[ARCHIVED THREAD] - Early Retirement - need input (Page 1 of 3)
Posted: 4/5/2017 10:12:08 AM EDT
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Background: My wife and I are both in our early 30s and are Engineers. Obviously the money is good but the job is stressful, I cant fathom doing this for another 30+ years. Two years ago we decided to take a different path. We started the Dave Ramsey program, we paid off all of our debt including our home and are saving aggressively for retirement, but cant decide how much we actually need and when we can or should retire.
Questions: 1) At what dollar amount would you say "Ok, I have enough in the bank and stock market that I can retire and live a comfortable lifestyle"? 2) What age are you planning to retire? 3) Have you ever met anyone that retired in, says their 40s? early 50s? Youngest person I know of (not counting stay at home Moms/Dads) is an accountant at 55. |
| Lots of people would say if you can live on only the returns from your investments then you could technically retire. That's overly simplified though. Many people would say principle of $ 1MM - $ 2 MM. Again overly simplified. It depends on how much you need to live on mostly. |
I retired February 1st at age 50. I have more shit to do now than when I was working The thing is, it's stuff I want to do. I'm sure I'll go to work again at some point, but it will be something I want to do.
I can't answer your question because there are too many variables. |
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I retired from electronic engineering 5 years ago at age 56 (after being laid off and deciding I could make it work).
I had everything paid off (except a few more years on my house), and I'm also single with no kids so that made it a lot easier. What worked well for me was using Fidelity's detailed Retirement Planner, you do have to register at Fidelity to use the detailed planner but it is one of the best that I have run across on the i-net. The use of this tool is what really allowed me to make an informed decision on whether or not I was in shape to retire. https://www.fidelity.com/calculators-tools/planning-guidance-center It took a couple of years after I decided to call it quits to adjust my spending to a stricter budget (I never had that restraint before) but once I got a handle on that, retirement is GREAT and if you can swing it I can highly recommend it! |
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We sold and retired at 55/50 Having a BLAST! The money isn`t anywhere NEAR what we used to earn but we understood that going into retirement before we took the leap,
No debt, no worries I dabble in a few money making things from time to time but only for fun I went to an auction about a month ago and spent $1800 which is now well over $8000 in my pocket Don`t need the money but we`ll use it in our travels to the next auction,,,to make another $8000 We fish,play,eat,travel and more all day every day |
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Honestly, it would depend what you mean by Retirement. I personally couldn't fathom doing nothing, but I could see moving into a more stress-free career path, a la American Beauty. Granted, I'm a long ways off from retirement. https://media.giphy.com/media/NxVo52stpyyvm/giphy.gif I would probably look for a part time engineering position, although that's a tough thing to find. Or would get more involved with my hobbies and turn them into part time businesses. I teach CCW safety classes a couple times a year now but If I had the time I would teach them every weekend, they are a lot of fun. My wife loves baking and always has to say no to people who ask her to bake for wedding and other events, she just doesnt have the time and with engineering you cant predict if in 6 months you will have some crazy deadline the same day as little Tommy's Birthday party. |
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Honestly, it would depend what you mean by Retirement. I personally couldn't fathom doing nothing, but I could see moving into a more stress-free career path, a la American Beauty. Granted, I'm a long ways off from retirement. https://media.giphy.com/media/NxVo52stpyyvm/giphy.gif After I retired I have MORE shit to do than I did when I was working. Sitting around and doing nothing isn't EVEN a choice!!! 
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What did you want to be when you were a kid growing up? I worked with a guy that had a successful motorcycle dealership. His shop included a factory watercraft race team, mail order and performance tuning shop. He flew his own plane to his Colorado River house etc. He sold out to one of the biggest multi-line dealerships in SoCal to become a firefighter. He was investment savvy but did experience a change in lifestyle because he really cut his lifestyle back to be sure he could survive and did. I don't know what what he had in terms of $$$ going into what I thought was a huge life changing event at age 40 but I know he wanted to work.
Have you consulted a financial adviser? You have a long way to go from your 30's so you need something that generates income and a lot of it. If you can put enough money aside you could possibly chase that passion that will supplement your retirement fund. |
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I have started looking into this as well. I'm 40, and an engineer as well.
