Retire by 35? Am I crazy?

[Sarah in SC]

I think Fuego gave you some good advice. My opinion is for you to stick it out long enough to save enough that you'll have fully funded your retirement plans and that way, if something does come up, you'll be prepared, and if you find that elusive perfect part time job, it will be gravy. You can travel cheaply, as you know, so the money in the kitty for retirement will continue to grow unimpeeded. That's the whole point of FI.

Our story is that my DH will take a sabbatical next year and maybe go back to work, maybe not, but I'll keep working until I'm comfortable with our "number". After you've been in the savings mode for a long long time, you get to a point of flexibility about how your plans can adjust to things that come up. We've taken hits to our long term goal of retirement in order to fulfill some short term goals/opportunities that came up and we're glad we did.

But at any rate, good luck to you both and congrats on the pending nuptials!

 

[FIREd]

Hi bigbarley4,


Is your plan crazy? not at all. Is it riskier than what many here have done? I think it is, because your plan relies heavily on future market returns for success. Most "experts" believe that market returns will probably be disappointing for the next decade or more. If that's the case, your ability to retire fully might slip away. Thats' why I think it's more important to rely on what you can save now rather than what your portfolio can earn in the future in order to achieve your goal. In that respect, with an income as high as yours is today, you have an excellent saving capacity. I think you should enjoy that terrific advantage until you are closer to FI.

That being said, I am happy to have given up my career while in my 30's (but not before reaching FI) and I can understand your desire to do the same. It doesn't matter how old you are, time on this earth is too precious to waste.

 

[meekie]

My fiance and I are focused on the idea of a "super cheap year" after our wedding, but really this would be as many years as we need to get to our target $$ amount. We'd stay in our current rent-controlled apartment but would eliminate all nonsense spend like going out, big vacations, etc.

As much as I dislike my job at some points, I'm glad I haven't given up vacations now for retiring a year or two earlier. We also just moved to a more expensive house in an exciting neighborhood with bars, restaurants and parks within walking distance instead of in suburbia, so that we could have more fun on a daily basis.

I was spending a lot of time working overtime, and putting my job first. I only made it to one out of the 6 chemo treatments my mom had. It wasn't a huge deal, and she's better now, but it's something I regret, and is the exact kind of thing I don't want to regret.

Life can be short. No matter if you're going to retire at 65, 55, or 35, don't wait till you retire to start living it.

 

[ShortInSeattle]

This is interesting because DH and I are having a similar discussion. Until recently, we assumed we would work exhaustively until we hit "our number" and then collapse in a heap on the floor and recover. We each work about 55-60 hours per week, and make close to 225K combined.

Lately though, we've talked about downshifting. (We don't think of it as retirement)

1. Saving enough so that our nest egg can continue to grow on it's own until we hit 59.5 and can access those funds.

2. Paying off our condo, and streamlining our budget further. Healthcare costs remain the big wildcard, and so we're curious to see what rates look like in 2014 when the exchanges are up.

3. Downshifting our careers in about five years time. For me this simply means taking on fewer projects, since I'm already self-employed. For him it means shifting from a high pressure megacorp tech job to doing project-based work through one of the local agencies that loans out techies for 6-9 months at a time. It may take some time to hit on the right balance of work and play, but we estimate we can live comfortably on 30% of our current income, lower our tax rate, and enjoy more work/life balance while that nest egg continues to compound in the background.

A great idea, right? We've got close to 800K in retirement/savings, so we can conceivably pull this off within five years. But there are many scary considerations.

1) "Working less" is probably harder than it sounds. If I take fewer projects, I may lose some of my presence with my customers. Also, the "tech projects" for my husband could dry up if the market goes wonky.

2) Hubby's job is steady, great healthcare, and pays very well. Yet if he leaves, we don't know that he could get back in at that level again. So we may be saying goodbye to the goose who lays the golden eggs, forever.

3) We work a ton, and haven't figured out what we'll do with our spare time. What if we hate it? (Unlikely, but you never know. We're a bit type A.)

4) We have assumed 2.5 mill is appropriate for full retirement at age 59.5. But that is more than 20 years from now. Will inflation make our number way too small?

5) Shouldn't we just suck it up and work for another 15 years at least, to guarantee financial independence?

So in short, we really want to downshift. But we also know it's a bit of a risky move. We're giving up security and taking on risk. We are the typical mid-thirties exhausted couple with not much of a life outside of work. We're not sure that waiting another 20 years is right either. Life is uncertain.

So yeah, confusing. Appreciate any thoughts from others who waged the same inner battle.

