Talking About Early Retirement

This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35.  Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.

I didn’t begin my career thinking, “I want out as quickly as possible.” I’ve been fortunate to be able to work in financial advice, where I have a real interest. I enjoy talking with people about their finances and helping them organize for more efficiency and a greater probability of success. Having said that, it was my second choice, and I’ve always wanted to live with my family overseas. That’s my dream, and when I started thinking (over two years ago) how to realistically achieve it, early retirement presented itself as an idea that would allow me to mitigate as much of the risk as possible. If I’m financially independent, then I know my family will be stable, working only to cover the cost of the kids’ school and any extras, such as travel. But how do I explain this unorthodox life choice to others?

My concerns were first, that people wouldn’t understand. Why would I want to limit my lifestyle to a fixed income, when I could continue to be successful at work and earn six figures? And second, that people would feel jealous, wondering why I’m able to stop working before 40 when they’re uncertain about being able to retire at 65. I first had to tell my parents, since I work with my father and we will be moving their grandchildren far away. I must admit they were shocked. When we sat down with them, in our house, and explained what we wanted to do, the timeline we had in mind (six years) and the amount of money we have and need, they were surprised by the audacity of our plans, but also supportive that we were able to find something to be excited about and to work towards.

I work in a small office of under 10 people. Everyone at work knows of my plans, but I have explained that “I’m going back to school to become a teacher in a couple years, then moving abroad.” I leave out the “retirement” aspect, because I don’t know how to answer the obvious question, “How did you manage that?” and the implication, “and why am I nowhere near?” But it keeps coming up in little ways. Recently, one of the administrators came to me and said, “We got a notice that your life insurance isn’t paid for and will expire. Aren’t you going to pay it?” I explained that my house is paid for now, so it became unnecessary. She asked, “How did you manage that? Did you sell some investments?” Actually, I had, so I agreed with that, but she paused and asked, “Don’t you need the insurance to take care of your wife and kids?” They’re already taken care of because we are working toward financial independence. But I just said, “Don’t worry, we’ve thought of that and they’ll be taken care of.” I didn’t want to say more, and she left it at that.

A few weeks ago, my wife and I met up with a friend of my parents, whose family I had grown up with. We’re both involved in some similar projects around public education, so we were describing to her our plan to go back to school and then teach in international schools. She thought that was great, but pointed out that I have a good paying job and asked why I would leave it. “I’ve gone as far as I can in this job” is something I like to say. “I’ve enjoyed it and I’ve really learned a lot. Now I’d like to move on to something new, something that makes a difference in another way.” She liked that, but she’s smart. She asked about the money, and I admitted that we’ll have enough. “To retire?” she asked. She had guessed what I meant and she was impressed. I realized that many people equate money with intelligence and assume that smarter people have more money and people with money must be smart (not necessarily true). But I wouldn’t expect her to be jealous, since she has a six figure government income and her husband has a public pension.

A couple of my clients at work were personal friends before they became clients. One in particular seems to be on the traditional hamster wheel: earn more, spend more, repeat. I know that he’s worked quite hard to have more money, which he seems to use to have some of the nicer things in life. But he doesn’t seem to understand the fundamental idea of saving and investing. He asked me just the other day: why do you seem to be transitioning out of the business? I found it easiest to explain that I’m planning on going back to school. For him, this seemed to be a fully satisfactory response.

With all the people above, I don’t have a standard explanation of my situation and plans. I still don’t feel comfortable explaining that if I had to stop working, I’d be financially secure, and that will allow us to launch the next part of our life. There’s no secret how to get to this point (earn good income, stay out of debt and live below your means). But not everyone can do it and I fear that people may feel jealous of what they don’t have and don’t understand. Maybe that’s selfish and irrational and I should use my situation as an example for those around me. What do you think?

16 thoughts on “Talking About Early Retirement”

  1. I really like this post. It resonates with me. Your experiences are exactly what I run into when I express my desire to retire at 40. Some good strategies laid out in here and I’ll be sure to use them when talking to others about early retirement.

  2. Hi Robert, I just moved my three kids to Calgary and I too will be retiring at 40 in a couple of years. Have you figured out how and where you will manage to live abroad? I’d be interested to find out.

