Early retirement has been a long-term goal which has been burning in the back of my mind for as long as I’ve been employed. It seems I’d rather be spending my time doing what I enjoy rather than working to earn a buck. The other day I decided to do a little bit of rough math and figure out how much money I’d have to save every month in order to retire at 40.
If I changed nothing at all in my life I’d have to save a little over $500 a month (if my girlfriend also contributed the same amount) and earn a 6% annual return (compounded monthly) in order to “retire” by the age of 40. By that time the interest we earn on our investment would provide enough money to pay for our living expenses; housing, food, clothing and more. Of course, things in life will not remain the same and getting a 6% annual return will likely prove to be difficult, if not impossible.
We are left with two options; save more now or spend less later. Given that we are essentially living on next to nothing by some people’s standards it will be difficult to cut our expenses much beyond where we are at right now. Sure, we could cut the basic cable and internet, saving ourselves about $50 a month, but that is essentially the only luxury we allow ourselves. We could dine out less often, but we’ve also cut that out of our lives for the most part. We could buy less stuff, but really, we don’t buy much aside from the necessities. We do spend a significant portion of our earnings on travel, but both of us love to travel and we save our money in order to fund our trips.
The only other option is to save as much money as we can to boost our “nest egg.” Instead of saving only $500 each, we may have to save significantly more than that if we earn low interest rates. It is a matter of sacrifice, in a big way. We would have to delay gratification on a daily basis, but still be able to find a balance between intense savings and living our lives in a way that provides us with joy every day.
I thought I would talk to some people about my idea and while discussing my plan with other people they seemed shocked by the thought of sacrificing day to day things in order to be able to retire within 20 years. They said they would “not give up their life” in order to save the amount of money I would need to save. They are not willing to sacrifice today for a better tomorrow. And why should they? We are not guaranteed that tomorrow will ever come, so why not enjoy life today? That is the thinking of a lot of people, and they are not wrong, but I’m not going to say they are right either. We are not guaranteed anything in life, not even a tomorrow, but that doesn’t mean we shouldn’t be preparing for the future. We should be, and we might as well do all that we can to make that future the best future possible.
They aren’t willing to “give up their life” today and I feel exactly the same way they do, only from the other perspective. I’m not giving up the rest of my life in order to work at a job for an additional 20-30 years in order to “have a life”. By their standards, life is measured by material possessions such as cars, clothes and a big home packed with stuff. They fritter away their money collecting these things and as a result have to spend more time in a job which they no longer enjoy. This is not the measuring stick I use to define life or the value of it. I feel that life is more than anything a person can buy. It is the experiences and the people close to you which matter most. The moments where you laugh so hard that your stomach hurts and tears stream down your face. It is about doing something for someone which brings a smile across their face, even if that person is a complete stranger.
My grandmother passed away a couple of months ago and when I went to visit her in the hospital she wasn’t talking about her clothes, electronic gadgets, cars or anything at all to do with money or possessions. She talked about her experiences and the things that brought her joy in her life. Even in the midst of all her pain, remembering these things in her life brought a smile to her face.
Life for me is about sacrificing the small things in order to actually be able to live my life in a way which I enjoy. I do not want to have to work somewhere in order to survive. I’d rather have the freedom to do work which is meaningful, retire early and enjoy the rest of my days on Earth with people I love. I dont want to be 80 years old working at McDonald’s because I just couldn’t possibly live without all of those things that will eventually find themselves in a landfill.
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assuming of course you live to retirement age… srsly, though, retire at 40… doesn’t that seem young to you? the average retirement age is much higher.
i’m not worrying too much about retirement yet. we were putting money into our 401k, but have now withdrawn what we had left after watching the stock market fall too low… we’ve reinvested in precious metals, and i think that’s where we’ll stay.
we may end up working for longer, but we’re enjoying life now too. why wait until 40 to do some of the stuff you love? obviously, money can be a factor, but it’s possible to do the things you want if they are really goals that you really want.
we all have different ideas about how to spend retirement… we’d like to sell our house and live on a boat somewhere… we may not wait for retirement, but we will wait until our kids are in college, and they’re only 4 and 2 now, so we’ve got a while! :)
in the mean time, we live close to family and spend quality time with my kids’ grandparents every chance we get. it’s a pretty good deal, even if we don’t have the same amount of retirement savings as we ‘should’… :) (i’m not ever going to look to the government for money, they’ll never come through.)
You’re right, we should all be enjoying life now and not be waiting until we retire before we finally get out there and enjoy ourselves.
Though I hope to be climbing mountains when I’m 80, the reality is that my health will probably not allow for that to happen.
There is a great balance between enjoying our life now and still being able to provide for our future. The “sacrifices” I make today will help to create that future and don’t feel like sacrifices because I know where my values fall.
I can promise you that I don’t live like a pauper. I own some of the very same things I complain about, but they are not the driving force in my life. I preach about minimalist living on a regular basis, but achieving the level which is comfortable for you as an individual is what is important, not that you live with no material possessions. Having the realization that an object has no real value except what you put on it is what matters most.
As for a dollar amount which a person “should” have for retirement…that depends on what your definition of retirement means. When I talk about retiring at 40, I don’t mean sitting on the porch in my rocker sipping lemonaide, I mean retire from the daily grind of working for the man. Maybe I’ll find an organization to work with or start my own business in order to bring in money. I’m not the type of person who can sit around and watch the sun go down and the moon come up. I do enjoy those moments, but I am too ambitious, and hope to be all throughout life.
I’m glad that you are finding moments in life to enjoy the gifts you have been blessed with. Whatever brings joy to a person’s life is what matters most!