OT: Early Retirement

[IUHusker]

As someone in their Mid-30's dreaming about never working again.....

Anyone one here retire early (like before 60)? If so how soon and what financial benchmarks were key in doing so (Paying off home/kids out of college/etc..)

 

[HUSKERFAN66]

As someone in their Mid-30's dreaming about never working again.....

Anyone one here retire early (like before 60)? If so how soon and what financial benchmarks were key in doing so (Paying off home/kids out of college/etc..)

Every one has that dream and goal. But unfortunately unless you win the lottery, have a rule of 85 job, invent something and sell it for millions, inherit from a rich uncle that you didn't know about, or spill hot coffee on your lap and win a huge lawsuit.... financially early retirement is more of a pipe dream than reality.

You might be young enough that social security won't be a factor. At my age I have to work until 70 to maximize it which is fine with me because I don't plan on completely retiring until 75.

 

[TruHusker]

As someone in their Mid-30's dreaming about never working again.....

Anyone one here retire early (like before 60)? If so how soon and what financial benchmarks were key in doing so (Paying off home/kids out of college/etc..)

Not sure how to exactly answer this but here is a shot.

I am now almost 65 so not 60 but I have retired at least three times before.

Not enough room to post all of the things that can come up, here are a few:

What are you going to do for health insurance until age 65?
Do you have a pension or are you counting on IRA/401k investment returns?
How much debt do you currently have? (Note I really do not want to know)
Why do you want to retire and what do you want to do after you retire? Travel, build something, spend time with family even though they will be busy.
Do you have a spouse and will they retire at same time - I ran into this one, wife wasn’t ready so what do you do by yourself?
What looks like a lot of money now at say age 40 may not be as much in 25 years given inflation.
Do you have any passions you want to pursue to keep you busy? I have been in education and I keep getting opportunities to help kids, currently helping spec ed kiddos and although it doesn’t pay much it does give me some meaning for my life.
Without doubt, ALWAYS get rid of debt. Huge Dave Ramsey fan, owe no man, makes life much much easier.
What your health like? You won’t get SS until after 66+ depending on your age and it is based on highest 35 years. Do you have enough points to qualify for it? Check with them.


I could go on, I thought when I was younger I would work forever as I enjoyed it. The last years in school administration about did me in. I still “like” work but only do it because I want to not because I have to which is huge! My best advice is know what you really want to do and go for it. I know people that moved to Florida and hated it, others that quit in 50’s and never looked back.

 

[JohnRossEwing]

I teach and I don't see myself ever really retiring. The summers off are boring enough and make me realize that I would lose my mind having nothing to do all day everyday. I will eventually just coach and sub, but I never see myself totally retiring.

With that said, I think one key will be owning some rental properties...you can buy them now (maybe) and that can be a nice source of income for you in 20 years.

 

[ThrowBones92]

Not sure how to exactly answer this but here is a shot.

I am now almost 65 so not 60 but I have retired at least three times before.

Not enough room to post all of the things that can come up, here are a few:

What are you going to do for health insurance until age 65?
Do you have a pension or are you counting on IRA/401k investment returns?
How much debt do you currently have? (Note I really do not want to know)
Why do you want to retire and what do you want to do after you retire? Travel, build something, spend time with family even though they will be busy.
Do you have a spouse and will they retire at same time - I ran into this one, wife wasn’t ready so what do you do by yourself?
What looks like a lot of money now at say age 40 may not be as much in 25 years given inflation.
Do you have any passions you want to pursue to keep you busy? I have been in education and I keep getting opportunities to help kids, currently helping spec ed kiddos and although it doesn’t pay much it does give me some meaning for my life.
Without doubt, ALWAYS get rid of debt. Huge Dave Ramsey fan, owe no man, makes life much much easier.
What your health like? You won’t get SS until after 66+ depending on your age and it is based on highest 35 years. Do you have enough points to qualify for it? Check with them.