It seems the accepted rule of thumb is that there is a "safe withdrawal rate" taken to be about 4% that you can withdraw and live off of your investment returns FOREVER. So, if you anticipate needing $40,000 to live off of per year in early retirement, you should have $1,000,000 invested. I'm a long way off. 
Here is a couple of good, succinct articles that explain it all pretty well: How much do I need for retirement? and the one that really spoke to me: The Shockingly Simple Math Behind Early Retirement |
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I think a lot of people reach their early thirties and the thrill is gone. College then work then start suddenly ten years have passed and what thirty more of this? Nope.
In reality, yes is a better answer. I like my work and it pays well. Why would I retire? I'm early 50s and in the peak earning years. Ask me again in my 60s. I may be doing different work but it'll still be income generating. My father retired in his early 60s and watched the clouds go by for 29 more years. He was always worried about his retirement before that. It's a shitty way to live. YOLO and I'm not going to worry about mine. So far I've paid for three children's college education, paid off my house, only debt is mortgage debt on rental properties, drive a C7 convertible, and have a seven figure 401k. It's been working for me. Get your financial house in order then keep working 20 more years. If you have dual income for that you will be in great shape to retire and you'll have enjoyed the trip getting there. |
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What did you want to be when you were a kid growing up? I worked with a guy that had a successful motorcycle dealership. His shop included a factory watercraft race team, mail order and performance tuning shop. He flew his own plane to his Colorado River house etc. He sold out to one of the biggest multi-line dealerships in SoCal to become a firefighter. He was investment savvy but did experience a change in lifestyle because he really cut his lifestyle back to be sure he could survive and did. I don't know what what he had in terms of $ going into what I thought was a huge life changing event at age 40 but I know he wanted to work. Have you consulted a financial adviser? You have a long way to go from your 30's so you need something that generates income and a lot of it. If you can put enough money aside you could possibly chase that passion that will supplement your retirement fund. 
Obviously would need to cut back on the 401k at some point as that cant be accessed unto 59.5 years old. |
| just had this conversation with the wife last night. I'm in my mid 30s, realized i could punch out now, but make way too much money to do so. I figure, if I can make $300-$500k per year off investments I will quit working or at least substantially cut back the hours i work. |
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Yeah, there is no way I could truly retire and just sit around and watch TV. I would probably look for a part time engineering position, although that's a tough thing to find. Or would get more involved with my hobbies and turn them into part time businesses. I teach CCW safety classes a couple times a year now but If I had the time I would teach them every weekend, they are a lot of fun. My wife loves baking and always has to say no to people who ask her to bake for wedding and other events, she just doesnt have the time and with engineering you cant predict if in 6 months you will have some crazy deadline the same day as little Tommy's Birthday party. |
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Not sure about the dynamics of your job field, but a lot of people in my current field largely retire early(mid 40-s), but that is mainly because they just take on a consulting position as a 1099 and make just as much, if not more, money as they were previously with much more free time. |
| Carefully research where you will retire. It might not be in your now paid off house/area. Acquire a 2nd property, perhaps recreational, now that you would move to in retirement. Consider property/school/personal taxes where you will retire, and access to possible medical services. |
| You're Engineers. Do the math. Figure out what kind of lifestyle you want in retirement. Estimate how long you are likely to live (actuarial charts, family history, etc.). Estimate how much it will cost to lead that lifestyle from the time you retire until you die (factoring in things like the rate of return you can reasonably expect on your retirement savings, inflation, health care costs, etc.). Then you can use the time value of money to estimate how much you would need to retire at age X. I've done it for clients a few times. Google Excel retirement spreadsheet or Excel retirement calculator for examples. |
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Don't retire, find a career you like.
Catch 22 about working vs. not working: when you are on the job working you are making money and don't have the opportunity to spend it. When you are not on the job working you aren't making money and have plenty of time to spend it. Imo, retiring young should only be considered if your accumulated funds earn 2-3x your anticipated expenses - and be rational about your estimate of expenses, taking into account the catch 22. I have been idled twice by long non-compete agreements. I get bored the third year. Getting bored can be f'in expensive - or, can lead you to going back to work. JPK |
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There are many considerations to look at and no person is going to fit into the same mold. I largely live by something called a FIRE (financially independent retire early) principle and I plan on retiring in about 10 years (will be 45). There are tons of blogs, forums, podcasts about it if you really want to dig into it, if so look at the Mad Fientist and MrMoneyMustache pages. JL Collins also has a really good website (the simple path to wealth).
