Budgeting for Early Retirement

I’ll be honest. The idea of “retiring” has always been something that I’ve almost completely ignored, mainly because it’s felt so far away. Through my work, I get 14% of my salary stashed into a 401k each month, and so I’ve felt like that’s enough so that when I’m 65 or 70 or whatever the retirement age is, I’ll be able to retire and be fine. End of story.

Except now I’ve been thinking it from a different angle. To retire, I need to have saved enough money so that Denisa and I can live on the earnings. In other words, there’s an amount I could save that would make it so I could retire, and once I reach that amount, I don’t (theoretically) have to work anymore. And that doesn’t have to be when I’m 65 or 70. In fact, it would be dandy if it were earlier.

Because I’ve largely been ignoring retirement as a concept, my approach to budgeting has been much looser than it was in days past. I’ve gotten raises, Denisa’s gotten work, and my book sales have picked up to the point that when we need money, it’s always just kind of there. And I’d justify pretty much anything I wanted (within reason) to “celebrate” when a book sold or royalties came in. I’m not saying I was just spending like a madman, but I haven’t been paying that much attention to it. We’ve spent less than we earned. That’s all I needed to worry about, right?

Well, not when I’m suddenly thinking about retiring early. Because there’s a few dials you can turn in your calculations for that. You can take how much you spend each year and then figure out how much you’ll need to make to be able to afford that same lifestyle perpetually. At my rate right now, that’s around $2,750,000, assuming I’m spending the interest very frugally.

I don’t know about you, but I definitely don’t have that kind of money kicking around. Not half. Not a quarter. And the odds I’ll ever have that saved up with my 14%/year retirement approach are non-existent. So is it a lost cause?

Not hardly. Because what if I started to actually, you know, budget? What if I tried to cut costs, so that my yearly spending goes down? It’s a novel idea, I know. But if I actually made a list of everything I’m spending right now, then I could get a better handle on things. I think I’ve been avoiding doing that, mainly because I haven’t wanted to look at just how much I’ve been spending. It’s like not going to the dentist because you know you’ve got a seriously big root canal in your future. Not going doesn’t make it disappear.

So I’m doing it. I’m looking at what I spend each month. Once I’ve got all of that in front of me, I can look at it from a perspective of “would I still have this expense when I’m retired?” I can also find ways to reduce what I’m spending each month. From that, I can figure out how much money I’d actually need to have to retire. The lower I can get that monthly budget, the sooner I can retire.

Mind you, my goal isn’t to turn into a church mouse for the next decade or two. I still plan to go on vacations. I still plan to get my kids fun Christmas presents. (Though I’ll likely be spending much less money on Magic the Gathering . . .) I know from experience that my kids are only here for a certain amount of time. I want to have great memories with them during that time.

However, MC is going to be graduated from high school 8 years from now. 8 years used to feel like a lot of time. It doesn’t, anymore. What if I were to somehow get myself into a position where I might retire 8 years from now? It’s something to shoot for, at least. Or make it a decade, and retire when I’m 55?

Some things could affect that as well. Would Denisa still want to teach? Would I want to work part time? Would my books still be bringing in money? The more I look at it, the more feasible it all seems.

I definitely don’t live to work. I work to be able to live and enjoy life. Yes, it helps that I have a job that I feel helps other people, and contributes to society, but society will be just fine when I step away from it. So why not step away sooner, rather than later? Will I reach this goal? No clue. But I know I won’t reach it if I don’t even try, and if by trying, I make it so I can retire five years earlier, I’d say that was time well spent.

Wish me luck.

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