Category Archives: Retirement Plan

There Are Many Flavors Of Early Retirement: Why Mine Isn’t For You

Retire Early, Retire Often, Retirement Plan

There are many flavors of early retirement that people have found success with. The recipe usually starts with the same base ingredients. It begins with envisioning what our ideal retirement lifestyle would look like. Then it’s all about what it will cost, how much we need to save to pay for it, and what could actually be done to pull it off. But different people will add different favoring to the recipe. What works for them may not be appetizing to others. Based on what people believe about early retirement and the negative feedback that they enjoy sharing, I know that some of the flavors of early retirement that I found success with isn’t for everyone.

There Are Many Flavors Of Early Retirement: Why Mine Isn't For You

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The Flavors Of Early Retirement I Chose That Might Not Work For You

When I left the grind I didn’t really know anything about financial independence retire early (FIRE). I simply wanted to retire as young as I could and had to figure out what would work for me. I met with a financial planner, I would read books, and I researched the few online resources at that time to get real life early retirement success stories. All of this provided some great ideas and for various reasons there were many things that just wouldn’t realistically work for me. It’s the things that could work for me that mattered. That’s what I used to personalize my early retirement success strategy.

If you are on your early retirement journey then you are most likely doing the same kind of research and know exactly what I am talking about. Although there are many flavors used in my early retirement that are useful to a variety of people, here are a few that you may or may not like –

Early Retirement Allows For Paid Work

This is a flavor where a little goes a long way when added correctly. Even though “Retire Early and Often” is my tag line, my having worked some retirement gigs and a short encore career is the thing that I catch the most grief about from people who love to let me know the rules of retirement. I get it, traditional definitions of retirement means being done with working. It seems to be very hard for some people to let go of. This flavor of early retirement that I chose and live by spells it out this way: Retirement is the absence of NEEDING to work, not the absence of working.

I don’t need to work to live the lifestyle I want to live. But I certainly stay open to opportunities that I would be interested and passionate about doing. Months and years will and have separated my adventures in paid retirement gigs.

Many early retirees will engage in any number of paid endeavors both big and small.

This chosen flavor of early retirement is one where I live off of my portfolio and strategically add any salary I may earn back into my net worth. I’ve shared my experiences and how much it has benefited me. It isn’t a flavor for anyone who can’t shake loose of outdated retirement rules and accept that they just might one day WANT to re-enter some form of paid work as part of their retirement. After spending decades in the rat race, I’ve found it both exciting, enjoyable, and even somewhat liberating to take on an opportunity for just as long as it meets my interests, passions, and needs.

An Early Retirement Where The 4% Withdrawal Rate isn’t Gospel

I chose instead to flavor to taste. No matter what percent is used or believed as a safe withdrawal rate, my flavor of early retirement doesn’t believe in a static withdrawal rate that’s set at our retirement date. I see it as guidance, not gospel. Why? Because life will happen. Things will change as we age and through time in our retirement. There will be things we can and can’t possibly plan for or control, both good and bad. I believe in having a dynamic withdrawal rate with a heavy dash of lifestyle inflation control. A 4% withdrawal rate on the common early retirement benchmark of $1M sets it at $40K a year. That’s great if you can earn enough to save $1M or more. But for me and most people I know, accumulating a portfolio of that size would mean delaying retirement to old age, if ever.

I started with a withdrawal rate closer to 5.5%. But I also calculated in my expected Social Security income to start about 16 years later. My Social Security, even if reduced because of government inaction to shore it up, should lower my portfolio reliance by at least 50%. That’s one major reason my starting withdrawal rate wasn’t planned as static over my retirement. Therefore I chose to retire early with less than a million dollars and began the early retirement lifestyle I planned for.

My flavor or early retirement has a withdrawal rate based on retirement calculator results.

I didn’t start retirement funding with a percentage of my portfolio, I started with an amount I needed. I simply ran the needed funding numbers against my portfolio amount and plugged in my future Social Security. Now nine plus years into early retirement my withdrawal rate is 3.7%. That’s even with today’s higher than planned health insurance cost. I expect my withdrawal rate to significantly drop even more once my Social Security begins. Medicare is even closer for me to start. It will most likely further reduce my withdrawal amount because our health insurance represents a third of my current budget.

The way I retired early probably won’t work for those who only believe in a gospel of a static withdrawal rate plus inflation. My early retirement flavor is to have a flexible, dynamic, and realistic withdrawal rate. One backed up by Monte Carlo retirement calculation results.

Funding Early Retirement With Tax Deferred IRA & 401K First

Flavor sequence matters. The traditional way to sequence our retirement withdrawal sources was to use non-retirement assets first. Then look to tap into our tax deferred IRA and 401K. Any Roth accounts are then tapped last. The thought is it’s best to spend down non retirement accounts first. Reasoning it’s better to allow our tax deferred retirement assets to continue growing tax deferred. Our Roth IRA funds would then be left for late life tax-free withdrawals. It seems like sound advice and for many this is the default path of retirement funding sequence. But that didn’t taste right to me because it doesn’t fully consider the impact of taxes.

My funding sequence uses a different retirement withdrawal strategy that considers tax efficiency.

The strategy I use starts retirement funding by first withdrawing from my tax-deferred (401K/IRA) retirement accounts. Withdrawals were limited to stay below the upper threshold of the 15% tax bracket. Today with the new tax law the goal is now to always stay within the 12% bracket. I was in a higher tax bracket than that during my saving years in the trenches. Getting the higher tax benefit savings then and paying less taxes now on tax deferred savings is a welcome gain.

Before I reached the age of 59 ½ I used SEPP 72t to avoid the early withdrawal penalty to fund my early retirement from my IRA. With that now ended I still use my IRA first. My withdrawal strategy will only withdraw from my non-retirement account savings/investments if I ever need more than what the 12% tax bracket allows. Roth accounts are still sequenced to be used last, only after my other non-retirement account savings/investments are depleted. My Roth is not being held until my IRAs are dry. They will also be used when needed for tax rate management. This withdrawal strategy was found to add to portfolio longevity. I also believe in using this strategy to assist with managing Social Security’s taxability when I eventually begin it.

Anyone who believes in and prefers the more simplistic and commonly touted portfolio fund withdrawal strategy will not favor this flavor that I use.

Flavor Your Early Retirement To Your Taste

The above flavors I shared are just a few that I’ve used for my early retirement. There are all kinds of early retirement success stories to be inspired by. They range from extreme frugality to mega portfolio accumulation. They come from people who are Social Security believers to those who have given up on it and would never consider counting on it. We will always come across some of the touted early retirement flavors that won’t work for the unique blend we prefer, we can realistically reach, or that we can tolerate.

During my pre early retirement research I did run into ideas that I took in as workable. But there were others I just moved on from as not being for me. I understand why some of the ways I put together my success recipe for early retirement won’t be for everyone. Hopefully what I share about my early retirement experience provides some new ideas that can be turned into your own unique solutions. Wherever your early retirement research takes you, look for ideas that appeal to you, verify through calculation, and craft your own winning combination of early retirement flavors to use for your success plan.

Surviving The Final Stretch To Retirement: Fighting Emotional Urges

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Why is it that things always seem harder when there is just a little farther to go towards reaching our goals? I’m reminded of this psychological urge when dealing with the last mile to road trip rest stop relief. But the same kind of mind trips can and usually happens at work as we get closer to reaching our financial goals and announcing our retirement date. As someone who had to fight through it, surviving the final stretch to retirement will go much easier if we do a few things to help us push through.

Surviving The Final Stretch To Retirement: Fighting Emotional Urges

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Tricks To Surviving The Final Stretch To Retirement

When we plan for our retirement we should always focus on what we are retiring to. We envision what our life of freedom will look like and all the things we want to pursue. It not only sets the basis for what our retirement lifestyle will cost and what’s needed to fund it, but it also helps motivate us to establish sustainable smart budgets and save money to reach it. But face it, there is this thing we will happily leave behind. If we loved our job and truly enjoyed what we were doing, we probably wouldn’t have done everything we could to happily walk away from it. Love our job or hate it, there are always little things that we can’t wait to never have to deal with again.