To answer your questions: 1. Depends on your anticipated expenses, personal considerations, and what you consider a comfortable lifestyle. The above mentioned websites have all sort of calculators that do a good job of determining when you can retire based on your own scenario. 2. I won't ever "retire" I might be an angry Walmart greeter but I plan to leave my main job and retire at 45ish. That may change as I have significant health considerations to factor unfortunately. 3. I have personal friends that retired in their late 30's. They have passive income from a few rentals and still do occasional side gigs (IT related stuff) but could sit on their ass and not do a thing the rest of their lives. Both my wife and I have the same goal but people think we are crazy, we live the life we want but people are floored by how much we do not spend, how much we save, and we have no children which is a huge plus for us. |
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I think a lot of people reach their early thirties and the thrill is gone. College then work then start suddenly ten years have passed and what thirty more of this? Nope. In reality, yes is a better answer. I like my work and it pays well. Why would I retire? I'm early 50s and in the peak earning years. Ask me again in my 60s. I may be doing different work but it'll still be income generating. My father retired in his early 60s and watched the clouds go by for 29 more years. He was always worried about his retirement before that. It's a shitty way to live. YOLO and I'm not going to worry about mine. So far I've paid for three children's college education, paid off my house, only debt is mortgage debt on rental properties, drive a C7 convertible, and have a seven figure 401k. It's been working for me. Get your financial house in order then keep working 20 more years. If you have dual income for that you will be in great shape to retire and you'll have enjoyed the trip getting there. Going to college, getting that first real job, getting my PE license, moving onto a bigger firm with higher pay (and longer hours), etc... it was all great for awhile but the daily grind has set in and the long 50+ hour weeks are wearing us down. Combine that with hitting 30 this year and are sort of having a mini pre-midlife crisis. |
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You're Engineers. Do the math. Figure out what kind of lifestyle you want in retirement. Estimate how long you are likely to live (actuarial charts, family history, etc.). Estimate how much it will cost to lead that lifestyle from the time you retire until you die (factoring in things like the rate of return you can reasonably expect on your retirement savings, inflation, health care costs, etc.). Then you can use the time value of money to estimate how much you would need to retire at age X. I've done it for clients a few times. Google Excel retirement spreadsheet or Excel retirement calculator for examples. |
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I'm 29 now and plan to start working part time at 35. I have a number of rental properties now and plan to build my portfolio over the next 6 years to act as a base passive income, so I don't have to work, but can take a part time job to keep myself entertained.Â
Eta - I have an engineering degree and now work in project management. I've come to grasp that I'm quite okay with living a simple lifestyle if it means I can retire at 35 and spend more time with my kids. |
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That pretty much nails it. Going to college, getting that first real job, getting my PE license, moving onto a bigger firm with higher pay (and longer hours), etc... it was all great for awhile but the daily grind has set in and the long 50+ hour weeks are wearing us down. Combine that with hitting 30 this year and are sort of having a mini pre-midlife crisis. There's the problem. You're burning out and people make bad decisions when they're burnt out. I'll work 50+ hour weeks if I know that doing so for a couple years will get me legit fuck you money. No way I'd do it for an upper middle class income. Find a 40 hour a week job, even if it pays a little less, and put up with it until your late 50s and it will let you be healthier and ultimately save more before you need to start whittling down your nest egg. |
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That pretty much nails it. Going to college, getting that first real job, getting my PE license, moving onto a bigger firm with higher pay (and longer hours), etc... it was all great for awhile but the daily grind has set in and the long 50+ hour weeks are wearing us down. Combine that with hitting 30 this year and are sort of having a mini pre-midlife crisis. Rather than retire, start you own firm, or find a career you like, scale back... But don't stop working. Having a goal each morning is important. ETA: Maybe both of you take year off and screw yourselves silly, travel, have a break and a blast. [My wife and I had two young kids when I was first sidelined. But we had a great time and with time on our hands it was ridiculous how often we went at it.] But define how long it will be. I'd bet that after a year, maybe a year and a half you would want to go back to work. Or go back to school. I graduated from law school when I was 34. I enjoyed law school, unlike the youngsters who were ticket punching. JPK |
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Click here: http://www.kiplinger.com/ There's a link in the header bar on retirement.
