Author Topic: Frontload and then down shift?  (Read 10371 times)

jordy913

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Frontload and then down shift?
« on: May 29, 2015, 06:52:11 AM »
I've been considering this and wondering if anyone else is doing it as well.

I have about $60K saved so far for retirement. Since getting involved with MMM, I cut my expenses and my savings rate has increased a lot. I am now "scheduled" to save about ~$30,000/year.

At this rate, I'm (roughly) anticipating having $250,000 in about five years. This is just from using a compound interest calculator at a 5% interest. I know it's not an exact prediction, but my question is...

Let's say I reach $250,000 and then just let it grow without adding anymore to it. After ~30 years, at a 5% growth assumption, it would be over a $1 million by the time I'm 65. And that's if I don't put another dime in it, which is highly unlikely.

Has anyone just kind of stopped saving after hitting a certain number? And downshifted to another less stressful job/career or part-time work that would be used to cover expenses + short term savings?

I know this forum is about retiring early, but I would say I'm much more in the FI camp than ER. I'm still pretty young, so I don't foresee myself totally stop working. I would love to feel financially secure enough to pursue opportunities that are more fulfilling. Or if DH and I have a family, it would be great to not feel chained to a full-time job and free to take on part-time work. To me, that is a lot of freedom. 

Thanks for all your feedback!

okits

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Re: Frontload and then down shift?
« Reply #1 on: May 29, 2015, 07:00:21 AM »
That plan is our safety net.  "Retirement is fully funded, so we can quit and do something more fun if our current jobs become unbearable."

We are planning for me to downshift soon.  With assets and a family suddenly it takes a lot more (money, satisfaction, or both) for me to willingly trade my days for cubicle dwelling.  Our kiddo is growing up so fast!

seattlecyclone

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Re: Frontload and then down shift?
« Reply #2 on: May 29, 2015, 07:04:51 AM »
If you do this, you're always going to have the risk that you stop enjoying even your part-time job, would like to quit, but don't have enough savings to do so. There's no way to avoid all risks in life though, so if this plan seems to be the right thing for you, then go for it!

2Birds1Stone

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Re: Frontload and then down shift?
« Reply #3 on: May 29, 2015, 07:13:57 AM »
I think this is the strategy of many on there. I have two significant milestones to hit on my journey to FIRE. The first is $375k where my barebones expenses would be covered with a 4% SWR, at this point I can reconsider my line of work, work part time, work seasonally, etc. The second point is hitting $750K where I could probably stop working forever and enjoy a fairly luxurious life sans work.

theadvicist

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Re: Frontload and then down shift?
« Reply #4 on: May 29, 2015, 07:17:29 AM »
This is kind of my plan. All of my earnings will go to retirement savings for the next fews years, whilst we live on my husband's salary. Our true retirement (starting at 57, the earliest we can access tax advantaged money here) will be taken care of within the next four years.

After I've built that stash, my husband's salary is totally sufficient, and he doesn't want to stop working. So I may well give up work whilst we coast along until he retires at 57 on the stash  built earlier. Or, I may work part-time and invest it. He may see me enjoying myself so much he wants to join in, in which case I'll work to build a new (non tax advantaged) stash that we can live off before 57. Not sure.

But I do know that the pressure will be off. Actually, I feel as though it already is, just from having 1) a plan and 2) low expenses. If we can already survive on 1 salary between us we are in a much better situation should one or other of us be unable to work for some reason.

jordy913

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Re: Frontload and then down shift?
« Reply #5 on: May 29, 2015, 07:25:31 AM »
It's really great to hear this feedback. Thanks!

@theadvicist - you have basically the situation I'm shooting for. And you're definitely right about the pressure. Having a plan makes a huge difference. True FI seems so far away for me, but this is a milestone I can actually see happening soon. I feel like a huge weight will be lifted once I know that retirement is fully funded. Then it's just a matter of "should we get these faster?"

humbleMouse

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Re: Frontload and then down shift?
« Reply #6 on: May 29, 2015, 08:04:38 AM »
Everybody has different priorities.  Personally, I am pretty young(20's) and once I hit 100k invested plus a 10k+ savings account, I will be totally relaxed about finances.  Right now I work a pretty intense but good paying job, but keep my expenses very low (1500/mo-ish).

Once I have a nice cushion, I am going to sit around and make art, music, work some freelance tech gigs, maybe be a fine-dining server a couple days a week.  All things that I enjoy doing.

Kind of rambling but I think you are not alone in thinking this way.  I can understand why people with kids and families want to get as much $$ as possible, but for me 100k is plenty for piece of mind.  I can always get a 9-5 when I am 35 if I need to sock away some more cash!

mozar

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Re: Frontload and then down shift?
« Reply #7 on: May 29, 2015, 09:04:41 AM »
That's one way to think about it. Having a goal of retiring in ten years was too depresing for me. In 8 years I'll be FI. At which point I can downshift and coast until my stache compounds its way to RE for 3 or 4 years. Or if work is going well or at least continues to exist I can work for two years until the finish line.

