Anyone here retire by 40?

[FIREHacker]

[FONT=&quot]I’ve set the goal for myself to FIRE by 40 and I’m sure there are others here who have the same goal. I’m still about 12 years away from then, but I’m wondering if anyone here has managed to do so. If so, could you shed some light on the following:[/FONT]

[FONT=&quot]1. [/FONT][FONT=&quot]What were your overall strategies for accumulating wealth before retiring?[/FONT]
[FONT=&quot]2. How did you know you were able to retire? [/FONT]
[FONT=&quot]3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?[/FONT]
[FONT=&quot]4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses? [/FONT]
[FONT=&quot]5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)[/FONT]
[FONT=&quot]6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?[/FONT]
[FONT=&quot]7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?[/FONT]

[FONT=&quot]I’m not sure how common (or rare) it is for people in the FIRE movement to retire by 40, but it’d be interesting to get some visibility on this if possible.[/FONT]

[FONT=&quot]Thanks![/FONT]

 

[97guns]

1) accumulate company stock at discount, sell and reinvest
2) when I created an income stream that exceeded my working income
3) didn’t, got laid off, collected the 18 months unemployment
4) Fired for 9 years with increasing net worth through real estate
5) N/A see #2
6) N/A never
7) after accumulation phase, my residual income has been stored in silver and gold

 

[Human]

1. Live below means. Start saving young. Save as much as reasonably possible. Follow proven investing principles (max out 401k, low cost index funds, etc.).
2. I didn’t really plan it. Sold my business and intended to start another. That never happened, so retired by default.
3. Told the company that acquired my company after serving the minimal time. Nothing unexpected, so it wasn’t big news. I did however negotiate a small monthly retainer fee.
4. 12 years so far. Lifestyle has been amazing. Wealth has increased, however my wife and I work some (self employed) and make good money per hours worked. Expenses have been about as expected. That said, health insurance costs are the biggest concern.
5. Via our work (enjoyable and minimal) and taxable investments.
6. Not really. 2008 kind of sucked. But as we’ve continued to do some work, I had the comfort of knowing we could ramp up work if needed.
7. I’ve followed a typical glide path - getting more conservative on asset allocation by decreasing stocks and increasing bonds.

You didn’t ask but...
I’d be lying if I didn’t say that luck played a significant role. No major medical issues. No bailing out family. No divorce. Parents sent me to college. Right career opportunities came my way. My business worked out OK. Etc.

Anyway, happy to answer any follow up questions.

 

[scrabbler1]

[FONT=&quot]I’ve set the goal for myself to FIRE by 40 and I’m sure there are others here who have the same goal. I’m still about 12 years away from then, but I’m wondering if anyone here has managed to do so. If so, could you shed some light on the following:[/FONT]

[FONT=&quot]1. [/FONT][FONT=&quot]What were your overall strategies for accumulating wealth before retiring?[/FONT]
[FONT=&quot]2. How did you know you were able to retire? [/FONT]
[FONT=&quot]3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?[/FONT]
[FONT=&quot]4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses? [/FONT]
[FONT=&quot]5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)[/FONT]
[FONT=&quot]6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?[/FONT]
[FONT=&quot]7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?[/FONT]

[FONT=&quot]I’m not sure how common (or rare) it is for people in the FIRE movement to retire by 40, but it’d be interesting to get some visibility on this if possible.[/FONT]

[FONT=&quot]Thanks![/FONT]

I didn't retire at 40, but I did retire at 45, 9 years ago. I'd like to answer your questions, anyway.

(1) While I built up a considerable chunk of money in my 401k and my after-tax account, a big boost to the former was the exploding value of the company stock I later cashed out. Also, it was not specifically a strategy, but I attribute a lot of my successful retirement to being single and childfree.

(2) I knew it when the company stock hit a certain value, which coincided with the other pieces of my ER plan falling into place. The value of the stock was going to generate an income stream when invested in a specific bond fund.

(3) I announced it with a short note to my bosses. It wasn't awkward although I was nervous because I couldn't believe I was actually going through with it. The reaction was very low-key. My coworkers were a little surprised but not totally stunned, mainly because I was working only 2 days a week for the last 16 months and PT going back 7 years.

(4) ER has been great. I have been retired for just over 9 years. I come and go as I please 7 days a week instead of 5 days a week (when I last worked, 2 days a week). I retired in late 2008 while the markets were crashing, so sine then my wealth has only increased (nearly doubled). Expenses have been pretty much as expected, except for health insurance, which has been erratic but has stabilized since the ACA became fully effective in 2014.

