Do you want to retire early with your spouse? If so, this post will discuss achieving the two spouse early retirement household versus only one spouse retiring early.
After all, we often call one spouse retiring early as being a stay at home parent. I firmly believe it's better for both partners to retire early rather than have one continue to work.
My Retirement Background And Current Status
I retired in 2012 at the age of 34. My wife then retired three years later at age 34 in 2015. We've been a two spouse early retirement household since.
However, I do consider myself a fake retiree since I continue to write online and published a new personal finance book. I spend around 20 hours a week staying mentally active with my work on Financial Samurai. To me, 20 hours of stimulating work a week is the ideal retirement lifestyle.
After purchasing a new house with cash in 2023, I'm technically no longer financially independent. I need to earn active income to cover our ~$50,000/year after-tax expense gap.
With part-time consulting and writing, it's not a problem. But I hope to once again have enough passive investment income by December 31, 2029 to technically be FIRE again. Thankfully, but my kids started school full time in September 2024, so I've got more free time to earn. I've been a stay-at-home father since 2017 when our son was born.
Retiring Early As A Couple Is Ideal
In my post about reflecting on five years of early retirement, I mentioned that having my wife join me two years later was an import shift that made the early retirement lifestyle much easier.
This may sound strange since being able to do nothing all day would seem easy enough. But the reality is, early retirement isn't very meaningful if you have nobody to spend it with. This post talks about becoming a two spouse early retirement household.
As an early retiree, it takes time to find your people. The vast majority of your friends will be at work all day, every day. Therefore, during the first six months you're probably going to feel a little lost as I did. Only after about a year do you finally start feeling a little more comfortable with not working as you adjust to a new routine and make new friends out of necessity.
When my wife finally negotiated her severance package (she had the #1 coach by her side and got a juicy one!), I really started getting in a great groove. Now I always had someone to walk in the park with before grabbing some lunch. Instead of exploring Europe solo, I could now explore Asia with her for a month at a time.
As an extrovert, life became much better when she was always around. At the same time, it's important to have our own friends and space.
How To Retire Early As A Married Couple
Retiring before receiving Social Security, a pension, or having penalty-free access to a 401k or IRA is risky if your expense coverage ratio or passive income is insufficient. Risk is why I didn't have my wife negotiate her severance the same year as I did in 2012.
I wanted to first test the waters before suggesting to her it was OK to jump in. It's the exact same reason why I recommend everybody work on their entrepreneurial side hustle while working before taking the leap of faith.
We've already discussed strategies on how to convince your spouse to work longer so you can retire earlier to live the good life. Some people found the article to be funny, while other hard-charging spouses found it to be offensive. Whichever one you believe, the fact of the matter is that having a working spouse to pay the bills is a great way for you not to work.
Now I'd like to share some strategies on how both of you can prudently retire early. The goal of these steps is to help minimize doubt, eradicate resentment, and maximize harmony with each other.
1. Set a target age to depart.
The key to achieving a two spouse early retirement household is to have a target date or target age. Once you circle a date in the calendar, you will do everything you can to prepare beforehand. I left Corporate America at age 34.5 because I didn't like what I did anymore. But my target date for early retirement when I was 32 was actually June 15, 2017 on my 40th birthday!
Setting a target age to do something is important because while we can never buy one more minute of life, we can do our best to achieve as much financial prosperity as possible by a certain age. Once we hit that age, it's time to move forward.
Because my spouse is three years younger than I, we agreed that after she turned 34, she too, if she wanted, could also retire. Since we both believe in equality, there was no argument with this logic.
Related: Shoot To Retire By A Certain Age, Not When You Achieve A Financial Target
2. Set a income replication target.
Not only did we agree on an age target, we also agreed on replicating my day job base salary with my online endeavors before she could join me, whichever came first. Given that I was often bored in early retirement, this financial target gave me the incentive to keep on hustling.
After two years and three months of grinding, I finally replicated my monthly day job salary. After six months of consistently achieving this target, she initiated severance negotiation proceedings in September 2014.
The other financial target we considered was achieving a $200,000 a year passive income stream before she could leave. In the end, we decided the target would take too long to achieve. Good thing we passed, because I only achieved the $200,000 target at the end of 2016, a full two years after she left.
Finally, instead of an income target, you guys can also consider a net worth target to achieve before both of you leave the workforce. My recommended net worth target is 20X gross household income. Get to 20X your average income at ANY age, and you are financially independent and can retire if you want.
3. Go on a financial fast.
It wasn't enough for me to replicate my day job income through my entrepreneurial activities. She too had to reach some achievement goals as well. We decided she needed to raise her savings rate after maxing out her 401k from 25% to 40% in the second to last year (age 33), and then to 50% in the final year (age 34). The logic was to simulate a lifestyle in which we had way less than she/we were used to.
