What Early Retirement Means to Me and What Will Define Our Retirement Readiness
Spending quality time with friends and family is one of our favorite things to do. And last month we took a weekend trip to NYC, to visit friends whom we hadn’t seen in a while.
We stayed with an awesome couple that is getting inspired by the prospects of our early retirement plan. And we’re secretly hoping that they’ll join us on the FIRE journey so that we have more friends to travel with for long periods of time in early retirement. 😉
Although it was a very short trip, we had time to exchange ideas, eat delicious home-cooked meals, watch an improv comedy show and even dine al fresco. We had so much fun in so little time that I can only imagine how much fun doing these quality trips for a longer period of time will feel like. It’s definitely something to look forward to in retirement.
We got there on a Saturday afternoon and I started writing this post at 6 AM on the following morning, while our hosts and Mrs. Enchumbao were still sleeping. Awoken by my favorite morning alarm, aka the sun, I got inspired to write about what early retirement means to me.
We’re still working towards our last early retirement goal and life can always throw a curveball when least expected. But we’re so close that it’s hard not to think and sometimes drool about the prospects of early retirement.
Early retirement has a different meaning for everyone
Early retirement means different things to different people, but it’s important not to lose focus on what it means to you. Forget what the “Internet Retirement Police” says about it. Forget how us, bloggers, are trying to define it for you. Let’s just focus on what it means to each of us.
What does early retirement mean to you?
The meaning of early retirement is a very personal one and it should not be dictated by what others think.
I personally don’t care whether society will see me as retired or not when we are ready to hang our boots. What society thinks of me hasn’t been my business ever since I started to free my world from their constraints. To us, it’s all about what makes us happy.
What defines our retirement readiness
Our investments define how ready we are for retirement, not our age
We’ll retire young. Since everything is going according to plan Mrs. Enchumbao will retire at 33 and I’ll retire at 44. But, who cares if some believe that we are too young to retire? The point is that are financially ready to take that step and finally be free.
Just because someone is 65 doesn’t mean that they’re financially ready to retire. Yet, if they leave their career job, they’re considered retired.
Our savings rate determines when we can retire, not our age
We averaged a savings rate of 65%-70% during the last years of mandatory work. Due to our effort of saving much more than others in similar situations, because we focused on buying our time back instead of following the predetermined societal path, we can retire at a much earlier date than they can.
Age is not the determining factor that dictates when we retire, it’s how much we put aside every time those paychecks hit the bank account.
Living on less while getting more pleasure out of life
One thing that I appreciate about having a high savings rate is that we no longer know what it would feel like to spend all of our money. We’ve been having a high savings rate even before we got married, back in early 2014, so we never got used to spending both paychecks as a married couple.
When you get used to a certain level of spending, it’s harder to cut down, but not impossible. I challenge you to track your spending and cut unnecessary ones if your spending does not reflect a truly happy life.
If we had to spend all of our income as it comes, we wouldn’t even know where to start. It would probably be a stressful and sad outcome.
So, because we don’t spend it all, cutting the paychecks from our lives will not feel as painful when we retire. We’ll continue to spend the same way. What a great transition into retirement that will be. 🙂
It’s amazing that today we live on much less than we did back in 2010, when I woke up from consumerism. It’s like our expenses have the Benjamin Button effect.
Spending less as time goes by and becoming happier, when the consensus is to spend more as your income increases, seems like a no-brainer to us.
We’re on track for retirement. How about early retirement?
Every year we get an email from Financial Engines with an analysis of our retirement readiness. Financial Engines provides personalized financial guidance. You either get a red, yellow or green light depending on how much income they predict you’ll have in retirement.
in 2017, I got a green light and they predicted that I’ll be able to spend $113,000 if I retire at the traditional age of 65. I jokingly hinted to my wife that maybe we should retire later.
And then I expressed that if I was able to spend that much money per year back then, I wouldn’t know how to spend it to increase my happiness. I’d probably be very unhappy because that level of spending would come with added stress and saturation of junk in our lives. We live very happy lives spending less than half of that money.