Better yet, subscribe to Kiplinger Personal Finance and follow their advice. It worked for my wife and I. We retired comfortably in our late 50s. |
| There was an "early retirement" trend in the 1970s, that happened to coincide with a recession and high inflation. I remember one of my dad's friend's, a fellow WWII veteran, having to sell off a lot of his war trophies including a collection of very fine Samurai swords that would be worth a fortune today. |
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I am an engineer that retired in 2003 at age 56 after a 30 year career. My wife, who was a school teacher, also retired at that time.
At the time I retired I had enough of the high stress job of being an Engineering Director. My wife was burnt out on being a teacher. The first year we did a lot of travel and things we had put off. However, once we settled down we both decided that we needed to do something other than recreational things. I went to work as a part time consultant and my wife as a tutor. I also taught a few college classes in my field. I actually made as much money in a year as a consultant that I made as an Engineering Director working a lot less hours. We did that for about four years. Since we both had pensions and 401K we were OK financially. I will be 70 this year and so far we have not had to draw on our 401K yet. We will have to start doing that next year because of the stupid IRS rules. When we retired we had no appreciable debt and a significant amount of equity in our home. Our sons were out of college and on their own so no debt there although we would get hit up for some or another all the time. Here would be my rule of thumb for an engineer retiring making a six figure salary. You need to make sure you don't have any significant debt. Your retirement income needs to be at least 60% of your present salary. If not you are probably going to have to go to work part time in order to sustain the same kind of life style that you had before. Every year there will be some kind of unexpected expense. Traveling/vacations will be very expensive. It would be good if you had enough retirement income so that when you start to draw Social Security it can be used to make up for inflation and not be part of your core retirement. You better make sure you have medical insurance covered before retiring. We were lucky enough so that our pensions and retirement benefits enabled us to have enough income without social security or drawing on 401K. That enabled us to live comfortably although it never seems like we have enough money for everything we want to get. Retirement will be 30+ years without earned income so make sure you plan wisely. It is great Sunday evening knowing that you don't have to get up and go to work zero dark thirty Monday morning. After 14 years of retirement my biggest problem nowadays is putting things off. I use to never let anything go. If there was anything to be done then I did it immediately. Now I don't give a shit most of the time. I know if I don't do something today no big deal because I can always do it tomorrow. |
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Well, I'm an engineer (have also worked in IT) and about to find out. Have a decent 401k and a traditional retirement plan. Will sell my Seattle area house and some property I have.
It's not so much a stressful job but just one that has the following: Very little praise No upward mobility for 30+ years (not just me, virtually all of my age cohorts who are male) Stupid processes to follow Almost no technical challenge Good income and benefits Bosses who aren't leaders, just attendance takers and hall monitors Just a general dullness and dissatisfaction. A chance to get a layoff voluntarily with severance--out of here. Seattle area really starting to suck: homeless ugliness and filth, traffic, cost-of-housing, lunatic politics. |
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I retired from power plant 5 years early and enjoying it. The one thing I did 5 yrs before I retired is kept a spread sheet on everything we spent each month. Don't forget insurance for everything, make it detailed. One thing most people cannot tell you for sure is what exactly they spend a month. I mean everything from cash to gas to food, insurance, intertainment ect. 1st thing my finance guy ask is how much do you need per month. I knew for sure and then I padded it by 25%. Have a cash emg backup in a savings account that you can live normal for at least 2 years should you have to and don't touch it unless an emg. Spending.... if you cant pay for it now you don't buy it. Plan for hobbies in your spending because you have a lot more time to enjoy life and that cost. Automatic vacation fund. each month put in $ for fun. Do this and it will make it a lot less stressful. Enjoy life its too short.
Try simulated retirement. Take only half of monthly income your making now and live normal. Put the other half in savings during test. Do this for 6 months or so. See how it goes but make sure you do everything bills cash all of it. That alone makes a good tool for retirement planning.
