Early Retirement: It’s Not As Risky As You Might Think

Slicing Through Money's MysteriesLike you, I’ve been inspired by the teachings of the Financial Samurai for some time now. I enjoy his constantly bullish take on life, his flame-breathing enthusiasm for hard work, and his interesting tales involving of money and rental properties.

But there’s one place we seem to disagree, and that is in the area of Early Retirement (I actually agree, just not by 30). For those that don’t know me, I’m a big proponent of that lifestyle, and I write about it frequently on my own blog. Mrs Money Mustache and I quit our own cushy corporate jobs over six years ago in order to raise our little kid, and we haven’t looked back since then.

Sam, on the other hand, occasionally likes to poke fun at the idea of early retirement. I’ve collected a few quotes from him on the matter.

Let’s be honest, writing about retiring in your 20′s and 30′s is a gimmick.

Apparently, there are people in this world who actually work 40 hours a week or less and complain why they can’t get ahead!

I love to work and the ideal amount is 2 to 4 hours a day. I think if everybody were able to work less hours a day, they’d probably love their jobs that much more and last that much longer too. 

 

On top of that, I’ve seen Sam speculate that several million dollars in net worth would be required to retire, and I’ve read case studies on this site suggesting that people might not want to walk away from their $250k jobs, even after they’ve been working them for 16 years.

That’s cool“, I always say, “To each his own“. The MMM family is still happy with our own early retirement and the party goes on.

But recently there have been some challenges thrown down between our two camps. Financial Samurai has been popping up around the web, saying things like ,”Mr. Money Mustache should be a hedge fund manager for being able to show investment gains during the 2008 downturn!”  (My main area of curiosity.  Making money during the downturn would be an incredible feat.)

I know a friendly ribbing when I see it, and I think the Samurai is really challenging me to answer this question: “How can you retire at age 30, with a family, on less than a million bucks, and still live a good life and even survive gigantic financial turmoil like we’ve seen?“.

Here’s The Answer: Very easily! Let me tell you a little story.

I didn’t know much about retirement when I set out to become financially independent. I was only 21 years old when I got started, and I hadn’t yet learned about retirement planning, savings rates, or even the basics of stock investing. The only things I understood were how to earn more money (working hard at my job), and how to spend less than I earned (buying less stuff than my friends did).

As time went on, I learned more things. I read about a hundred books on economics, finance, and investing over the years. I learned how to renovate my own house and take care of my own cars. I even read about health and fitness, nutrition and cooking. I got married and my wife learned a bunch of skills too. In addition to her main job in software project management, she got her real estate license and became a badass web developer. We moved to the US together and learned about the new culture in this great and business-friendly country. Most importantly, we had plenty of fun and met lots of people in our new hometown – people with many additional skills that were happy to share them.

As the years passed, the habit of stashing away cash and the new skills started to mix in interesting ways. I was able to move from my first house, which I had renovated from a 1978 junkpile into something trendy and modern, and rent it out at a profit. This paid our mortgage on a second house, which I also renovated. The hobbies of fitness and biking paid off in the form of being able to share one older car instead of two newer ones, saving thousands per year. These savings could then be profitably invested in stocks due to the better investment knowledge. Weird synergies like these continued.

Eventually, we realized we had built up enough passive income from stock dividends and rental houses to sustain our low-cost lifestyle, so we quit our office jobs and had a baby.

But just like Sam, we both still love to get things done occasionally. We took up part-time jobs doing things we enjoyed, from home. She would occasionally help a friend buy a house and earn a real estate commission, and I would occasionally do some carpentry in my garage or around the neighborhood. At other times, when family duties or long vacations called, we would not work.

Things didn’t always go smoothly.  The Great Financial crisis hit in 2008, and caused the worst recession since the Great Depression. The value of my retirement savings in stocks was sliced in half. I was also stuck with an extra house I couldn’t sell. We had been blindsided by something we never could have predicted a few years earlier.

