Five Key Points to Consider When Early Retirement
Going towards early retirement, whether you are in the middle of your career and just want to shave for a few years, or you are early in your career and want to shave for a decade or two, is like working really fast. long runs on uneven surfaces. You can see this stunning finish line in your head, but there are many questions to overcome first, and there is real potential for something unexpected.
This post was originally published on The Simple Dollar .
Almost all of the financial success we experience in life comes from thinking carefully about our options and making smart decisions. This is true from the little things, like whether to buy pasta in the store or not, to big things, like early retirement.
If you like the idea of spending money below your income level throughout your career in exchange for early retirement or expanding career opportunities – and I really like it – then I encourage you to think about these five key things very much. thoroughly.
1. Children will almost certainly delay your early retirement.
I would be “retired” right now if I didn’t have children. Since Sarah and I have decided to have kids, my “retirement” is likely to come shortly after our youngest high school graduates and he goes to elementary school.
This is a pretty big change, but it reflects the reality and cost of having children. I don’t regret my choice to have children, but I also don’t deny the financial impact they have had on our lives.
If you are not neglectful, children spend a lot of money. You feed, dress and house the child for eighteen years. You are providing this child with toiletries, educational materials for this child, household items for this child, and medical care for the child. You can also buy gifts and treats for your child at different times.
Also, having a child affects your career. You are about to take a vacation for your child. Your child will absorb the free time that you could spend on a part-time job, on self-improvement or career growth. Your baby will also eat while you sleep, especially when young, but also during adolescence.
This does not mean that having a child is not enjoyable. This is very helpful. However, these rewards are very personal and do not appear on the balance sheet.
If you are planning to have children – or you already have children – and you are also considering early retirement, you need to recognize that having children will slow your progress towards that goal. Consider this when making any decision.
2. You will not “keep up with Jones”
If I look up and down the block we live in, almost everyone has newer cars than ours. Our two cars are currently seven and thirteen years old, and the oldest car owned by any of our neighbors is also around seven years old, according to our best estimates. In other words, we drive old cars around our neighborhood.
My kids are close friends with a few kids from home, and they all have nifty toys and gadgets that far surpass what our own kids have. It’s the same with adults in every home.
The thing is, I could get really pissed off. I might have envied it and wanted to buy a new car or a bunch of new gadgets to “keep up”.
But why? How does that really fit in with what I want out of life?
Despite the fact that I have such a point of view, there are times when I feel a fit of jealousy. Sometimes I want to have everything they have, although I know in a broader sense that I am making the best choice for myself in the long run.
You’ll have to deal with this contradiction all the time, and when you decide to “keep up with the Joneses” – or keep up with people in your social group, or keep up with people in your online communities – you end up paying the price for achieving your early retirement goals.
Buying things you personally value is okay, but when that value is exaggerated out of the urge to “keep up,” it’s a purchase that ultimately has little long-term value. This idea is harder to master than it sounds, but essential for early retirement.
3. You must be somewhat selective about your “little treats”.
Many people fill their lives with small pleasures, such as stopping by a coffee shop for a morning latte and bagel, or stopping by a bookstore regularly, or stopping by a convenience store in the evening for six packs of beer.
Often times, people consume a lot more “little treats” than they think. These little treats are often easily forgotten because they are cheap, consumed quickly (or simply added to collections without a second thought), and then completely forgotten within an hour or two.
The catch is that the costs of these small treats add up, while at the same time the frequency and forgetfulness of these treats makes them essentially meaningless in terms of providing long-term enjoyment. They deliver a very small, very short-lived burst of pleasure in exchange for a chunk of your future.
The best solution is not to give up the “treats”, but to arrange them so that you also get the joy of waiting and can no longer be forgotten. You can get almost as much joy out of a monthly café visit, for example, as a daily stop, because that monthly stop is a real treat and seems special.
Mastering this distinction and avoiding the daily and weekly routines that are centered around small pleasures is a very important key to any financial situation, but many people choose to view this change as an utter misery. However, without it, the resources needed for early retirement simply flow straight out of your pockets, without building any future for yourself, and at the same time, you sacrifice the expectation and “feature” of many pleasures. in your life.
The transition is difficult, but necessary.
4. You will be criticized by people you trust who think you are a fool.
In fact, you’re probably better off just keeping your plans to yourself in a mixed company, because you’ll almost always be greeted with disbelief and odd criticism when you mention your plans.
Most people simply do not agree that early retirement is possible even for themselves or for people of their approximate income level. Remember, 76% of Americans live paycheck to paycheck , and paycheck to paycheck life is the exact opposite of early retirement. You cannot retire early if you live paycheck to paycheck, which is why 76% of people in America immediately ruled out early retirement for themselves. Even among the rest of Americans, many are saving for normal retirement or even somewhat late retirement.
The idea that someone is doing something else is usually quite critical, and you have to admit that you will hear some criticism – mostly unfounded – if you choose this path. People will generally tell you that early retirement is not possible, or they will imply that you have to live as a hermit, although neither is true.
Don’t let such criticism bother you, but know that it will come. Know how to handle it politely. My typical answer is that even if things do not go the way I want, I’m quite happy with my life right now, and I’ll have enough for a traditional pension.
5. You must have a plan for what to do after you “retire.”
Let’s say you retire early. You ended up working, say, at the age of 50 or so. What are you going to do then?
At this point, you have more than three decades left in your life, most of which should be associated with good health. You suddenly have a lot of free time. How will you fill it?
The reason to reflect on this question now rather than later is that if you don’t have a good vision for this time, why are you retiring early? Without some kind of plan for the years after retirement, early retirement is useless.
For me, retirement is more of a tool to start a new career that won’t necessarily bring a lot of money, but a lot of personal pleasure. The day when I leave “work” is not the day when I become idle. This is the day when I move on to new plans.
What are your plans? And, if you don’t have these plans, why are you retiring early?
Final thoughts
Early retirement is not an easy path. This is what is fraught with temptations, distractions and big questions about why you are doing this at all.
If you think about these things early on, before they hinder your progress, you can tell the difference between success and failure.
Let these ideas be food for thought as you think about your own path to retirement, early or not.
Five Key Points to Consider When Planning Early Retirement | Simple dollar