An early retirement household in the making should practice going on a financial fast before making a big purchase or a big life change. For example, if you know it will cost $1,000 a month more if you buy a particular home, then it's a good idea to try and live on $1,000 less for at least six months before you buy that home. If you do this first, you should feel zero burden on your lifestyle.
4. Identify specific things to do post retirement.
It's nice for both of you to have a ton of time together. But after a while, you may start getting annoyed with each other if you're both not doing something meaningful. Therefore, it's important to identify various things your spouse may like to do after retiring.
We didn't initiate this step beforehand and suffered because of it. When my wife retired, she did what many normal people do and took it easy. Me, on the other hand, stepped it UP a notch because I now felt MORE pressure to save and earn even more since we were now both jobless!
Instead of getting up by 6am every morning to write, I frequently got up between 4am – 5am to do more work. As a man, it almost seems like I have this embedded desire to provide.
After a couple months of me getting up before 5 am, and she getting up after 9 am, envy and resentment on my part welled to the surface. Damn, she was having such a nice life while I was slaving away! So unfair. Wah. After some frank discussion, instead of sleeping in with her, we decided to divide up the responsibilities of our business. She could take the “night shift” and I would take the “morning shift.” Now all is good.
Please have this frank discussion with your spouse about things to do after s/he retires early. Learn from my mistakes.
5. Create financial buffers for your financial buffers.
Early retirement is relatively easy when you have a working spouse. Before the 1970s, we didn't consider a non-working spouse retired because one spouse took care of the household while the other worked was the norm. Despite all the social progress, still few men want to be known as a stay at home spouse, hence the self-proclamation of being an early retiree.
Without a spouse's reliable paycheck and subsidized healthcare plan, early retirement is scarier. We, for example, pay $1,400 a month for health insurance despite being in great health. It's our responsibility to subsidize the poor and less healthy. Still, this expense is worrisome if healthcare costs are not contained.
Creating financial buffers for your financial buffers means always having an income backup plan. For example, if my online income were to ever disappear, we will rely on rental income, real estate crowdfunding income, stock dividend income, and bond income to survive.
If all of those income streams die, then I will rely on tennis teaching income and personal finance consulting income. If those income streams disappear, I'll take on financial technology consulting projects billing no more than 25 hours a week to save the retirement lifestyle. As a last resort I'd go back to work full time.
An early retirement household always has backups for its backups.
6. Conduct regular financial checkups.
Knowing that your finances are strong is KEY to minimizing early retirement stress and elongating the early retirement lifestyle together. At least once a month, go over all income and expenses to make sure you've got positive cash flow. Then conduct a net worth audit to make sure your asset allocation is appropriate. Finally, push each other to keep on saving and investing.
The reason why so many people overestimate how much they need in retirement is because they forget that once they retire, they no longer need to save for retirement. However, I recommend continuing to save for the future once you've retired because it feels so damn good! You'll feel like you're playing with the house's money every single day you aren't drawing down principal.
My wife and I treat early retirement almost like a game. We're trying to run up the score (net worth) as much as possible while making sure we're having a good time. Once the pandemic hit, I focused on trying to make more money online again since there was less fun things to do. This way, when I re-retire, we'll have more passive income.
Related: The Fear Of Running Out Of Money In Retirement Is Overblown
Early Retirement Household Dreaming
Having a best friend to explore the world, raise a family, or work on a business is a dream come true. That said, it's important to set stretch goals to ensure you both have no regrets.
My wife felt she needed to advance as far as she wanted to go in her career before retiring early. She accomplished this by getting one last promotion a year before she left. She then looked at the person's job one level higher above her and decided it was not something she wanted to do. Rather, she preferred helping me grow our business.
Since 2012 we've done as much traveling as we wanted. I think we're up to 85 countries. Now we're focused on raising a family as two stay at home parents. Building a harmonious relationship takes work. But once you guys thoroughly understand each other's objective, a two spouse early retirement household can be a reality.
Please note that I decided to come out of early retirement once the pandemic began. My thought process was that if I'm going to stay safe and locked down, then I might as well spend more time trying to make money online.
I wrote a new bestselling book entitled, Buy This, Not That: How To Spend Your Way To Wealth And Freedom. I'm very proud of this achievement since the pandemic has been brutal for parents of young children!
Once the year is done, I plan to go back to early retirement once more.
Related posts about retiring early with your partner:
How To Make Your Spouse Work Longer So You Can Retire Earlier
If You Love Your Spouse, You'd Make Them A Millionaire
You Will Never Be Free Unless Your Loved Ones Are Also Free
Retire Earlier With Real Estate Passive Income
Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. Stocks are fine, but stock yields are low and stocks are much more volatile.