I could go on, I thought when I was younger I would work forever as I enjoyed it. The last years in school administration about did me in. I still “like” work but only do it because I want to not because I have to which is huge! My best advice is know what you really want to do and go for it. I know people that moved to Florida and hated it, others that quit in 50’s and never looked back.

Great advice and things to think about, thanks for sharing!

 

[IUHusker]

Agree - Debt is everyone's primary obstacle to retiring early, (also a big DR fan).

Also when I think of retirement - its quitting the office job, maybe having a few rental properties and doing some day-trading (outside of my 401(k)).

When it comes to what I would do with my free time, I think I could manage. Books, enjoy family, college football, maybe go back to school (wife works at a college so I could take classes for free), cooking, etc..

My goal is 60 - but would love to do it much much much sooner

 

[TruHusker]

I could go into great detail on SS and Medicare and all that. I incorrectly said you could not get SS until age 66+ which is not true. You can begin reduced benefits at age 62 and they are reduced 25-30% compared to your FRA (full retirement age) whenever that is for you. For me it is 66 and each year you wait after your FRA nets you 8% more on your benefits up until age 70.

Medicare is available at age 65 but only covers about 80% of the bills so you need a supplemental plan. Added cost when you figure out of your SS they take out Medicare and you still have to buy a supplemental and drug plan, not inexpensive.

The one thing that I am seeing although it has not hit me yet is taxes. I have a pension and with SS when I draw it combined with my wife will take care of us. If you have tax deferred money you have to start taking that out at age 70.5 and start paying the tax man. Where we are at we don’t have much for deductions so yep the tax man cometh and he always gets his share.

And yes, I have a couple rentals, wish I had at least two more. 15 years to pay them off and then you have a steady income stream. Say at age 65 you have four paid for and each nets you 500 a month it isn’t hard to do that math. Trick is get them paid for ASAP before or shortly after you retire.

 

[GretnaShawn]

Many people can retire before 65, most don't make the choices to (I am not). You need to very disciplined and live a life of somebody in the 1950's (unless you have a very high salary). That means; small house, no cable, limited vacations (or cheap vacations like camping), inexpensive car that you keep for many years, cheap cell phone, no eating out, etc.

If you ever visit reddit, there is a sub there that is called financial independence. They're a good resource.

 

[Dean Pope]

Unless you are in a career that allows for early retirement or make a six figure plus income, I think your best shot is to live a simple, debt free lifestyle. Always drive a car with 150,000 miles on it, never take an expensive vacation and do not eat out. Forget those season tickets to Husker games. Save a third of your income or more. Live in a small, affordable house that you can pay off early. That kind of lifestyle does not appeal to most people, but if you are willing to do that you've got a shot at retiring early. How early depends on how soon you get started as a max saver.

 

[RealTucoSalamanca]

I will retire, again,in 5 years at the ripe old age of 55.

 

[GeorgeFlippin]

“You can keep your retirement, and your so called social security, big city turn me loose and set me free.”

 

[SnohomishRed]

Most people who have saved reasonably will go at 62 if you have options for insurance other than paying a 1000/mo. If you go at 62 you can still make 17000 with no penalty. So i guess i feel the best way is to ease into it which is what i am doing.

I do think it takes much less to retire than many financial advisors will state

 

[SOCALHSKR]

As someone in their Mid-30's dreaming about never working again.....

Anyone one here retire early (like before 60)? If so how soon and what financial benchmarks were key in doing so (Paying off home/kids out of college/etc..)

retired at age 62, very happy with retirement. at age 30+ there is just one requirement -money- save it, earn it, inherit it.
so many things will change in the next 25 years you can do very little in specific planning, various government programs will be a key part but what will they be in the future?
Paying off a home is not essential, better to take out a mortgage if rates are low and put the most you can into higher paying investment.
One of the most difficult decisions is when and if to buy long term care insurance.

 

[TheBeav815]

Typically you get more out of investing wisely than you do paying off your house early. Let's say you got a 4.3% mortgage rate and you can average 5.5% returns on your 401k. You'd actually lose money by paying down the house early and not letting your compound interest run on the investments. If you have extra income, invest, invest, invest.