(5) Before I retired, I had my money in 3 roughly equal parts: after-tax, 401k, and company stock (ESOP). It was 1/3 after-tax and 2/3 pre-tax. When I cashed out the ESOP (using NUA to reduce the tax bite), the ratio reversed to 2/3 after-tax and 1/3 pre-tax. I generate enough dividend income to cover my expenses with a decent cushion to cover me against unforeseen expenses.

(6) The markets were still in decline for a few months after I retied in late 2008. While I was still generating enough income, it was a little scary seeing the stock part of my portfolio keep dropping until March of 2009, when the reversal began. I did some mild rebalancing but mainly stayed the course.

(7) I have maintained two different AAs, one for the after-tax part and the other for the rollover IRA (from the old 401k). The IRA's AA has been gradually shifting toward bonds from stocks and I have done a few rebalancing moves per year. In my after-tax part, I rarely rebalance because it is tied to my income stream. I have had to use the quarterly stock fund dividends in cash since 2014 to enhance my income, something I always envisioned having to do at some point

 

[HadEnuff]

Well, that was about the age I retired from my first marriage, the process of which, while liberating, delayed the retirement from work by a decade or two.

 

[Senator]

Many of my former renters retired at age 18. It seemed pretty easy.

 

[jetpack]

I saved up 10 years of expenses and quit my day job at age 33. My online business was making more than my day job. Been doing that ever since. Work as much or little as I want. With some months basically doing nothing.

 

[Rianne]

Whoever retired at 40...how much $ did you retire on? Healthcare is the scary part.

 

[z-d-g]

Retired at 35 after selling a business I started when I was 28. Not sure how that relates to your situation, but here are my answers anyway.

[FONT=&quot]1. [/FONT][FONT=&quot]What were your overall strategies for accumulating wealth before retiring?[/FONT]

I started a business that had no major ambitions beyond just making enough in net profits to afford a decent home in Texas. After a few months, it was obvious we had struck gold (not literally, of course) and ambitions changed quickly. We moved, expanded, moved again, expanded again and after about 4 years in business I started planning to eventually sell the place for enough to retire on. Goal was to do it by age 38, got lucky and got bought out at 35.

[FONT=&quot]2. How did you know you were able to retire? [/FONT]

We got an offer out of the blue. Was just sitting at home when an odd email came in offering us millions to sell our business. After jumping around the apartment with my wife, we ran some spreadsheets and called a tax expert to make sure our numbers made sense. We negotiated with the buyers to sell for a net-of-tax price that would just allow us to retire. Not lotto money or anything, just enough to not have to work again.

[FONT=&quot]3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?[/FONT]

N/A. I owned the place. The hardest part for us was not letting my employees know about the sale.

[FONT=&quot]4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses? [/FONT]

So it's been 6+ years now. Our wealth has definitely not increase, but that's my fault. Most of our investments have done fine, but I made an excruciatingly stupid move just before the '16 Presidential election that cost us hundreds of thousands. We're still in fine shape, but I wish we had more (who doesn't?). The expenses question is one of the best ones because we've found that our expenses have changed over time. In the beginning, we still had champagne tastes from the days of owning a very successful company. After we got over that and moved to the West Coast from NYC, we cut our expenses tremendously. Few years of that and then decided to jack up the expenses again with a very expensive move to central Los Angeles. That was just stupid. Since then we moved back up the coast, cut our expenses by 50% and are much happier. A lot less stress. You just have to figure out what actually makes you happy and what expenses are necessary to get you there. For me, it was a house that isn't falling apart, in a neighborhood full of considerate upwardly mobile neighbors. As long as we have our regular restaurants (nothing fancy) and a coffee shop, I'm much happier than when we were spending hundreds a day on food. All that did was make me expensive, but not happy. You'll have to find your own 'happy place' expense-wise.

[FONT=&quot]5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)[/FONT]

We put our money into DFA mutual funds for the first 3+ years and I highly, highly recommend that as long as you can live within the drawdown means. Since then, we put most of our money into cash and use a small chunk to be super aggressive with derivatives. It's a lot more stress and ups-and-downs, but it means the next crash won't wipe us out. Frankly, if I could do it all over again, I'd have just left everything in DFA. Our money has been in a taxable account since the business sale, so I can't speak to that one.

[FONT=&quot]6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?[/FONT]

Yes. Right after the big election shock (financially I mean) and we moved back up the coast, I started freaking out because I thought I'd have to start another business. Here's the funny thing: we could EASILY afford to never work again and live like middle class kings, but every once in a while, you can feel pride kicking in and you think to yourself, "yeah, but I could be making five times as much if I just started another business." Usually only takes a few seconds before you remind yourself that work sucks and that living within your means without working beats the alternative.