    Do you work in downtown? Perhaps we can meet for a coffee sometime.

  3. Of course we’re all jealous when someone achieves an early retirement goal… on the other hand, we’re jealous of everybody’s success and sure wish it could be us. That’s human nature, wanting something that others have because we don’t have it in our own lives.

    Now if you say something like “we make saving money our first goal”, then it should serve as an inspiration. Quantify it further “we save 60% of our takehome pay” and that gives the other person some idea of the ‘sacrifices’ you’ve made to achieve the goal.

  4. I had a short, quick answer to anyone who wondered how I was able to retire in 2008 at age 45 (and in a high-cost area such as Long Island, New York):

    No kids, no debts.

  5. @deegee. Why not just say lotsa money, or no Porsches and no boats, or no handicaps that limited my earning potential.

    I don’t mean to make fun, but the no kids thing continues to bug me because I have 3 kids, and I’ll be probably retiring at 40. In fact I really could retire now and maintain my lifestyle, if by retire you mean have-no-job.

  6. @Perfect Dad, you are able to retire early despite having 3 kids, not because of it. If you had no kids, you would be able to retire even earlier.

    I maintain that it was no kids and no debts, in that order, which enabled me to retire at age 45. I know it bugs you when I say that, but for ME it is true. Having no kids was the reason I had “lotsa money” – I wasn’t spending any money on kids.

    Many people have no Porsches and no boats but are not able to retire early. Many people earned more money than I did in my years of working. I averaged about $43k per year of working (nominal US dollars, not inflation-adjusted) in my 23 years of work, so my earnings were not huge and never excedeed $80k.

    At my former company, many coworkers of mine made more than I did, and many had greater company stock portfolios than I did, but nearly all of them could not (or would not) retire. A big reason for that is they had kids and those kid-related expenses were high, eating up their excess money.

    I kept my expenses low because I spent ZERO on kids. Unless your kids are generating more household income than household expenses, they will always be a drain on one’s finances. It is as simple as that.

    If you can overcome that drain on your finances and still retire early, then more power to you.

  7. I do understand that kids cost money for upkeep, but my point is that everything costs money. LIVING costs money.

    I spend my time and get enjoyment out of kids. You spent your time on something else because we all have the same number of hours in a day. I don’t go to all-inclusive resorts, I’ve never been on a cruise. My childless friends do those those things because that’s what they like. I have one vehicle, while my childless friends have two. My childless friends have debt, while I have none.

    Here is an example:
    We go to McDonald’s when we want to “eat out” because it’s fun for our family. Others look down at me because they disapprove of McDonald’s and want to go to Au Pied du Cochon for a $70/person dose of high class saturated fat. I’ve been to both and it’s more fun for me to hang with my kids, let them order, talk and laugh, etc. So I had more fun (according to my preference), and my dinner was $25 instead of $150. Therefore you could make the argument that my kids saved me money. Of course that’s a ridiculous argument, but how can you deny the numbers 🙂

    You probably go to neither McD’s nor the fancy place. Probably you like something even cheaper than that, maybe watching a movie at home or going for a walk.

  8. Yes, it is a ridiculous argument (about the dining out) because if your childless friends ate at McDoalds their dinner would cost $10 or $15, less than what it cost you. And if you went to their restaurant it would cost you at least $300, more than it cost them. The comparison only works if the other factors are kept equal.

    If your childless friends had kids, they would be in debt. If you had no kids, you would still be debt-free. So what’s your point?

    In case you are wondering, I knew when I was 20 years old that I would never have kids – I knew they would provide no enjoyment for me on a 24/365 basis. That was 2 years before I graduated from college, 4 years before I paid off my student loans, 15 years before I paid off my mortgage (which was not very high because I lived in a small apartment… apartment which did not cost much because….I had NO KIDS) and became debt-free, and 25 years before I retired. This sequence of events would not have been possible if I has kids.

    That being said, even though I did NOT get up one morning, decide I wanted to retire at age 45, ask myself the best way to go about it, and decide not to have kids, I would advise anyone who wants to retire that early that if they want to boost their chances of retiring early then they should have no kids.

