I’m retiring within a decade and it’s thanks to 3 realizations I’ve had over the course of my career
7 min readI’m retiring within a decade and it’s thanks to 3 realizations I’ve had over the course of my career
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- FIRE stands for “financial independence, retire early,” and the movement has gained momentum over the last decade.
- I’m planning to retire before 50 with plenty of money to enjoy the next decades of my life.
- I don’t want to have to work until I die, compound interest is on my side, and it’s always good to have options.
Over the last decade of self-employment, I have worked many 50-plus hour weeks, as well as in planes, trains, and even gas station parking lots. I have purposely set my alarm for 4:00 a.m. so I could begin working before sunrise, and I have labored away many evenings, weekends, and holidays along the way.
My hands even ache as I type these words, but I’ll keep going until I’m done. Yet, I don’t work because I love it, or because writing is some sort of passion I have. I don’t even work because I need to earn a specific dollar amount to pay my bills.
I work because I want to retire early. And right now, I believe I could be around seven years away.
Why I started pursuing early retirement
I am 40 years old, and my husband is 41, which means we could potentially retire at the ages of 47 and 48. It all depends on how much we can invest until then, and on the investment returns we receive. At the latest, I believe we can both easily retire at age 50.
It’s also possible we could retire earlier if we wanted, but we don’t want the constrained sort of early retirement you hear a lot of FIRE bloggers write about (FIRE stands for financial independence/retire early). We don’t want to cut coupons or live in a tiny home, nor do we want to avoid dining out for the rest of our lives. Not at all.
Some would say we are pursuing Fat FIRE, which is basically early retirement on steroids. Where FIRE stands for “financial independence, retire early,” Fat FIRE assumes you want more money than you need so you can continue your current lifestyle or better.
For my husband and I to live the retirement lifestyle we want, we need enough money that we can maintain a high standard of living. For us, that mostly means being able to travel internationally several months out of the year while also maintaining our residence at home.
And of course, we want to have plenty of money so we can have breathing room and never, ever have to worry about money again — even if we don’t work for another 40-plus years. If I want to go out to dinner, buy a new kitchen gadget, or donate to a cause I care about, I want to be able to do it without hesitation.
But the main reason we’re pursuing early retirement isn’t so we can feel “rich.” It’s so we can live true, authentic lives without having to worry about projects or deadlines or pointless Zoom meetings.
One day, in the not-too-distant future, I want to wake up in the morning, drink coffee, and read aimlessly for hours. I want to spend months in my favorite cities (Athens? Zagreb? Rome?) around the world, exploring every street and the little off-the-beaten-path sights I never have enough time to see. I want to spend four hours making meals from scratch with absolutely no regrets because I have nowhere to be and nothing else to do.
I also want to have time to volunteer and pour myself into projects I care about without having to be paid for my time and efforts.
Basically, I want to do whatever I want. There, I said it. I don’t want to work.
3 reasons to pursue early retirement
What’s funny is, a lot of people seem to think pursuing early retirement is really strange. After all, most people in their 30s and 40s are deep into their careers but not worrying about the future too much quite yet.
But now that I’m a little older, I actually think it’s nuts to not think about retirement at all. In fact, I think it’s ludicrous to work 40-plus hours a week, not have any idea where your money is going, and just hope for the best. The incredibly sad thing is, that is what most people my age do.
The numbers don’t lie. A recent Vanguard study revealed that the average 401(k) balance is just $111,572 across all age groups. For those ages 35 to 44, the average balance is just $76,354, and those ages 45 to 54 have just $142,069 saved.
Even for high-earners who bring in $150,000 or more each year, the average 401(k) balance is $340,245 and the median balance is $201,301.
No matter who you ask, it’s safe to say all of these numbers come up short. If you’re curious why I feel the way I do about early retirement and wondering if you should get on board, here are a few concepts that helped to change my perspective over time.
1. You should not have to work until you die
According to recent data, the average retirement age is around 64, although individuals in some states retire later than that. Meanwhile, the average life expectancy in the United States is 76.4 years, according to the Centers for Disease Control and Prevention.
This means that, if you go with the status quo, you’ll likely work 40 to 50 years of your life before enjoying the final decade or so and living the way you want. Unfortunately, far too many people have health problems that prevent them from following many of their dreams at that point, and those on a limited income may not be able to afford to.
I mean, you may want to travel the world when you retire, but you may not be in the best health or have the cash to do it unless you plan ahead.
2. It’s always better to have more options
I believe we will reach our retirement number in less than 10 years at this point, but that doesn’t necessarily mean I will stop working completely. In fact, I could very well continue working to create more of a buffer, or to boost my kids’ college savings accounts as they get closer to leaving the nest (they’re 9 and 11 now).
Heck, I might keep working on special projects so I can pay for over-the-top travel I normally wouldn’t splurge for, like a business-class trip to Dubai first then the Maldives, where we could stay in an overwater bungalow.
But the point about saving for early retirement is getting the option to quit working if that’s what you want. If you don’t save early and invest often, you’ll have to keep working whether you want to or not.
3. Compound interest is magic
Here’s another thing that has become painfully clear to me over the years — the incredible power of compound interest. I don’t think many people realize that, if you hope to rack up $2 million or $6 million in a retirement account, you don’t actually have to save and invest that much money.
All you have to do is invest some (enough!) money on a regular basis and give it the room to grow. From there, compound interest will do the rest.
For example, imagine you could save $1.5 million by age 40 and you hope to retire at age 50. If you invested $1.5 million by 40 and earned a 7% return for 10 years, you would have more than $2.9 million by the age of 50 without adding a single cent to your account. That’s just an example, but it illustrates the magical powers of compound interest.
We all know that not everyone can pursue early retirement, or for some, any type of retirement at all. But for those who can, it seems like a shame to work hard for decades without having an end goal or any type of plan.
If you run the numbers, you may find that hitting retirement earlier than expected may be more attainable than you think — especially if you start fairly young. At the very least, you should play around with a compound interest calculator to see what it would take to reach your goals. One day, not too long from now, your future self might thank you.
This article was originally published in December 2020.
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