Retiring Early and Yes I am Lazy!
May 4, 2013 2:15 PM   Subscribe

I am 28, have a $60,000 a year job in Accounting and expect to be making close to $100,000 in seven years (after that, raises more uncertain). I want to retire some time in my early to mid 40s. I have a wife who is 34 and works as a retail manager (making about $40,000 a year). I am planning on living off of 20% of our after tax income (excluding mortgage payments). We currently do not have a mortgage but are planning on a house soon. We would like to travel at will and have the (option) of not working ever again. We also do not mind retiring in a cheaper location (Costa Rica, etc) to save on costs. What investment vehicles should I be considering given that I am retiring early? What kind of jobs that are part time could a retiree easily perform? How much money should be going in employee 401k type programs vs. individual investment options and IRA contributions.

I assume I should contribute the max on my IRA and 401k. Should I also do this after retirement? Where can I get a 5+% return with "relatively" little risk? What is your opinion on immediate annuities?
posted by locussst to Work & Money (9 answers total) 42 users marked this as a favorite
 
I don't think your timeframe changes things much, you're talking about around 15 years.

You should probably go here: the FIRE early retirement forums.

I commend you on working towards this goal, btw. Someone I know was very intent on something similar in their 20s and 30s and as a result lived frugally (they still drive the car they had when they graduated from college, for example) and as a result could pretty much could stop working today if they wanted to -- but I know them primarily because they decided they didn't want to (yet). From an outsider point of view, though, it's incredibly liberating.

You may or may not find that when you get there you actually want to keep working because certain things changed (I know two people who had planned on south america and abandoned it when it got close -- one did retire @ 42, though, but in New Mexico) but you will have an incredibly different experience in your late 30s if you focus hard on building up assets early (and avoiding debt and stupid, expensive purchases). Just when you start to get tired of it, you'll be set, and your friends will be getting tired, too -- of living paycheck to paycheck.
posted by rr at 2:32 PM on May 4, 2013 [1 favorite]


Do you have kids? Are you planning on having kids? That would change the equation considerably.

I think it might be wise to talk with a fee-only fiduciary financial adviser, not a salesperson/broker. The fiduciary will develop a plan that is in your best financial interest and not try to sell you something that is in their best interest. If you elect this route make sure the person has a fiduciary obligation to you. Ask them specifically about this just to be clear.
posted by Seymour Zamboni at 2:41 PM on May 4, 2013


I really think you need to do a realistic budget for supporting your self (selves) during your retirement. That is a lot of years to draw done on interest and savings. Regardless of where you retire you will need to factor in things such as health insurance, out of pocket medical/dental expenses, transportation, other insurances, housing. travel, etc.
If you are jointly making 100,000 K that means you are probably netting 70-75 K +/- 10%--living off of 20% of that seems very thin, if not very very thin for two people with careers. That leaves you 60K +/- to invest--you can reasonable generate $70K +/- annual retirement income. This seems quite reasonable but does not account for inflation. I would guess that working until 50, not buying a house (unless it is a very good invest) and being extremely frugal is an excellent goal for a long and healthy retirement. Please do a realistic budget for the 40 years you will be retired--I am retired, planned and live quite well--but I can tell you--knowing what you want and need makes the goal much more realistic.
posted by rmhsinc at 2:53 PM on May 4, 2013 [1 favorite]


The Four-Hour Workweek has some interesting ideas in this vein.
posted by yclipse at 3:08 PM on May 4, 2013


Can't give you any direct help, but I follow Mr Money Mustaches block and while he's a little free and easy with the swearing (which doesn't bother me but might bother some) he has some interesting ideas on how to retire early and gives a lot of details from how he did it.

Not all of it sits well with some people. The idea of retiring and working part time or making hobbies pay and cutting back on living costs when retired does not go down with some peoples ideas of how to retire but it sounds right up your alley. Sorry I can't offer more advice, still at the early stages of getting my families own retirement stash in order.
posted by wwax at 3:41 PM on May 4, 2013 [3 favorites]


Lots of retired accountants do people's taxes through the tax season,working like crazy, then take the rest of the year off.
posted by ThatCanadianGirl at 5:22 PM on May 4, 2013


I checked out those sites and they all seem useful. I like the FIRE forums - lots of info on there especially in the "best of the boards" thread.

Where can I make an accurate budget? Are there any tools online or otherwise that will help me estimate expenses?

Expenses is something I haven't considered in depth because I've been more concerned about how much I could save.

Maxing out the tax advantaged accounts seems like a given to me and then I can use the individual money during the time before I have access to the other accounts.

What are the best options for individual accounts? The reputable ones with the lowest broker fees?
posted by locussst at 5:27 PM on May 4, 2013


I have found this blog helpful: caniretireyet.com
posted by Short Attention Sp at 4:54 AM on May 5, 2013


401(K) before IRA if the 401(K) has matching. But try to get a SDBA (self-directed brokerage account) for your 401(k) so you don't pay a bunch of opaque fees.

For retirement and non-retirement long terms savings buy highly diversified (total market) low fee stock market index funds or ETFs as well as some other investments such as REIT index, bond index, etc. to give more diversity to your portfolio. You'll find low fees at places like Vanguard and Fidelity.

Make your investments automatic withdrawals from your bank account so that you will have built-in discipline in your investment plan.
posted by Dansaman at 9:44 PM on May 5, 2013


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