Were Our Early Retirement Dreams Shattered?

Amazingly enough, they barely took a hit! Most US companies continued to make their dividend payments at a barely-reduced level throughout 2008 and 2009 (many US companies cut their dividend payments to preserve cash eg financials, consumers, tech which made up 60%+ of the S&P500). The rental market remained strong enough to keep properties from sitting vacant. Sure, the stock prices were down, but who cares about stock prices when you’re not selling them?

We dialed back our spending for a year or two, continued to rent out the un-sellable house, and I even made a point of doing some extra work so I could afford to buy some of the stocks that had been beaten down to bargain levels.

Eventually, the economy recovered. Stocks rebounded, my rental income went up and I started working less again. Meanwhile, my little boy has made it to six years old now, and hanging out and learning with him continues to be my biggest job by far, just as it has been since he was born.

What does all this look like on a graph? I put my best estimate of the numbers into the chart below for your review:

This chart is based on the numbers from an old article on my own blog called “A Brief History Of The ‘Stash” (an excellent chronology). The key thing to note is that while stock prices and real estate values fluctuate wildly, dividend and rental income barely changes with a recession.

Addendum from MMM: Their after tax monthly expenses for a family of three is ~$2,000 and monthly after tax income from dividends, rental income, and part-time income ranges from $2,500-$3,000.   “Dividend X 10″ means the real annual figure is the amount divided by 10 eg $90,000 div income in chart = $9000 a year in real dividend income.

That’s a long story, but it’s supposed to be a lesson too. I am trying to show my more fearful friends that Early Retirement is not a risky or scary proposition. It’s pretty much just the same as a regular working life, except you have much more flexibility. This flexibility lets you adapt to any changes that might happen – financial, health, or otherwise, and continue to lead a good and happy life. The more flexible you are, the greater your chance of being happy, wherever your life takes you.

Overconsumption Habits Are Risky

A big part of this flexibility comes from having a bunch of complimentary skills. Imagine a workaholic double-career family who are so busy earning (and spending) $300k per year that they don’t even have time to clean their own house or cook their own dinner. These people feel “security” from their high-income jobs, but they are also locked into two expensive cars that they depend on even to get to the grocery store 2 miles away, a gigantic mortgage, $900 per month in extracurricular activities for their kids on top of the $3,000 in childcare or private school tuition expenses, and the list goes on…

This family is secure only as long as they both maintain their high-income jobs. Even a few months of job loss would leave them deep underwater with no hope of rescue. If an industry evolves and their skills become obsolete, they could be stuck forever, with bills they can never pay. If their roof leaks or the car breaks or the lawn needs mowing, these people don’t have the skills to solve their own problems without spending a ton of money. So they will always be dependent on earning ton after ton of money.

Let’s contrast that to the early retirees. With the mortgage paid off and no debt of any sort, these people have very minimal monthly bills (mine are only about $2,000 per month, and that includes raising a young child and living in a rather large house). They have savings equal to at  least 25 years of living expenses, which are invested to provide enough cashflow for the expenses, with plenty held back to keep up with inflation. They have the ability to cut their spending much further if hard times ever hit. Plus they have skills and personal connections that would allow them to earn income if it were ever needed. On top of that, they actually do earn occasional income, and save 100% of it, further growing the nest egg.

Where’s The Risk?

When you really think about the two lifestyles, does it really seem that early retirement is risky at all? I feel safer now than I ever have in my life. And the freedom is useful in motivating me to try things that I wouldn’t otherwise have time to do – like starting some low-key businesses in areas that interest me, and of course, a blog about early retirement!

So for those pondering early retirement, I’d like to offer some advice: if you do the hard work required to save for it, chances are you’ll automatically develop the skills to thrive once you are there. You don’t have to worry about what it will be like – just start the journey and let your life skills grow even as your cash does.

