In this guest post Tim from Canadian Dream: Free at 45 shares his path to early retirement at 45. If you like to read more about the road to early retirement you can subscribe to his RSS Feed here.
I like to think of myself as fairly ordinary. To outsiders I seem to fit into my neighborhood. I watch movies, cut my lawn and play with my son outside when it is nice out. Yet despite that I’m so fundamentally different from them. You see I don’t plan on working past my 45th birthday. Now being almost 30, most people think my plan to retire at 45 is merely the idealized fantasy rather than a likely outcome. When in fact barring any major problems like my house burning down the day after my insurance company goes bankrupt I’m for certain to retire before 50 and very likely to retire at 45. So how is this possible? Well simply put it was a choice. About five years ago I decided that working until I turned 65 sounded like a bad idea. After all I liked my job, but I can easily think of at least a half a dozen other ways to spend my time rather than working. So I decided to retire early. At first I was thinking about doing it at 55, but then I thought, what the hell let’s go for broke and try for 45.That’s when I started to look into it. I realized retirement is actually a fairly simple equation if your investment income is greater than your spending in a year you can retire. So you can either save more or reduce your spending to get there a lot faster (even faster yet, if you do both). So I took a hard look at my lifestyle and realized I don’t really need a lot of money to be happy. I’m happy with home cooked meals and borrowing books from the library. Assuming I can pay my mortgage by 45 my wife and I can easily live off of $24,000/year in today’s dollars.Then came the challenge of reducing expenses. In the beginning it was easy to find the wasteful spending on power (switch to CFL’s), food (cooking more at home), water (low flow shower heads) and using the library for DVD’s as well as books. Then after a while it was adjusting insurance deductibles to reduce premiums and focusing more on my investing to get a better rate of return. The end goal of it all is simple. How can I have a happy lifestyle on the lowest amount of spending possible while maximizing my savings?You see I don’t want to retire by giving up my lifestyle today. I still eat well on $300/month to feed a family of three. I eat steak with a drink of red wine, but I don’t expect to do it all the time. I also grow a garden, because it saves money and I enjoy doing it (and it tastes so much better).
Early retirement can be achieved by anyone. It’s just a matter of your priorities: do you really want a new car or would you rather buy a used one and retire a year earlier? Then you set your goal and work towards it. It isn’t about getting there by living in misery, but rather find your own path. Each of us is unique and so shall our paths be. Best of luck finding yours.
If anyone would like to share their plans and goals for early retirement or financial independence let me know at <myfirstname>@earlyretirementextreme.com
Originally posted 2008-03-03 07:33:24.