For all but the truly blessed, your final stretch to retirement will have all of your workplace irritations amplified. All of the management buffoonery and self dealing that causes unnecessary rework. The plethora of unnecessary policy or process changes, finger-pointing, and scapegoating you’ve put up with over many years won’t change. The gaggle of incompetent and possibly insane coworkers, managers, executives, or clients you avoid at all cost will never change. Your commute most likely isn’t going to change for the better either. But we change as we approach the final stretch to our retirement and that is what we can and must control.

What’s needed is adding a new retirement goal.

We have a choice. Either gripe and complain while hating the last of our careers which can possibly end things before we are ready, or deploy some countermeasures to cut the work BS and our emotional urges. The idea should be to get through this final stretch to retirement in the best way possible to not only survive but win with a smile on our face.

The Last Stretch Is Important To Us

We have to understand and emphasize to ourselves that the last stretch is important, not only financially but also psychologically. Our target date was set for a reason that is most likely tied to specific milestones: Portfolio amount, pension eligibility, penalty free access to our retirement accounts, etc. We are generally earning the most from our careers at this time so we do need to stay to our plan’s end. Then there is the psychological aspect, we want to retire on our terms. That means sticking to our plan no matter how irritating our work becomes or how excited we are about our next chapter. We don’t want to do anything to screw this up and end up second guessing our retirement or regret ditching the rat race when we finally do. There’s enough mind-warps to deal with in our retirement transition without adding to it.

One easy trick is to set up a mental reminder of your retirement date.

We’ve all seen the retirement countdown clocks. If you have a great work environment and you’ve been open about your plans then something along that line is a good reminder for you and everyone around you about your joyous plans. For people in a less than perfect work situation it can be a great way to passive-aggressively mock an abusive coworker or manager without saying a word. You can also say it’s an unattainable dream to throw everyone off and leave them wondering why you smile every time you say that. If like many folks you are secretly on the path to retirement then use a picture or any other means for coded messages to yourself of when and what is ahead for you. The thing is this: The last stretch to retirement, no matter how trying it is for either good or bad reasons is only a temporary situation.  

Disinvest Emotionally While Keeping Up Job Performance

Even if you love your employer and work, every job has its share of BS. We put up with much of it no matter how irritating it is because we care about what we do, we want our paycheck, and we want to do well to earn any yearly raise. By gradually disinvesting ourselves emotionally from our job we can carefully set aside BS that isn’t really critical for the business. “Carefully” because this is a balancing act as we need to fly below the “I’m close to retiring” radar and maintain our job performance so that we are allowed to continue to our target date. If our retirement date is beyond the next salary treatment or bonus payout, then that may also play into your disinvestment strategy.

It’s all about cutting irritating activity or avoiding jack-hole folk that offers little or no return on our investment. Concentrate on performing the company’s value added activities you enjoy doing. or at least the activities that don’t bug the fun out of you. You know how they always say to someone who they are laying off that it isn’t personal, it’s just business? Well, we have to have that same type of mindset when surviving the final stretch to retirement. A lot of times the on-the-job BS goes the path of least resistance. Start adding a little emotionally free resistance. See if it can go somewhere else or simply not even be missed.

Counter The Nagging Feeling That There Must Be More To Life Than This

Some of us will hit the wall hard during our final stretch to retirement and everything about our job feels pointless. This can happen to people who are in a truly perfect job and company or a hated one. We can lose all patience and think about forgetting our plan because we’re so close to pulling the plug and life is too short to waste doing this. It sure happened to me. The excitement about our planned future can be intoxicating. The call of our retired life that lies just ahead can be very loud, but we can counter it.

Increase your life outside of work. My job was all-encompassing including an irritating demand that I carry a pager 24/7/365 in my last years. I was excited about what I was about to begin in retirement. By pushing to get a life outside of work, job stress and being tethered via pager be damned, I was able to keep things in perspective. It helped me tolerate the last miles on the job. It’s about forcing ourselves to get more balance in our life. I concentrated on what I wanted to be in retirement and let that direct what I mentally focused and acted on.

By doing this before we retire we also start to build a bigger and better social circle outside of work. This is a major perk to help us during our retirement transition. Sadly, many of us have a social life that revolves around our job and coworkers. Most of that will most certainly drop off once we retire. There really is more to life than our jobs. The trick is to start bringing some of that life we envision in retirement into our life while still dealing with our final stretch.

Don’t Tip Your Hand Too Early: Maintain The Secret Until You Are Ready

If the final stretch to retirement is driving you crazy, then you should fight any urges to blurt out your intentions before you are really ready to pull the trigger. It can make both good and bad work environments worse. There is a right time to announce your intentions to retire. Something flipped in my brain where I got psychologically cocky on a subconscious level. I knew I was close and I wanted to rub their noses in it with every unfair demand being pushed on me. I doubt I am alone feeling this way. Maybe you work somewhere that treats everyone great and you are motivated by impatience and your excitement to let the cat out of the bag. If so, you should still fight your urges. The last of your working experience can end up less than desired.

Here’s what we should understand: Business has very limited or no morality. It’s all about numbers, profit, and power. Don’t underestimate the possible ruthlessness of your employer or people who may try to undercut your chances of reaching all of your plan’s goals and retiring completely on your terms. The final stretch to retirement can be trying. Especially when in a stressful work environment or one filled with jack-holes or unfair policies bugging the holy crap out of you. Mentally disconnect from the nonsense. Keep your head, keep your secret until appropriate, and keep doing what you can to stay focused on your dream.

Fight counterproductive urges in your final stretch to retirement

If you are like many, including myself, who weren’t blessed with a wonderful work life experience toward the end of their career, then the final stretch to retirement can drive you nuts. It can even be true for other reasons for those who are blessed with a great work life. The final stretch to retirement will be a time of excitement, emotion, and sometimes many urges to do something counterproductive to your plan. It’s also a great time to make positive changes. Changes to improve both your experience in the final stretch of your career and get a head start on your transition to a new life of employment liberation.

Does Your Credit Score Matter After You Retire?

Managing Debt, Retirement Plan, Saving Money, ,

Retirees, and especially individuals looking to retire early, may wonder if their credit score matters after they retire. The short answer is that it does. You may still need to borrow in retirement, and your credit report significantly affects your ability to do that. 

Individuals with good credit scores get more favorable interest rates on loans. They are also more likely to be approved for loans, to begin with. Higher credit limits are allotted to people with good credit, allowing you to enjoy more of your golden years. 

While your relationship with money may change dramatically upon retirement, it will still be a necessary part of your life. The following are some things your credit score will affect even in retirement. 

Does Your Credit Score Matter After You Retire?

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Buying A New Car

Your credit will be checked when purchasing a new vehicle. Many people buy new vehicles after retiring for either travel purposes or to downsize. You may even decide to sell your home entirely and purchase an RV home in which to travel. 

Fortunately, you are unlikely to be denied a car loan even if your credit isn’t stellar. This is because vehicles are easier for banks to repossess should you default on the loan. However, a vehicle will cost substantially more due to higher interest rates if your credit is bad. 

Buying Property

You may still purchase property in retirement, even if you aren’t planning to. For example, you may downsize from your existing home into a condo. Health issues may necessitate moving into an assisted living facility. A better credit score will make it easier and cheaper for you to buy a property of any kind. 

Even if you plan to rent, landlords check credit as well to evaluate the risk of taking you on as a tenant. In fact, your income and credit history are two of the biggest factors landlords evaluate when reviewing your application. Be sure to budget appropriately for your living costs in retirement. 

Refinancing A Mortgage

If you are still paying a mortgage in retirement, it may be a smart idea to refinance your house. Doing so can help you save significant amounts of money on your monthly mortgage payments. However, to get a good deal on refinancing, your credit score has to be good. 

Remember that borrowing against your home equity can affect your credit score. Go in with the best credit score possible and a solid understanding of how a refinance can affect your credit. Your lender can even cancel your refinance loan if your credit score falls below a certain level. 

Keeping Low Insurance Rates

Certain states do not allow credit rating to affect insurance rates, including California, Hawaii, and Massachusetts. If you live anywhere else, insurers can take your credit rating into account when determining your rates. The lower your rating, the higher your rates will be. 