[FONT=&quot]7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?[/FONT]

We went from super aggressive (almost entirely US Small Value funds) to a well diversified portfolio (50/50 equity/bonds). Once we went from the diversified portfolio to 95% cash/5% derivatives, things got a lot more volatile if you can believe it. We'd have days where I'd make $60k and days where I'd lose $60k. The big days are a hell of a ride; I'm not sure I'd recommend it. It's just gambling and like I said, I sort of wish I had just stayed in the 50/50 portfolio the entire time. You're probably asking "well, why don't you do that?" and the answer is simple....because I've lost just enough that if I did that, I couldn't guarantee enough money to last us the next 40 years. We're likely to go into a diversified portfolio, hedged with derivatives, so we can catch the big swings but not get wiped out by crashes. Honestly, the big loss we took came down to exactly one common mistake that I hope you can learn from, and that is: know your risks at all times and don't exceed them. Easier said than done. I was 99% sure I knew how the election would shake out and positioned us in some undefined-risk derivatives. When the thing most of us expected to happen, didn't, we found ourselves getting annihilated quickly. I had to panic-close our position and take a loss that I would have never allowed us to take before or since then. Have boundaries and find a way to stay within those. I guess the TLDR version of that is: don't ever risk more than you're willing to lose. Protecting your wealth is more important than gambling on 'more.'

[FONT=&quot]I’m not sure how common (or rare) it is for people in the FIRE movement to retire by 40, but it’d be interesting to get some visibility on this if possible.[/FONT]

Yeah, it's weird. I can tell you this...I live in a part of the galaxy with a ton of young wealth (the Bay Area) and I can count on one hand the number of people I know who retired at 35 or younger on their own money (so, not counting trust fund kids or inheritance).

Many good lucks with your own plan!

 

[z-d-g]

Whoever retired at 40...how much $ did you retire on? Healthcare is the scary part.

About $3m after all taxes were finally paid out. We pay $1217/mo for Kaiser healthcare in California (family of 3).

 

[Ready]

Retiring by 40 seems like an odd goal to me. If I was Mark Zuckerberg I could have retired in my 20's. But folks like Mark will never be happy being retired because they thrive off the excitement of being entrepreneurial.

So for someone to successfully retire by 40, they would have to be successful enough that they made substantial wealth during a very short period of time, but then decide they don't want to do that any more once they turn 40. Usually the folks that make substantial wealth by 40 do so because they love it and would never give it up.

I'm sure there are exceptions, but in general we don't see many retire by 40 folks on this forum.

I semi-retired at 46 and fully retired at 50. People still ask me why I quit so young. I'm still evaluating if it's right for me.

 

[beeboy]

Retiring by 40 seems like an odd goal to me. If I was Mark Zuckerberg I could have retired in my 20's. But folks like Mark will never be happy being retired because they thrive off the excitement of being entrepreneurial.



So for someone to successfully retire by 40, they would have to be successful enough that they made substantial wealth during a very short period of time, but then decide they don't want to do that any more once they turn 40. Usually the folks that make substantial wealth by 40 do so because they love it and would never give it up.



I'm sure there are exceptions, but in general we don't see many retire by 40 folks on this forum.



I semi-retired at 46 and fully retired at 50. People still ask me why I quit so young. I'm still evaluating if it's right for me.

I think around your 40s is when a lot of people hit the wall - been working for 20 something years and begin to get burnt out and/ or sick and tired of the grind. So, maybe it’s not before 40, but more like in your 40s. If I had the ability (i.e. I knew financially I could make it work), I’d jump ship. Hopefully, I don’t have too much longer to go.

 

[SecondCor521]

[FONT=&quot]I’ve set the goal for myself to FIRE by 40 and I’m sure there are others here who have the same goal. I’m still about 12 years away from then, but I’m wondering if anyone here has managed to do so. If so, could you shed some light on the following:[/FONT]

[FONT=&quot]1. [/FONT][FONT=&quot]What were your overall strategies for accumulating wealth before retiring?[/FONT]
[FONT=&quot]2. How did you know you were able to retire? [/FONT]
[FONT=&quot]3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?[/FONT]
[FONT=&quot]4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses? [/FONT]
[FONT=&quot]5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)[/FONT]
[FONT=&quot]6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?[/FONT]
[FONT=&quot]7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?[/FONT]

[FONT=&quot]I’m not sure how common (or rare) it is for people in the FIRE movement to retire by 40, but it’d be interesting to get some visibility on this if possible.[/FONT]

[FONT=&quot]Thanks![/FONT]

FIREd at 46 with three kids and an ex-wife, but want to play anyway.

1. LBYM, try to minimize taxes and investment expenses, LTBH, 100% stock AA from 1987 through 2016. It was somewhat lucky for me that my highest earning years and highest percentage saved were in 2010-2016.

2. When my FIRE stash hit 25 times annual expenses, I had 5 years expenses in my Roth conversion ladder available, and work had sucked for a while and showed no signs of getting better.