Love,

Mr. Money Mustache 

Sam’s Notes:  Thanks MMM for sharing your story and congratulations to you both for retiring early!  I’m glad you helped clarify what happened in 2008-2009.   I think one of the key points about early retirement is that it’s different for everybody.  One can work on their own things while retired, and consider themselves retired, for example.

America, Australia, Europe, and Canada are such easy countries to live in that it doesn’t take much to retire or survive.  We’ve got a social safety net, decent unemployment benefits, good public infrastructure, freedom, and many ways to make money other than through a traditional 9-to-5 job.

How To Make Money Quitting Your Job

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. Dan Thompson says

    “Sure, the stock prices were down, but who cares about stock prices when you’re not selling them?”
    And I’d add, you’re still receiving the same dividend payment (providing the company hasn’t slashed it of course). That’s the beauty of dividend investing and why IMO companies that don’t pay dividends aren’t worth investing in.

    I love your hustle, working on side projects as needed to stay busy and to earn a little extra cash in a crunch. Great post MMM.

    Dan

    • Jerry Curl says

      Dan, dividends were actually cut aggressively in 2009, and subsequent years in 2010 and 2011. Only in 2012 are dividend payout ratios and yields making a comeback.

      It’s funny how memories fade so quickly in the stock markets. Here’s just a sample article how the feeling at the time, and how it was becoming LESS looked down upon that companies are slashing their dividends. http://www.businessweek.com/investor/content/mar2009/pi20090319_775659.htm

      I for one would never retire at 30, no matter how much I had saved. There’s so many great organizations to join and things to do that also pays very, very well.

      • Dan Thompson says

        That’s a broad overarching statement. Some companies cut their dividends. And even if a company cut it’s dividend so it was only yielding 4% instead of 8% I’m still generating income while the rest of the market was getting the tar beaten out of it. Sure, that company could be getting hammered too but if I’m in it for dividends the pain isn’t as substantial.

        I don’t really consider MMM retired. If he is raising a child, managing property and working part on the side, that’s a full time job. I think he’s focused his energies towards things in which he loves to do (presumably?) and for that, I give him full marks.

        • says

          A much better classification for MMM and others like him is that they’ve reached a stage in their lives where work is optional, and they get to spend their efforts doing work that builds their souls as well as their pocketbooks. MMM works hard on housing/rental projects because he greatly enjoys it, and as a side bonus it increases his ‘Stash! He simply says early retirement so others can attempt to wrap their heads around it.

        • Jerry Curl says

          Yielding 4% vs. yielding 8% is a 50% decline.

          MMM isn’t retired as you said, hence the gimmick. But it’s OK. Everybody needs a gimmick.

  2. says

    I like your chart MMM. It’s nice that the net worth stayed somewhat stabled throughout the downturn. Your stock/cash came down quite a bit from the high, but your real estate investment more than made up for it. I see your point about acquiring more skills. I’ve been concentrating more on the day job and lack many of your skills. I can remedy that when I retire soon. ;)
    I also think working part time on something you enjoy does not cut into a retirement.

  3. says

    I achieved financial independence (38 y.o.) by investing in income property and multiple businesses. I returned to work because I enjoyed working. Now I have multiple income streams and happy doing what I enjoy. Priceless!

  4. says

    Very good timing on this as I just posted an article on Early Retirement Extreme. http://marriedwithdebt.com/2012/04/early-retirement-extreme/

    Sam did stop by and talked about why the two sides of this issue can’t come together (because they are locked in an insult war: “you are an evil workaholic,” and “No, you are a lazy, stupid bum.”)

    I agree that retiring early is much more doable than many think, and I agree that you can buy security now for cheaper than it’s gonna cost in 30 years.

    This does come down to one’s definition of retirement. “Workers” picture early retirees as couch potatoes doing nothing, while early retirees may be thinking of all the social projects they want to work on.

    Great post.

  5. says

    Thanks for inviting me to stop by with this post, Financial Samurai!

    It looks like the commenters here are equally positive about the idea of early retirement, which is nice to see.