You cannot afford to live without certain types of insurance. In particular, the costs of not carrying adequate homeowners insurance are too high to be worth the risk. Car insurance is legally mandatory. You may also need to carry insurance on items such as boats or RVs. 

Facilitating Better Travel

The freedom to travel is one of the biggest perks of retirement, especially retiring early. Some credit cards give you incredible rewards you can use to travel for cheap or free. However, these cards all require a very good credit score to be approved for them. 

It can also be difficult to travel without a decent credit limit. Doing so can take away money from other necessary expenses. This can create a cash flow problem that could be a real issue under the right circumstances. Never charge more than you can comfortably repay. 

Avoiding Identity Theft

If you haven’t checked your credit score much in retirement, you may be at higher risk for undiscovered identity theft. Identity theft is particularly high among seniors because there are many scams targeted to that demographic. Knowing the status of your credit and being in control of it is key to detecting identity theft immediately. 

Credit cards also offer protection against fraudulent purchases that other forms of payment do not. Aside from guarding against identity theft, credit cards can also come with added warranties for items you purchase. 

Starting A New Business

Upon retirement, you may decide that you don’t want to actually stop working. Retirement can be an excellent opportunity for pursuing a lifelong dream, hobby or passion. To do this, you may be considering starting a small business. 

Many businesses will require loans to set up. Like other loans, you will be charged a higher interest rate the worse your credit score is. This added expense will be a burden on your business from the beginning and make it more difficult to remain in business. It will also be much more difficult to get a business loan at all if your credit worthiness is poor. 

Existing Debt

If you have outstanding debt upon retirement, you will want to maintain a good credit score to keep interest rates low. Credit card issuers regularly change the interest rates of cardholders depending on how their creditworthiness changes. 

Interest can accumulate quickly and put you in a bad financial situation. This is especially true if your interest rates suddenly or gradually increase due to a decreased credit score. Do not let this happen. Continue to pay off debt and maintain a good credit score, and you will pay less in interest over time. 

Getting A New Job

You may not plan to get another job after you’ve retired, but plans can change. Perhaps you decide you need something to do or could use the extra income from a part-time job. Neither of these situations is uncommon among retirees, and you should be prepared for the possibilities. 

If you do get another job at any point, your credit score will be something your potential employer views. While it certainly isn’t the only factor in determining whether to hire someone, it can be a red flag for an employer if you fail a credit check. A hiring manager is going to view someone with strong credit as a more reliable candidate. 

Supporting Family Members Financially

You may be financially well-off, but your family members, especially your children and grandchildren, may not yet be. This often results in parents giving their children a little financial help every once in a while. Unfortunately, doing so can become more difficult and costly if you have bad credit. 

Being able to cosign for children who need help to get loans of their own is a major way parents help their kids. Doing so can help ensure your children get loans and at favorable rates. You can be a cosigner on things such as leases, car loans and more. However, you need to have good credit to be a cosigner. 

Preparing For Healthcare Costs

As you get older, you will often run into increased medical costs. Even if you have saved for retirement responsibly, medical expenses incurred due to age-related conditions can add up quickly. 

A high line of credit, which you can only get when you have and maintain good credit, will help you pay for these medical expenses. Hospitals are also more likely to agree to a favorable payment plan if your credit history is good. 

Preparing For Emergencies

A good credit score will give you a higher line of credit to cover the costs of any emergencies when they occur. You need to be prepared to financially cover emergencies no matter your age. Unexpected expenses are sure to occur at some point during your retirement. 

Emergencies where having good credit and a higher credit limit can pay off include car repairs, home repairs, medical bills, and other possible necessities. You may need to borrow to cover these costs, and the loans will cost less if your interest rates are lower due to good credit. 

Other Places That Check Credit

Other places check your credit you were probably not even aware of. For example, cell phone companies will give better deals to individuals with good credit. Utility companies will also do a credit check when you set up services with them. 



Your credit undeniably plays a major role in your life at any age. It is one of the best tools you have to prove your financial reliability in a wide variety of circumstances. Maintain good credit so it won’t affect unforeseen areas of your life. 

Retiring is ultimately no reason to stop monitoring your credit score. Check it regularly to ensure your score is good and that there are no issues such as fraud occurring. Maintain good credit by paying bills on time, keeping a budget and using your credit responsibly. 

Do you have a question or anything else to add? Be sure to leave a comment.

Thank you John Blakely for this informative article contribution to Leisure Freak

About the Author:

John Blakely has had a passion for all things personal finance for over a decade. He is a firm believer in having big financial dreams and executing on a plan to realize them. He is an Education Ambassador for ScoreSense where you can find more of his writings.

My Early Retirement Spending Miscalculation, It’s Less Than Expected

Budgeting, Early Retirement Lifestyle, Retirement Plan, ,

I was looking at my retirement budget calculations. Just a quick glance at the planned long-term numbers I used pre-retirement to ditch the rat race at the age of 51 on December 17, 2009. I’m happy to see that after 9 years of monthly retirement budget tracking I made an early retirement spending miscalculation. Happy because it’s in my favor.

Overestimating early retirement spending is certainly a good thing. When we plan for retirement we have to figure out how much retirement income we need. It comes down to estimating what our retirement budgetary needs will be and applying inflation to the equation. To get our starting number we guess what costs will go up and what costs will go down once we dance our way out of the workplace. But it’s all an educated guess. We won’t know until we are actually living our desired retirement lifestyle and the real inflation rate is revealed down the road.

My Early Retirement Spending Miscalculation, It’s Less Than Expected

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It’s Easy To Make A Retirement Spending Miscalculation

The default advice is you’ll need 70% to 80% of your salary in retirement. That didn’t make sense to me as I was saving a high percentage of my income for retirement. I also expected to pay less taxes. I took the approach that I needed 100% of my pre-retirement frugal living budget minus estimated savings of work related costs like commuting, clothes, and the alcohol I had depended on to counter work induced stress. Then I added 10% to cover my tax obligations. That final estimated figure was far less than using the salary based calculation.

Once I settled on the budget amount I then applied a reasonable yearly inflation factor of 3%. That is except for healthcare. I pulled that amount aside and applied a 6% inflation factor against it to get a closer estimate. Running the numbers through a retirement calculator and coming up with good results is the green light to take the leap.  

The high level retirement spending miscalculations –  

My early retirement spending reality is that healthcare went way up over that 6% inflation amount each year while some others were less than the 3% I used. Some things I initially budgeted for have even disappeared. That’s because things change as we live and experience retirement doing the things we want to do. We settle into an entirely new way of living and our taste for certain things changes over time. Here’s some of my early retirement spending findings.

Healthcare – Medical Insurance

Nobody should be surprised that this went way higher than inflation for everything else. It’s my biggest retirement spending budgetary item and pre-retirement miscalculation. When I retired in December 2009 my retirement health insurance benefit cost $476 a month. For 2018 it was $1,064 and in 2019 it will rise to $1,340. Ouch! The difference between 2010 and 2018 is 123%. That’s a huge healthcare cost increase over 9 years. It should be easy to see how this one will skew anyone’s retirement spending calculations.

I thought doubling to 6% would be high enough when I separately calculated inflation costs for this item from everything else. I figured it was a reasonably obscene inflation percentage to make sure this expense item was covered. The reality is it should have been calculated using a 12% inflation rate. Aside from the company killing this retirement benefit (as they occasionally threaten) and our going on ACA if it still exists, I see little relief from this until our medicare years. I have adjusted future budget projections to reflect that realization.

Cable TV and Entertainment

When I retired we had a basic cable plan. That was our family’s frugal living compromise. Our retired parents all said with more time in retirement you will want to have a good paid TV package. Thinking our basic cable plan was plenty, I included it in our retirement spending calculation. When I retired my cable cost $35. Over the first 6 years of my retirement the same cable service slowly climbed to $92 a month with all their higher channel and fee increases. That increase was well above the 3% inflation rate I used.

We found in our retirement the opposite of our parents retirement experience. We were satisfied with local TV viewing and really only watched a handful of cable channels. It didn’t justify the cost. The nationwide analog to digital TV transmission upgrade and new antenna designs made cutting the cord easy to do. Streaming development also made paid cable or satellite service an easy retirement cost to eliminate.