3. I took a 12 week leave of absence and then gave them my 2 week notice via email at the week 10 point. It was not awkward for me. My boss didn't care, he had bigger problems to deal with. 100% of my co-workers were surprised and supportive. 99.9% of them thought I was leaving for another job.

4. My official retirement date is in February 2016, but I left work sometime in November 2015. It's about what I expected and quite nice. My wealth is mostly in the US stock market so it has gone up about 30%. My expenses are actually somewhat lower overall than I thought I'd be, because I didn't account for some stress-related spending going away.

5. Roth conversion ladder. Although I'm ahead of schedule in a good way because I have some non-portfolio income that I didn't account for originally which is stretching my ladder out. I think I have about 7 years expenses available now.

6. No, I've been very lucky so far. In 2015 when I was making final preparations, I did mentally prepare myself for the fact that the market could pull back. Obviously the last month or so was a little rough, but intellectually I know the recent volatility is well within what my plan can handle. During this time I have sat on my hands and done nothing, although I would have rebalanced from bonds into stocks if Vanguard's frequent trading policies would have allowed it. As it was, the restriction there was lifted on 2/24 and my AA had returned to 90/10 on it's own, so I continue to do nothing.

7. I decided to move from 100/0 to 90/10 in June 2016 because I realized that my emotional capacity for risk had lessened somewhat without an income.

Besides people on this board, I know of nobody else who retired at my age. Retiring at 40 is probably much rarer, but I imagine someone who starts early with laser focus and either remains single or married (i.e., divorce can be expensive) has a decent chance at it.

Good questions.

 

[ExFlyBoy5]

I guess I technically didn't retire until *after* my 40th birthday, but hey...it's close enough, right? The key to my early retirement was a trifecta of perfect circumstances that allowed for it. Those are, 1) being military, my pension started on day one; 2) healthcare insurance cost is not an issue since it is made available through Tricare, and is some of the most affordable healthcare insurance available; and 3) no children.

Nonetheless, not a lot of military folks (especially enlisted) are able to quit w*rking all together since the pension (although is GREAT!) is a fraction of what one makes while still on active duty, and like most other Americans, they spend it faster than they make it...so when you take a 50% (or more) paycut, most aren't able to make that fly.

But...here are my answers to your questions:

1.What were your overall strategies for accumulating wealth before retiring? Most definitely LBYM. In my early military days, I spent like a drunken sailor. Worse, my ex-wife spent even more. Once she was out of the picture, I went back my frugal ways (as I was raised) and saved like a crazy mad man. By the time I retired, I was saving around 65% of my income.

2. How did you know you were able to retire? This was pretty simple. The math told me that our everyday expenses were covered by dividend income and rental income on a paid for house. The pension was "above and beyond" the everyday expenses.

3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it? Not awkard at all since most folks in the military retire (from that) in their 40s. Only the closest co-w*rkers knew of my plans to fully retire and most of them were of the mindset that I would get bored and go get a j*b. So far, I am a little 3 years into it, and I have ZERO inclination to "go get a j*b".

4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses? A little over 3 years and it's been AWESOME. I describe it like this: Do you remember when you were a kid during the summer? The freedom? The excitement? I am sure you do. For me...it's just like that, except it's BETTER because I don't have to go home when the streetlight comes on! As far as expenses are concerned, they are about the same. My commute was pretty short, and now I drive about the same distance visiting my Dad...so no real change there. I would say that the travel expenses are a little higher, but not by a significant amount. And yes, my wealth has increased. My DW continues to w*rk (but I am thinking that is short lived...that's another discussion) and is saving in the neighborhood of 80% of her income. As mentioned before, our rental income and dividends pay for almost all of our expenses, so I am currently saving my entire pension. Also, I have been using my GI Bill for school (another story!) and all the housing stipend (over 3 years, about $45K) has also gone into savings.

5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)Discussed above. We minimize taxes through DW's 401K, and expenses on the rental house.

6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time? Not so far and don't see a time when I would have to return to w*rk. Outside of the pension and investment and primary home, our assets are well over 25x our annual expenses. Even in the event of divorce, I see no reason that I would *have* to go get a j*b.

7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why? DW is contributing the maximum to her 401k that is in a targeted fund and they match 5%...which is great. My entire pension goes into Wellington (VWENX) and has served me well. For the *most* part I don't invest in single stocks but I have been looking at alternative investments to grow some cash I have been sitting on. Whenever the DW decides to retire, we may look at how we allocate things. Much of this will depend on where we decide to live and what that might do to our taxes. The biggest game that we play with our money right now is trying to minimize our taxes.

Whew...I am tired now. Guess I will go take a nap. Did I mention that it's nice to be retired?

