What Early Retirement Means to Me and What Will Define Our Retirement Readiness

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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 with 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 doing these quality trips for a longer period of time. 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 an 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. If everything goes according to plan, Mrs. Enchumbao will retire at 34 and I’ll retire in my early 40’s. But, who cares if some believe that we’ll be too young to retire? The point is that we’ll be 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% during the last five years. Due to our effort of saving much more than our peers, 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’ll retire, it’s how much we put aside every time those paychecks hit the bank account.

early retirement means

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 sad outcome.

So, because we don’t spend it all, cutting the paychecks from our lives will not feel painful when we retire. We’ll continue to spend in the same way. What a great transition into retirement that would be. 🙂

It’s amazing that today we live on much less than we did just seven years ago, 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 on 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.

This year 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 now, 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 a saturation of junk in our lives. We live very happy lives spending less than half of that money.

Last year 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 a 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.

 

early retirement means

A well-employed dollar can bring you a never-ending fountain of true happiness.

 

The only institution that claims a portion of our paychecks is our 401(k) provider. They’re in charge of shielding that money from taxes and transferring it to our 401(k) accounts.

Then, we take a look at our asset allocation and send those dollars off to work! 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 the 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 two years.

 

early retirement means

Society will judge you for retiring early

I don’t know why society can be so harsh on everyday middle class folks that retire early. Why do we do that to ourselves? What is it with all these judgments on who’s really retired and who’s not?

However, we’re not that judgmental when it comes to celebrities retiring early.

Many professional athletes retire from their sports 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 that retired from basketball in all his glory or as a guy who is not retired because he makes money from endorsements?

Or maybe you fantasized about him during his underwear days. Was he with Hanes or Fruit Of The Loom? I supposed he must have retired from those activities as well.

 

 

And again, famous or not, who would care if he’s retired or not, as long as he’s happy.

We should be celebrating other people’s happiness, not turn every piece of positive early retirement news into a hate spectacle.

What would 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, where someone just likes to hear themselves talk.

Ever had one of those meetings?

Early retirement will mean that we claim our time back

And that is the ultimate freedom, to be able to claim our time back and declare work as optional. The alarm app will be deleted or move 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, 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 means 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 fire those work 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 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 going out to work in the rain? I sure don’t enjoy dressing up with work clothes and leather shoes to face the rain. Well, in retirement, I look forward to skipping going out in the rain.

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 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 work computer for hours, I’ll get to enjoy the outdoors a lot more. I’ll get to write for fun when I feel inspired, including between 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 passionate 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: true happiness fueled by financial independence.

What does early retirement mean to you?

Please like & share:
How We Became Big Believers of Early Retirement and Rejected The Nonsense That Leads to an Average American Lifestyle
3 Constant Reminders at Work of Why We Need to Seize the Moment and Retire Early

Mr. Enchumbao

I work for a large investment management company helping people save for traditional retirement. During my spare time, I help others save for financial independence and early retirement by writing for Enchumbao. My journey to FI began in 2012. I was in a lot of debt back then, but I turned things around and became debt free a few years later. My wife and I reached financial independence in 2017 and are preparing to retire by 2020.

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2 Responses

  1. Louis Bautista says:

    Early retirement to me means no more excuses of having no money or time to do the activities I want. No more excuses to not visit my friends and family when I want to. And it also means being able to work on projects that I had no time or funding for. Great post!

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