    Regarding dividend yields during the crash: check out this table for the S&P: http://www.multpl.com/s-p-500-dividend-yield/table?f=m

    You’ll see that the dividend yields increased rapidly as the stock prices fell, and yield approximately doubled over roughly the same period of the years that the stock prices were cut in half. If companies had cut their dividends anywhere near as significantly as their share prices fell, you would see the dividend yield being more constant. (I’m still looking for a table of the actual dividend payments instead of the yield, since that would be even more useful)

    • Jerry Curl says

      MMM, of course dividend yields rose during the crash! Share prices fell first, and then came the realization from management they had to cut their dividend payout ratios.

      2008: IBM is a $100 a share and pays a $3 dividend = 3% yield.
      2009: IBM declines by 40% to $60 a share and maintains it’s $3 dividend = 5%
      mid-2009: IBM management says “OH SHIT, we should preserve cash and slashes its dividend to $1 = 1.7% yield.

      I’m an investment professional MMM. Dividend payouts got obliterated.

      Look at the dividend payout ratio, not the yield, which only captures a static point and is misleading.

      “Hi ma! I made a 3% dividend yield!” Meanwhile, sonny boy lost 35% in principal.

        • Jerry Curl says

          Going from “28″ to “22″ is a 25% decline, not a 21% decline. And yes, if your dividend payout declines by 25% on average, and your stock portfolio got “cut in half” as you say, that is obliteration. But, it’s all semantics. Whatever you say to make yourself feel better as humans have a great coping mechanism.

    • says

      Aha, I found a good chart: The rightmost column of this table shows S&P dividend payments in absolute dollars per “share”. In 2009, the dividend payments went down from their all-time high of 28, back to 22, which is about a 21% drop.

      That would hurt your beer money a little if you lived on 100% stock dividends and started with an already-tight budget. But it’s much less severe than the over-50% drop the share prices themselves took. Plus, the dividends were already back up to 26 in the year 2011, and if you look at the history, it is extremely rare that they drop at all.

      Anyway, the real point is that stock market crashes are not a big deal for retired people.

  6. says

    MMM, forgot to ask you something very crucial: How’s your cash flow situation, if you are comfortable revealing? You mention “low cost lifestyle”, but everything is relative.

    If you can provide your annual or monthly net after tax income average and average average tax expense, it will help readers get a better idea to make a more informed decision about early retirement.

    Jacob from ERE was fine for readers until they found out he lives in a trailer, and lives off $7,000 a year and has a working spouse. Just gives readers more perspective. Thanks!

  7. says

    So, let’s look at it this way – long-run life plan. The biggest risk to retirement is that you outlive your savings, mostly due to inflation and increasing cost pressures. From what I understand from the chart, neither your total income nor your net worth seems to have kept pace with increasing prices. Even if we use CPI-U (probably far more conservative than it should be) you’re looking at an increase in prices of at least 15%. This could be far larger, but there’s no way to know whether or not food, medicine, etc. makes up a greater portion of your spending compared to the BLS basket of goods.

    Anyway, the point is, it looks like in the brief time you’ve been retired that your real, after-inflation income and net worth are lower today than when you quit your job. This is only after six years.

    Do you have any concerns about the gap growing larger as you look out 20 or 30 years and you start buying other things in other categories (medical services, in particular) that seem to go up in price a lot faster than other goods and services?

    Any concerns about the skills that make you valuable in the workforce might deteriorate over time?

    Those would be my two biggest fears.

    I think it’s awesome that you’re embracing the lifestyle. Sounds like you have quite the plan, and you’re still young enough to go back to work if you had to. My fear is that an exit back out of retirement only gets harder as you reach the age at which people traditionally retire. Jumping ship early is a pretty scary thought, especially as it gets harder to swim back to the boat with each passing day.

    • Jerry Curl says

      You make a point. It does look like they have not kept up with inflation after the past 6 years. And, since they weren’t working in the past 3 years when the economy recovered, they didn’t get the full benefit of the economy.