 

[TexasCanuck]

My Story

I retired when I was 37. The approach I took was multi-pronged. I saved like crazy in my 20’s. 65% to 75% of my paycheck saved every month. I was obsessed with saving money(offense) in my early 20’s. My money was invested 100% in Index equity funds with 75% US exposure and 25% international. I then started my business in my late 20’s. The business took off and I sold it in 10 years. That’s what really facilitated me retiring once and for all. Even without the proceeds from the business sale, I had still managed to save almost a million dollars when I was 35 by just saving most of the money I made from my paycheck and automatically investing it in a diversified stock portfolio as mentioned above. Nothing fancy just time and patience.

I knew I was able to retire simply by using a budget in Quicken my last 2 years before the business sold. At first it was just a means to look into what my family spent our money on in the first year. That was an eye opener. Year 2 was adjustments to see where we could save if we wanted to. Then it is just extrapolating out. On here everyone uses Firecalac but I used Quicken and my own spreadsheets. Its all basically the same inputs. Calculated a conservative 5% return in retirement with an average 3% inflation

When I told my employees, I was retiring after the sale they all laughed at me, some pretty hard, but I always say no one knows you but you so let them laugh or think what they want. Pretty much in unison everyone said I didn’t have the personality to retire early and I would start another business within a year. 6 years into retirement I am content. Sometimes I get the urge but spending time with my children and wife are my priority now.

My life in retirement is a mix of emotions. Including excitement, relief, depression and gratitude. Finding a life outside of your wife and family is key!! In fact I have found you need 3 or 4 things as you will tire of some and need to move onto others. My wealth has increased overall in the 6 years since being retired. We keep our spending between 3.5% and 4% of our previous years net worth. This has served us well. Even though we are setup for 5% return a year we have averaged between 6% to 7%. This has been in the middle of a raging bull market, so we know it will revert to the mean.

Our expenses have increased in certain areas since retirement, most notably healthcare and entertainment (retirement things to do) however, we now focus on our budget (defense) as much as I use to obsess about saving (Offense) in pre-retirement.

Funding our early retirement is through taxable accounts since we are now in our early 40’s. We have 3 years of living expenses in liquid cash (CD’s, I Bonds, MM) The rest is in a Stock/Bond/Alternative Asset mix with a goal of a 5% return. Our tax advantaged accounts (IRA) are not touched and invested as part of our overall return strategy. (5%)

For us nothing is too scary worrying about the money running out. That is what the 3 years in expenses provide. A security financial blanket. No need to take any more crazy risks, we already made it.

As alluded to earlier we switched from an all equity-based portfolio with a 8% to 10% return goal before retirement to a mix of stock/bonds/alternative assets with a 5% goal. You only need to get rich once after that it is just maintaining it and enjoying life.

One last thing that helped me. The best advice I ever got was that no one cares about your money more then you, NO ONE. So educate yourself on taking care of your money as it can be a vehicle to a fuller life and give you more TIME, which is irreplaceable and can be the most important thing you have.

I hope this helps

 

[kgtest]

I always thought I would retire at 40 but that was the attitude of an entitled youth that didn't put in the effort required to reach my goals. Instead I blew through well over 600k of salary from 16-26 until I finally had exposure to my first 401k with a company match .

I made a lot of excuses why I wouldn't save or invest, now I make a lot of excuses about how I don't want to change my saving strategy.

Start early, save often, and care about the value of a dollar. If I knew the grind *could be as long as it is for most, I would have been wiser in my youth, a few less bars, a few less blondes.

 

[beeboy]

I always thought I would retire at 40 but that was the attitude of an entitled youth that didn't put in the effort required to reach my goals. Instead I blew through well over 600k of salary from 16-26 until I finally had exposure to my first 401k with a company match .

I made a lot of excuses why I wouldn't save or invest, now I make a lot of excuses about how I don't want to change my saving strategy.

Start early, save often, and care about the value of a dollar. If I knew the grind *could be as long as it is for most, I would have been wiser in my youth, a few less bars, a few less blondes.

I don’t think you’re alone in this - so many of us, including myself, have had the same experience (especially the bars and blondes But, it’s never too late, you live and learn and we are all here now. Wasn’t able to retire BY 40, but I’m definitely shooting to retire IN my 40s.

 

[JakeinChina]

I've been thinking of retiring or at least getting out of the rat race of an executive position for some time, hence spending time reading posts on this site. I'm 39, have lived in Asia for 17 years and always made/saved a good portion of my income. I also bought a town home in Shanghai, China in 2005 and sold it 4 years later and made a 300% profit. Then since 2009 was part of the real estate crash, I took 500k USD and eventually turned it into over 1.5 mill USD by buying a number of single family homes in 2009 and 2010 in Palm Beach County Florida. I know rent 6 properties out for around 5500 USD net each month. I also have stocks/funds/equities in accounts like TDAmeri and Etrade. My biggest issues are probably like most young people considering a RE or something like it.


