Late Start? You can Still Retire Early.

[R.H.]

Didn't start my career until I was 37 years old (never could find my niche). At that time I was unmarried (divorced, actually) and had roughly $25K in assets. I started my career with the federal government and I suspect I will finish my career as a federal worker. I've never been promoted beyond GS-13 (read "no fat paycheck") and I am perhaps the most conservative investor God ever placed on the face of the Earth -- all my Thrift Savings (401k) contributions have gone into the Government "G Fund" (i.e., NO stocks, NO bonds). Nearly all of my other investments consist of U.S. Savings Bonds ("EE" and "I-Bonds"). Oh yes, throw in another divorce along the way. Never inherited a nickel and never won a dime. Not an auspicious start to an early retirement. However, I have one saving virture (no pun intended) -- I've always lived below my means, i.e., I like to save. About 7 years ago I remarried (my wife is a GS-7 federal employee). In three years we plan to retire. I'll be 58 years old. We'll have roughly $1,000,000 in relatively liquid assets, but no house. I'll also have a small pension of about 17 to 18K per year once I turn 60. In all fairness, I should note that my wife and I have been fortunate in that about 4 years ago we accepted an overseas tour with our respective government agencies. Consequently we have enjoyed free housing. This has allowed us to live on my wife's paycheck and bank mine (been saving roughly $60K/year lately). The moral of this story is that even with a very late start, and a modest income, you can still achieve an early retirement with a little fiscal discipline.

 

[John Galt]

Re: Late Start?  You can Still Retire Early.

Or, you can not save, not plan, start late, get a
bit lucky and still make it work. Is this a great country or what?

John Galt

 

[Whisper9999]

Re: Late Start?  You can Still Retire Early.

Wow! Thx for the story. I'm a fairly late starter as well. It's good to know someone has done it...

 

[Jay_Gatsby]

Re: Late Start?  You can Still Retire Early.

In reading between the lines, it doesn't appear that you have kids from any of your prior marriages. That may have facilitated you and your current wife's ability to save the $1MM you indicated. Furthermore, since you only had $25k in assets when you were 37, it's not likely that you were tagged with heavy alimony (and child support) after your first and/or second divorce. Again, these things probably contributed to your ability to save a substantial amount over the past 21 years. Finally, the overseas stints for your and your wife certainly helped your ability to save (and may have led to your ability to move up "steps" within GS-11 and GS-12 faster than your domestic counterparts who live in the expensive metropolis of Washington, D.C.

In pointing these things out, I'm in no way trying to minimize your accomplishment. Rather, as is the case with anyone who achieved something extraordinary, there are always details that reflect intelligent planning, strategic opportunities for advancement/pay, etc... It would be foolish indeed to believe that one can live beyond one's means until age 37, and subsequently achieve what you have.

 

[JWR1945]

Re: You can Still Retire Early.

RH

..I am perhaps the most conservative investor God ever placed on the face of the Earth -- all my Thrift Savings (401k) contributions have gone into the Government "G Fund" (i.e., NO stocks, NO bonds). Nearly all of my other investments consist of U.S. Savings Bonds ("EE" and "I-Bonds").

Most likely, you are doing much better than you think.

In view of your investment preferences, you are likely to find this thread especially interesting.
3% SWR for 56 Years from Mon Oct 13, 2003 3:19 pm CST
http://nofeeboards.com/boards/viewtopic.php?t=1541
http://nofeeboards.com/boards/viewtopic.php?p=12536#12536

Long term TIPS are currently returning around 2.1% to 2.2% yields to maturity on the secondary market.

TIPS with a 2.2% yield to maturity would provide you with a 3% income stream (i.e., $30000 annually if starting with a million dollars) plus inflation for 52.2 years before running out of money.

This calculation does not include the effect of taxes, which can be significant when TIPS are held outside of a sheltered account (such as an IRA or a rollover IRA).

Have fun.

John R.

 

[Berkshire_Bull]

Re: Late Start?  You can Still Retire Early.

how do you like being a federal employee. any truth to the rumor that the job is more "kushy" per se, than the private sector? is the consensus that government jobs are more secure as well? what do you think the outlook is for them with the increasing priitization in this country? wow i'm just full of questions today... inquizative minds want to know

 

[R.H.]

Re: Late Start?  You can Still Retire Early.

Jay_Gatsby -

Very perceptive. You are correct. I didn't have any children until 2 months ago (my wife and I adopted two teenage daughters). Having no children until now has certainly made it easier to save. And, you are also correct that my two unsuccessful marriages ended amicably and I was left relatively unscathed (at least financially speaking). This helped too. And, having the opportunity to work overseas, at least for the last 4 years, has been a BIG blessing as well.

However, the point of my starting this thread is that life can be forgiving at times. I made lots of financial mistakes, and ended up getting a VERY late start. I missed the ENTIRE bull market. But, I will still be able to retire early -- not as early as I would have liked, but still earlier than many of my peers. This has been through no great skill of my own. Rather, it has simply been a product of being willing to live below my means and saving conscienciously. When all else fails, frugality will still get you there.

Berkshire_Bull -

I wouldn't know whether federal jobs are more "cushy" than jobs in the private sector because I've spent my entire career working for the government. My experience has been that some employees work their tail off and other do just enough to get by. Probably not much different in the private sector. As far as job security, it is true that federal employees enjoy some protection under the civil service laws, but it is certainly not true that civil servants cannot be fired or disciplined. Regarding job security, federal employment probably offers more security than many jobs in the private sector, but try to explain that to someone who has just lost their job in an A-76 competition (privatization). All in all, I'm satisfied with my choice, but I wouldn't recommend government employment to everyone.

JWR1945 -

Thanks for the advice. I'm hoping that by the time I retire that TIPS will be yielding somewhere in the neighborhood of 2.5 percent. If so, I'll convert most of savings into TIPs and be satisfied. I figure when my pension kicks in (another 17-18K per year) I'll be able to afford a comfortable, modest lifestyle. If I ever see any Social Security, that will just be icing on the cake. I could probably shoot for a higher cash flow if I was willing to accept more risk, but I'm simply not willing to gamble where my future is concerned. There's no "starting over" if you make a big mistake. Security means more to me than a few extra dollars to spend.

 

[indymom]

Re: Late Start?  You can Still Retire Early.

Many, many federal employees have been downsized out of a job lately. BRAC (base realignment and closure) has dumped thousands of people, esp. techies, on the market.

 

[shanna]

Re: Late Start?  You can Still Retire Early.

I would second the warning about fed. employment. My husband is 6 years away from retirement at age 56, and in a position that has not experienced any downsizing. It's only very slightly possible that he might be moved or "displaced" within his agency, I think that's the term they use, but not downsized.

Younger employeers are being replaced by contractors. It's a bummer for these folks. My only advice would be to save save save while you have the good benefits, and if possible, transfer into a position that is non-contractable.