We have also eliminated other entertainment cost.

We’ve started using our library where DVDs are free to check out. We also connected to our community’s event online calendars to get event email notifications and have enjoyed free concerts near us. Having time also allows us to go to the movie theater or other venues during off hours at a discount.

Retirement brings more spare time but it didn’t raise our TV and entertainment cost. It instead lowered them.

Mortgage

I retired with a modest mortgage still on the books. I calculated our monthly payment into our retirement spending calculation without thinking I would ever pay it off. But then I started a short but sweet encore career. Since I was basically living off of my retirement funding I simply directed 100% of my paychecks to the mortgage and cleared it within 18 months. This move is what made the insanity of rising healthcare cost a near wash for my early retirement spending miscalculation. This is a case of you won’t know what will impact your retirement budget until you are retired. You simply don’t know what you will do until you do it. I had no idea this would happen when planning my early retirement.

Eating Out

Even with all the free time, restaurants didn’t call our name any louder than they did before. In fact they are even harder to hear. Initially we took advantage of happy hour discounts but soon got over it. We prefer home cooked healthy meals and we now have the time to make them. We spend 50% of what we initially modestly budgeted for this.

Travel

We had a decent travel budget. We try to save money when we travel and have done that for decades. With retirement we have time to look for deals and can travel off-season. We also can make reservations and lock into deals months in advance. Another thing we have experienced is our appetite for travel has decreased over the 9 years of retirement. We simply like where we live and play. As far as travel goes we prefer quality experiences to quantity of travel. Although the cost of travel has increased over the years, I’ve found that we travel as much as we want to but are spending the amount we started with. Our travel spending has seen a near 0% inflation increase over these 9 years.

Fuel

I calculated a 50% drop in fuel cost once I retired. Simply thinking that I would be using some of my extra free time to go places but also subtracting out my 20 mile (200 miles a week, whoa!) work commute costs. In actuality the drop has been closer to 75% of our pre-retirement cost. We shop local and travel shorter distances and prefer to spend most of our time outdoors, not driving somewhere. We are lucky that we have outdoor recreation and everything needed within 5 miles of our home. Not only is fuel cost down but so is all auto maintenance like tires, brakes, oil changes, etc.

Taxes

I was paying a large percentage of income in taxes when working so I calculated 10% for my retirement income tax obligation. The reality is when I am not working it is actually only around 5% of total retirement income. Some of that is due to using a more tax efficient withdrawal strategy that I hadn’t considered before I retired.

The Takeaway From This Early Retirement Budgetary Exercise

This exercise wasn’t a yearly spending study.

I merely looked at our initial retirement budget at the end of 2009 with my planned yearly projected increases using our applied inflation estimate. Then I compared that to our spending for 2018 to see how it tracked.

I was happy to see that we are 14% less than what our calculated long-term 2018 budget projection was.

2018 was a year where we did everything we wanted to do. It was also a normal year without any catastrophic events.

For the between years there was one that did go over budget projections. It was a bad year due to a medical crisis. But the other years came in under spending calculations, some much more than others depending on retirement life events. For instance the year we paid off our mortgage and a couple of the following years before health insurance had risen so high came well below the earlier budget calculations.

Having a plan matters.

I believe this shows that having a reasonable plan along with purposeful living and spending discipline, even crazy stuff like obscene healthcare increases won’t necessarily derail one’s retirement plan.

It’s good to have an emergency fund or access to other funding in retirement.

Having the means to carry us through a bad spending year is important. The medical crisis year that we experienced could have caused problems if we only had a fixed monthly income to depend on. We need funds beyond our sunny day budget projections to get through any rainy years.

Retirement life happens and things can change.

During retirement we will do things, stop or decrease doing other things, and make decisions that we couldn’t know to plan for. In my case starting that encore gig and casually paying off my mortgage was a decision that had huge implications in the outcome of this exercise. Had I instead invested my salary, my retirement spending would have been ratcheted higher by healthcare. I would however have more money in my portfolio. Hopefully doing that would have provided higher income to counter the retirement healthcare spending increase. I think I made the better choice.

Inflation is tricky to predict but plays a huge role in planning and outcome.

I admit that my first nine years of early retirement came with many lifestyle cost items having an actual low inflation rate. Healthcare’s massive increase ate solidly into what should have been a stellar lower than expected retirement spending amount. However, had I correctly applied the higher 12% inflation rate to my healthcare calculation the results of this exercise would be off the charts in my favor. The opposite is also true. If we begin to see hyper inflation increases across the board then we have to recalculate our budget going forward. Hopefully investment income can keep up but if it can’t then spending control or possibly returning to a paid opportunity is our best defense.

Having more free time doesn’t necessarily mean spending more to fill it.

I thought we would spend more than we are for travel, entertainment, and all else we do when we are out and about. Although this was partially true in the first couple of years of our retirement, it didn’t stick. In our case having time allows us to save money while still doing everything we enjoy doing.   

Retirement Comes With All Kinds Of Spending Variables

Everyone’s retirement experience will be different. Things like retiring with a child at home that causes spending changes as they age, experiencing a health crisis, or finding out during retirement that you are a passionate travel freak, can throw all projections out the window. If that happens it will hopefully be short-term and you can find yourself back on track or find a way to adjust your budget to meet your retirement’s new spending needs.

Retirement lifestyle cost is a concern for most people when they decide to retire.

What I have found is that as long as there is a reasonable plan based on the lifestyle we want to live and can afford to live, we have a retirement funding cushion available for any bad years, and we  monitor our spending, we can overcome most challenges before they become a huge retirement financial nightmare.

There are no guarantees in life or budgets, but worrying too much about things does no good. Instead know that planning well and tracking our spending gives us the best chances. If the worst should happen then it won’t be due to head-in-the-sand financial recklessness.

Early Retirement Hindsight: What I Would’ve Done Differently

Retirement Doubt, Retirement Plan,

I feel truly blessed to have been able to pull off an early retirement. I take great pride in being able to take the leap at the age of 51. It came after a long career with a less than a 6 figure salary. Still, after experiencing early retirement for many years and knowing what I know now, I often think about what I would have done differently. Allow me to share my early retirement hindsight.

Early Retirement Hindsight: What I Would’ve Done Differently

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My Early Retirement Hindsight – The Things I Would’ve Done Differently

I Would Have Set Aside More Cash

It took time to get my retirement footing even with all the research and planning I had done. I retired with just a bit over $20,000 in non-retirement account cash available to me. It was my emergency fund, there in case I had lost my job. That certainly wasn’t an issue anymore with retirement. Looking back at my financial journey, my desire for investment growth had me underestimated how much having sufficient cash reserves can calm one’s retirement transition. Believe it or not, retirement can mess with your mind after spending decades in the rat race trenches.

Everything worked out but in early retirement hindsight I would’ve had $40,000 in cash to get through my retirement transition. It isn’t even about spending it. Instead it’s about knowing it was easily available if I needed it or wanted to spend it without having to liquidate investments.

I Would’ve Prioritized Mortgage Payoff

I never gave early mortgage payoff a thought before retiring. It did get paid down over the years and I refinanced it for the lowest payments possible. I simply figured it best to direct any extra money toward retirement savings and planned for a retirement that included a manageable mortgage payment. We rationalize that we will get better returns than the mortgage interest we save with payoff. That is until we don’t and invested money goes negative as it did when I retired in 2009.

I did prioritize mortgage payoff a few years after my first early retirement by directing the salary of my encore career to it. Years have passed since that payoff date and it still makes me smile. I underestimated the benefits. Yes, we can expect over time, investment returns to exceed mortgage interest. For some people the tax deduction also comes into play, or it used to. But in the end, without a mortgage payment you not only save that interest but you need less in your retirement budget. That means less taxes paid year after year. So much of our having a great retirement is mental. Being mortgage free certainly adds another level of mental freedom.

