But there is a growing community of individuals and couples who have amazing financial stories to tell. They did what most of us only dream of doing: They retired in their 20s, 30s and early 40s.
No, they didn’t inherit money or hit the lotto. They cut their expenses to bare bones, saved and invested well enough that they could tell their employers, “Peace out. I’m done.”
CNNMoney profiled some of these early retirees.
“Millennials are the first generation to shun traditional retirement and seek financial freedom instead — when income from savings is enough to cover expenses, and working becomes a choice, often long before the age of 65,” the introduction to the CNNMoney story began. “Becoming financially independent and retiring early, a process known as ‘FIRE,’ can be achieved at any income level by saving a high percentage of your salary, or cutting your expenses — or both.”
After working in finance for just seven years, J.P. Livingston, quit with $2.25 million saved.
Most people who are able to retire young did so by saving at least half their income, reported CNNMoney’s Anna Bahney.
Livingston did even better than that. She put away at least 70 percent of her income.
“About 60 percent of Livingston’s net worth came from savings, and about 40 percent came from investing, primarily in a combination of low-cost index funds, options and municipal bonds, Bahney reported. (And yes, they verified her numbers)
Like many early retirees Livingston, which is her pen name, writes a blog — TheMoneyHabit.org — that can bring in additional income.
The FIRE movement is robust with devotees. There’s a forum on Reddit just for people interested in early financial freedom.
Chris Reining quit his information technology job at 37 after saving more than $1 million. He lives off his investment income and income from a blog, which help in quitting “your soul-crushing job.”
How did he do it? In a Q&A with The Washington Post he said he and his wife, “Renovated a junky house into a nice one, kept old cars while our friends drove fancy ones, biked to work instead of driving, cooked at home and went out to restaurants less, and it all just added up to saving more than half of what we earned. We invested this surplus as we went, never inflating our already-luxurious lives, and eventually the passive income from stock dividends and a rental house was more than enough to pay for our needs (about $25,000 per year for our family of three, with a paid-off house and no other debt).”
I’m impressed by the commitment of the FIRE folks. They are truly on fire for financial freedom. But at the same time, I wonder if such stories make a lot of people feel that they gave failed. To be fair many of the people retiring early don’t have children and the expenses that go along with raising a child, such as saving for college. Many also earn money from various ventures, which means they are still working even if it’s for themselves.
Still, above all, to retire early you have to embrace frugality. That’s a hard thing when conspicuous consumption is all around you.
“While many have found success with the FIRE movement, the truth is that most people would never be happy living such a lean lifestyle, if they could sustain it at all,” wrote Eric Rosenberg for The Balance.
We all can learn a lot from early retirees. They show us the possible by pulling back on what we think are necessary expenditures.
As Rosenberg writes, “If you can take small steps to cut expenses and grow savings, you might just find yourself on track for an early retirement, too — maybe not by 30, but certainly well before you turn 65.”
Have you retired early? If so, how did you do it? Or on the flip side do such stories make you feel bad about your financial choices? Do the stories seem realistic for the average person? Send your comments to firstname.lastname@example.org. Please include your name, city and state. Put “Early Retirees” in the subject line.
Retirement rants and raves
I’m interested in your experiences or concerns about retirement or aging. What do you like about retirement? What came as a surprise.
If you haven’t retired, what concerns you financially? You can rant or rave. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to email@example.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
Last week I asked: Do you have a side hustle that’s help you fund your retirement? Tell me about it.
More than 44 million Americans have a side hustle, according to a Bankrate.com released last year.
Bob Larkin from Tempe, Az., wrote, “I have always been a fan of side hustles and therefore I have always tried to turn hobbies into money. The majority of my career was spent managing the environmental science and archaeology projects for a large consulting firm. In addition, beginning 20 years ago, I also began teaching online as an adjunct at various colleges and universities. My original plan was to save everything that I was making from teaching and apply it toward retirement. Life became very expensive, however, and the direct separation of the two incomes did not occur cleanly. It is a great idea to plan to increase your sources of income. In my case, I found teaching online to be extremely convenient, as it can be done from home or pretty much anywhere. It produced not only direct income through the years, but it also substantially increased my future Social Security income.”
Cathy Ries of Duncans Mills, Calif., wrote, “My husband and I are 68 and each retired within the last four years. Though savings never seems to be enough to feel secure, especially with the fear of an unexpected health crisis, we retired to our dream location on the northern California coast. I have always believed in multiple income streams, so besides taking all possible advantage of IRAs and 401 (k)s, we scraped up the cash to buy a fixer-upper during the Recession, and struggled to keep my ‘side-hustle’ — a small gift store — in the black while continuing to work our day jobs. The side hustle” has paid off beyond our expectations, giving us a net yearly income of about $40,000 since retiring while requiring each of us to work only about 12 hours a week. So right now we are feeling pretty good about our retirement prep and choices, but we are always aware that another economic downturn could wipe out some of our savings and reduce our business income.”
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