      The other problem is, who would hire someone in tech who has been out of the business for 6 years, when they could just hire someone who is up to date, and only been out for 6 months?

      $800,000 between two people for a net worth is OK, but I bet once MMM breaks it down, a lot of that is in illiquid assets.

      • says

        If the job is based purely on knowing what’s happened in the last 12 months that might be a stretch, but there are a lot of more enduring needs in tech depending on your past areas of experience. Given that a lot of places are having trouble finding good people and you can learn all the latest stuff at home in a few hours (in fact you’ll learn about newer things that many people who have been stuck working with a 20-year old technology for the last 10 years at their job), it’s not a death sentence. What’s it like in the investment industry?

      • says

        You are forgetting that there was a massive recession lately, so the fact that his net worth stayed even when he relies largely on investments is a rather good thing. As the market recovers, as will his investments in the stock market, thus increasing net worth.

    • Christine Wilson says

      I don’t think MMM will ever need to go back to work because he’s created many businesses for himself… well both him and his wife. Between the two of them they are in the process of creating a fabulous web property which is their blog, investment rental properties, dividend income and then freelance, part-time and carpentry jobs. And who knows I might have missed something! Basically they’ve got a very balanced portfolio of equities… they are portfolio managers!

      • says

        Thanks Christine! I can see that the perspective is different from a regular MMM reader and writer like Christine – here in my guest posting I have not been able to explain everything clearly so it is understandable that there would be some doubts.

        The graph of net worth is sort of a “pro forma” one in that I excluded anything that we have earned through our post retirement projects since 2005. In reality we have much more these days, but I didn’t want that to cloud the picture since it would mask the effects of the financial crash.

        Regarding earning money after retirement – this is something I talk about on the blog quite a bit.. but in the lifestyle that I’m promoting, I find that some money earning is inevitable. Not only do I earn cash while pursuing my hobbies, but both my wife and I seem to get repeated offers to return to the tech industry for higher pay. (Although I will NEVER accept one of those offers since retirement is too much fun!)

        So I think the rumors about “once you get out of the workforce, you can never return” are totally false. Ask any early retiree, and most will tell you the same thing – job opportunities expand rather than contracting.

        @JT – true, net worth has not kept up with inflation, but that’s because it was measured during a very short time period – starting in an asset bubble and going through a 100-year crash in asset prices. Over a much longer period I think you’d see that figure rise faster than inflation, since my living expenses don’t require me to sell shares or houses – I’m living only off of dividends and rent.

        @FS: Our monthly cash spending these days (family of three) is about $2000. This is subsidized by owning our house (a nice one) and two cars without loans, and the fact that I enjoy taking care of my own house. And, we bike for our main source of transportation, since that’s the only way to live! The income from retirement assets is about $2500-$3000 (rental house plus assorted dividends and other interest-bearing investments). This provides a nice safety margin.

        But our optional part-time income, during the periods when we do work, is actually larger than either of these figures. Some people use this as ammunition to say “you’re not really retired!!”. But my definition of retired is: your passive income more than covers your living expenses, and thus work is fully optional.

        And to my credit, I really did earn very little over the last year due to the addictive blogging habit displacing my other projects. Unfortunately, even that habit is now starting to generate income. Crap! :-)

        If you plan to have a different retirement where you only play golf, you are free to adopt that as your own personal definition of retirement and I won’t fault you.

        • says

          Gotcha. That puts everything in perspective for readers who want to retire early.

          * Stay within $2,000-$3,000 in monthly after tax expense
          * Earn $3,000 or more in monthly after tax income via passive, active, part-time income

          This is definitely doable for many people who want to live on these numbers. Not sure why there would be dissenters.

        • mrmoneymeister says

          Sam – I agree in that this is doable but living on $2,000 – $3,000 per month is
          not everyone’s cup of tea. I for one would really like to see a detailed
          breakdown of how one stretches such a modest income to cover two cars,
          a home, children, food, clothing, taxes, insurance, utilities and other living
          expenses.