I Would Forget Any Notions About Loyalty & Leaving A Career Legacy

In early retirement hindsight I really messed up here. I stayed dedicated to the company and job to the bitter end. Even at the detriment of my personal life in the last years. I had built a legacy of good work and accomplishments and didn’t want to slow down and possibly tarnish it. Simply put, as far as the corporate world goes I was a dumb-ass. Nobody really cares and the memory of our efforts quickly evaporate once we are out of sight. We falsely build up in our minds the importance of leaving a workplace legacy because we are in a relationship with the company and our team of coworkers. But the reality is the relationship is just business and survival.

During a time of constant layoffs that were supposedly performance and economic based, I should have said screw the legacy and proactively made myself an attractive candidate for a severance package. All it would have taken was dragging my feet a bit and using the word “NO” when approached with asinine demands a few times. There were certainly numerous opportunities for doing that. In hindsight, had I done that I would have built up my earlier mentioned cash reserve deficiency and put an even bigger skip in my early retirement rat race escape.  

I Would Have Gained Pre-Retirement Side Gig Experience

I have had a couple of really enjoyable retirement gigs. But there is one that got away and I wonder, what if? I certainly had a passion to do it and was qualified as it wasn’t anything super technical that required advance skills or education. I was dismissed as a candidate because I was overqualified based on my career and I had no real experience doing it. In early retirement hindsight I wish I had slowly scaled back my career effort and responsibility to make time to do part-time work in this different field before I pulled the retirement plug. It’s probably easier to get a foot in the door part-time while still working. I should have been more selfish with my time and personal desires. I regret not having been able to pursue this target of interest and passion even if in the end it didn’t work out or lasted long.

Looking Back At What I Think Went Better Than I Thought It Would

Embracing Frugal Living – This not only got me to early retirement but has proved a blessing for a great early retirement lifestyle.

Retirement Gigs – When you spend decades in the rat race it is all you really know. I can’t explain how different, rewarding, and enjoyable it is to work doing something you really want to do for only as long as you want to do it.

Social Expansion – Putting in the effort to increase my social circle beyond work is one of the most fulfilling parts of my retirement. Connecting to my community has been an important key to retirement happiness.

My 72t Strategy – I funded my early retirement with an IRA using 72t for penalty free monthly distributions. It is seldom talked about and when it is there’s many cautions. I couldn’t have done what I have done without using this backdoor retirement funding approach.

 

I am sure there are a few more things in hindsight that I could come up with that I would’ve done differently in this early retirement adventure. There are always ways to have done something better. I can say that I have absolutely no regrets about retiring early or what it takes to do it. When breaking the work-to-old-age norms there is always risk. But done right or as close to it as possible, it is 100% worth taking the risk.

Is Early Retirement Using Stealth Wealth Gaming The System?

Retirement Plan, Saving Money, Taxes,

I have been told by some people who I’m routinely in contact with that I’m hard to figure out. I’m always dressed casually, drive some older but uniquely memorable cars, and they know I don’t work in any conventional sense. Yet I am able to live in a somewhat high-cost area. I am seen all over town and at events enjoying the heck out of life. I do stick to what they see as a financially measured routine. Just an average friendly guy on a budget. It works great for me because that’s exactly who I am. I’m not purposely using stealth wealth to fool anyone I encounter. As I get to know people better I clue then into the ways of early retirement.

For me, practicing stealth wealth isn’t about hiding my net worth from my family, friends, and community, although I don’t talk about it with people. It’s about how I want the government to see me. Based on my taxable income, I live below average median income levels. A type of stealth wealth strategy to live beneath the government tax and benefits radar. Am I gaming the system? Good question. I’m of sufficient net worth to retire early, yet I’m indistinguishable from the lower-income working class. I simply live the same frugal lifestyle that I enjoy and used to reach my early retirement financial target. I just look like most everyone else in this income centric society and its current economic rules.

Is Early Retirement Using Stealth Wealth Gaming The System?

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Is My Use Of Stealth Wealth Gaming The System?

I shamelessly admit that I use stealth wealth tactics to my advantage. As far as I am concerned I’m just using a different flavor of what the worshiped rich do. I use every legal means possible to pay less taxes and make myself able to take full advantage of qualifying benefits. Some people who I talk about early retirement with feel that some aspects of stealth wealth seems as unfairly gaming the system. I have to explain that “the system” they feel uncomfortable about gaming is based on rules and laws. None is being broken. For some crazy reason the thought of any of us common folk doing what the worshiped rich do is somehow unethical. I wonder, where do these kinds of thoughts come from? Well, I refuse to feel any shame and here’s why –

Using Today’s Most Worshiped Rich Guy As An Example To Make My Point

This guy proves why using stealth wealth to game the system must be alright with today’s world. He flaunts his wealth. It’s well known what was revealed during the presidential debates. In one of the only dug up tax returns, even with millions in income, he used tax loopholes to pay no income taxes. He famously proclaimed, “that makes me smart”, yet it wasn’t held against him. He obviously received the electoral-college edge to become president and has millions of ardent followers.

So, if the worshiped rich do it and it’s seen as OK, why then is it held against or thought unethical if the working class takes advantage of any tax laws and benefits that are available? Is gaming the system only acceptable for the worshiped rich?

Obamacare – Affordable Care Act (ACA)

Having a decent net worth and doing what it takes to qualify for low-cost Obamacare health insurance is the issue some folks lose their minds over. That’s why I always start with using the most famous, or as some prefer, infamous, of today’s worshiped rich guys as an example.

Yes, if you use stealth wealth strategies to keep your taxable income low enough in early retirement, you can get federally subsidized health insurance. Why is stealth wealth retirees using subsidized ACA healthcare different from when billionaires pay no or very little in income taxes? They certainly receive the same benefits of being an American as the working class people who do pay taxes every year. Answer: It isn’t! If purposely structuring your income to qualify for taking ACA subsidies is being an unethical leech, then so is the billionaire president or any of the many others for paying no or ridiculously low federal income tax on millions in income.

It’s perfectly legal and within the rules to be an IRA millionaire and apply for Obamacare subsidized health insurance. For many people, early retirement before age 65 and starting medicare must find a way to overcome the huge healthcare challenges. If your income amount qualifies, the ACA should be considered without shame, regardless of anyone’s overall portfolio size.  

My Early Retirement Healthcare

I’m not on the ACA and I pay $1064 a month (2018) for my health insurance from an employer retirement benefit. I’m one of the dwindling few Americans who after 30 years of service had something like this available. But it has changed to a use-it-or-lose-it for life benefit because of company mergers and is under threat of being cancelled every year. Based on our taxable income I could get a subsidized ACA silver plan for half what I’m now paying. But the ACA is under constant political threat. So, even though I could save substantially, I won’t give up my retirement benefit. I’m on my retirement benefit healthcare plan until it gets killed. But I see no shame in going to the ACA If anything happens to my retirement health plan.

Purposely Lower My Tax Rate

When working there was little I could do to lower my taxable income beyond what a 401k and IRAs could do. After that I was just left with Schedule A deductions. There wasn’t a legal way that I could substantially reduce my taxable income. I paid in taxes nearly what my yearly retirement budget is now. Once I retired and started living off of my portfolio I had some control over taxable income. My biggest stealth wealth move is looking like I live on a lower income and thus pay little in taxes. It comes right out of the billionaire handbook – Pay the least amount of taxes possible.

Tax Efficient Income Strategy

I purposely use a tax efficient retirement withdrawal strategy to control my taxable income and improve portfolio longevity success. Instead of trying to find tax deduction loopholes as the worshiped rich do, I use a mix of both taxable and non-taxable funds during the year to get my total budgeted amount. It lowers my taxes and is what allows me to be eligible for ACA subsidies if I ever need them. If I were to go on the ACA I would need even less taxable income from my portfolio and will pay even less taxes. A win-win!

Delayed Tax Payment

Not only do I keep my taxable income low but I only pay the minimum taxes through the year without getting hit with a underpayment penalty. I make the government wait to the last-minute to get what’s fully owed. The amounts I hold back go instead into an interest paying account. Why shouldn’t working class folks, the dwindling middle class, collect interest on their money by saving it instead of prepaying more than they need to? Even if it’s a small interest income amount earned, it’s more than zero. I never overpay through the year. Refund my own overpaid money, interest-free, only when they are good and ready to – Forget that!

