Yes, you read that right.
45
My friend and neighbor down the street has been living his early retirement dream since he retired almost 20 years ago at the age of 45.
He spends the winter months in Hawaii and the rest of the year traveling throughout the West Coast. When he’s in town, he’s swimming, riding his bike, visiting national parks and living that active, healthy California lifestyle.
He’s been doing FIRE (Financial Independence Retirement Early) well before it became popularized by Mr. Money Mustache and other early retirement bloggers.
And, no, he didn’t win the lottery, have a trust fund or receive an inheritance.
How Was He Able To Do This?
1. Good Paying Profession.
When he was working, my neighbor was a dentist. He made a good, though not exorbitant income, over 20 years of practice. He worked hard to make his money, and his highest income year was around $200K.
2. Save Money
My neighbor saved 50% of his income every year. He took advantage of every tax saving opportunity available while he was working.
He did this without depriving himself or his lifestyle, but rather he spent on what was important to him. For much of his working career, he lived in a nice condo not too far from the beach instead of the big, fancy dentist home. He took nice vacations.
One thing he had no interest in was impressing others. As my neighbor said to me the other day: “You see all these people in the neighborhood trying to keep up with each other with their new Range Rovers and Maseratis. My focus was different. I wanted to get out of the grind as early as possible.”
3. Make and Execute a Plan
My neighbor didn’t just luck into early retirement. He carefully planned this. And, he executed the plan.
After some early bumps in his personal life, including a divorce, my neighbor decided that he wanted to put himself into a position to retire early. This meant figuring out his personal finances, savings and investments.
This meant grinding away at work, finding ways to work additional hours and make extra income, to maximize his chances of meeting his early retirement goals.
4. Unconventional Thinking
The notion of retiring at 45 is probably absurd, and almost certainly unattainable, to most Americans.
For much of human history, there was no such thing as retirement. You toiled away in your subsistence living until you died. In the 20th century, in many industrialized countries, as life expectancies improved, you started to see this notion of retirement. But, certainly not 35+ year retirements.
My neighbor is not a conventional thinker. He made a decision for how he wanted to live his life. He didn’t care about what he was “supposed” to do, and instead he decided for himself what he wanted to do.
My neighbor bucked the consumption culture that is so prevalent and pervasive in much of American society. His identity wasn’t tied to his profession. He didn’t spend his raises. He didn’t accept others’ vision of success.
To make the decision he did truly took an incredible amount of courage.
5. Family
My neighbor does not have children, and he readily attributes his ability to retire at 45 to not having the expenses of raising children.
Certainly, not having to pay for college tuition, clothes, food, activities and childcare allowed my neighbor to save more money and retire earlier. Kids are expensive.
But, make no mistake. My neighbor would have retired early even if he had children. Even if the expenses of children dropped his savings rate from 50% down to 40% or 30%, he would have retired early – just not at 45.
6. Invest
In your early earning years, saving a large percentage of your income is the fastest way to grow your nest egg. However, as you reach your retirement years, earnings from investments are critical to maintaining your nest egg.
My neighbor budgeted living off of 4% to 5% of his savings and invested accordingly. He’s the living embodiment of someone who has planned for and thrived under the 4% Rule.
7. Interests, Activities and Hobbies
Unfortunately, I know a lot of lawyers who hate their jobs. Many want to quit but have no idea what they want to do instead. More than one friend wishes she or he married rich. Others daydream about what they would do with millions in the bank.
My neighbor isn’t like this. He didn’t hate his job. He didn’t want to retire early because he hated dentistry.
My neighbor retired early so that he could live the ideal life he saw for himself. A life of spending more time with family and friends. Surfing, cycling, hiking. Reading, art, cooking.
He wasn’t escaping from something. My friend and neighbor retired TO the life he wanted.
What Do You Think?
Is early retirement something that you want or aspire to? If so, how do you plan to get there?