And investing means buying a solid company that pays dividends and holding, not trying to gamble on the market and be buying and selling in and out of stuff all the time.

The short version is live a little leaner than you're tempted to and invest every cent you can stand. If you company gives a 401k match make damn sure you contribute enough to get the full match out of them. That's giving away free money if you don't do that.

But make no mistake, you gotta earn the money on the front end. If you think you'll become a millionaire by living tight on $20,000 a year, you won't. You have to invest time and energy (and sometimes money) into upgrading your earning potential. Personally I work a job that I feel pretty "meh" about but it pays well with excellent benefits and I've launched a side job training dogs for extra income.

Save where you can. If you can fix it, don't throw it out. If you can fix it yourself, don't hire it done unless your time earns more money than you spend on the repair guy. Don't buy a new car every 5 years, get a used one and drive it til it drops. Don't waste $7 every morning on a foofy Starbucks when you could brew your own for a few cents.

A lot of it comes down to deciding between trying to look rich now or trying to be rich 40 years from now. It takes a lot of patience and dedication.

 

[Redscarlet]

Max out on you’re Roth IRA every year 5,500 unless you are 50+, in which case you can put in 6,500 a year. Same goes for your wife too.

It’s a no brained that the earlier you start saving for retirement the quicker you can retire more comfortably...

You still have to not live beyond your means but don’t forget to enjoy life along the way once you decide to pull the trigger.
I’ll be 61 in December and retired when I turned 60 and loving playing golf twice a week and not very often on weekends.

 

[HuskerO58]

Unless you are in a career that allows for early retirement or make a six figure plus income, I think your best shot is to live a simple, debt free lifestyle. Always drive a car with 150,000 miles on it, never take an expensive vacation and do not eat out. Forget those season tickets to Husker games. Save a third of your income or more. Live in a small, affordable house that you can pay off early. That kind of lifestyle does not appeal to most people, but if you are willing to do that you've got a shot at retiring early. How early depends on how soon you get started as a max saver.

Spot on!

*Except about season football tickets to Husker games...

 

[Charlie Marlow_rivals363743]

maybe Urban will have some insight into this.

 

[Pennsyhusker_rivals246774]

I retired from my university at age 54.

The key is to be debt free and have some savings. I bought a sheep ranch. Sell wool and lamb chops. Lol.

 

[HuskerHusaria]

I retired from my university at age 54.

The key is to be debt free and have some savings. I bought a sheep ranch. Sell wool and lamb chops. Lol.

Pardon my curiosity, but which subjects did you teach?!

 

[DerHusker_rivals270018]

I retired from my university at age 54.

The key is to be debt free and have some savings. I bought a sheep ranch. Sell wool and lamb chops. Lol.

Lamb chops are great but lamb shanks are Yumm!

 

[Lincoln gopher_rivals]

Unless you are in a career that allows for early retirement or make a six figure plus income, I think your best shot is to live a simple, debt free lifestyle. Always drive a car with 150,000 miles on it, never take an expensive vacation and do not eat out. Forget those season tickets to Husker games. Save a third of your income or more. Live in a small, affordable house that you can pay off early. That kind of lifestyle does not appeal to most people, but if you are willing to do that you've got a shot at retiring early. How early depends on how soon you get started as a max saver.

I can't entirely agree with what you said. I just retired at a few weeks before my 60th birthday. I worked for the same company for 32 years, have a company funded pension and a 401k. My family lived in a mid sized house in a 30 year old neighborhood, it is paid for. Nothing cheap, nothing expensive. Had new to 10 year old cars. Took vacations and so on. My point is you, don't have to live like miser, just be smart. Max out the 401k contributions and get your house paid off. I am lucky, because I can get health insurance at a reduced rate forever. A benefit of those 32 years of employment. You can retire by 60, just be smart.

