Early Retirement
Yep, we really did retire at 45…
One of the smartest & most unusual things we’ve done in our lives was to retire very young. We started planning for our retirement in 1991, when we were 35. We retired ten years later, in 2001, at 45. We’re not rich, just frugal. We’ve now been retired for over 20 years. It’s been an awesome ride.
We chanced into thinking about very early retirement when in 1991 Scott picked up a close-out book called “Cashing in the American Dream: How to Retire at 35” by Paul Terhorst. It hadn’t occurred to us to even think of such a possibility; the book made a clear and compelling case for both how and why. And he did it with kids. We were hooked on the idea, and spent 10 years saving even more money than we already did, repositioning ourselves to retire as early as possible. The book is dated now, but it’s got the basics right, and is a great place to start off if you’re interested in very early retirement.
How’d we do it? Mostly, the old fashioned way, by increasing our savings, cutting our spending, and investing conservatively. We had a few things going for us – being raised by depression-era parents made us inherently frugal, we both had well-paid high-tech jobs, we didn’t have kids, our savings were magnified by the great bull market of the 80s/90s, and Scott made a few bucks from stock options at a start-up he joined. We had no great inheritances, no lottery winnings, no jobs at Google. At the time we retired, we had cut our expenses to the point where we were saving half our gross pay.
We actually could have retired a couple years early, but the end of the 1990s were heady days for anyone in high tech, with lots of lucrative opportunities for people with the right skills, which we were lucky to have. But, then the bust came, and we were conveniently both laid-off on the same day, April 30, 2001. You can read about Scott’s real-time reaction to being laid-off here. Unlike most people who received pink-slips that date, we were deliriously happy & popped a bottle of champagne to celebrate our long-planned early retirement.
We immediately threw ourselves into traveling the world (frugally), which you can read about in the Travel section of our website. Scott took three semester-long professional culinary courses and one in web design. We volunteer, visit friends & family, keep in shape, and in general have a wonderful time.
Interested in learning more? Here are the books you should read to get you started. Kathy taught a course on Very Early Retirement at the local adult-ed center in the late 1990s. A copy of the slides is attached here – it’s dated, but will give you a an idea of our approach.
This is the book that started it all for us, and still a good place to get your head around the idea. The investment advice is dated; the rest is still great. It’s out of print, you’ll need to find it used.
A more recent book, this contains most of what you need to know about early retirement. If I were to update my course, it would look a lot like this.
Investing isn’t rocket science, and it isn’t full of mathematics. You just need to learn some basic concepts, and this book is a good place to get started.
The biggest question of all – how do you spend your time if you are not compelled to work? This book gives you a good start on finding your own answer to that question. Hint: it’s about a meaningful life, not just a happy life.
Asset allocation is at the heart of any sound investment strategy. You don’t need to pick stocks – you need to pick an asset allocation that matches the level of risk you’re willing to take (and hence the level of return you will get). You can put your investments on auto-pilot after that. This is the best book I’ve read on the subject.
Another classic, it re-frames how you think about spending. How much of your life are you willing to trade to have a Jacuzzi tub? What other things could you do with that time?