We are retiring at 50.
There, I said it out loud, for all the world (or my 3 readers, whichever) to hear. I wanted you all (all 3 of you) to know about our plan, because I know at times I’ve cried poverty or professed my cheapness when discussing things. And I wanted you to know why two reasonably middle class people would claim they can’t afford the same things most other Americans already spend money on. It’s because our resources are tied up in our future priorities instead of our present wants. It’s our choice.
And for the record, I prefer “frugal” to “cheap”.
David and I have been planning our early retirement since shortly after we met. We’re not delusional, or job-hating (right now), or trust-fund babies. Neither of us have ever had super high paying jobs or inheritances or even incredible luck in the stock market. We are average people with average jobs and average abilities. We just practice above average fiscal responsibility.
We save over 14% of our annual income in retirement accounts, plus we put money in additional investments.
We have a cash savings equal to one year of my salary. Okay, I work part time now, so it’s not as much as I would like, but still. It’s there, and it’s liquid, in case of emergency.
The only debt we have is our mortgage.
We drive old cars. No, really old. Mine is a 1996, David’s is a 1999. Mine was bought new and paid off in 2 years. David’s was bought used, for cash. We maintain them, and plan to drive them until it’s no longer economically feasible, i.e. the repair costs rival a down payment on a new car. At that time, we’ll replace them with used cars (paid for in cash). I think we should get bonus points on this one for environmental responsibility, too.
We use credit cards that give 1% back on all purchases, and pay them off every month. Always. When the rebate checks arrive every year, they go straight into savings.
Oh sure, we indulge here and there. We have satellite TV and a DVR. We like to watch movies, we still travel (though not much anymore), and occasionally, we go out for dinner or drinks. And don’t get me started on our art collection and our books. Or David’s wine hobby.
But we don’t get carried away with spending. We live in a modest house in a modest neighborhood. We eat gluten free and healthy on a budget. We don’t own every electronic gadget out there, though we desperately want a Wii. We give generously to several charities, but won’t pay $50 each to go to a charity event if we can volunteer and go for free. Yes, I’m talking about the South Florida Gluten Free Cooking Spree in November. And yes, I would still go (and pay $50) if I couldn’t volunteer. But they do need volunteers, so instead of donating money, David and I will donate time (and probably a little money at the event). It works out well for all of us.
Sometimes being frugal kind of, well, sucks. When I pull into the parking lot at work and my 12 year old clunker is surrounded by gleaming new Mercedes, BMWs, Corvettes and Bentleys (yes, really), well, I get car envy. And when my friends talk about their shopping trips and their spa treatments and the games they bought for their Wii, David and I exchange a wistful glance.
But then we go home and talk about how great it will be to retire at 50. And we look at our net worth. And that makes it all better.
So can we really do this? Will we really do this? I don’t know for sure yet. We are fiscally on track, and we really want to. But our projected retirement date is over a decade away, and who knows what will happen between now and then. We might not actually leave work at 50, but I damn sure want to have the fiscal resources to do so, if I choose.