 

[TruHusker]

Well, like most threads on here, this one is getting interesting. Dean isn't too far off but I think he exaggerates just a bit. First is do things on the front end that will help in your income earning potential which doesn't mean getting a Doctorate in Under Water Basket weaving. Too much money is spent on higher education needlessly. And I was formerly in that business at the two year level. I have read of people who made very little in their lives and retired very wealthy so it happens but not without planning.

For those who care - know the rule of 72. Divide the return on your money into 72 and tells you how often it should double. So a 10% return doubles every 7.2 years or a 5% return doubles every 14.4 years. When I taught personal finance in HS, kids were floored by how much they paid for a house that they mortgaged for 30 years. Go 15 and get it paid off. The interest rate is not the killer, time is. Finance a $200,000 house at 4% for 30 years and you pay $143,738 in interest whereas a 15 year on the same amount is $66,287 but yes you do have higher payments. Another one I firmly believe in is to not calculate what you can afford if your wife or significant other is working. We decided my wife should stay home with the kids for the first several years and it was worth it in the long run but we didn't overextend ourselves on house payments.

Everyone is correct, live within your means or slightly below and invest - not just save. Pay cash whenever possible. Yes I fixed up wrecked cars and trucks for years and saved a ton of money on cars - now days I just purchased a new Outback and looked at buying a new pickup, all cash. Nice to be able to do that now in my "old age." So it comes down to what you want now versus what you want later.

The "what to do with yourself" I am finding is more challenging than the money part. And yes, it is possible to have too much money saved up! We are glad we are at that point where we can help others in financial ways which for the most part does not include our two kids - they need to learn to earn and invest on their own.

For my final contribution, perhaps, I had an article from the Business and Finance section of the OWH several years when I was teaching HS. There was a survey of the top three ways people planned to have enough money to retire, I don't remember the order but it was something like this:
1. Inherit it
2. Win the lottery
3. Sue someone

Notice none include working harder, smarter or saving. Develop a plan and stick with it. Invest 15% at least and take more risks especially when you are younger. You will have a million before you know it.

 

[Lincoln gopher_rivals]

Typically you get more out of investing wisely than you do paying off your house early. Let's say you got a 4.3% mortgage rate and you can average 5.5% returns on your 401k. You'd actually lose money by paying down the house early and not letting your compound interest run on the investments. If you have extra income, invest, invest, invest.

And investing means buying a solid company that pays dividends and holding, not trying to gamble on the market and be buying and selling in and out of stuff all the time.

The short version is live a little leaner than you're tempted to and invest every cent you can stand. If you company gives a 401k match make damn sure you contribute enough to get the full match out of them. That's giving away free money if you don't do that.

But make no mistake, you gotta earn the money on the front end. If you think you'll become a millionaire by living tight on $20,000 a year, you won't. You have to invest time and energy (and sometimes money) into upgrading your earning potential. Personally I work a job that I feel pretty "meh" about but it pays well with excellent benefits and I've launched a side job training dogs for extra income.

Save where you can. If you can fix it, don't throw it out. If you can fix it yourself, don't hire it done unless your time earns more money than you spend on the repair guy. Don't buy a new car every 5 years, get a used one and drive it til it drops. Don't waste $7 every morning on a foofy Starbucks when you could brew your own for a few cents.

A lot of it comes down to deciding between trying to look rich now or trying to be rich 40 years from now. It takes a lot of patience and dedication.

Great points, your comment about paying off the house is correct, just have it paid for by the time you want to retire.

 

[Pennsyhusker_rivals246774]

Pardon my curiosity, but which subjects did you teach?!

Philosophy and comparative religion

 

[JohnRossEwing]

Philosophy and comparative religion

Did you only ever teach at a U or did you start off in HS?

 

[cornhustler]

As someone in their Mid-30's dreaming about never working again.....

Quit dreaming bud!!! Just DO IT!!!!