The combination of rising rents and rising real estate prices builds tremendous wealth over the long term. Meanwhile, there are more ways to invest in areas of the country where valuations are lower and net rental yields are higher thanks to crowdfunding.
Best Private Real Estate Investing Platforms
Fundrise: A way for all investors to diversify into real estate through private funds with just $10. Fundrise has been around since 2012 and manages over $3.5 billion for 500,000+ investors.
The real estate platform invests primarily in residential and industrial properties in the Sunbelt, where valuations are cheaper and yields are higher. The spreading out of America is a long-term demographic trend. For most people, investing in a diversified fund is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. These cities also have higher growth potential due to job growth and demographic trends.
If you are a real estate enthusiast with more time, you can build your own diversified real estate portfolio with CrowdStreet. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor's track record and experience is vital.
I've personally invested $954,000 in private real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000. Financial Samurai is a six-figure investor in Fundrise.
Wealth Building Recommendation
To help you achieve the two spouse early retirement household, sign up for Empower. Empower is the web's #1 free wealth management tool. In addition to better money oversight, you can run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely check to see how your finances are shaping up as it's free.
Our early retirement household has been using Empower since 2012. We've seen our net worth skyrocket during this time thanks to better money management.
For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. To get my posts in your inbox as soon as they are published, sign up here.
Hi Sam, love the site. I retired early at 46. Sold my business. We sound a lot alike. One of the reasons for retiring was to travel with my daughter to support her junior tennis development on the ITF circuit. Love being her hitting partner during tournaments. About 6 months in now and I am fairly happy with my decision. Was not a huge transition since I did not work much when I had my business. I love playing all sports ( baseball, hockey, tennis, golf, volleyball etc ) and tend to fill my time with these activities. Wife stopped working about 15 years ago once our business took off. We golf a lot together. Life is a dream not worrying about business related matters. Having said that I do miss some of the daily interactions with business people. My biggest problem/stress is my investments. I have over 20M but I cannot seem to sleep easy as I am constantly worried about my returns. Not worried about the rate so much as “will there be enough to live on”. A year before I decided to sell we did a 6 month financial fast to see what we would need monthly to live on. Came out to 15k ( we have no mortgage or car payments ). We do have both kids in private school. Tennis takes up a lot of the budget though ( 4k per month ). Other kid plays every sport there is but more at a local house level so not much travel. How do you deal with the anxiety of getting enough returns to meet your family needs? Sometimes I wonder if the stress of that is more than the stress of running a business
I would take $20 million and multiply it by the risk-free rate. That’s 2% on the 10-year or 2.4% with an online savings account now, which is interesting how it’s higher.
The income equates to $400,000 – $480,000 a year with zero to minimal risk. If you’re only living off $15K X 12 = $180K, $20 million should be enough!
Enjoy life!
Maybe I am missing something, but how do you call yourself retired when you or your wife are up before the dawn and/or working into the evening? Maybe a better term would be semi-retired?
I retired last year at 53. Wife has not worked for $ in over 24 years. No pension and no working in any capacity – not now and no plans to even again. Extensive travel with wife and living the dream – doing what we want, where we want, how we want and when we went. Annual spending of several hundred thousand dollars financed entirely from invested assets. This is what I envisioned when thinking about “retired”.
You do a great service with your blog. I enjoy reading your posts. My gripe is only with characterizing what you do as retired.
I sometimes call myself retired because I left Corporate America in 2012 after negotiating a severance. I haven’t been back to work for anybody since then. My wife negotiated a severance at the end of 2014 and hasn’t worked for anybody since then either.
We live off 100% off our passive income streams, which is currently over $200,000 a year.
Our goal in retirement is to always stay active and do what we love. We love to travel and write, so that’s what we’ve done aggressively every year since. Early retirement is so fun we can’t really believe our luck.
By pursuing our interests, we’ve been able to generate more from our writing than the passive income we spent 18 years building. It feels like we’re playing with the houses money since we’re having a lot of fun writing and connecting with folks. As a result, we just save and invest everything beyond our passive income.
When we go to parent meetups, we sometimes say we are stay at home parents. When I go to a fintech meetup, I sometimes say I’m an entrepreneur. This is the beauty of not having to work for a living. You can do, say, and classify whatever you want because it doesn’t matter.
Congrats on your retirement! Try not to do too much! :)
Related: Early Retirement Five Years Later: Reflections on Life After Work
People like you and your commenters lead others to believe (unrealistically) that this is so easily achievable. When you’re making money off of other people, yeah, sure, no problem. Investment bankers do it all the time by taking funds in the form.of extravagant fees for their perceived financial market knowledge. It is all a scam and I stay as far away from people like you as possible. Especially guys who retire before the wives. Boy.. She was sure desperate to get married. The numbers here just don’t add up.
Your cynicism is great.
Nothing good comes easy.