In 2016, we traveled, ate well, bought what we needed and our essential and discretionary expenses totaled $33,326 if you add the profit from the rental property which helps pay our rent. So why would we stick around making more money that we won’t need?
Working to make more money that doesn’t bring additional happiness into our lives is a very inefficient use of our life energy.
And our spending levels are so low, compared to our income, that we could screw up for months, go wild, push the spending pedal to the ground and still not damage our overall financial picture.
But we still got some serious savings to do, so that’s not part of our plan!
When you spend way less than what you make, you have a nice gap to allow for splurges.
What’s the reason why our dollars do so well?
We don’t only try to stretch our dollars, but we employ them well. A well-employed dollar can bring you a never-ending fountain of true happiness. All of our dollars are either buying us something or getting invested.
“Debt (noun): an ingenious substitute for the chain and whip of the slavedriver.” ~Ambrose Bierce
None of our dollars are paying for past mistakes. We pay no interest to anyone! No banks claim part of our paychecks. No late fees or credit card interest payments make it to our monthly statements. We don’t owe a penny to anyone.
Debt is simply not a part of our lives.
The only institution that claims a portion of our paychecks is Vanguard, our 401(k) provider. They’re in charge of shielding that money from taxes and transferring it to our 401(k) accounts.
We send those dollars off to work according to our asset allocation. Some will work forever, others will retire in time. Even your dollars get to retire at some point. Who knew?
Our employer is so fond of our actions that they even add a little incentive to our savings as a match, making it a sweeter deal.
It sounds great. Doesn’t it?
Well, if you want to be free, you need to get rid of debt and fund your investments. You can start investing by saving in your 401(k).
Our early retirement plan
When we set out on this early retirement path, the plan was simple and it still is: save enough to fund our lifestyle forever. Easier said than done, only because it requires discipline.
The beauty of our plan is that it will also fund our home purchase and then some. And then some… beautiful!
Our plan will guarantee that we’ll have food, shelter, clothing and transportation covered. And then some money for travel and entertainment. When times get tough and we have market declines, we can always scale back a bit since our essential expenses will be low to begin with.
And what’s the worst thing that could happen if our plan fails? (It has very little chance of failure, by the way.) I guess that we’d go back to work, back to a regular job.
Wait, we probably wouldn’t even need to go back to a full-time job, part-time might just do.
So, we can either take an early retirement and risk having to go back to mandatory work, or we can continue playing it “safe” by staying at work?
What would you do?
We’ll take our early retirement package!
“Wait, but you’re not even age eligible for early retirement by your company’s standards.
How are you getting the retirement package? ”
Don’t need to, the plan is fully funded by us!
Please wrap it up and put a bow on it.
We’d like it delivered in 2019!
Society will judge you for retiring early
I don’t know why society can be so harsh on everyday middle class folks who retire early. Why do we do that? What is it with all these judgments on who’s really retired and who’s not?
However, society is not that judgmental when it comes to celebrities retiring early.
Many pro athletes retire from their career and move on to make even more money from endorsements and business partnerships… and nobody questions their retirement status.
Do you remember Michael Jordan as one of the greatest basketball players who retired from basketball in all his glory or as a guy who is not retired because he makes money from endorsements?
And again, famous or not, who cares if he’s retired or not, as long as he’s enjoying what he’s doing and considers himself retired.
We should be celebrating other people’s happiness, not turn every piece of positive early retirement news into a hate spectacle. I guess people resent others for trying to retire early.
What will early retirement mean to me?
Early retirement will mean no
Although early retirement will mean yes to so many delayed plans, like a 3-month European trip we’ve been salivating for, it will come loaded with a big effing NO! It will mean being able to simply say “NO” to unwanted projects.
It will mean no more meetings because I hate having to go to unnecessary meetings.