The recent tax cuts threw us a few peanuts and gave the big cuts to the worshiped rich and corporations. That alone is reason to think about ways to game this part of the system in our favor just like the folks who dreamed up this new scheme. What’s good for the wealth flaunting elite is good for the stealth wealth early retiree and everyone else.

Living Well Without Shame

Early retirement is all about living well, very well, for the working middle class. There are many things that should be considered. Some are less known than others, like the retirement loophole to get IRA money before age 59 ½ without penalty. Using stealth wealth strategies both in how we live and how we structure our finances isn’t gaming the system. It’s taking advantage of a financially sustainable lifestyle within the existing rules and laws so we too can live well.

Gaming The System? Hardly!

As to those who feel stealth wealth retirees are gaming the system, we need to get over squabbling with each other over the peanuts that the worshiped rich message we are only worthy of. What next, tell us that the Social Security and Medicare we were forced to pay into our whole lives should be cut to cover the growing deficit.? A deficit made worse from the worshiped rich tax cut.

We have the same rights to pay lower income taxes and collect any qualifying benefits as the billionaire ruling class and mega corporations do. It isn’t gaming the system at all. It’s about putting our money towards our retirement freedom, the causes, charities, and the people we care about. And, for me that list has absolutely no worshiped rich folks on it.

I do love being the regular ordinary guy that’s hard to figure out by folks. After decades of paying into the system a higher percentage of my income than the worshiped rich do, I love even more being seen by the government as a lower-income working class taxpayer like most everyone else. I do admit there may also be enjoyment that goes beyond financial in my tactics. Sometimes it’s the little things that we amuse ourselves with that adds a little fun to life.

The Retirement Calming Effect of More Cash and No Mortgage

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There are a lot of financial decisions a retiree has to make. How to best fund their retirement, when to begin social security benefits, etc. But once that is settled, there’s a couple of decisions a retiree might have to make that can bug us to no end. How much cash should I keep and should I pay off the mortgage? If you have the funds to even consider these questions then the mental conflict is to just keep the money fully invested in the markets. That way it can possibly provide decent returns. I made these retirement money moves and can attest to one under-reported and powerful aspect to these decisions – The retirement calming effect of increasing cash and being mortgage free.  

The Retirement Calming Effect of More Cash and No Mortgage

My Retirement Calming Decisions of Cash and Mortgage

It’s certainly a first-world problem for those of personal finance success. Even talking or writing about it feels a little dirty knowing the struggles of many underfunded retirees trying to figure out how to pay for retirement when there isn’t enough. I am only able to reign in guilt when I think about where I came from to get here. Just another poor working stiff who used frugal living to feed an early retirement plan.

I never questioned retiring with a mortgage when I retired in 2009. There was about $100K still on the bank’s books and I budgeted for the monthly payment. As to cash, I left my first career with only about $20K available. The rest of my retirement funds were all in recession diminished stocks and bonds within my 401k and IRAs.

The Retirement Calming Effect of Cash

Going To One Year Retirement Funding Cash

I did wish that I had set aside more cash but it didn’t overly disturb me. It was just there in the background of the normal “what ifs” all new retirees go through. I had always planned on living a “retire early and often” lifestyle and after a few months put it to action. With my first stepped down retirement gig I continued to live off of my 72t distributions and I used my salary to increase my cash to around $35K. That represented one year’s retirement funding. I invested the rest of my paychecks into the offered 401K and my IRA.

That simple cash increase gave me my first retirement calming taste of having a bigger cash cushion. It reminded me of how I felt when I became non-mortgage debt free. This small cash jump gave me a feeling of calm knowing I added to my financial strength and it told me something about myself. Not only did I feel more confident about my retirement funding, but I didn’t sweat all the market swings as much during this 2010 through 2011 period of my early retirement.

I was a proud risk taker regarding my ditching a long career for early retirement. But I mentally preferred a bigger cash cushion when it came to my portfolio. Financially rational or not, I simply had less market worry and higher retirement confidence.

Going To Two Years Retirement Funding Cash

Two years into my early retirement I left the stepped down retirement gig and started what I call my encore career. I stuck to living off of my 72t and used the new gig’s larger salary like I had done before. Knowing the retirement calming effect I received with my first cash increase, I decided to increase my cash to cover 2 years retirement funding. It provided even more early retirement confidence. I discovered that I find financial calm in using cash to hedge against market volatility.

Going To Four Years Retirement Funding Cash

Years after my encore career and last paycheck ended I decided to once again increase my cash. The market was at all time highs and when running my numbers I found that I could take some chips off of the table to pump up my retirement cash. There’s no doubt about it, I’m really calm now. I should be able to easily outlast a recession or market downturn when it comes and for me there’s nothing more retirement calming than that.

The Retirement Calming Effect of Being Mortgage Free

As I mentioned above, I had never considered retiring mortgage free. It seemed out of reach without staying on the job I no longer enjoyed a lot longer. My total house payment was reasonable after refinancing to lower interest rates and it made for manageable payments in my retirement. I had already dropped below Federal Tax ‘Schedule A’ filing thresholds and wasn’t getting any mortgage interest tax benefits. It was during my encore career after hitting my 2 years cash goal that I made the decision to focus my salary on the mortgage. It was dispatched just 18 months later and I joined the small ranks of mortgage free homeowners. I was surprised at how eliminating this payment made me feel. No matter what manufactured market crisis occurred, I would own my home. It’s an intangible value that provides long-lasting retirement calm and happiness.    

Why How Much Retirement Cash To Have or Using Funds To Clear A Mortgage Are Tough Questions To Answer

The financial argument against cash is its inability to retain value against inflation. My cash isn’t dead money. I do get a little interest from my savings account and money market accounts. I am getting 2.5% from a 13 month CD and will continue to look at other higher interest earning opportunities. Yes, all pay less in interest than inflation. But the majority of my portfolio is invested in the market and I see the difference between cash’s earnings and inflation as the cost of what I call my retirement calm insurance. I find value in the emotional peace and that makes it worth it.

When it comes to paying off the mortgage the financial argument is about the loan interest percent saved in payments vs. the percentage that could be earned if left invested. I locked into a guaranteed return. No matter what else happens in the markets, I have that locked down. But the other benefit is it takes less to live on. When not working as I am now and living off of my portfolio, I’m able to reduce my taxable income by the payment amount. I not only have a guaranteed return but I now will pay less income taxes too.

The argument against both higher cash savings and mortgage payoff includes the lost opportunity for money left in the market for big market gains if invested right. Especially over the long-term. Depending on your goals, this can not only impact your long-term retirement funding but also any thoughts towards leaving a financial legacy to your family. That’s why it’s important to run your numbers through a good retirement calculator to make sure your portfolio will last at least as long as you do. You also need to have a clear legacy plan in place and make sure you can still meet it.

In the end, we all know markets don’t always go up which must also be considered in the arguments for and against having more cash and using funds to pay off the mortgage in retirement.

The Questions That Need To Be Answered

I’m not some super investor, had no inside secrets, nor received a windfall to retire early as I did. I am just an average Joe who decided that I wanted to be free of the rat race and figured out how to pull it off in a way that worked for me. But now that I’m retired, I prefer to not be looking over my portfolio’s shoulder all the time. I prefer the retirement calm of what the extra cash and mortgage freedom provides me.

The questions I needed to answer before making these retirement calming moves were –   

Is now the best time to pay off the mortgage?

We had considered long before retirement that we would sell our home and move to a smaller home in a less expensive real estate market. That way we could be mortgage fee. But after grand-kids came we nixed that plan. I don’t believe it would have made sense to use taxable retirement funds to payoff a mortgage. In my case I had income coming in and no mortgage interest income tax benefits. Payoff also meant reducing my taxable retirement funding needs in the nearer future. Yes, it was the best time to pay it off.

Do the numbers still work with so much cash on the sideline?

When I increased to one year and two years worth of cash this wasn’t an issue. I was happily in retirement gigs and used the extra income to grow cash. This question came in the jump to four years cash while I was relying 100% on my portfolio. Running the numbers through the FIREcalc retirement calculator was my first step. I then made my proposal to my CFP and they also ran my numbers. Yes, the numbers looked good.

If the numbers work, then why risk unnecessary injury playing in a game already won?  