- Buy a duplex and live in one half, rent the other.
- Never carry any debt, anything on credit costs you more than the fair market value of said thing. Except an income producing property.
- Cars are notorious money pits - use public transportation, ride a bike or drive a 1990's Toyota Camry.
- Invest at least 50% of your take home pay into mutual funds.
- Don't have kids haha

Set the goal now and never deviate from that. Get pumped and attack it head on!

 

[Husker.Wed._rivals]

I retired from my university at age 54.

The key is to be debt free and have some savings. I bought a sheep ranch. Sell wool and lamb chops. Lol.

In the Dragnet movie Friday had to take Tom Hanks as a partner because his long-time partner retired to a goat farm in Ukiah. It was his dream.

 

[Husker.Wed._rivals]

www.caniretireyet is the site where people who have retired early or hope to gather.

From what I can see there, many of the young retirees find ways to live on low income, or find ways to hide income so they can qualify for max ACA subsidies. Many of them do work seasonally, blog, things like that. Many don't consider themselves "retired", more like not beholden to a 9-5.

Only you can decide what is right for you. What was right for me was to live quite frugally, but I have always had cable, a driving or flying somewhere vacation every year, ski pass, etc. I mean I watched my pennies, but didn't live like a monk. I am retiring soon at age 60 and am so happy I saved and stuck with a job long enough so the time I have left will be unworried and secure. I had a job all that time I didn't hate, so that helped.

 

[Dean Pope]

Spot on!

*Except about season football tickets to Husker games...

Ha! Yes, I knew that wouldn't be popular on this board! But I do think as a max saver, watching the games at home is the way most people would go. By the way, I agree with those who say not to pay off your house early. But I'm thinking smaller house on a 15 year mortgage, it will be paid off before you retire and then that money goes into savings as well. Definitely max out the Roth before doing anything else. Always do the company match though if your place of work has such a thing.

 

[Anon1727835823]

As someone in their Mid-30's dreaming about never working again.....

Anyone one here retire early (like before 60)? If so how soon and what financial benchmarks were key in doing so (Paying off home/kids out of college/etc..)

Hi urban!

 

[Dean Pope]

I can't entirely agree with what you said. I just retired at a few weeks before my 60th birthday. I worked for the same company for 32 years, have a company funded pension and a 401k. My family lived in a mid sized house in a 30 year old neighborhood, it is paid for. Nothing cheap, nothing expensive. Had new to 10 year old cars. Took vacations and so on. My point is you, don't have to live like miser, just be smart. Max out the 401k contributions and get your house paid off. I am lucky, because I can get health insurance at a reduced rate forever. A benefit of those 32 years of employment. You can retire by 60, just be smart.

I agree wholeheartedly. My max saver advice would be for someone wanting to retire earlier than what you did. I've heard of regular "ham & eggers" who have retired at 50 and even earlier just by living that simple, cheap lifestyle.

 

[Huskers=Best]

You should also check out http://www.mrmoneymustache.com/ for advice on “early retirement.” He takes the investing early and frugality approach to being able to retiring early. He also found a “job” in his retirement for something to do that could still make some money by doing custom construction work because it was something he enjoyed.

I think you definitely have to find something that you enjoy to do post retirement, so that you can still have that type of fullfillment out of life. Humans were made to do some sort of work, so if you have some passion that may not pay the best or whatever, doing the things possible to make that passion possible is something that is akin to early retirement, but does not demand that you have several million dollars worth of money passively earning money for you in investments (although you do want to have that avenue of income).

 

[Pennsyhusker_rivals246774]

Did you only ever teach at a U or did you start off in HS?

Taught at a prep school in Princeton for five years while working on my dissertation.

 

[chicolby]

This topic is an unhealthy obsession of mine right now. How much do you need? How to maximize your money and equity you have now? Etc.

Do you enjoy your money when you’re young and have able bodies or wait until you’re 70 and too tired and bad knees?

These are all individual questions and answers each of us has to make. You also “can’t take it with you” but don’t want to end up broke before you are dead.

There’s a lot of great advice in this post. I’m 46 and think I’m doing the right thing for me, but there are and will always be questions like “should I have been plugging money into my home vs using that money for other investments?”