Also, a lot of luck is involved too.
Hi Mike G.,
Hopefully you see this as I know it’s an old post. Can you please elaborate on what your invested assets are? My husband and I come from lower middle class families and have been teaching ourselves to the best of our abilities (and incomes) on what to invest in. We both have our 401s maxed and some funds in stocks for general money markets and specific companies. We have some extra cash to invest (not much as we just had our first child!) and are struggling on where it would be best used (bonds, stocks, save it towards an investment property…?) We always enjoy hearing/learning the details of successful individuals! Thank you!
I don’t think my girlfriend will ever want to FIRE because the work she does is so vital and gives her so much life. I do think that she could pull back a little if I got us to the financial position where we could forego work. That’s my current aim. Make it possible and then see what we want.
Thanks for sharing your experiences Sam. It’s great to learn from someone who has already been there, done that. I’m glad you mentioned the importance of both partners having some fulfilling stretch goals to work on. I see how this could make a big impact and is something I’ll be thinking carefully about. Thanks again!
A couple of comments:
1) We are on track for this, despite having made normal upper-middle class incomes b/c I started saving at 17!
2) I’m a woman, and I get a kick out of saying I retired early (although I do work part-time from home) rather than saying I’m a stay-at-home mom. I have three little kids, so my life involves a lot of labor- it’s just that much of it is unpaid. I started saying I “retired early” because I handle all the finances and honestly, me being full-time vs. part-time would be a drop in the bucket at this point. Our investments make us more than we make at our day jobs. As an engineer, I would be expected to travel to clients, put in 40+ hrs a week, etc, if I were full-time. As it is, my work is strictly limited to what I can do on my computer from home, a few hours a week (no commute, part-time preschool/daycare rather than full-time, etc). I’m starting to think I won’t ever go back full-time, even when all the kids are in school. The return just isn’t worth the cost. I’ll find something else to do with my time (homeschool, volunteer, etc).
3) I’m clear on planning for retirement. What gets me is how to plan for college costs since it’s such a huge unknown…do you just pick an arbitrary number and shoot for that? Right now I’m planning to save 100k per kid and call it a day. How do you factor that into early retirement? I’m not anticipating any financial aid b/c even if we were both retired and not earning income…our net worth is too high to expect financial aid. We both went to state schools/military academies, so we graduated debt-free. I’m willing to save enough to pay for state school for each kid, the question is how much to save. I think many people just pay for it out of their current salary, so if you were looking to retire before your kids hit college (a possibility for us), you would have to save ahead of time.
So awesome you started saving aggressively at 17! Well done. I saved, but didn’t earn much.. just enough to take my girlfriends out on dates :)
Keep up with telling everybody you retired early! More women should say this, not just the ego fragile men who refuse to say they are stay at home dads!
Stay At Home Men Of The World, UNITE!
I called myself “early retired” when I quit working while my wife was still working. She originally planned to quit within 6 months of my quit time, but they kept offering her more and more $$ for and less responsibility and fewer hours, so she stuck it out 2 years longer than expected. We viewed her working as a temporary thing and my status as “retired” doesn’t depend on what my wife does. I am my own person after all :)
2 years is a long time to be temporarily working but we made the most of it. Year one came with an extra 5 weeks paid sabbatical (on top of unlimited family/sick leave and 6 weeks paid vacation/holidays). Year two came with an extra 12 weeks paid sabbatical. Her last six months consisted of working remotely for just 20 hours per week while still getting paid full time. Pretty killer set up and too good to just straight out quit. Until she decided she was done and she left work for good.
In the end, “stay at home parent” or “early retired” is just a label. When I didn’t feel like engaging in conversation with someone, I’d let them think I was a stay at home dad. It is true after all :)
A few comments.
1) Thanks for this article. As always, a great combination of mindset and pragmatic tips. Speaking of mindset…
2) “We can call ourselves whatever we want.” Boom! For me, I vastly prefer “Stay At Home Dad,” but a label is simply thatl and nothing more….we are not cans of soup.
3) I think one’s mindset could have a lot to do with their FIRE age. I ripped the cord at 52.5, and my wife still works. I’m more comfortable with doing very little than you most likely would. On the other hand, I busted it out for nearly two decades longer than you did…in definitive middle management “grinder” jobs — 6 day weeks, long days, always on electronics, politics up the arse….yadda yadda yadda wah wah wah get your box of tissues but not really!
4) My wife is eight years younger….we initially settled on a plan like yours, i.e., she can retire when she its 52. But honestly, she can go at any time for reasons I won’t disclose here because my attempted stealth gravatar is not stealthy enough. We’d just need to make some different choices. Health insurance is definitely the biggest concern. She has a high deductible plan that’s quite good. And I only just “discovered” her HSA, which we had been using incorrectly. I’d love to build that up to a still paltry 25K minimum and then not touch it for as long as possible.
