Retire Early ( under 40 ) (mother, city, boomers, retiring)
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with the recent oklahoma teachers thing, i always thought this is the way to go if people wanted to go into a low paying career... get to financial independence first then do the low paying work/volunteer later in life
Quote:
Originally Posted by CGab
Living off $40k annually for a family of 4- 5 is poverty level!
Then all the retirees with a paid off house living on $3k a month are in poverty? I think not. That is a very general statement for an average family in an average COL location with a typical working salary of $40 k, where 7.2% goes to FICA/Med, and federal and state income taxes are taken out. A frugal family in a no state tax LCOL location, living on LTCGS & Tax free Divs pays little or no taxes, so that $42k can easily spend like a $48-50k taxed salary can. They can survive decently on that, even with kids, IF THEY CHOOSE THAT LIFESTYLE forever. They are optimistically also counting on some sort of SS in 25 years.
I mean, I sure wouldn’t do that and live like that, but many have it WAY worse than that income wise and survive knowing they stil have an old age retirement issue, which this couple will have less of an issue with, having firmly lived off a self generated income for decades. Older age childless retirement will be a walk in the park for them, IF they survive it financially, as their income will be mapped out far in advance. The vast majority never have that training, and can’t handle living on a reduced income, especially if in debt, or will keep working in fear of that.
I wanted to go over some advantages of early retirement with kids.
Free Time
Some parents want to home school their children, but can not find the time because they have to work all day. Although I do not think we will home school our children, that’s a great option to have if it ever makes sense. We have the free time, so it is a possibility if the kids (and us parents!) ever want to give it a try. So far they are happy in public school.
We can do some extensive travel with our kids this summer. We can move and enroll our kids in school overseas or try out home schooling for a year. Another great option to have if life in the States gets too mundane and we feel like a really long adventure. It would be hard to not learn the local language of wherever we end up. Immersion in a foreign language is a great way to gain rapid fluency.
Whether we travel for a month or a year, I’m definitely looking forward to the “slow travel” lifestyle instead of the action packed week long vacation more common for those working full time jobs. No longer will we rush from shuttle bus to plane to another plane to shuttle bus to hotel to attractions to restaurants. We’ll have the time to take it easy, relax, and live a little more local. We can rent a lakeside house for a week or two, explore an area, do some hiking or boating, and make our own authentic adventure.
The biggest benefit of retiring early with kids is that you get to spend lots of time with your kids. You get to actually know and interact with them as other human beings seven days per week instead of only seeing them for a few hours each day during the work week. Working tends to cause stress and exhaustion, and that interferes with the ability to establish high quality deep relationships with your kids.
I know when I was working, I needed time each day to decompress from the workday. During the week I wasn’t really “there” one hundred percent in the evenings after work. Now I’m able to walk to their school and take a nice stroll back home with them, and they get to chat with their friends on the walk back.
I also have way more time to help out at my kids’ school. I recently visited their school on two different days to help out with their engineering projects. It’s nice to have the leisure time to pass a few hours with your kids and their classmates and pass on a little wisdom while you’re at it. And I’m always up for chaperoning field trips. I love seeing how all the kids are wowed by the different museums and sites they visit! No more telling my kids “oh, I’m out of town for business that day. Sorry, can’t be there for your field trip!”.
Retire early and cut kid costs
You can save a lot of money on kid-related expenses if you are not working. The biggest savings come from being your own daycare and preschool. With monthly prices often exceeding $1,000 for one child, a family with multiple young children can easily spend $25,000 per year on childcare. As the kids get older, costs usually go down (if you can find a good free public school), but before- or after-school care and summertime care can still cost a small fortune.
Other than day care, there are still more savings to be had from retiring with kids still in the house. You will have way more time to do things yourself instead of outsourcing to others. For example, instead of dropping a few hundred dollars on a birthday party at a local entertainment spot, you can spend $50-100 on pizzas and party favors and bake a cake yourself. You might even have more fun, since you can entertain guests all afternoon instead of rushing through the two hours at the skating rink or jumpy house places (or Chucky Cheese!).
There are lots of free activities during the weekdays that we are now able to take advantage of since we are no longer working. Our local library just up the street offers story time for different age groups two or three times per week. The community center next door to the library offers two hours of free open play for kids up to age five twice per week. The community parks, hiking trails, and pools are also great free (or almost free) places to take young kids during the week. These places are like ghost towns when all the other parents are at work.