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I retired at 37. Â I'm 50 now.Â
You'll need more $ than you think.  Investment cycles can take away just as easily as they reward. More time on your hands means more time to spend, invest in things, etc... The abilities/energy that allowed you to earn and retire early - don't just simply turn off - you have to direct that energy into something. Hobbies, projects, investments... not all investments make money. None of your friends can go play with you... they have to work - soooooo - make sure your hobbies are engaging enough to keep you busy - and still not spend all your dough.... Or you'll drive your wife nuts! Before you retire - make sure you already have every single bill / mortgage paid off. Oh and you already own a couple vacation homes right? And you've already gone through the phase of "rewarding yourself" right? Ie - (had the sports cars and grew tired of them) (decided to stay married and not chase the tail) IMO you need 10 million banked to retire and not worry.  This way you can still lose half and be semi OK. |
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OK, you should sit down with a professional and discuss this. Doing research yourself is great and I would do that too, but there is software and resources available to financial planners that isn't readily available to the general public without a hearty fee. Even then, you need experience and education house it.
On top if that, there are pitfalls to any retirement you need to discuss with a professional who is a fiduciary. Full disclosure.....i have been in financial services for over 9 years and am a CFP. I know some people think they can do it themselves, but few can, and even then you want advice from someone who is not making emotional decisions about your money (instead is making logical decisions). |
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My cousin and her husband retired 4 years ago at age of 47/51. They were both biologist and worked for state forestry service for 20+ years and had a landscaping business on the side where they specialized in high end Japanese Koi pond...they were featured several times in various publications. They saved up a little over 1 million dollars in cash and assets and cashed everything in and moved overseas to South America. They live in a small community (about 20 couples) of retired Americans where they built their house. They got bored after a year of just playing so they started a small business where they buy land and then build a house and sell them to other Americans who want to retire there. They don't make much money doing it but they are not loosing money and the have fun doing it. Last year they purchased about 20 acre of land outside the city and couple horses and they are building a horse farm...they always loved horses. Now my cousin gives riding lessons, they rent out stables to other horse owners and couple other things. They said that it was great just having fun and playing but after a while it gets old and missed being productive so they had to do something. Their businesses don't make much money but it isn't loosing any either and they do it to enjoy their life.
My wife and I always had plans to retire and live overseas so we have made some plans already and purchased some land (about 5 acres) up in the mountains. We plan on building a house on it in about 10 years. |
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Our youngest will be 18 when I'm 59, 42 now. The biggest issue for us is the cost of healthcare. If we did not have to consider those costs we could probably retire at any time. Not sure I would welcome the lifestyle change though. Without a doubt, health insurance is my largest expense - luckily I'm quite healthy, but the cost of healthcare and health insurance sucks big time!!! It is easily my largest monthly expense in my retirement. |
| Don't underestimate the cost of healthcare as you get older. I retired at age 57 after working for 33 years for a medical manufacturer. The only reason I was able to leave was due to their retiree medical plan and access to good healthcare. If I had to venture out on my own, I'm not sure i would have been able to swing a policy for both my wife and I. With that said, I have NEVER regretted retiring early while I am still healthy enough to enjoy things. I took an entire summer off my first year and motorcycled to Alaska then through the entire western part of the U.S. I've been to Peru and plan on tackling Egypt later this year. A co-worker that stayed with the company for 5 years longer than me retired, then promptly had a massive stroke. Last I heard, they were teaching him to sip his nutrition from a straw. |
| One of the reason many young people who retire and move overseas is for the health care. If you retire early and stay in US you'll have to pay for your health insurance which is very costly. If you go over seas you can set up as a resident and qualify for that country's medical insurance...which are usually very cheap. In most countries you can get national medical insurance for $100/month or less. Many 3rd world countries have very high quality medical facilities that cater to American/Western customers. |
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Our youngest will be 18 when I'm 59, 42 now. The biggest issue for us is the cost of healthcare. If we did not have to consider those costs we could probably retire at any time. Not sure I would welcome the lifestyle change though. |
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Retired at 52. 31 years as a teacher. Have pension, 401k, and social security. A catastrophic illness ca wipe out saving if yo do not have a good health plan. A good health plan is a must - luckily I was able to keep my work insurance until age 65 when Medicare and a supplement took it's place at about the same monthly cost. |