1. What would I do after I quit my 9 to 5 office job? I don't have any hobbies except for maybe some travel and watching pro sports on TV. Maybe take a part time job? Maybe take a less stressful middle management job instead of continuing to be in top management? This is the biggest question I have.


2. Do I have enough? I'm on my way to hit 2.5 Mill USD by 42 years old. The rental income can allow me to RE since we only spend between 4k to 4.5k USD each month, but there are a lot of what ifs. What if the rental property runs into problems? Having only 1 mill or less to fall back on and generate enough income is not what I want to do. I don't want to touch the equities, I'd prefer to just live off the rental income, which my sister in law manages for us.


3. Spouse's Thoughts - The wifey is concerned I'll just hang around the house and bother her. She supports me to quit my high level management job, but she wants me to remain active somehow. She also gets bothered when I hang around the house too much, at which she doesn't work and is a stay at home mom. We have a 5 year old daughter, whom I love to have out with, but she will eventually grow up and not want to spend as much time with her parents.


Much to consider, but for now I've got no plans to quit for the next 2 to 3 years, as I'm saving around 150k USD per year with my salary and rental income. The job is stressful, and with many new colleagues and a new CEO who is making big changes, work is becoming more difficult, but I think I can manage. at least bang it out for a couple of years while I figure out what I want to do with the rest of my life. Anyway, that's my thoughts on the topic. Best of luck OP on whatever you decide.

 

[Human]

@JakeinChina Seems like you are on a great path - minus the stressful job. I retired at 40, and here's my experience:

Since FIRE, I've done part-time project based consulting.
Addresses points 1, 2, and 3 in your post.

My routine includes starting each day with a hike or mountain bike ride. Addresses points 1 and 3.

My spouse works part-time (also self employed, so very flexible schedule).
Addresses points 2 and 3.

 

[JakeinChina]

@JakeinChina Seems like you are on a great path - minus the stressful job. I retired at 40, and here's my experience:

Since FIRE, I've done part-time project based consulting.
Addresses points 1, 2, and 3 in your post.

My routine includes starting each day with a hike or mountain bike ride. Addresses points 1 and 3.

My spouse works part-time (also self employed, so very flexible schedule).
Addresses points 2 and 3.

Thanks for the feedback Human. What region do you live in the U.S.? Being able to do many outdoors activities sounds awesome. How long have you been retired now and how has your outlook changed since when you firsted retired until recently? Thanks

 

[Human]

Thanks for the feedback Human. What region do you live in the U.S.? Being able to do many outdoors activities sounds awesome. How long have you been retired now and how has your outlook changed since when you firsted retired until recently? Thanks

I’ve been retired around 10 years and live on the west coast. As for my outlook, I guess I’m less concerned about earning money through my consulting gig...and a lot more spoiled ;-)

 

[Offgrid Organic Farmer]

Anyone here retire by 40?

I retired at 42.

I was a submariner in the US Navy. I got out after 6 years, and I went to college using the GI-Bill. After completing college, I realized the true value of a 20-year pension. So I went back into uniform and served another 14 years on subs. If I had stayed in, I could have retired at 38.

I’ve set the goal for myself to FIRE by 40 and I’m sure there are others here who have the same goal. I’m still about 12 years away from then, but I’m wondering if anyone here has managed to do so. If so, could you shed some light on the following:[/FONT]

[FONT=&quot]1. [/FONT][FONT=&quot]What were your overall strategies for accumulating wealth before retiring?[/FONT]

I married an accountant who is greatly focused on 'Home Economics', she prides herself on frugal living. When we were courting, we agreed to the goal of retiring as early as possible and living on a farm.

So any money I earned, she held onto, and we were both focused on the same goal.

[FONT=&quot]2. How did you know you were able to retire? [/FONT]

My wife did the math.

[FONT=&quot]3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?[/FONT]

In my career field, a 20-year pension is pretty standard.

The US military has a High-Year-Tenure [HYT] policy. I am an E6, as an E6 I am allowed to stay on Active Duty for 20 years, then I was forced onto pension. I was not allowed to serve any longer.

If I had made the promotion up to E7, then my HYT would have been at 22 years.

The higher you can advance, the HYT policy allows you to stay in a bit longer.

As my HYT date approached, my command had a big ceremony. Mandatory attendance in dress uniforms for a bunch of officers to give winded speeches.

[FONT=&quot]4. How long have you been in early retirement and what’s it like?

I have been retired for 17 years. I am 59.

It is great

Has your wealth increased since then?

Yes, our Net Worth has gone up considerably.

And were your estimated expenses on target with your current expenses? [/FONT]

Yes, our budget has held up to the task.

