The early retiree is a late-50s individual who has had a successful and storied career, right? Either that, or a financially savvy investor who made all the right decisions.
Not necessarily. An early retirement can actually mean leaving the workforce well before you turn 50. It could even mean leaving well before you’re 40, too!
How is this possible? Here are two stories that highlight similar methods of achieving this dream.
Mr Money Mustache
‘Mr Money Mustache (sic)’ is a blog written by a “thirtysomething retiree” who found the secret to what’s known as ‘extreme early retirement’. Whether he has a real moustache or not is up for debate, however, as he is an anonymous writer – to protect his family’s identity.
According to Mr Mustache’s site, both him (Pete) and his wife (unknown) studied engineering and computer science and worked pretty normal jobs throughout their early careers. This might not seem amazing until you realise that they both retired in 2005 – remember, ‘thirtysomething years old’ – to raise kids.
So how did they do it?
“It was a gradual process,” Pete told Market Watch. He said that both he and his wife knew they wanted to be parents, and wanted to retire in order to raise the little ones.
“This really increased our motivation to spend less and invest more, and we cranked things up.”
Through frugal spending (and we mean frugal), they had enough to theoretically live off for the rest of their lives by 2005. According to the Mr Mustache site, they cut down to a lifestyle about “50% less expensive” than their friends and colleagues. They saved enough to pay off their house and still have CA$600,000 in investments – enough to generate around CA$24,000 per year (AU$24,500).
Billy and Akaisha
Billy Kaderli and his wife Akaisha are another couple who chose the early retirement route. Together they ditched the restaurant and brokerage industries to retire and travel at the age of 38.
Mr Kaderli was a trained chef who, together with Ms Kaderli, opened up a restaurant in California, which was open every day of the year. After half a decade, Mr Kaderli went off to help run a brokerage firm with a man called Dean Witter, so the husband and wife duo worked separate jobs for a time – but jobs nonetheless.
After taking a long, hard look at their lifestyle compared to their dreams, the Kaderlis made the decision that few are able to make. They cut their spending back, retired from their successful businesses and moved country.
“In 1991 we had close to $500,000 when we took this leap,” they told Get Rich Slowly.
The couple feel that consumerism is to blame for many other people being unable to do what they did, which is a big part of why they left the US. To avoid the “distraction” of this lifestyle, they set up shop in Nevis (that’s a tiny island in the Caribbean, by the way) and began a gypsy life of travelling.
What can you learn from these two tales?
One of the main things you can learn from this article is that retiring early isn’t all about clever investing or inheriting wealth – it’s about setting a goal and sticking to it. For these two duos, this was to retire as young as possible and live on less than AU$30,000 a year. One group wanted to raise a family, the other to travel.
Both couples also wanted to shun a consumerist lifestyle, refusing to get caught up in the perpetual cycle of keeping up with the Joneses.
If you save smartly, you’ll also find building superannuation a breeze. When you reach preservation age, you’ll be able to use this to boost your lifestyle to enjoy the golden years in bliss.
As the Kaderlis themselves advise on their site: “Embrace your future! Follow your dreams!”