  8. says

    MMM,

    Would you consider doing a post that breaks down your investment portfolio to see what positions you own? I realize you wouldn’t do this as a “prescription” for others to follow – investing is highly individualized – but nonetheless, I think a lot of your readers are probably very curious about WHICH dividend stocks you prefer. Thanks,

    Bryan in Tahoe

      • says

        All right, Jerry Curl, I’m getting just a little amused at your lack of understanding. First of all, the dividend income on the graph is $9,000 per year, not $900.

        The reason it is so low is that I choose to have assets in rental real estate which yield an additional $24,000 or so per year. Just another form of dividend, and I could always sell the properties and get passive returns from my capital in any number of other ways (more dividend stocks, REITs, etc).

        Retiring in your early 30s on a couple of average engineering salaries is not much to get excited about? I know a few people who would disagree.

        Finally, I find it interesting that you claim to be a financial pro, yet you seem to combine a lack of patience and an eagerness to criticize, with a decided misunderstanding of percentages and graphs!

        • Jerry Curl says

          $9,000 a year is much more interesting. I’m assuming you have roughly a $300,000 dividend portfolio then, yielding around 3%? That’s pretty good, and something you can hopefully share with us readers here about what exactly you’ve invested in.

  9. says

    Not sure if these responses will be published as I requested to FS that he delete my comment to avoid confusing everyone, but here is the final word:

    The graph shows $9000/year in dividend income.

    I accidentally wrote “900″ in the addendum below, which should have said this: ”Dividend X 10″ means the real annual figure is the amount divided by 10 eg $90,000 div income in chart = $9,000 a year in real dividend income.

    This is simply because I couldn’t get Google Spreadsheets to give me a separate Y axis on the right hand side, so I had to combine everything onto one axis

  10. says

    With monthly rental income, and early retirement is far less risky. However I’d consider being a landlord (and managing tenants and properties) a job… so not exactly living the “retired life”.

    • rjack says

      I think part of the problem is the term “Retire” or “Retirement”. It has connotations of a sort of permanent vacation (if you are healthy and wealthy) and sitting around at home (if you are unhealthy or poor).

      A better term is Financial Independence (FI). Once you are FI, you are free to do whatever you want. You may want to start a business, invest in real estate, work a regular job, travel, relax, etc. MMM likes to rehab houses and turning them into investment properties. He could just as easily sell the investment properties and invest in the stock market.

      • Dan Thompson says

        While I was managing our two rental properties it consumed approximately 5-10hrs/month. Rentals are incredibly passive, unless you have a fleet of properties it really isn’t a job.

        You nailed it Rjack! Financial Independence is probably the right term. Retirement is overrated, FI isn’t.

  11. Mr Giggles says

    MMM you rock! I understand the skepticism.

    I mean, How is it possible to retire that early and NOT live in a trailer in someone’s backyard with one pair of pants and 3 socks?

    Having read most of your website(including the breakdown of budget and streams of income), It provides a great example your badassity!

    Keep up the good work, and I’ll keep on giggling at the haters!

    • says

      I don’t think there are haters per se. Rather, the audience here is quite different from MMM’s. I think the level of income, assets, and net worth is probably much higher, as a result, more people are amused by the figures, rather than taking them as seriously as others to retire early.

      To each their own. It’s just fun to observe and see other people’s perspectives. It makes me happy that one can retire off just $3,000/month after taxes, b/c that means I can too, along with many other readers on FS!

      • Dan Thompson says

        Solid point, $3000/month isn’t very much to live on with a family. There is nothing wrong with simplicity, but as you said most of your readers probably earn considerably more than that.

        It sounds like MMM has the ability to ramp up production and I tip my cap to him for figuring out what he wants to do and making that dream a reality.

  12. BusyExecutiveMoneyBlog says

    It’s all about diversification. MMM is showing that if your diversify your financial life, you will survive even the scariest times. Mind you…diversification doesn’t mean over-extending and jumping into a 100 different things. I am always asking myself…”how many things would need to go away to make me really fearful about suporting my family?’