SIS

 

[haha]

This is interesting because DH and I are having a similar discussion. Until recently, we assumed we would work exhaustively until we hit "our number" and then collapse in a heap on the floor and recover. We each work about 55-60 hours per week, and make close to 225K combined.

4) We have assumed 2.5 mill is appropriate for full retirement at age 59.5. But that is more than 20 years from now. Will inflation make our number way too small?

You list of concerns is excellent, and as you pointed out, although the questions are good, there can be no answers as it involves a far off future. A comment on your #4 above-

If you mean equivalent purchasing power of $2.5 mil today, but the nominal amount scaled up to whenever you start withdrawing, very likely OK. If you mean today's nominal $2.5mil unadjusted for inflation, but accessed 20 years from now, it would be a total crap shoot and very likely not OK.

If I had good, transferable, well paying professional skills, I would strongly consider not losing them. This is not what I did, but what I wish I had done. My retirement looks pretty secure, but I believe that likely more than any time since the 1930s, it is hard to get visibility into business and even political and social conditions going forward.
We have positive thinking threads, retirees are actually well off threads, and the media loves negative threads, but in my opinion the media stays completely silent about the major threats to business as usual.

#1 I believe, is that the world is running out of cheaply produced crude oil. The US will produce more crude for a while by formation fracturing and horizontal drilling in tight shale formations, but this is not going to be cheap. Similar conditions are facing many extractive industries, which are after all, finite, while our economics and political stability require continuous compound growth.

So, if retirement early in life is worth what I believe to be a real gamble, why not? Otherwise, consider carefully.

As you and anyone reading knows, these are my ideas only, and we may actually be on the threshold of a great leap forward.

Ha

 

[ShortInSeattle]

Good points haha, thanks. I think we all wish for certainty in retirement planning but what we are left with is semi-educated guesswork.

I definitely agree with not letting our skills erode. In our downshifting model, we still plan to be active in our (same) career fields 9 months out of the year, just at a lower intensity of hours.

What I think I need to do is go and subtract estimated inflation rates from my estimated annual rate of return, then re-do the numbers.

That will probably provide more realistic numbers. And I'm sure we'll have plenty of time to waffle back and forth on the idea over the next several years.

In the mean time I have a short term goal. Less stress next year and 10 fewer hours per week of overtime. We'll see how that goes.

SIS

 

[bigmarley4]

This is interesting because DH and I are having a similar discussion. ...we've talked about downshifting. (We don't think of it as retirement)...Appreciate any thoughts from others who waged the same inner battle.

SIS

Downshifting is a great word for it. That's kind of how I consider it too -- although I think others have made really good points about part time work being just as annoying as a full-time gig IF you need to work for financial reasons.

I showed my fiance some of the posts here, and we agree we'd rather be FI than have to work. But we may be able to get a lower target number by living some in low COL countries/areas and "vagabonding" while traveling, which we are into anyways.

I still don't know how exactly to determine our target number... I've tried numerous calculators and such but at the end of the day you just have to go with your best estimated guess.

We're also going to try to save a lot more money. We made enough over the last 3 years that we could meet all expenses, max out 401K and IRAs, contribute some to our brokerage accounts and still have lots of fun, so we didn't feel "bad" about the fun part and didn't spend a lot of time analyzing expenses or have specific joint-saving targets. With some more discipline we should be able to increase our savings a ton and hopefully we can continue to grow incomes so we can reach FI soon! I'll continue to update everyone here as we try to make this happen.

 

[LeavingOhio]

Bigmarley4,

If I were you, since you don't HATE your job, I would plan to work full-time at that job until age 40. I'll use wild stats and say of the 270,000 you take home $175,000. I say you can live on $75,000 take home...that's $6,250 a month. You say you will get raises, but I won't even consider that.

Let's take your $400,000 and add $100,000 a year to it for 8 years (getting you from "early 30s" to 40). That's $1.2 million if your stuff earns nothing during that time. I'll give you a very conservative rate of return of 6% over that time, so that it's really worth $1,686,670.83. Even though you plan quit your high-paying job, simply because you are still young, I would keep that stuff invested aggressively...no need to be 40% bonds or something like that.

What if you took 3.5% of that beginning at age 40? $59,033. Can you live on that and explore the world? Likely not. Can you take that and then move to a very cheap area of the country and just relax there, not making any more income until you will get SOME Social Security later on? Yes. Doesn't sound like what you want to do though. I'd take that income, move to your cheap area of the country and then work part-time (or maybe full-time for part of the year) and THEN do the travel thing. Seems age 35 is too soon to me. Also, with your income, you and your new wife should be able to do a lot of traveling BEFORE you quit your jobs. Can't delay all the fun until after retiring.

Anyway, good luck.