I recently Googled the term ‘early retirement’ to see how the media is chattering about this topic. Since I’ve been boring readers with this topic for more than 9 years, I felt I had a responsibility to keep up-to-date with how early retirement is being discussed in the media. As usual, the headlines were confusing and at odds with each other:
“My Dad Sacrificed Everything For Retirement. Then He Died At 58.” (Business Insider)
“Playing With FIRE: How To Retire Early.” (BBC)
“When Should You Retire? Not As Soon As You Think.” (Yahoo Finance)
“How To Retire As Soon As Humanly Possible.” (NY Times)
Taken together, these headlines are as clear as mud. In general, I’ve found that the media is often negative on the idea of early retirement, so I was happy just to see a little positivity in the mix this time. With the S&P 500 up +18% this year (following last year’s +24% performance), you would think there are a lot of readers looking to retire right now.
If you believe you are well-saved for retirement, but not sure if you should pull the trigger yet, let me be very clear on what you need to do.
- Double Check Your Numbers – Even if you have saved well, do some analysis to check your sensitivity to differences in inflation, health care costs, and market returns. We’ve been retired 8 years and have been lucky enough to have 4 years with +20% market returns. That’s not normal. What does your portfolio look like if we have a major downturn?
- Walk Through It Year-By-Year – Where will you pull spending money from in early retirement? Savings, investments, pensions? Where will you get health insurance? In our 8 years retirement, we had several pre-planned pivots between different ‘sources’ and ‘uses’. Early on, we had stock options to cash and bought our own insurance. Now we are largely living off savings and a pension – and have taken MegaCorp health insurance. We had that plan years ago.
- Stay Flexible For Future Income – Just because you are retiring, doesn’t mean you have to quit making money entirely. If you aren’t sure about your retirement timing, keep a shingle out for consulting or side projects. With $100 and 90 minutes time, you can set up a LLC and run it on Quickbooks. If nothing else, you’ll have some extra ‘fun money’.
I would say if you can positively answer these three simple questions about your potential retirement … it’s time to get retiring!
You may not feel you have the lifestyle of everything figured out, but you’ll soon have a LOT of time to do that. Start making some initial plans of things to do in the typical buckets of retirement – travel, learning, fitness, volunteering, arts, and giving – and pretty soon an early retirement lifestyle will emerge. If after that, you think you might be bored, you need to work on not being so boring!
Take it from someone who has done it. When I quit working just short of my 50th birthday, I didn’t know if it was the smartest or dumbest thing I had ever done. What I learned is that if you have the desire & money to retire early, it’s time to do it.
Get going.
Image: Pixabay
MrFireStation 
Hello Mr. Fire Station,
May I ask how you were able to secure MegaCorp retiree benefits at age 49? My MegaCorp’s minimum age for retiree benefits is 55.
LikeLike
Most of the articles I see about retirement fall into four categories.
Your having a pension and health insurance from a Mega Corp is not the norm these days. Only government workers widely have these now.
I did not have a pension available at any of the companies I worked at except my very first company I worked at for two and a half years. This job was in the defense industry and there is no way the job would have lasted long enough for me to get a pension.
When I started working after graduating from college in 1982, 401(k) plans had been started only four years earlier in 1978. I started saving right away because I quickly realized that the 401(k) was as close I could get to a pension and I had to take care of myself. The other cornerstone of my retirement program always rolling my company 401(k) plans into a Self-Directed Brokerage Account that allowed me to directly purchase dividend paying stocks at very low cost. In 1997, I was able to switch to a broker that offered 100 free trades a year with automatic dividend reinvestment. Today the firm gives me unlimited free trades.
401(k) plans come with a lot of responsibility because it puts you charge of your financial future. They also come with flexibility because you can change jobs to increase your income without losing your pension. This roll your own approach was also a blessing in that it forced me self-educate about investing. A 401(k) based retirement means that you really don’t retire. You become an investor who earns enough that you don’t have to work anymore to support yourself.
LikeLike
(It’s been a while since I’ve posted. Sorry…it’s been a busy year.)
I’m now in my eighth year of early retirement, and while life has certainly thrown a lot of curveballs during that time, it was still one of the best decisions I’ve ever made in my life. In retrospect, I could’ve have done it even earlier as my assets have nearly doubled in the time since early retirement, given the unusual market growth we’ve experienced. (Again, hind sight is 20/20…Who could’ve predicted those incredible returns?!) I lost my wife of 38 years earlier this year, and undoubtedly the greatest value of retiring early was the extra quality time we experienced through the first seven years of our early retirement. So put me in the “believer category” of retiring as soon as the numbers make reasonable sense to do so. Flexibility is the key, and freedom is a gift.
LikeLiked by 2 people
Welcome back, Thom – so very sorry to hear about your wife. I have two brothers that have gone through that and I honestly can’t imagine what that is like.
So what are you doing with the extra $ in your portfolio? I know you are significantly invested in real estate, but maybe you’d sell a few properties to splurge on something?
Our portfolio isn’t up 2x in the 8+ years since we retired, but it’s up enough that we bought a vacation condo in FL with cash. We now have our place in the sun. Maybe a place for you in the Keys this winter?
LikeLike
Other considerations before retiring:
I really enjoy your blog and you are a good photographer!
MJ
LikeLiked by 1 person
Thanks SO much, MJ! Very good points. I started helping my parents with their finances a few years ago. My Dad passed away earlier this year and now I’m helping my Mom with all of the issues the “survivor” has to deal with.
LikeLike