Cooking at home can save a ton of money and tends to lead to healthier cuisine. These cost savings are available to the early retiree whether they have kids or not, but the savings are multiplied when you have more than two mouths to feed. You can spend $10 on great ingredients and make your own awesome dinner instead of dropping $40 on take out for you and your kids. With more hungry fridge raiders, leftovers are less likely to go to waste. Yesterday’s dinner might make a great snack the next afternoon.
All of these savings are available to any stay at home parent taking care of the kids, just like they are to an early retiree who is also a stay at home parent. If you are thinking about having one income earner stay at home with the kids, these cost savings are part of the equation. The loss of income might not be as bad as you think after accounting for these cost savings and other costs avoided by not working.
Tax Savings
Our three children knocked $5,500 off our tax bill. The tax savings from kids really add up. For each kid, you get a $4,050 personal exemption deduction and a $1,000 child tax credit. If you are still working, you can contribute to a child care flexible spending account pre-tax.
If you plan to pay for part of your kid’s college expenses, then contributing to a 529 college savings plan can lead to state tax advantages.
Changes in spending patterns with kids: Some expenses go up, others go down
After you have kids, your kid-related expenses go up while your other non-kid expenditures might drop. When we had kids, we noticed our restaurant expenses dropped. Instead of packing three kids into the car and trying to keep them under control at a restaurant, dining at home makes meal time much simpler.
Without kids, we would probably take more expensive vacations out of town. With kids, we can not easily pop off for a quick weekend trip or overseas vacation with long flights. We will not be flying this summer, but on other trips, plane tickets for five can add up. So far we have been able to get free plane tickets through credit card rewards and sign up bonuses.
The kids’ school schedule constrains our travel budget, making it hard to travel nine months out of the year. We also tend to travel a little slower. For our trip this summer, we are planning to rent an apartment for a week at a time instead of a hotel room by the night. The cost difference between a one bedroom apartment and a two bedroom apartment (to accommodate our three kids) is negligible.
Kids tend to consume a lot of time, so we don’t have as much vacant space in our schedules to fill with other activities or hobbies that might cost money. This may sound like a complaint, but it isn’t, since we generally enjoy spending time with our kids.
Sure, you’ll spend more money on your kids, but you’ll spend less in other parts of your life. Retire earlier than old. There's more to life than work!
I mean, I sure wouldn’t do that and live like that
I think this is what a lot of the posts here boil down to, they can't imagine living on that therefore it isn't financially sound decision to retire.
I've seen plenty of people post their annual living expenses (32k for a couple, 22k for single guy, etc.) where I'm thinking no way that's real but then they break out their household budget and damn if it doesn't work for 'em. They don't have cable TV or a car, they only have a 1 bedroom townhome, they don't eat out much, not interesting in alcohol, etc. and it's easy to assume since we all want more other people can't possibly be happy with that much less. They watch movies and TV on Netflix, they like to cook, they ride bikes everywhere, they hike/read/fish a lot for fun, etc.
I wouldn't want to try to raise a family of four on $42k, but if someone else is doing it and seems happy with it then good on them.
Was 46 when I was able to push the button after completing my 25 year law enforcement career. No regrets and enjoy every single day without setting an alarm clock or even wearing a wrist watch.
Your wife and you are much younger. However, if my wife were to retire with me at such a young age, I'd be fearful living out the next 30 years or so off our investments. Children are still young and education costs, vacations and simple day to day expenses add up. If your both able to do it and sustain your current lifestyle then more power to you. Personally I'd have waited a few more years until the children were a little older.
Good luck yo you both and enjoy your early retirement.
No, that is for touching whatever you need to touch from the 1.5 million to withdraw $60k per year annually for 30 years.
A safe withdrawal rate (like 4%) is an annual withdrawal from initial portfolio value, indexed for inflation, that historically has rarely spent the stash down to $0 over a retirement. It is lower than historical returns because it plans to survive worst cases scenarios, so you usually and up with a lot more in your portfolio after 30 years than when you started.
You cannot take some average statistic like this an apply it to everyone in the USA. People all live differently and require different things to be content in their lives. We all have thresholds where we can't imagine someone being happy with less, but that doesn't mean they aren't that way.
In other words, you have no idea what it costs that poster to raise a child for one year.
I think this is what a lot of the posts here boil down to, they can't imagine living on that therefore it isn't financially sound decision to retire.
