Early Retirement Plan

Early Retirement Plan

The beginning of my early retirement plan

About two years ago I was watching random videos online and ran across Mr Money Mustache. A guy who retired and quit his job in his 30’s without any special cash windfall. He didn’t have an early retirement plan, he just wasn’t very materialistic, his life style didn’t change with his increase in income and one day realized he was very close to no longer needing any income. He just saved and invested a large portion of his income. he pointed to James Collins on the nuts and bolts of how to invest and focused his website on trying to change the common mindset that living a simpler life,  while cheaper, isn’t deprivation. We all draw lines on what we “need” but 99% of these needs are really wants and giving in to those wants only make you happy for a very short time due to hedonic adaptation leaving you itching for another fix to make you “happy”. This is a very unhealthy way to live but has become the American way and indeed the way many live across the world. There is many similarities in Mr Money Mustache’s views and interests and my own, he’s preaching to the choir with me but still find it fun to read his blog. Mr money mustache introduced me to Jim’s blog who has an amazing amount of information on investing that has been invaluable to me as a beginner.

Jim has the experience and has learned many things the hard way if you read some of his stories. While Jim is currently retired, saving money and eventually becoming financially independent didn’t have to do with wanting to quit his job. He wanted control of his working life and be able to travel. He learned there’s power to be had in your working life just in having wealth.

These blogs were very enlightening and maddening. I wanted to know why investing isn’t a standard class taught in school. I learned how to manage money and saved much of it but never knew what to really do with the excess. Finally with the new information I was able to build my early retirement plan using Jim’s information, as well as reading other sources as a base. Going through life without having a financial blueprint for retirement, early or not, is like driving blindfolded. Relying on pure luck to get to your destination. It’s something I would recommend everyone learn and figure out and the math behind it isn’t that difficult.

Today, as my work life engulfs my personal time pretty well, I’ve had just about enough of it after only a few years. 5 day work weeks makes me feel very restricted when it comes to what I learn and do as well as my health I believe. I grew up with many interests from working on cars, motorcycles, carpentry and computers. I loved learning new things like history, chemistry and physics. Even while I enjoy what I do, doing it 5 days a week often away from home 50 hours+ a week just leaves too little time for my other hobbies and interests. I believe working 4 days a week would make a huge difference In my happiness but I feel like I need to put a decent dent in my savings and investments before I consider such a move. When it comes to building wealth, getting as much as you can into investments early is extremely important so you can let the power of compounding interest work for you.

Luckily for me I was already pretty frugal and non-materialistic. Being new to investing and pretty late to the game I do have a decent amount of money left after my monthly expenses to try to catch up.

Vanguard is the standard when it comes to personal investing, but being new to the sport my early retirement plan starts with using a robo-advisor, Betterment. I will also try different investing avenues as time goes on.

My Goal

I would like to move to a 3 or 4 day work week within 10 years and probably completely retire to occasional freelance work shortly after.

My Early Retirement Plan

To max out my Roth IRA every year and Invest any extra in standard taxable accounts. I will also consider putting more money into my company’s Simple IRA.

Here is rough idea of what the Roth IRA is expected to return in 10 years without any other investments.(2014 and 2015 accounts were both created in 2015)

2015-2024 Roth account expected growth for early retirement plan.

2015-2024 Roth account rough expected growth.

My Start:

I am 28 years old and have had a late start to my retirement fund, I have only realistically started investing this year when I maxed out a 2014 Roth IRA and have almost maxed at a 2015 Roth, nearly $11,000 at this point. I also have about $5000 or so in my work’s Simple IRA acount. I have a mortgage and student loans but no credit card debt.

Future posts will break down further the why’s and how the numbers work as well as my thoughts on each. I am not in any way an expert in investing but yield to those who are much more than I.

Mr Money Mustache – The blog that started it all, also got me interested in reading blogs for the first time.

If you’re interested in reading a great resource on investing basics, I recommend James Collins – Stock Series as a start.


2 comments on “Early Retirement Plan

  • It is always awesome to see other people share their data on investing. I stuck with Vanguard High Dividend Yield ETF (YVM) to test the market. Overall return is currently -1.04% on about 100 shares but I feel long term it will perform fairly well. I also looked at the funds that gave the most dividends percentage wise.

    I’ll have to start maxing out my IRA contribution. I’d like to read more about what quantifies as “enough” for early retirement. Especially with two kids, mortgage, life, etc.

    • For what is “enough” there is always the classic 4% rule.
      It is also very common to need less than anticipated over time as you pay off your student loans, mortgage, kids move out and finish college, etc.
      Also if your goal is control of what you get to work on and not necessarily to stop working, you will still make money working each year, likely still enough to cover your expenses.

      My personal plan is not to quit working, I’ll choose to work less days for less money before I hit 4%, I’ll still make more than I need, and let my investments grow or “coast” to that 4% rule or more mostly on their own.

Comments are closed.