5) As others have commented, the 20X average gross salary is hard for some of us to grok. With my wife making a nice base, plus bonus, plus options we cash out annually (high quality ‘problems!’), 20X that total AGI is astronomical. Unless I’m dragged off a United flight with me belly hanging out, I have a hard time seeing how we get to that. Therefore I’d rather play the manipulation game and use a multiple of spending. And it’s precisely because we CAN manipulate it – life is all about choices. Just one example: when the day comes that neither of us are participating in the tech economy, we’ll look long and hard at leaving our area – with its beautiful weather and great people but high taxes, decaying BART-tastic infrastructure and sub-optimal public education system. Because our house is paid off, we can likely extract 75% to 80% of the selling price after improvements, selling costs, taxes, etc.
6) Life is good.
Man, if I worked until 52.5, I would DEFINITELY not be doing as much writing and hustling now. I’d probably just coach HS tennis and sleep in! Well done grinding for so long. Very admirable. I wanted to go for 5.5 years until age 40, but couldn’t make it. The severance was also too juicy to deny.
With a paid off house, you are living golden.
Age: late 40’s
Income: $2M+
Networth: ~$18M
Saying I need to continue to work to accumulate another $22M seems pretty harsh. Personally thinking about chucking it in next year, before 50. This ain’t no dress rehearsal, and can’t take it with you..
Actually, that came across as overly critical.. love the blog, and you give plenty of great advice. Context helps too. Annual expense rate is around $250k, as opposed to what you might expect with that income, hence the reason 20x’s income is overkill. Bigger challenge/frustration for me is taxes. Effective tax rate is 47%, being a resident of one of those over-taxed east coast states. Makes it de-motivating to keep slugging it out to only keep around 50 cents on the dollar. Love articles where you talk about tax strategy. Also followed your lead into RealtyShares DME. Let’s see how that works out.
No worries. Congrats on your financial success. There’s a law of diminishing returns b/c your $2M is $1.1M after taxes, so you’re saving maybe $850,000 a year? Adding $850,000 a year to a $18M net worth is not bad at 4.7% growth, but doesn’t really make you feel the difference I suspect.
Have you read these posts to help you with your decision?
Shoot To Retire By A Certain Age, Not By A Certain Financial Figure
Overcoming The One More Year Syndrome To Do Something New
What is it that you do for a living? And finally, are you happy or any happier than when you had and made less? If not, time to move on.
Work in your old industry, Financial Services, no surprise.. yes, have read all of your posts. I am generally happy, and do not look to derive my happiness from my job. That said, it comes with a degree of power, prestige, and perks e.g business class travel to nice places, nice hotels, tix to major sporting events, etc, which add to the allure. Flip side is stress, always being on call. On the whole I consider myself pretty lucky for what I have achieved, not going to an Ivy or born with the proverbial silver spoon. Worked very hard and sacrificed for 25 years. Of course there will always be trade offs.
Cool. It’s funny you mention those things, b/c I thought I wouldn’t be able to do those things as much or as easily once I retired, but that didn’t turn out to be true.
For example, we flew better than 1st class with friends to Indian Wells for the BNP Tennis Tournament last month, after deciding to go last minute. Sat in the front row for the semis and finals to see Roger Federer beat Jack Sock and Stan Wawrinka, and stayed in a nice suite close by. Then we decided to get a hit in after the finals and then dinner before flying home late Sunday evening. Since we didn’t have to go to work Monday, we felt very relaxed.
The joy/desire for prestige goes downhill when you have all the freedom you want. It can be recreated by starting your own company and calling yourself CEO if that’s what you desire.
If you’re in financial services, you need to engineer your layoff given all your years of experience. Getting ALL your deferred comp and severance is huge!
I can guarantee you this: your life will feel no different once you hit $30M+ versus now.
Of course you are right on all accounts Sam. Although twenty large would be nice. You are an entrepreneur and a hustler. Wish I had half your energy, drive, and skills. You are going to end up very wealthy Sam, no doubt!
Hi Sam, I’m wondering about that 20X gross income as a net worth target. Does it slide (up and down) for people at different income levels?
Also, I’m not sure it’s the case that just because family A has $360K income, they have 3X more spending needs in retirement than would family B making $120K. (Assuming family A are early retirement savers, rather than living the entire lifestyle that $360K can afford them, I mean).
For example, take the people with the current gross household incomes below:
$60K = 1.2M (hmmm… might need a bit more?)
$160K = 3.2M (would seem pretty solid, maybe a bit more to be safe)
$260K = 5.2M (think many would be happy with this)
$360K = 7.2M (good to go)
$460 = 9.2M (does this family need so much more than the others, just because they once had high income?)
