I recently stumbled upon an interesting blog, Millionaire Mommy Next Door. She retired at 40--very impressive, huh? She discusses financial issues surrounding the path to financial independence. While I will also be a young retiree at 44, I feel I really can't, in good conscience, offer too much in the way of financial advice on this blog.
The truth is, I can't claim to have scrimped and saved to reach this goal. Nor can I say I've given up much in the way of luxuries to achieve retirement. I do not profess to be some sort of investing genius, nor have I made much in the way of hard choices along the way. The way it happened for us is really, mostly, non-transferable. (And no, I'm not a trust fund baby--that one would make my dad laugh out loud, I'm sure!) Our path to retirement looked like this:
My job made it easy:
Seventeen years ago, I landed the job of my dreams. I was excited to leave the world of public accounting for a new and interesting job in venture capital. The environment was wonderful, my job was challenging in new ways, and the people I worked with were fun, interesting, and appreciative. It also turned out to have a lot of up-side potential (which was not actually apparent until after I had already been there for five years). As you can see, there's no advice I can really offer here except to say go get a job you really like and hope for the best . . .
My husband lost his job:
Obviously, this is not an approach I would recommend. My husband worked for a dot-com which bombed and he found himself without a job. The experience was a tough one and so he took some time off to decide what to do next. What we then learned during that time was that we not only could live comfortably on just my income, it was how we wanted to continue living our life. (The advantages of a stay-at-home husband are beyond the scope of this post, but you can imagine how easy my life is because of it!) It was a forced way for us to find ways to live on less, which I guess is a good exercise for anyone considering retirement (if, like for us, retirement will provide for a fixed budget within which you must live).
We don't have kids:
Another obviously non-transferable method, either you want kids or you don't. You can't really use this one as a retirement planning tool. It's just something that wound up, indirectly, putting us at a financial advantage. We didn't have the day-to-day expense of kids or the financial burden of saving for college (that money went to buy a vacation home--which will be sold to help finance retirement!) But here, we didn't feel like we were giving up anything because neither of us ever wanted kids. So, no take home message here either.
We saved all the gravy:
Which brings me back to my job and the upside I mentioned. The only real advice I can offer that applies to most everyone is to sock away the gravy. You know, the unexpected windfalls, bonuses, and other remuneration beyond regular salary. Not everyone has gravy, so this may not be possible for everyone. But I do observe that for many people, as there is more money available, more money gets spent. I include myself to a certain extent here because I never was one to "save the raises" and continue living a lifestyle of the previous year's income. But we did save the gravy. Saving the raises is certainly also a good approach, but we opted to grow our lifestyle with each raise. We've enjoyed many luxuries because of that. If we had not done that, we would certainly have a bigger nest egg now, but everyone has to balance their own current level of enjoyment with their future goals. Striking that balance is an art, not a science, and requires a different formula for each of us.
The big challenge now will be living within the new budget. But that's a subject for a future post . . .