The same question echoed during my decision to retire or stay on the job longer. Do I have something more to prove or can I be happy and satisfied by making the move. I never regretted giving up the title and salary of my career, I had enough. It was easy to answer this question. I had no doubts. I wouldn’t regret about my higher cash savings missing out on any market runs.

Would I really value this as retirement calm insurance?

History and numbers show that staying at two years cash with a diversified asset allocation would work fine over the long-haul. But what I was going for was gaining even less concern about market volatility and being able to fully enjoy my retirement without thinking about finances all the time. The sting of the last great recession hit me hard. When being truthful about what causes me more distress, either having this sidelined money miss out on a bull market run or not having enough cash to get through a long market downturn, the answer was clear.

Are there any other upsides other than the retirement calming effect of jumping up cash?

Along with the memory of the last great recession’s sting is also the memory of all the opportunities to buy heavily devalued investments if only I had some cash. In 2009 as the markets hit bottom and the years that followed, stocks were a bargain. Having higher cash reserves means being able to take advantage of any future investing opportunities.

 

Everyone’s risk tolerance is unique to the investor. Finding the perfect formula that meets both necessary funding needs without adding investor distress is the recipe for a retirement calming portfolio. My mentally preferred recipe just happens to love the higher cash allocation and being mortgage free.

Seek that which keeps you calm, Lokah Samastah Sukhino Bhavantu.

Stop Waiting For Birthdays, There’s No Ideal Age To Retire

Funding Retirement, Retirement Plan,

When asked, when is the best time to retire, do you answer with an age somewhere from 61 to 65? If you do then you are part of a majority of Americans according to a Bankrate.com survey and you most likely answered WRONG. There is no ideal age to retire. The correct answer is when you can afford to retire. When I pose the question as the “best time” to retire and the first thing that comes to someone’s mind is an age, then I suspect there’s a lack of a real retirement plan or one of confidence to back up that “age” answer. It’s just a birthday based retirement hope plan.

Stop Waiting For Birthdays, There’s No Ideal Age To Retire

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Why Age Comes To Mind, Even When There’s No Ideal Age To Retire

When conversation turns to retirement and I ask people when they plan to retire and they answer with “in “X” amount of years” it’s easy to believe they have an actual retirement plan of some kind. But most of the time I get the “age” answer somewhere between age 62 and 70. People get hung up on age based retirement goals with little thought as to exactly why. Some understand their finances enough to know the money details of why they answered with an age, but unfortunately many who haven’t thought about or haven’t done any kind of retirement planning replies with an age that just sounds like an ideal age to retire.

Dig deeper and it comes down to a psychological association to Social Security and Medicare eligibility along with a pinch of retirement tradition. Then it’s whipped up into hope, whether there is any financial basis to back it up or not.

When I tell these folks I retired at the age of 51 it gets their attention and starts their retirement wheels turning. There’s usually a puzzled look followed with- How? That’s when things get interesting. I get to explain that we do have some power to retire without solely relying on traditional retirement birthday milestones and just hoping for the best. It’s about reaching our ideal time to retire. That has less to do with our age and everything to do with our personal finances.

Forget About An Ideal Age To Retire, Decide To Set Your Ideal Time To Retire

Certainly there are a lot of people with a lifetime of low wages, inconsistent employment availability, or have experienced other financially catastrophic situations during their lives. They are unable to save or adjust their lifestyle enough to escape waiting until their Social Security age requirements to have any kind of retirement. But that isn’t about being your ideal age to retire. It’s still a matter of your ideal time to retire because of your financial situation. However, you won’t know that or have any idea what’s ahead if you don’t get your head in your own game.

When would you want to retire?

As time goes on, shifting our retirement milestone mindset away from age and instead toward our finances may give us a better chance to bring retirement more in alignment with when and how we want to retire. Too many default age based retirements find out at the last-minute that they still can’t afford to retire. Hitting the age to begin Social Security and Medicare isn’t a guaranteed fully funded retirement. There are things that everyone should do to shake themselves free from the ideal age to retire thinking and just hoping it works out.

Set Your Own Financial Retirement Goals

There are a lot of opinions about retirement out there. Take in the abundance of broad stroke financial advice as valuable guidance, not hard rules to conform to. Most of it borders on the minimum to be done. The system is designed to cover the masses without regard to individual initiative to break free from employment and consumer conformity. It’s geared toward traditional old-age retirements. Strive to beat it when you can.

Social Security and Medicare –

Social Security will play a major retirement role for most of us. There’s a lot of talk about delaying retirement until age 70 when we can get our maximum Social Security benefit. Others say to take Social Security as soon as we can. People can weigh the pros and cons of starting it early at age 62 through waiting until age 70. However, those are financial considerations about how it plays into our financial and even our retirement lifestyle goals. Something that even people who retired early, long before being Social Security and Medicare eligible, calculates into future retirement funding plans.

Separate the Social Security and Medicare age requirements from when you see as your ideal time to retire. Make a cognitive decision as to how much they will play in calculating your ideal retirement time.

Age is just part of our financial calculations, like when it’s best to start taking Social Security benefits to reduce reliance on our savings or lack thereof, vs. longevity calculations. There’s also the impact Medicare will have on the budget and future funding needs.

Take control of your future –

It’s done by shedding debt and creating a happy and sustainable budget-friendly lifestyle. Then purposely saving and investing for retirement. A retirement that gets to start once financial numbers are hit, not just hitting an age. Here’s what to do –

Figure out the lifestyle you want to live

Take stock of your current lifestyle and how you want to live in retirement. Figure out the “where and how” you see your ideal and financially backed life as being. Cut waste from your lifestyle and commit to a sustainable plan. Look at retirement like anything else in life. Not what age, but how much will it cost and when can I afford it.

We can set financial goals to be met by a certain age but it’s the financial numbers that we’re motivated to hit, not the birthday. The date is only relevant to measuring and tracking our progress against. See retirement as the biggest purchase of our lives and save for it because it’s a huge purchase that we can’t finance. We then get to dictate what we buy and when we buy it.

Track and validate finances, not the number of birthday candles

Once figuring out the lifestyle you want to live you get a better picture of what it will cost. Calculate how much money you need, then determine your ideal time to retire. Use a good monte carlo type retirement calculator and start playing with the numbers with different retirement dates. Pull your Social Security estimates and plug into the calculator different benefit start dates and their associated payment amounts.

Is your ideal time to retire before Medicare eligibility? Figure out how and where your retirement medical insurance will be handled and include its cost in your retirement calculations.

Diversify your investments within your risk tolerance and stick to your retirement savings plan. Plug into the calculator different stock-to-bond ratios to understand what impacts it has on your retirement funding success.

If the calculations show your retirement cost and affordability are out of whack, then time to rethink your desired retirement lifestyle. Change your plan. Just like when you can’t afford a Cadillac you instead decide to buy a Buick or Chevy to make it work and still get what you need and most of what you want.

After getting an idea of your retirement financial goals you should track your progress, success, and mistakes. Make adjustments with life’s ups and downs but always move forward toward your financial goals.

Birthdays come and go

Celebrate birthdays but don’t solely count on them to identify your ideal time to retire. Let your planned financial situation do that. Hopefully that happens early enough that there will be many birthdays to celebrate in retirement.

Seek information and get serious about retirement planning. The earlier we do this the easier it is to take control of our future. If you need or want help, seek professional assistance from a CFP. Hopefully if asked when you plan to retire you can say with confidence in “X” years and have the details to back up why and how. Remember that even if you try to better your finances and fall short, or your ideal time to retire still depends solely on your waiting for Social Security and/or Medicare, you are much farther ahead than if you had done nothing to take control of and better your personal finances.

Now let me ask you, when is the best time to retire?

Want Early Retirement Solutions? What You Really Need Are Ideas

Retire Early, Retirement Plan

FIRE is a growing phenomenon. Who wouldn’t want to set a course for financial independence and early retirement? Anyone interested in pulling off this extraordinary feat can do research and get all kinds of early retirement advice, opinions, and success stories. Based on posted negative comments I’ve read when doing my own research, not all of it is seen as helpful. Perhaps many hopeful FIRE Walkers are just taking the wrong research approach. Here’s a thought, forget about looking for early retirement solutions. What you really need are early retirement ideas that you can use and inspire your own solutions.  

