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okay, I will buy that people with kids may have had $250,000 more had they not had a kid. But it's not the sole reason why they can't retire early since people without pensions need a lot more than $250K to live until and then with social security. So maybe they would have had 3.25 million had they not had a kid...but what about the remaining 3 million they don't have?
This analysis is off. First of all, 3.25 million is not a realistic retirement goal for most people. The median income in the United States is about $50,000. To reproduce that income on safe investments, you'd need about $1.25 million in the bank. Second, you assumed only one kid but the average number of kids among families who have kids is 2.0 in the US. So that's $500,000 - a much bigger chunk of that 1.25 mil you need. Lastly, you don't pay out the 500k at the end. You pay it out bit by bit as you go, so what you pay has a much larger future value. For instance if you pay it out over 25 years of child-raising (to get two kids through college) that's $20,000 per year, which could build up to $1.35 million if invested in the stock market at an average return of 7% over the same period - in other words more than the total amount you would have needed to retire!
Something I am proud of is that I retired early (52) and that it is completely self-financed (we buy our own insurance, no pensions, etc.). To me it's even more amazing that my husband and I did it on making very average incomes (under $100K combined). It was a lot of living below our means, saving, and investing.
But when people usually discount this achievement by saying that it was doable for us because we don't have children. The implication is that they could have done it as well if they didn't have kids. It sort of stings that people don't see the discipline it took and the time and energy to learn about investing (some good years in the stock market a long time ago didn't hurt either, I will admit). I've wondered if it's really true---and was interested to see this article:
It says: Having children also did not appear to affect people's plans to retire early, even though raising a child to age 18 costs close to a quarter of a million dollars. Some 87 percent of those intending to retire early had children, in line with those not ready to stop working.
So, okay, I will buy that people with kids may have had $250,000 more had they not had a kid. But it's not the sole reason why they can't retire early since people without pensions need a lot more than $250K to live until and then with social security. So maybe they would have had 3.25 million had they not had a kid...but what about the remaining 3 million they don't have?
From what I can see, not every childfree person/couple can retire early and it IS possible for parents to retire early. So I think we have to acknowledge that people spend and save/invest money differently and the presence or absence of kids is far from the entire story. Does anyone agree?
I don't think people are trying to degrade what you did by saying this. They are just making a point. Retiring at 52 is VERY unusual and a wonderful achievement that few can do. You should be proud. Most people who retire early retire when they are 55 or so. To do that at such a young age is commendable.
Raising kids is not easy and not cheap. The cost really depends on the way you raise them. Some people just give them clothes, a place to sleep and food. Other parents will give them lessons, a lot of activities and vacations and pay for the best education. That is when it gets really expensive and makes it hard to retire early for anyone especially when college can cost you a couple of hundred thousand a kid.
So to answer your question, yes, people with children can retire early but it is not quite as easy as when you do not have children. Jay
Yup, I AM sensitive about this---I've had so few accomplishments that I hate this one to be discounted, but I normally don't care what other people think, so you are absolutely right, ER.
I do feel for parents paying high college tuition costs. But as Clark Howard, a consumer advocate advises people, there are no scholarships for retirement, so parents should first fund their own retirement since kids can get scholarships and loans.
Easy for me to say since I am not a parent, but I do think parents need to look out for themselves. I've seen too many parents sacrifice just so their kids can get the standard of living the kids want. A neighbor in my community had to move out of the condo she loves because her daughter got divorced and wants to remain in the big house and needs her mother there sharing expenses. Another friend's son wasn't happy in his current home, so she was going to buy and move to that home if he couldn't sell it just to enable him to be living where and how he wanted, even though she knew there were problems in son's neighborhood with neighbors and parking, etc. It's nice for parents to be loving and generous but I do think younger folks have to suck it up sometimes and not have the idea lifestyle they want, if it comes at the risk of their parents struggling financially to enable it.
I love Clark Howard and agree with a lot of what he says and recommends but quite frankly it is easy for him to talk and tell people what to do since he is a millionaire multiple times over and does not really have to worry about money any more. I know that he says that you should first worry about retirement and I suppose he is right TO A POINT but children are our future and a parent SHOULD do everything in their power to give them the best future they can. If you are not willing to do that, then you should not have kids to begin with (and believe me there are many people that should not have them).
The examples you give are a bit extreme but neither of those people HAD to do what they did. They chose to do it. The one moving in with their daughter will get a chance to become really close to her grandchild. What is wrong with that? It may actually be the best thing for the child who is likely going through a tough time dealing with the divorce of her parents. The grandmother can make it easier and isn't that a good thing for all? It will give that grandmother an important purpose (helping future generations) that too few do these days. What more would any person want in their lives?
Your second example is a bit more extreme. Giving up your current home because your son can't sell his him is kind of silly. That is his problem not the friends. Then again there must be a reason the friend agreed to this. Do they like the sons home better than where they live now? Is the sons home closer to him so in the future it will be easier to care for her? There sounds like there has to be more to it than just buying the sons home so he can move. Then again, maybe there isn't. Jay
From what I can see, not every childfree person/couple can retire early and it IS possible for parents to retire early. So I think we have to acknowledge that people spend and save/invest money differently and the presence or absence of kids is far from the entire story. Does anyone agree?
Sure, I'd agree to that. My wife was a pretty good "anchor" and it was in our nature to be fairly frugal and go after only what we needed. Many people buy a house that is too large or a new car every couple years. They go after things that they don't need and don't save enough when they have the earnings to make a difference later. We retired early and we had one child. We paid off the house and used the home equity to help with college at very low interest. We had deferred compensation at work but were slow in getting involved and then were not doing very well with investments. We found a guy who knew what he was doing and gave us great advice and guidance and things took off. We were never wealthy but had everything we needed and an emergency fund in savings. My eleven-year-old car runs great and probably has another 100k miles to go (knock on wood).
Jazzcat makes a great point. I see this a lot, where parents are subsidizing their children after they are grown, or they give the kid a new car, or they pay for a college education, but require and expect no work from the child to help pay some of their own expenses. Its called spoiling their kids. No doubt, many of these people will be left with little or nothing to retire on. Now that's just plain foolish. But there is a middle ground.
You can't let a kid go without braces if his or her teeth are all messed up. If the schools are terrible in your area, its worth the sacrifice IMHO, to move to a better house in a more expensive neighborhood to get a better public school, or move out of town completely if you have to. We had to do this. The local schools were terrible. So we moved. A kid only gets one education. Its worth making the sacrifices to keep your kids safe and get them the best start you can in life, but you can do that without spoiling them.
However, all parents should be free to make their own decisions and not be influenced too much by some guy on the radio. Heck, I bet my wife and I have never even earned a total of $3,000,000 in our life time. Not only that, but some of these folks don't understand how a kid can eat. Ever had boys that were in sports that you had to feed. I remember my mom sending me to the store for 5 lbs of hamburger and brats combined to have enough for one meal, plus have a little left over. We had 3 teenage boys. My one brother ate 9 brats at one meal one time. When I was in HS, I would come home, and if my parents were gone, I'd have a whole large pizza just for myself, plus a quart of OJ, and half a jar of applesauce. A young man can really put a hole in your food budget.
Often tho both marriage and kids brings about a more responsible person earlier means better planning. Its not like whether single.no children or children retiring early at say 55 does not involve planning at early age in most cases. I see lots of cases of people buying a home who have not planned and get over their heads in debt. Living early over your head and building high debt is a bad path I have seen time and time again.
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