In an ideal world, when I “retire” I’d like to have a small business that someone else mostly runs but that I have enough interest in it to still oversee a couple days a week.

 

[Husker.Wed._rivals]

This topic is an unhealthy obsession of mine right now. How much do you need? How to maximize your money and equity you have now? Etc.

Do you enjoy your money when you’re young and have able bodies or wait until you’re 70 and too tired and bad knees?

These are all individual questions and answers each of us has to make. You also “can’t take it with you” but don’t want to end up broke before you are dead.

There’s a lot of great advice in this post. I’m 46 and think I’m doing the right thing for me, but there are and will always be questions like “should I have been plugging money into my home vs using that money for other investments?”

In an ideal world, when I “retire” I’d like to have a small business that someone else mostly runs but that I have enough interest in it to still oversee a couple days a week.

I got to the really hardcore planning around age 52-53. By hardcore, I mean calculating different retirement incomes for different ages, savings rates, investment results, tax brackets, taxes in various states, stuff like that. All I can say is if I had a crystal ball that could tell me the exact month and year I will die, my planning would be much easier.

 

[grayhairedfreak]

Back in the mid 90s I subscribed to Kiplinger's Personal Finance magazine. They had a story of a lady that started right out of college at the company that utimately turned into America Online. She got tons of stock options along the way. When AOL went public she cashed out and retired at age 30. Her dad had to take time off work to attend her retirement party. Laughing

Short of falling into things like that, I agree with everyone else's advice. Live below your means, pay off debt, and pay cash.

 

[chicolby]

Back in the mid 90s I subscribed to Kiplinger's Personal Finance magazine. They had a story of a lady that started right out of college at the company that utimately turned into America Online. She got tons of stock options along the way. When AOL went public she cashed out and retired at age 30. Her dad had to take time off work to attend her retirement party. Laughing

Short of falling into things like that, I agree with everyone else's advice. Live below your means, pay off debt, and pay cash.

I think for 90% or more of the population, these general rules are perfect. Well, actually they are great for 100% of the population, but with a caveat. There are nuances like Roth IRA vs. Traditional IRA, max 401K, invest in real estate as an investment property, borrow against home equity because it can gain at a faster rate in a stock market vs. real estate growth, etc.

It can get rather complicated if you're looking to really maximize every dollar. It's also worth noting, that is why many of the "richest" people in the world are also up to their eyeballs in debt, because they are always getting access to as much cash as possible so they can use it to outgain their loan interest.

 

[SOCALHSKR]

I retired from my university at age 54.

The key is to be debt free and have some savings. I bought a sheep ranch. Sell wool and lamb chops. Lol.

If you are not financially knowlegeble or can team with some one who is this

I think for 90% or more of the population, these general rules are perfect. Well, actually they are great for 100% of the population, but with a caveat. There are nuances like Roth IRA vs. Traditional IRA, max 401K, invest in real estate as an investment property, borrow against home equity because it can gain at a faster rate in a stock market vs. real estate growth, etc.

It can get rather complicated if you're looking to really maximize every dollar. It's also worth noting, that is why many of the "richest" people in the world are also up to their eyeballs in debt, because they are always getting access to as much cash as possible so they can use it to outgain their loan interest.

You need to restate your real estate comment. the comparison isn't RE growth but rather interest rate to borrow vs. investment income from using the money not put into your house. Value of your house is not affected by that decision

 

[huskerfan1414]

How many on here own rental properties? Sounds risky? Thoughts? Homes in college towns?

 

[Buicklife]

I had an uncle that retired at 46 but he had about 10 years of high income and owned rental property.

Also, it didn’t hurt that his wife took a job at a phone company at age 18 and put in 30 years to get a 40k pension ( outstanding in 1984).

He never spent money on cars/clothes/homes. He lived simply and most importantly .... never had kids.

my grandpa had him in the stock market At a young age. He put a minimum of 20% take home into his investments.

He had more than enough when retirement came and kept his thrifty ways.