My Path to Retirement

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 . . .

Comments

[Millionaire Mommy Next Door]

Hi! I found you through your link to my blog (thank you!). I love finding stories of early retirement - the choices one makes, the lifestyle choices, the thought process.

I just read all of your posts to date. Not only are you insightful, but you have a great writing style. I'd love to introduce you to my blog's readers. Would you be interested in submitting a guest post to publish on my blog, with a recommendation intro and a link to follow to your blog?

Maybe I missed it - but are you retired already or are you in the planning stages? (My reading was interrupted several times this morning...)

I look forward to following your life story - sewing or skydiving!?

[Retired Syd]

Millionaire Mommy:

Thanks again for your comments. Of course I would love to do a guest post on your blog. I've sent you an email directly about that one.

Thanks!

Sydney

[Lise]

Hi there - I discovered your blog thanks to MMND, and I wanted to just mention I've been following it eagerly. I'm currently 27 and I want to retire in my early 40s myself, so I find what you write inspirational.

I have the no kids thing down pat, and the socking away the gravy, but not so much with the job I love. Still trying to figure out what I want to do when I grow up ;)

Maybe you mention it somewhere else, but how exactly do you sock away the gravy? I'm curious to know what kind of investments are necessary for this goal.

[Retired Syd]

Lise:

Thanks for stopping by and letting me know you are there. Maybe I should do a post in the future about my investments, but I think I'm more lucky than smart, so hesitate to do that.

In those early years, I dollar-cost-averaged into index funds and bond funds (all at the low-cost leader Vanguard). In my retirement accounts I had a mishmash of actively managed funds somewhat randomly chosen by reading Money Magazine--in large, mid, and small cap funds, international funds, and a hand full of stocks I probably had no business investing in. Then I never questioned those decisions for the next 10 years. As luck would have it, I did ok (only on the funds, NOT the individual stocks)--maybe would have done better if I knew what I was doing.

Now I accept that I really don't know what I'm doing with regard to picking funds and have an investment advisor--so I do take a haircut of 1%. But the truth is he has forced us to diversify much more than I ever did (which is really protecting us right now).

Now that I'm retired, I'll have more time to pay attention, and perhaps will start managing things myself, but for now, I'll just say that I didn't get to be retired because I was so smart with investing, just really good about not frittering away "found" money--and it all added up.