Want Early Retirement Solutions? What You Really Need Are Ideas

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The Frustration of Looking For Early Retirement Solutions Instead Of Ideas

FIRE comes in all kinds of flavors and not all of them are going to exactly match your financial or income situation, your early retirement wants, or even what you value in your lifestyle. With the flavors of FIRE running from Frugal Lean FIRE to Fat FIRE, it’s no wonder that looking for early retirement solutions instead of useful ideas that fit well for you can be frustrating.

Here’s the deal. There is no one size fits all early retirement solution to be found. It’s all  just guidance based on other’s early retirement success. Most of it orbits time-tested financial common sense. Use what is aligned with your unique values, beliefs, desires, and abilities. Discard from memory or skip over anything that won’t work for you. Then put in the effort to formulate your unique early retirement ideas.

Taking Early Retirement Ideas and Making Your Own Plan

My early retirement isn’t necessarily what you might consider how you view early retirement. But parts of it might be. When I was reading books about early retirement and then later what was found online as information was pouring out, I found a lot of things that just didn’t apply to me. When that was the case I moved on and just took what was better aligned with my unique situation and wants. I was constantly surprised by little gems that would totally work for me or something obvious I had overlooked. But first it’s important to understand a few things before going in.

Know what you want –

Early retirement is more than not having an alarm clock, saying good riddance to commuter hell, or never having to report to a job with work, coworkers, or boss we despise. That darker stuff defines what we don’t want and won’t allow as part of our early retired life going forward. We need to know what we want to have. How else would we be able to know if we come across a good idea or not?

Part of what I wanted in early retirement was employment liberation where I never would need to work. But I was OK with working for pay when on my terms for as long as it remained on my terms. My talking about retiring early and often isn’t everyone’s idea of early retirement. Just as some other’s early retirement success stories and lifestyle, where they live, how they live, etc. doesn’t appeal to me. But there are always ideas that can be taken that will be a great fit to use.

Come to grips with your unique situation and life –

As the saying goes, reality bites! Once we know what we want it comes down to whether we have a chance in hell of pulling it off. I loved reading about the 30-year-old retiree who amassed a $1M+ portfolio and lives frugally off of the income. Or young people who retired early and travel the world. It’s fascinating reading but my reality is different. I didn’t earn enough or could live frugally enough to match their financial accomplishments at that young age. My life’s dedication and direction where I wanted to stay close to family also created reality based parameters that I wanted to stay in. Their examples didn’t offer me an early retirement solution, but there’s always ideas that could be used within my unique reality based situation. I then maximized those ideas for my income, frugal lifestyle, where I lived, how I wanted to live, etc.

How far are you willing to go to get it –

I would do anything to lose some weight except diet and exercise. Well, good luck with that. There’s no easier way to achieve results.  The same kind of logic goes for early retirement. The rules of the universe will always apply. We have to save and invest a large portion of our income to retire early. What kinds of lifestyle changes are we really willing to do to make this happen? Is extreme frugality on the table? Starting a side hustle or going for a promotion to bring in extra income? Moving to a lower cost home, city, state, or country? These are all parts of people’s early retirement success stories from which ideas that apply to us can be born.

I could see that we had room to decrease our lifestyle cost without jeopardizing our happiness. There was also room for more financial discipline to boost our savings rate and refine our early retirement strategy. Figuring out what we are willing to commit to and turning ideas taken from other’s early retirement stories is the right recipe for success.

Not all early retirement research is going to be useful to us –

Instead of getting frustrated looking for early retirement solutions and venting in a comment or on a forum, just take the best ideas that apply based on what we know about our unique wants and parameters. Research and read about a broad range of early retirement success stories because you never know what you might find. Forget about any N/A stuff seen and just move on. Then develop your own solutions and/or seek solution help from a trusted professional financial planner.

How To Improve Your Financial Situation Today For A Better Future

Financial Independence, Frugal Living, Managing Debt, Retire Early, Retirement Plan, Saving Money, , , ,

Money is something that not everyone is comfortable talking about. Either you’re doing well and you don’t overly want to go into your situation or seem like your boasting, or you’re not doing so well and you don’t want to have to think about it. Despite which option applies most to you, you may find that you just don’t want to have to think too much about money. But if you want to be able to let your finances really flourish, you just have to. You have to be okay with thinking about money, coming up with ideas, and planning what you’re going to do for a better financial future. There’s no way around it. Because if you are going to enjoy a healthy financial future, you have to start putting the wheels in motion today. And this is something that not everybody realizes.

So, you want to enjoy your retirement or have a more comfortable standard of living in ten years time? Well, that all starts today. Today is the day that you really need to be okay with making changes to your current circumstances, habits, and actions. When you can work on making improvements now, you will find that you really turn things around. Even if you’re not struggling and you have your sights set on being in an incredible situation. If you want that to happen, you need to get real about it all today. If you’re not sure where to start, let’s take a look at some steps that can help you to do it.

How To Improve Your Financial Situation Today For A Better FutureImage source

 

1- Be Real About Your Financial Situation

 

When you’re looking to make any kind of change in life, the first thing you need to do is access where you are. So think about your current situation. Whether it’s negative or positive, you need to understand what position you’re in now, so that you can work out what it will take for the better future you want. From living frugally to investing in yourself more, there are so many solutions to consider. But first, you have to really get to grips with where you are.

 

2-Deal With Debts

 

One thing you absolutely have to address is any debts that you have. If you are debt-free, then move on to point three. But if you do have debts, no matter how big or small they may be, you’ll want to work on paying them off as soon as possible. So speak to your providers and see if you can work out a repayment plan that is going to be as favorable to you as possible – no matter how long it takes.

 

3- Ensure You Have The Funding Available For Now

 

From here, you will want to make sure that you have all the funds you need to live today. This means that you will need to know that you can pay your bills and afford food for the time being. If you are in a short-term financial bind you can consider borrowing money. This is easily done if your credit is decent. But, you can get a small loan for bad credit too.  Just something to consider as help to cover a short-term gap. By working out a rough budget that you can stick to for now, you should be able to cut back on things that aren’t necessary, so that you are always living within your means going forward.

Improve Your Financial Situation Today For A Better FutureImage Source

 

4- Increase Your Income

 

Now, you need to work on increasing the money you earn. These ideas to drastically increase your income are always worth considering. Yes, this is going to take work. But if you want to improve your future, it will always be worth it.

 

5- Get A Side Hustle

 

Another option is to get yourself a lucrative side hustle, as seen in that post. Sometimes, you won’t always be able to earn the money that you want from your job. But doing something on the side will allow you to get the extra income you need.

 

6- Save Today To Benefit Tomorrow

 

Now, you may struggle to cut back today, because you think you need all of those things in your life to live comfortably. But if you really want to be able to enjoy your future, you will want to make sure that you’re living frugally today, so that you can enjoy more tomorrow. This may be something you need to do for a few months or a few years, but if you’re serious about your future, this will always pay off.

 

7- Start A Savings Plan

 

To help you do exactly that, you’re going to want to come up with a savings plan. Think about the amount of money you have free to pay towards your goals for the future (more on this in point ten). When you create a plan, you should find it much easier to start putting money away automatically, rather than seeing it as difficult to part with the cash.

 

8- Think About Your Retirement

 

Now, a huge part of your future will be retirement. You’re likely here because you want to retire early. But how early are you talking? Do you know what age you’d like to retire and how you’re going to do that? Maybe it’s time to sit down and really plan out what you need to do with your career to make this happen.

 

9- Watch Your Money More Closely

 

To really help you to make this work, you have to keep an incredibly close eye on your financials at all times. Check in with your accounts daily, assess your spending daily, and make judgments going forward to help you to keep things in line.

 

10- Set Financial Goals

 

Lastly, you should find that it really helps you if you can set yourself some financial goals. Now, they don’t have to be huge, but you should ensure that you have some kind of guide in your mind about what you want to do with your money. This could be to save a set amount of money to go on a vacation or it could be to commit to a certain payment each month to a 401k. As long as you have goals in place, you should find that you can really improve things for the future.