6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?

Yes, it looked bad in 2009. We had to file bankruptcy.

Our tenants all lost their jobs and moved away. We had to carry mortgage payments from our savings, until we ran out of savings. Then the mortgage company foreclosed and sued us.

7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?

We bought income property at each duty station. [Tri-plex, four-plex, five-plex apartment buildings] When I retired, we consolidated down to only one property, and we had a positive cash flow from it. Everything looked rosy at that point.

Owning those properties, each of them had built-up some equity as we paid down the mortgages. Selling them allowed us to liquidate the capital, and we bought our farm with cash.

Up until 2008, we lived on our farm and we had separate rental income.

In 2016 we had enough cash to buy another rental property, we are remodeling it now. We currently have four tenants, we hope to have it full with fourteen tenants this summer.

 

[Live And Learn]

I retired at 52, not 40 but I think the way I got there can help you

1. What were your overall strategies for accumulating wealth before retiring?

saved 100% of all my bonuses except for 2 (one used for a "bucket list" vacation, one used to buy a boat).

Never let "lifestyle creep" or "keeping up with the Jones" be part of my life. I automatically saved 50% of all my raises so while my standard of living did increase it increased alot slower than some of my collegues.

2. How did you know you were able to retire?

I have always tracked every dollar that I spent and have always had a budget to keep my spending "on track". I would allow over budget in one area if I could identify under budget areas elsewhere. My budget also includes 15% for non-recurring expenses (new roof, replace car / appliances / etc). I would not allow an underbudget variance in this category to offset any overages since I know that someday it will work out.

Once my budget was 3% of my spendable funds (taxable and non taxable accounts, excluding real estate) I was comfortable that I could retire. I did not include the FV of any potential SSI - this is my "insurance policy".

3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?

Everyone has known forever that I am very frugal and that my goal was early retirement. When I knew layoffs were in the works I offered my name to be put on the list so that someone else who needed the money to put food on the table could keep their job. My bosses were surprised (because I "appeared" so happy at work) but they knew I was going to achieve a goal and I was helping them because they could lay off one of me vs two younger people and save the same amt of dollars. My collegues said "wow - you really WERE serious when you said you have been saving for retirement since your first day of work!". They then went on with their own lives. No big deal.

4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses?

2 yrs 9 months and it has FLOWN by. I have never been happier. My expenses are exactly where I thought they would be because I have beer tastes to go with my beer pockets. I don't need alot, I don't want alot. But even if I did, as long as I could afford it within 3% of my initial portfolio I'd be fine spending more.

5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)

I thought about Rule 72t but my interest and dividends cover over 75% of my expenses and I started off with more cash then I should have. The cash is dwindling and I will need to withdraw funds next year as part of my rebalance process. It will be the first time I've had to sell a long term holding so it will be interesting to see how I handle it emotionally.

6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?

Not yet but I'm sure it's coming. I won't go back to work ! I will cut back on anything I can and eat ramen noodles every night if I have to !

7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?

I was 50/40/10 on the day I retired. With my cash dwindling and my equity holdings growing I am now closer to 58/40/2. My goal is 50/45/5 so when I withdraw and rebalance in January I move closer to my "ideal".

 

[Nords]

I’ve set the goal for myself to FIRE by 40 and I’m sure there are others here who have the same goal. I’m still about 12 years away from then, but I’m wondering if anyone here has managed to do so. If so, could you shed some light on the following:

I’m not sure how common (or rare) it is for people in the FIRE movement to retire by 40, but it’d be interesting to get some visibility on this if possible.

My spouse and I reached FI on our assets (high savings rate) at age 39. I retired from military active duty at age 41.

FI is still rare, let alone by age 40. However there are thousands of bloggers publicizing the techniques and tracking their progress. You’ll find several outstanding references from the 1600+ who are listed at Rockstar Finance:
https://directory.rockstarfinance.com/personal-finance-blogs/
It’s also illuminating to sort that directory by its “Net Worth” column.
Two well-known bloggers did it right here on E-R.org: Justin at RootOfGood and Jeremy at GoCurryCracker. I’m sure there are others who I’m not remembering just yet.

1. What were your overall strategies for accumulating wealth before retiring?

High savings rate: Maximize your income, optimize your spending.
http://The-Military-Guide.com/Start-here/

2. How did you know you were able to retire?

The 4% Safe Withdrawal Rate and (in 2002) FIRECalc along with FinancialEngines. Today I’d also check with other calculators like c FIRE Sim (remove the spaces around those eight letters for the website link) or Darrow Kirkpatrick’s reviews on CanIRetireYet.

Note to other posters: I’m not going to debate the flaws of the 4% SWR or of retirement calculators. They’re suitable tripwire indicators of FI, and people can maximize portfolio survivability by variable spending or with a small SPIA. In America, Social Security might be all the annuity necessary.

