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It Takes More Than Money to Retire Early: Gen Y Money

It Takes More Than Money to Retire Early: Gen Y Money

When we think about early retirement, we tend to focus on the money. That’s natural because we need a sizeable investment account to retire early. Building up a portfolio is a crucial step to early retirement. When I was trying to retire early, it was all about how much we spend and how much passive income we need. However, it takes more than money to retire early.

We have done well over the years and saved up a nice amount. That’s true for lots of people. There are over 12 million millionaire households in the US now. Most of these millionaires are still working hard. Clearly, money isn’t the only requirement for early retirement. Some people just aren’t a good fit for early retirement. Finance is a big part of the equation, but there is more to early retirement than that. I thought it’d be interesting to see what that elusive something is. That’s why I’m doing this interview series.

Today, we have Gen Y Finance. She is one of the OG bloggers from way back. Check it out!

Can you give us a brief background about yourself? What career did you retire from?

I am in my late thirties and I have been in the workforce for over 15 years.  I have not retired yet but I guess you could say I ‘retired’ from working full-time because I work part time.  I work about 20 hours a week and I highly recommend “Part Time FIRE”.  I work in health care.

I don’t have an official ‘retirement’ date or goal in mind, but I plan to work part-time to get extended health benefits- perhaps until my children finish getting their braces, which will be another 10-15 years or so. 

This sounds irrational I know, to keep working until my children get their braces.  But I know that without benefits, we will probably not go to the dentist as often for preventative care simply because we are inherently frugal.

In Canada, even though basic medical care is covered under universal health care, there are a number of things that are still not covered like prescription drugs, eyeglasses, and dental care.

Anyway the reason I want to keep working part time is because I like the balance.  I feel like I am more patient with my children if I have some balance.  If you get tired of one thing (like work) you can focus on the other (family or side hustle).   Also, my husband and I have joint and separate finances so I like to build up my financial independence.

Early retirement means different things to different people. Lots of people don’t think I’m “retired” because I blog a few hours per day and I’m a stay-at-home dad. That’s perfectly fine. Everyone is entitled to their opinion. What does early retirement mean to you? Do you work at all?

When I think of early retirement, I think of a nomadic lifestyle or I think of people who are location independent and live out of an RV in their 30s.

I think financial independence is far more important than early retirement.  I think that people essentially want financial independence and the choice to not have to work if they don’t want to. 

People who are early retired can do whatever they want even if that means generating income.  To feel happy and successful even in retirement, people need purpose and that may be trying to generate income however they wish. 

That being said, it would be disingenuous to advertise that you are early retired when you are relying on your income that you generate for retirement, or if you are ‘selling the dream’ of early retirement but using the funds that you earn for retirement.  I think this is what the “Internet Retirement Police” get up in arms about.  That’s why I think it’s more important to focus on the Financial Independence part of “FIRE” rather than the Retire Early.

*Joe – I don’t rely on my active income (blogging and side hustle.) Our passive income covers our expenses. 😉

What were your financial goals and how long did it take you to achieve them?

My financial goal is to achieve a 7 figure portfolio (I know this is largely out of my control because of the unpredictability of the market) or a 7 figure liquid net worth by age 40.  After that, I hope to generate $35,000 of passive income from my dividend investment portfolio and not touch the principal

I am not so keen on the 4% safe withdrawal rate and plan to just live off my dividends and passive income instead of withdrawing a set amount per year.

I have not achieved this financial goal yet.  You can follow along with my dividend income updates.

When I was planning my early retirement, I was consumed with the money part of it. I didn’t put much effort into the other details. I’d say it was 90/10, financial/non-financial. What about you? Did you put much effort into the non-financial side of early retirement planning?

To be honest, I have not. Life with little ones is so busy and all-consuming, I am honestly just treading water most days and trying to figure out which soccer camp to register my 3-year-old in these days.

Once my children are in university or out of high school I do plan on more trips around the world.  The days of hiking in the Himalayas amidst the giant rhododendrons, exploring coral a beach in Tanzania seem like a distant memory on days I am wiping the floor for the umpteenth time of spaghetti sauce.  I will definitely try to plan some more family friendly trips with children in tow too.

We do have a dream of having our kids go to school for a year abroad, maybe in Asia, while we travel around during school breaks.  The logistics of that will be challenging though but it would be such an enriching experience for our kids (and ourselves).

Where are you in your life cycle? Most people retire around the traditional age – late 50s to early 70s. Their children are grown, their partner and friends are stepping back from work, and their parents may have passed. In short, you have a lot fewer obligations at a later age. To go against the grain and retire in your 30s or 40s can be lonely and challenging. Do you think it is difficult to retire early with all these obligations?

I think it is challenging to want to retire in your 30’s when you have young children.  Being a stay at home parent 100% of the time is a difficult and often thankless job (the thanks comes maybe decades later from your child).  There is no time alone to yourself when you have young children.

I can see retiring when your children are in school age to be more appealing because then you’ll have more time alone.

It takes more than money to retire early

Now let’s talk about the intangibles. To be blunt, lots of people have more money than you. Most of them aren’t retired. They still work and contribute to the economy. What makes you special? How can you retire when almost everyone else in your position continues to work? Why are you different?

I’m not different and I’m not retired, haha.  I think it boils down to being diligent about saving your money, using that money to invest, tracking your investment portfolio, and not distracting yourself with things that cause lifestyle inflation.  Many people who are early retired lead simple lives and don’t need a lot to keep them happy.  They don’t need a Tesla or a Chanel handbag.  Intangibles like time and freedom are more important than tangibles.  Time to walk in the forest and enjoy the outdoors, and time to spend with family is often enough.

Are you married? Is your spouse/partner retired? Did you encounter any challenges as a couple when it comes to early retirement? For example, one of my blogger friends got a divorce because his wife didn’t adjust well to early retirement.

Yes, I am married and as Warren Buffett says, the most important decision of your life is who you marry. 

“Marry the right person. I’m serious about that. It will make more difference in your life. It will change your aspirations, all kinds of things” (2009 BRK Annual Letter)

My husband is not retired but he is financially independent (and we as a family are financially independent).  He doesn’t enjoy traveling to new places as much as I do but he will go with me as long as the destinations are not dangerous or doesn’t involve multi-day hikes with no flush toilets (pre-kids I had a great time traveling with my girl friends around the world).

What’s your next big dream?

My next big dream is a trip to the Maldives.  It has been on my bucket list for a long time.  There was a Travelzoo promotion for a few nights at a family-friendly Maldives resort with food included.  The voucher expires at the end of 2022 so hopefully, we will be able to go.  Joe, I think you signed up for the same one.  Perhaps we might bump into each other in the Maldives, wouldn’t that be cool!

*Joe – My brother also purchased the same package to the Maldives. We’re trying to coordinate, but it’s really difficult. We probably will just go by ourselves in early 2022. I’ve excited to travel again.

Thanks, Gen Y Money for her perspective. She is in the middle of the journey to early retirement. There are many years left, but it sounds like she is enjoying it with her family. It’s a great idea to keep working on financial independence. Once her kids are out of the house, she’ll have a lot of options.

The post It Takes More Than Money to Retire Early: Gen Y Money appeared first on Retire by 40.

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