Shooting for Early Retirement

I don’t remember and don’t want to go back and look at all the previous Traveling Wallet posts. But……Do you even know what our retirement goal is? I don’t think that I have shared it with you.

I guess in a way I always wanted  to retire early but that to me meant at 50. I first started thinking about retirement because at my new full time job I had to decide what to do about this 401k thing. As I learned I thought 65 just sounded wrong specially with the acceptable retirement age getting older and older.

It almost seemed like it was just out of my control. So I started reading about retirement, a lot of it was very negative but I also discovered retirement calculators.  I got really infatuated with the MSN retirement calculator( its different now and nothing special it reduced user control by eliminating input fields, I was disappointed) it had lots of fields to fill and I began experimenting with scenarios.

Back then you could run it and make multiple adjustments to income, amount saved yearly, starting balance, investment return percentage, you could even check a box to include social security benefits.

Back then I also didn’t really know what I was doing so I made a lot assumptions based on popular opinion. Like the fact that I should have 1 million for retirement. I also started by assuming only 10% of income being deposited into retirement accounts.  And agreeing that I would need 80% of my last earnings for retirement. The only popular assumption I didn’t make was 8% growth. I always used 5%.  But that didn’t get me where I wanted so I started playing with the numbers. Sometimes including social security other times not. Finally I got it to work and so 50 was my goal.

When I started this blog I shared that goal with you. In my first post I mentioned retirement and it was a guess with calculations based on broad assumptions. To most people who feel like they can’t ever retire it was a very admirable goal. It was aggressive, though not unrealistic.

It said and I quote

“-Early Retirement (as in 50 or younger shooting for 45)”

Well soon after that post I finally learned about the 4% safe withdrawal rate and about the shockingly simple math to retirement. I ran some scenarios for just how early we could retire.  Learning that you don’t need a million to retire, what you really need is 25 times your yearly spend. So you could need less or much much more.

So I did the math to figure out our number. Then  assuming a 60% savings rate based off of last year. Here are our freedom numbers

Stats

150 months to freedom*
12.5 years to early retirement
FI in Oct  2026
Start date May 2014

*Mr.1500, I like your number based goal so I’m cribbing from you. I hope you don’t mind. 

Well there you have it. Now you know when the Roamer clan here at Traveling Wallet will be free from work. We are looking at 40 years old at the worst.

But since that math we’d much rather get there by 37. If we can pull off 35 that would be the shizz. But in the end the number is 25. 25 times our spend.

Everyone loves a good graphic so I figured I’d do something to communicate progress visually.

Most FI is done with a mentality to the dollars. The date will be whenever the dollars are enough. So I found it interesting to read Financial Samurai’s post stating that you focus on a retirement age instead.  I can see the draw in that since I am sure we will earn at least a little bit of income post retirement. 

Yet another perspective is Paula’s at Afford Anything. Post on semi vs mini vs early retirement. Opening up a whole new world for retirement.

So I’m constantly assessing and asking myself what would be ideal. How about you?

Are you dreaming of retirement or enough financial freedom to live life on your terms ? Let me know in the comments.