it would be really nice to not (occasionally) wake up in the middle of the night thinking about work.