I've seen plenty of people post their annual living expenses (32k for a couple, 22k for single guy, etc.) where I'm thinking no way that's real but then they break out their household budget and damn if it doesn't work for 'em. They don't have cable TV or a car, they only have a 1 bedroom townhome, they don't eat out much, not interesting in alcohol, etc. and it's easy to assume since we all want more other people can't possibly be happy with that much less. They watch movies and TV on Netflix, they like to cook, they ride bikes everywhere, they hike/read/fish a lot for fun, etc.
I wouldn't want to try to raise a family of four on $42k, but if someone else is doing it and seems happy with it then good on them.
Heck, there's people in their 20's, 30's, 40's, 50's......... living in vans, buses or RV's, living the nomad lifestyle, either working remotely making some decent money, usually in the web design/IT field or maybe just doing seasonal jobs making $10,000 to $15,000 a year, with no retirement money or little savings, but that's their life and it seems to make them happy. Whatever floats your boat.
That's the great thing about life and society, there are so many flavors to choose from!
OP, I totally agree with keeping at least one parent home with the kids! I understand it's not an option for some, but in other cases it makes no sense to pay a babysitter as it could eat up most of your earnings anyway! Not to mention kids that go to daycare get sick more, so that's another added expense if you have to stay home from work and take them to the doctor. I stayed home with my kids until they were old enough to go to school. I work work only when they are at school and can work from home when they are off.
At any rate, I wish the OP luck! To me, retiring early is a personal preference and to each his own
A 3% SWR may or be may not be bullet proof for 55years. That’s a long time. Its not impossible but still sounds sketchy to me. But Indo applaud their thinking. I wish I had developed their atitudenso young. By the time I was financially aware enough that my time vs money translation was skewed, Inhad already commited a number of financial blunders including 2 divorces, so I was starting over at almost 40. I chose a much higher lifetime income, and age 62, (less than 2 years away), because I have an easy commute and high paying job I actually enjoy and because of the amount of income gained on my pension those last two years. I emotionally can’t shake the mental possibility that I have to make sure I can live comfortably on 1/2 of my planned income in case I become a 3 time marriage loser, even though now married for about 20 years. There is also that whole “be successful “ thing that was drilled in to me for my whole life. ( Though I seriously have NO plans or reason to think that will happen, believe me, if you have been financially destroyed twice in your life by it, it is always lurking there. ).
I have so many friends from college and work that have guaranteed incomes in the $180-250k/yr range. Life may not be a competition but for many, it really is pathetically so. My plan is “only” $130k/yr based on nice pensions, SS, savings investments and hobby side hustle. Expenses SHOULD only be $90k including a mortgage, HOA, utilities, food of $4500/mo. Thst leaves $3k a month for new vehicles, fun money, etc even further savings build up for LTC etc if needed. Or worst case scenario, the amount I can instantly cut back on for what ever reason. Savings are just over a mil. I’m sure to many here, that is wildly successful. It is not, to me. I am overly conservative in my planning, coupled with that “FOMO” of missed opportunity. Each year I stay working through age 62 increases my pension $4.3k/yr. I have cousin that is worth more than 10 times that, and many childhood/college friends double and triple. I have always been competitive and I often hate I am that way. Dropping my retirement age from 65 to 62 was all I could force myself to do. I continually hope that when I reach 61, and we are already in our retirement townhouse, that I come to my senses. I know I need to still be working to qualify for the best mortgage. I don’t want to tie up an added $500k in the house. Yes, highish standards and all optional wants, not needs, but it is what is is. DW while not high maintenance or a spendthrift is decidedly not a good match for frugal living as described often here. That, coupled with wanting to be “rewarded” for all my years of work is part of my decision process.
BTW, I am aware of he typos and the letter n where spaces should be, all because I reply on an iphone but just too lazy to go back and change them
It’s so easy to get caught up in the competition thing. That was me too. All it took was one health scare and my mindset changed.
You're right here, and I don't think it's restricted to elderly people. Moving overseas isn't for everyone, the big joke in expat communities is that there is no need to buy new furniture when you arrive since there is always someone throwing up their hands and moving back to USA. Buy barely used furniture instead.
Your are correct there. The recidivism rate is like 50%. Our shipper said he takes just as many containers BACK to the U.S./Canada as he brings here.
It's certainly not for everyone. Only those who can view it as an adventure.
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