What I found after all these years and speaking to probably thousands of people is that everybody’s budget and spending tend to accommodate their income. So yes, having close to a $10 million net worth for a couple making $500,000 a year is definitely something they should shoot for, and a level of net worth that will make them feel financially secure.
I myself have run the gamut of earning four dollars an hour to making $40,000 a year to making $500,000 plus a year. At each stage I recorded my own thoughts and feelings in various posts and the multiple stays true regardless of income.
I’m conservative bc there’s no rewind button. Goals are also meant to be hard to reach.
Interesting. Most of the folks I know who retired early did so because their lifestyles stayed constant (below their means, so to speak) while income rose which allowed for higher savings amounts. Most would never have retired if they used the “20x their income” approach. Rathe,r they looked at their current and projected expenses and took some multiple of that. Most still found out later in life theyl had a lot more than they thoughtt they had needed when they agonized the retirement decision. Of course, many took some kind of work down the road as they they missed the commraderie, found out they really did not have many other interests, or maybe even found out that being aorund their spouse a lot was problematic. My feeling is that for as many pople as there are who underestimate what it takes to retire ,there are many who do the opposite and basically are afraid to take any risk. They often live in fear from all the articles that fill net about outliving your money.
Check out: The Fear Of Running Out Of Money In Retirement Is Overblown
A lot of us early retirees continue to work side gigs, or do work that we enjoy that pays us. So that really helps the gap.
I call it our X Factor. Sometimes, our X Factors blow up to more than we can ever expect e.g. this site for me.
“everybody’s budget and spending tend to accommodate their income. ”
Thanks Sam, I certainly agree that this seems to be the general case. But in the weeks I’ve been reading all you’ve got to offer here (by the way – what an incredible and fantastic resource!), I’m also checking out the blogs of many of your commenters, and the comments they get on their own blog posts. It seems to me that there are many in the ER crowd who are very good at saving. Of course, there’s a lot of self-selection bias in this sample because I’m reading people who are your readers and their readers, so I recognize I’m getting a skewed picture.
But I think my family is more typical of the folks I mention just above, and atypical of the many people you mention speaking to. We’re currently saving right at 71% of our gross overall, and 49% of gross is going into pre-income tax saving accounts (i.e., 42K to 401(k)s with me eligible for the 6K catchup, and I’m dumping 50% of my salary and all of my bonus into a deferred comp account).
Using 2017 dollars, our household gross has quadrupled since 1995 when we married. We did move into a larger house in anticipation of our 4th child in 2002 (last payment on the 15-year mortgage due this July), but otherwise little has gone up with our income except our rate of savings, taxes (which I’m now substantially ameliorating via the salary/bonus deferrals; I realize I’m very fortunate to be able to utilize that plan), and food costs as our kids have grown. Larger vehicles to accommodate a family of 6 (SUV & minivan) are more expensive than the sedans we had as DINKS, which we average 11 years on. And we do take somewhat nicer vacations than we did in, say, 2002 ($8K nowadays for a week in an ocean-front house in the Keys for Spring Break vs. $1K for a week in a cabin in the Smokies back then).
“I’m conservative bc there’s no rewind button. Goals are also meant to be hard to reach.”
No argument here.
Savings is actually the easy part. Just spend less and sacrifice more. Who can’t do that except for those who don’t want it bad enough.
Making passive income, finding good investment ideas, optimizing your net worth… now that’s the hard stuff I want to tackle b/c income upside is unlimited. If there’s no difference in happiness by certain net worth or income levels, then you might as well have fun trying to get rich I say!
Worst case, you can use your free time and extra money to help other people.
Related: Life After Financial Independence
20x times salary? Interesting. Retired 24 years ago at age 39 (wife 37) with two kids (7 and 5) at less then 10x. We only needed about 15% of our gross income to live on even with kids. However, but we did not live fancy. Did a lot of travel pre-kids and a lot of US travel and maybe only a half a dozen international trips with kids, but once they were in junior high they were so busy with other stuff there was not much time for vacations.
Every now and then wife or I would do a few weeks a year contract work that allowed deduction for medical insurance. After kids grew up and finished college wife decided she wanted to do a bit of part time work.
The issues I dealt with when I retired early were learning that it was okay to actually take money out of savings and that market crashes would be temporary setbacks. Also, it was important to believe if TSHTF I/we could figure out a way to earn money. It was impossible not to do some “what-iffing” when getting together with friends who continued to work and have substantially larger portfolios. On the other hand I had time with my kids, time to spend visiting friends and relatives, time to try new things, and time to do a lot of adventure travel that I probably would never have done had I waited until 60-65. Two more years until Medicare—where did the time go??
Yeah, I haven’t learned the part about taking money out of savings/drawing down principal yet. It feels like torture to me given my savings habits to get me to this point. I’m not even sure I use the income from my investments to live because I’ve been busy trying to create more income with my online endeavors as well as more investment income.