One reason that I don’t fuss about the flaws in the analytical tools is because I’ve seen too many people die during “Just One More Year” syndrome. One of my good friends literally passed away during a workplace department meeting.

3. How did you announce your early retirement at work? Was it awkward? And how did co-workers/boss react to it?

Everyone knew I was retiring when I filed my retirement request with the chain of command. The most palatable followup announcement is “I’m going to take a few months off to spend more time with family.” Everyone either applauds your standards or decides that’s an acceptable excuse for whatever miserable failure you’re hiding.

Yes, in 2001 it was awkward. Today I think it’s better understood and accepted.

FI has a way of separating your true friends from your co-workers and other acquaintances. (Some of your relatives might also change their behavior with you.) I told a few trusted friends and today we’re still friends. Everyone else interpreted my intentions through their own filters. 16 years later my father-in-law thinks I’m still trying to figure out how to find a job, but he’s given up helping me.

My boss reacted badly, but by then I knew him well enough to ignore his reaction.

4. How long have you been in early retirement and what’s it like? Has your wealth increased since then? And were your estimated expenses on target with your current expenses?

Best life ever. 16 years and counting. I don't know how I ever found time for work, and today I know there's no goin' back. In fact, in retrospect we overshot the mark and I should not have gutted it out to 20 years of active duty.
https://the-military-guide.com/dont-gut-20-leave-active-duty-reserves-national-guard/

Our wealth has risen beyond our wildest projections:
https://the-military-guide.com/hey-nords-hows-net-worth/

Our FI fixed expenses have actually remained flat (or declining). All of the discretionary ones also stayed flat or declined. No surprises. In retrospect our projected expenses were too conservative, and today we’re adding in new discretionary expenses.

The frugal habits which get you to FI are hard to give up after FI. You’ll probably have tight hands on the reins for a couple of years and then gradually loosen up. I doubt you’ll start shopping for airplanes or yachts, although you might fly first-class seats (with rewards miles!) or enjoy a cruise.

5. How did you fund the first few years of early retirement, if applicable? And how did you access money in tax-advantaged accounts? (Roth Conversion Ladder? Rule 72t? Other?)

We’re using the 4% SWR augmented with variable spending (if necessary).

For the first decade of FI we kept two years’ expenses in cash (CDs, https://buff.ly/2JA0rgF ) for spending during bear markets. Now that our net worth has risen (against our flat expenses) and our SWR has declined below 3%, we no longer keep a cash stash.

Here are other variable-spending techniques:
Bob Clyatt’s 4%/95% rule.
Social Security or other annuities.
Spending smile: https://buff.ly/2JA06KV
Guyton-Klinger or Pfau tactics: https://buff.ly/2JA085v

For the last 16 years we’ve been doing annual incremental Roth IRA conversions of our Thrift Savings Plans (military 401(k)) and traditional IRAs. We’ll finish the process this year.

I’d strongly favor a Roth IRA conversion ladder over the hyper-complex 72(t) and its penalties.

6. Was there ever a scary period of time during retirement when you thought the money wouldn’t last, or may need to return to working? If so, what did you do during this time?

Emotionally, you bet! I retired in June 2002 and there some tense spouse discussions in October 2002. We also did not enjoy 2008-09.

Logically we knew we could trust the 4% SWR math, our asset allocation, and the variable spending techniques. We also knew we could get jobs. However math & logic aren’t much help with emotions.

Today I think we’d do a better job of gutting through a (third) recession, and this time I really mean it. However that’s tempered by our experience and by our oversized (almost bullet-proof) net worth.

7. How did your investing/saving strategy (asset allocation) change once you transitioned from the accumulation phase to being financially independent and retired, and why?

Aside from getting rid of the two-year cash stash, we’ve stayed >90% equities in FI.

That’s all based on cold-hearted math & logic, although we may decide to back off our asset allocation in the future if we lose some of our risk tolerance. (I think we’ll just leave everything in autopilot.)

These are great FAQs, and I might edit this into a blog post. I’ll keep an eye on the other responses as well.

 

[mistershankly]

Nords, I'm always eager and appreciative to read your insightful posts. Thank you for sharing.

When you had the two years' expenses for a decade, did you dip into those reserves (as predicted when you first designated them as cash reserves) or did you find them to be a resource that provided you more peace of mind but never necessary?

DW and I are in the accumulation phase and I wonder if the doomsday scenarios I come up with in regards to cash reserves (or not having enough of them) are far greater than the reality of what can be done in a downturn (e.g. spend less, get a job, etc). Nothing is predictable, of course, but there is considerable wisdom on the other side where you and some of the folks on this site are at. Any insight would be greatly appreciated.