    • says

      No doubt. I agree. Diversification of income streams is key, and I will probably highlight my own post with my figures eventually, although I don’t know how much my readers really care. I like being the underdog.

  13. Mr Giggles says

    Nice point @Busy.

    @FS

    I think the points about surviving a downturn provided by MMM scale well.

    So, if Samurai readers need big gold plated swords studded with diamonds, no problem. Just scale up the MMM example.

    • says

      The point of the post was not on early retirement, if you’ve read my previous posts and the posts linked at the bottom.

      The point of the post was on what happened during the 2008-2009 downturn for MMM and other retirees in general, how to survive, and what to learn from it.

  14. Bobby says

    Thanks for sharing your story MMM. It’s great you guys can live off $2,000 a month after tax! Where do you guys live?

    • says

      We live in Colorado. Our mortgage is paid off, so the $2,000 per month doesn’t include that.

      As for the cars, we have one paid off car that we bought used and the second is a paid off used van that MMM recently purchased for occasional construction work.

  15. says

    Ridding oneself of as many monthly obligations as possible is key to this strategy. Speaking from experience, paying off the mortgage quickly makes a huge impact on cash requirements each month. Seems to me many of the people who complain about having trouble “getting ahead” also have monthly obligations in the form of one or more car payments/leases, fancy cable/internet subscriptions, gold-plated wireless plans, NFLX/Sirius/other other monthly subscription services, and so on.

    • says

      I agree with this. Reduce expenses little by little, only to what is most important. No mortgage is amazing. Something I’ve been tempted to take advantage of in one part of the world, for a very looooong time.

  16. says

    It all boils down to why we work which is to put food on the table and a roof over our heads. To do that, you need some cash flow and that is all. Like you state, it doesn’t matter what happens to the value of the assets, as long as they keep spitting out cash.

    Retirement planning has assumed that we save, save, save, quit working and then spend down those savings. It doesn’t have to be that way.

  17. says

    Great post, MMM! Very inspiring. I’m 23 and retiring at 30 sounds like a dream! Like Bobby, I’m wondering where you and your family live? Do you think it would be possible to retire that young in a high cost-of-living state like California?

  18. B_ Pi says

    Thanks for a very inspiring article regarding your perseverance toward a goal MMM. Good for you both. I wasn’t even thinking about retirement until I hit my 40′s… dang!
    I am an older guy than the crowd here seems to be and I am retiring “early” this year at 55 compared to most ‘boomers’. With a somewhat lower net worth than you have posted as yours, if I include the lifetime pension I have (with cost of living increases and inflation protection built in – excellent benefits), when paid out over 30 years it would be worth well over $1 million and would bring my net worth between $1.5 and 2 million. Oh boy do I ever want that pension to be there! But pensions are subject to change and the risk of partial or total loss is always possible in these strange times we are living in with potentially confiscatory attacks via bankrupt governments and businesses. Having assets safely out of reach of corrupt and broke government entities is one of my top priorities. I am planning on using our savings and other investments in calculating costs and options in retirement and as the pension payments come in they will be considered as bonus payments keeping our savings undiminished. But like others, my wife and I are not planning on spending all our days gallivanting around the globe or drinking our days away in hammocks. We are both healthy, inquisitive, creative and intelligent and will be sure to find ways to make hobbies and fun work into successful business ventures along the way for as long as we enjoy and are able.

    And I trust for us all that when finances are no longer a concern and there is time to be more observant with fewer distractions, maybe there will be revealed to us that which the great Teachers and Way-showers have long assured is always within and which brings sustained peace for all who find it. Residing just beneath the surface of our awareness seemingly and unnoticed with so many ceaseless thoughts and emotions swirling about and holding our attention – yet said to be always closer than our own breath.

    Best wishes to all in your pursuit of financial independence and self-knowledge on your journey!

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