I donno… I’m addicted to investing and enjoy the fun of trying to make more passive income.
If you’re two years away from Medicare (congrats btw for early retirement and making it through so long!!), cost of living was much cheaper in the 1980s. Man that woulda been fun to buy up all the SF and Manhattan property then!
Along the lines of “Financial Fasting” (great term, btw…) and “trial runs”…
If both spouses are currently working, and you’re thinking about one of you quitting – simulate it. Not for 30 days, but for, like, 6 months at a minimum.
How? Set up one spouse’s income to direct-deposit to a separate savings account, and just pretend it doesn’t exist. Go “cold turkey” from your 2 income lifestyle and live off the 1 income. Force yourself into it, while knowing if you’ve overreached? The money is still in a savings account. Safety net. (Don’t invest it or park it anywhere else just yet, just dump the paychecks to a savings account. This is a trial run.)
My (now ex) and I did this in the year leading up to the point where we were going to start a family and have kids. We planned on her stopping work when a baby arrived, and at the time we were pretty sure she’d go back to work eventually (never happened) but we *weren’t* sure how prepared we were to live off just MY income.
My income was about 3x what hers was, so it wasn’t THAT tough to tighten our belts and pretend her paychecks never came. We pooled up a ridiculous amount of savings during that year, and while we had to cut back on some of our financial jackassery we didn’t exactly go hungry. It was pretty easy, and a VERY “safe” way to trial run things.
Highly recommend this approach. Easy to set up.
Excellent recommendation. 6 month fast minimum or bust! Glad the finances worked out when the kids were born.
I have a lot of friends, MBA types actually who said they would definitely go back to work after their child was born. Never did. Kinda puts in perspective what’s more important: kids or work you don’t love.
I had a slightly different situation. My husband stayed at home to work on his online business while I continued to work in my job. He worked really hard and built his online business to a consistent 5 figure every month in less than 12 months, so I could finally leave my job to spend more time with our son at home.
Now, I am working on my own online business as well, and hope I can help take some pressure off him as the sole breadwinner. We are not early retirees yet. Given how expensive Singapore is, being frugal is not enough. Building our assets and creating multiple streams of passive income will be one of our goals for the next few years.
Sounds like a great plan! I really like the one spouse has a stable day job, and the other spouse has an entrepreneurial endeavor combo. Best of both worlds with huge upside potentially.
Build your business large enough so both spouses can take advantage. I’m just focused on a lifestyle business b/c I want to keep headaches/responsibilities of others to a minimum.
My spouse and I aren’t quite ready yet – college for our older boy starts in two years, the younger in (probably) thirty years, if he can stretch fifth grade that long.
From a work standpoint, I have to say that getting to a point where I had relative financial independence was . . . not motivating, as in a sixty or eighty hour week looked much, much less appealing when the alternative was hanging with my family.
Thanks again, Sam, for the motivation on your pages (and the how to!) on restarting my blog. I feel better now that I’m blogging again than I have in years. Or maybe that’s the wine?
“college for our older boy starts in two years, the younger in (probably) thirty years, if he can stretch fifth grade that long. ”
Oh, my. I had to read that twice, and when I did I seriously burst out laughing.
:)
No problem John. Ah, the development mysteries of our little ones. I’m so excited to have a family and see what life brings!
Thoughts on an ideal age gap between siblings? Sounds like your kids are 6 years apart?
My wife became a stay at home mom after working less than one year. I often joke that she should start a blog about how she retired early.
Of course this delays my plans for FIRE as making it on a single family income is rare these days.
However, I like what I do and I work remotely whenever I want so even after 20 years I have more to give. I participate in all of my kids activities to the extent that I want so no regrets there.
I hope to wind down my retirement by shifting to part time work in another 10 years. I’ve taken a few 2-3 month breaks where I did some international travel. But I always looked forward to going back to work. I guess I like being productive and working on a team.
My wife has been considering a ‘retirement’ recently. She still gets fulfillment out her job and we are just formulating a plan now. We will be experimenting with living on less for a month or two. She will probably then work part time just to pad the emergency/investment accounts.
Thanks for the post and great ideas for us to consider!
Hey Sam,
New reader here(started November 2016). Only wish I had discovered this
post way way ago. Keep up the good work!
Better late than never right?! Thanks for reading.
I guess as a single income family it’s easier for us to go into full “retirement” mode. Going into a financial “fast” sounds like a great idea, will have to pitch that idea with my wife. :)
It could be, or it might not be as I know many SAH spouses who don’t want their spouse to stop working out of fear of not being able to continue their lifestyle, hence the post: https://www.financialsamurai.com/how-to-convince-your-spouse-to-work-longer-so-you-can-retire-earlier/
Is the personal capital snapshot your actual net worth? minus your SF properties I suppose?