    It is so very common for people to tell everyone how they love their kids and the joys they bring to their lives and how much better their lives are because they had them. So why does it seem to so easily irk those same people when someone who does NOT have kids boasts about how much better his life is because he did NOT have kids, and how he was able to retire at age 45 because he did NOT have kids? Regret, envy, and “misery loves company” are the big reasons, I believe.

  9. Because not having kids didn’t bring you any happiness. You revealed it in your last comment that kids don’t bring you happiness. Whatever else you substituted made you happy. The absence of something does not make you happy, but filling your live with happy things is what makes you happy. Lots of people fill their lives with unhappiness — expensive things that don’t bring joy — they miscalculate. I found a way to be happy, and live within my means. Probably so have you, unless you’re not happy.

    As far as the dining out: I would not go to the fancy restaurant for $150 because I wouldn’t enjoy it as much. So my “combination” preference to go to McDonald’s to have a good time with my family is what saved me the money AND made me happy. All my choices together did that, not separately. I would NOT have been happier to save the $15 without my wife and kids there. If I didn’t have them then I probably wouldn’t have gone, and I may have instead gone to a pub with my single friends and spent $30 on pub fare and beer. People fill up time and spend money on what they think will make them happy.

  10. This whole post reminded me of all the subterfuges and excuses I used to feel I had to come up with when people pressured me about why I chose not to have kids. Nowadays I just tell the truth – I didn’t want any. I no longer feel like I have to make up a plausible excuse that will be palatable to whoever asked the question.

  11. Back to the original topic. I expected a fair bit of negative comments when my spouse announced his retirement at 46. Much to my surprise, coworkers were very positive and supportive. My family; not so much even in their silence. But with no debt,reasonably good health, kid’s education fully funded and pension in place I know we can manage our finances in the future. It’s not as scary as it seems.

  12. For me, Perfect Dad, the absence of something I did not want DID make me happy. Ridding myself of something negative, or having avoided that negative thing alogether DID make me happy. Not having to undertake the awful commute to work (and retire early) DID make me happy. The resulting peace and quiet caused by not having any kids DID make me happy (and did not cost me anything, either).

    We have both avoided and/or ridded ourselves of debt and that made us happy.

  13. I’m new to this post. I was wondering how much does everyone think they need in networth and/or yearly income to retire early?


  14. Kevin, different people have different needs and priorities. A study shows that CAD$30,000 annually can support a 4-member family. It is best to start to collect your own spending numbers in a spreadsheet and after a couple years, you can easily calculate how much you need.

    To be able to retire early, discipline is very important but I personally don’t think you have to sacrifice all your material needs. Once a right balance is found, stick to the plan and make it a habit. I have retired at 44 and I agree that being debt free is the first step, so pay off your mortgage asap!

  15. Perfect Dad and Deegee,Dave writes about retiring early without kids. I’ve been thinking of writing about retiring early with kids, but it hasn’t come together yet. I certainly appreciate the perspective you each bring.

    George, you’re right about how to explain it. A difficulty that I face is that I can’t explain it, even to myself. Because I was partly self-employed, I paid my taxes in one lump at the end of the year. So it’s hard to say that I saved x% (although it was around 50%) of my income. I also didn’t focus solely on paying off debt, but actually paid of my mortgage and borrowed back to invest. Of course, I plan to sell my house and rent while I live overseas, so it makes more sense for me to do that than for others.

    Kevin, I think you might enjoy my next post next Monday. How much a person needs to retire depends on how much they spend. Take the amount you spend in a typical month (accounting for annual expenses) and multiple by 200 for a simple estimate. I wanted to have around $3000 per month for my family of five (if there’s no mortgage to pay) and so my goal was $600,000. This has changed since, but everyone needs a starting point and a goal.

  16. Robert and Reitiredat44,

    Thank you for your comments.

    I look forward to your post on monday.

    I too did retire at 44 with a networth of 3mil plus but that includes my primary house and rec property( no mort) I’ve been using spreadsheet and charts for about 10 years. I have 2 younger kids and and I travel alot so i’m not sure if the money I have will cut it or not unless I cut out some of the travel and “fun stuff”. I’m targeting $125,000.00/yr gross to live on. I may need to consult a bit for extra money.

    From what I’ve read on your blog retirement isn’t to stop working it’s to follow your passion and not work for money… is that correct?

    Take care…Kevin

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