The saddest part of my day is when I have to go to a meeting and I’m faced with a window to the outside showing me nature on a sunny day.
Give me one minute and my mind starts to wonder outside the room, thinking of better things that I can do with my time then attend meetings.
Ever had one of those meetings where people just like to hear themselves talk?
Early retirement will mean that we claim our time back
And that is the ultimate freedom, to be able to claim back our time and declare work as optional like our friend Tanja from Our Next Life suggests in her book. The alarm app will be deleted or moved to the “barely-used” apps folder.
We’ll have time to eat more at home
Since I’m a morning person, I won’t need any alarms other than my body to signal that it’s time to get up. Given that I’m the chef at home, I will
probably be the one to make breakfast and the smell of the home fries and cooked eggs will be Mrs. Enchumbao’s alarm clock. (She’s nodding as she’s editing this post.)
Early retirement will mean we have time to eat breakfast at home, every day! We’ll no longer need to rush to prepare a breakfast-to-go every morning. We’ll no longer need to pack lunch.
Yes, we’ll have time to eat slow and have lunch meals on plates and not in microwaveable glass containers. Oh, and yes, we’ll also say bye to microwaves!
We’ll have time for slow travel
We’ll gladly welcome three months of summer traveling. Checking the work calendar to see how many days are left of vacation will no longer be a daunting task. Better yet, it will no longer be a task!
We’ll have 365 days a year at our disposal, aka PTO, to use as we wish. But from what I see with current FIRE bloggers, when you have it so good at home, it feels like you’re always on vacation.
So vacations or traveling will become activities to explore other cultures and the world, and not just serve as stress relievers.
Early retirement will be a time to reinvent ourselves
I see early retirement as a time to be who we really want to be. Early retirement can be a reinvention of our lives with no more excuses due to never having enough time. I feel that our bigger and better selves will follow after retirement.
Without the need to work for money, what do we want to do with our time? We’ll take our time in answering that question and it doesn’t matter how long it will take because:
We. Will. Have. Time. Period.
Early retirement will mean that we build our lives around weather, not work schedule
Do you enjoy commuting to work in the rain? I sure don’t enjoy dressing up and putting on dress shoes to face the rain. Well, in retirement, I look forward to skipping the rain and going out after the storm is over.
Do we need groceries? We’ll wait until the rain passes.
Do we need to change leisure plans due to weather? No problem, we’ll switch to indoor activities until the rain calms down.
Is it going to be too hot or too cold for the next three months? No worries, let’s pick up and explore the world and be back in time for pleasant weather.
Flexibility will be the name of the game.
Early retirement will mean that we get to be even more active
Without having to sit idle in front of a computer for hours at work, I’ll get to enjoy the outdoors a lot more. I’ll get to write for fun when I feel inspired and not work because I have to do it within the constraints of a 9-5.
I want to completely work on fun projects that get me so excited that I can’t wait to get up from bed to get to them. There’s a lot that I want to do with this blog, but I keep it on hold because of time constraints.
Early retirement will mean walking and biking more in our future hometown.
What if passion work leads to more money?
But what if we end up making money in early retirement besides the passive income from our portfolio?
I don’t know if that will happen. One thing I know for sure is that we’ll stay active. If the word retired means that we can’t stay active at some level, then we’ll never be retired. People can judge it as they please. Happiness is our only focus.
We’ll do what feels right in the moment. Like Marc Anthony says on his hit song, Vivir Mi Vida: voy a escuchar el silencio para entender el destino. (I’m going to listen to the silence to understand destiny). Check out the cool English intro to this video.
Early retirement will provide the time and space to do just that! What would be our legacy?
What’s your legacy?
Early retirement in one sentence
I have so many reasons why I want to retire early that I wouldn’t be able to finish this post if I were to list them all.
If I had to define what early retirement means to me in one sentence that would be: early retirement means taking back my time to do the things that make me truly happy, while our passive income takes care of the bills.
It sounds pretty much like our blog theme: fuel your happiness with financial independence.