Just trying to benchmark here, since we are also in the bay :)
Hey Sam –
You recommend 20x your HH income to FIRE safely. One problem I see with this is your working income might be much higher than what you’d actually want/need when retiring (assuming your gunning for FIRE, your probably conservative overall so expense stay repetitively low regardless of your income growth YOY). So, in that case, would you actually recommend 20x of your “desired” HH income post-retirement?
Quick example…
My household brings in ~$160k/yr
We only spend around $50k/yr
You’re saying I’d need 160k * 20x = $3.2M to ‘safely’ retire early
But what if I’m happy living off $60k/yr post-retirement. I’d only really need $60k * 20x = $1.2M according to your 20x safe rule, right?
Thanks!
I use 20X my average income for the last 3 years, which generally tends to be the highest earning years before people retire early. But you can also choose the income you feel is good enough for you. In your case, that income would be roughly $90,000 gross to cover your $60,000 in expenses. Hence, $1,800,00 target net worth.
It’s really up to you. I use a multiple of earnings because you CAN’T manipulate what you earn, but you CAN “cheat” on your expenses but cutting things here and there to fit a number.
The other thing is, with a lifetime of savings, it is VERY HARD to start drawing down principal in retirement. It just feels so bad. Hence, a larger number the better.
This is a great read! Technically, my husband is retired and I’m still working. I love running my blog, and it would be hard for me to stop. Plus, we’re already location independent and travel full-time. BUT, I would like to take a break eventually so that I could go on a long backpacking trip, sail around the world, or something else like that where I may not want to be chained to my laptop 24/7 :)
Great post, I love the spreadsheets that you use to show progressions based on age and income. I see them as a road map or financial guide to track and measure progress. My wife and I are planning on retiring in less than 12 years. I will be 52 and she will be 60. I started investing young and brought a nice nest egg to the marriage. She owned a home and has a PSERS pension that will pay her $82K per year at age 60. When we retire, She said that she is finished working, but I would like to work pt. We are following what you have suggested and are planning on how to spend our time together. We are also building in financial buffers and buffers for our buffers.
“financial fast” I like this idea – it’s the first time I heard it. I need to cut my cable, but have been a bit lazy to do so. I suppose I’ve been financially fasting from this without even realizing which gives me more of a reason to do it! Congrats on you and your wife being able to retire early together…..although I’m not sure if one person taking the morning shift and one night shift is total retirement ;-).
I really like the idea of going on a financial fast. We’ve been considering moving to a bigger home with modern amenities, which of course would increase our mortgage payment. I think an exercise of cutting back discretionary expenses and putting that money towards principal on our current mortgage would help us decide whether the additional cost is worth it or not.
Thanks for the mention!
Going on a financial fast is necessary when you’re making a big change like this. We have been testing our finance for a few years and we’re a bit short with passive income at this point. We’ll need to take a little distribution every year if my wife retire now. Not a huge amount and we should still be fine. 2017 is looking good, though.
Good tip with putting health insurance on the business expense. I’ll do that when Mrs. RB40 joins the team full time.
Yes, envy is not good for the marriage. Luckily, Mrs. RB40 doesn’t envy me being a stay-at-home dad at all. It’s a tough job with our crazy son.
No problem! You’ll have to share more stories about your “crazy son” and tell me how you managed to teach, discipline, love, and overcome!
I LOVE Joe from RB40! He is the reason I found FS…so please keep giving Joe a mention. He rocks!
My husband was already living the early retirement lifestyle before I even knew that FIRE existed, thanks to your site. I joke with him that he must have seen your post on “how to convince your spouse to work longer so you can retire earlier.” I can honestly say that my marriage is the best that it has been now that he’s retired. My husband used to be a traveling car salesman and then he worked at the local dealership and our relationship suffered (really, it was miserable) because I hardly ever saw him and when I did, he was exhausted from the long and oftentimes disappointing days at work when he would work for hours with a customer only to have them go home without buying anything…and his income was totally commission based. Now, he is so fun, loving, and helpful! I’m good with the situation because he’s happy and this is the happiest I’ve been so why change it?! Maybe I wouldn’t feel this way had he not paid off the mortgage on the house we live in or didn’t contribute to half the living expenses. We also set an agreed upon amount of money that he needs to contribute to investments every quarter. I envy how his days are just filled with working on whatever/whenever he wants. His income is from various sources such as managing a 4 unit property for one of his friends who lets him keep 50% of rents, buying motorcycles or cars that he fixes up and sells, does handyman work on investment properties that will be flipped, and investments. My early retirement date will come in 5 short years as long as we keep up with our investment plans. It feels great to have a date to strive for! Thanks again to Financial Samurai for exposing me to FIRE and keeping the motivation up.