KCM5

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Re: Frontload and then down shift?
« Reply #8 on: May 29, 2015, 09:24:33 AM »
This is basically our plan, too. Save $500k (or $600k if we can manage it) and then pull up and travel for a couple of years (on money other than the stash) and emigrate to Britain where wages are lower. Maybe we'll both work part time then or maybe one of us will work full time and the other part time or not at all. But basically downshifting at that point and let the money grow for a decade - we'll see if we contribute or not.

I know if we just worked here for 12 years instead of the 8 that we plan we could just retire when we emigrate. We still might do that but my spouse really hates the winters here so it's easier to think about 8 years rather than 12.

Gone Fishing

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Re: Frontload and then down shift?
« Reply #9 on: May 29, 2015, 09:31:15 AM »
Our intial plan looked something like this, but the downshift job my wife had her eye on didn't work out, so I decided to go for full on FIRE.  We would have actually had way more than we needed if it had.  That's the beautiful thing about having money, options.

Gray Matter

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Re: Frontload and then down shift?
« Reply #10 on: May 29, 2015, 09:35:09 AM »
This is our plan, too, and we are sort of living it.  We did consciously save as much as we could in order to be able to save less later (but this was all pre-MMM for me, so "as much as we could" wasn't that much to be proud of).  Still, it allowed me to leave a more lucrative career in the financial services a year ago in order to take a part-time (80%) job at a non-profit.  DH still has a fairly lucrative corporate job, and we're adding to the stache, but his job is not necessarily stable and he's not necessarily happy, so we are considering a job change for him. 

If he stays at the same level and savings, we could retire frugally in two years, or less frugally in 6.  If he takes a part-time/lower-paying job, we can let our savings grow without adding to it and retire comfortably in 8-10.

I don't know what we'll do, but I do feel like my career is already in the "ramp down" phase.  From here on out, I don't see myself working full-time ever again, and do see myself slowing down even more in a couple of years.  It's hard to tell about DH.  There are days when he wants to go full-bore ahead in order to retire with enough money to maintain two houses (one a cabin) and travel internationally, and there are days when he wants out of the rat race right now.

What I like about this approach is the flexibility--we have many, many options.  (Figuring out which one would make us happiest is a' whole 'nothing story, though.)

TheThirstyStag

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Re: Frontload and then down shift?
« Reply #11 on: May 29, 2015, 09:43:41 AM »
This is a very good question, and kinda what I see in the SWAMI path.  I like the idea of front loading savings and get to the "could retire if we wanted to, but jobs are great" level. 

I think after realizing that time (for compound interest to work its magic) is one of the most precious things we have, front loading makes so much sense. 

NotJen

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Re: Frontload and then down shift?
« Reply #12 on: May 29, 2015, 10:15:58 AM »
Has anyone just kind of stopped saving after hitting a certain number? And downshifted to another less stressful job/career or part-time work that would be used to cover expenses + short term savings?
This is my plan, except I don't have a specific number. I'm not ready to quit yet, but I like knowing the option is there. I could make a lot less and still be quite happy. And still probably manage to save!

According to the simple calculator on my company's 401k portal, I could stop saving now and have $1 million when I turn 60. This is the result of me saving "what felt right" and not having a real plan before.


dandarc

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Re: Frontload and then down shift?
« Reply #13 on: May 29, 2015, 10:18:58 AM »
Wouldn't say it is our plan, but we have hit the phase where a "normal" retirement requires no further input.  Worst case, we work to just cover our expenses for the next 35ish years, and we're still OK.

Gotta remember that when I get overly stressed about work!

Midwestache

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Re: Frontload and then down shift?
« Reply #14 on: May 29, 2015, 10:32:15 AM »
This is our plan also. Plan to heavily save for the first 10 years. Gain financial independence. Then determine whether to continue working. I'm almost certain that I will continue working. Then keep stashing at a lower rate. The amount of money that will be stashed will depend on what the foreseeable income from the stash will provide. Live off that amount only. Thus, Past 10 years my assets will always thus be able to cover my expenses and thus I can quit at any time.

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Re: Frontload and then down shift?
« Reply #15 on: May 29, 2015, 10:44:49 AM »
This is something I've been thinking about a lot lately- glad other people are on the same page!  I think it's a great option for those of us who have well paid part time work readily available.  I plan on working in my profession (in some capacity, whether it's 2 days a week or the minimum amount required to keep my license) until I am physicially and mentally unable to do so. 

Right now I'm planning on working 9 more years (full time or almost full time) and reevaluating our finances at that time.  Ideally, at that point we'd work enough to only cover our household expenses, with no savings (& a paid off house).

mathlete

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Re: Frontload and then down shift?
« Reply #16 on: May 29, 2015, 11:16:43 AM »
Yeah this is basically my plan.

Right now I make more money than I really need so I end up plowing a lot of it into savings every month if I can't come up with anything worth spending it on.

By my projections, I should have my home paid off and $350K (2015 dollars) in retirement savings by the time I'm 35.

I like my job well enough right now and so if I had to guess, I'll probably still keep working at it past 35 b/c the extra money still means loads more fun trips while I'm still young. I like having the option though and with the numbers I describe, I can quit at 35 and screw off for 30 years, survive 4 bankruptcies, and still have a paid off home and 1 million+ in retirement savings (2015 dollars) by age 65. 

jordy913

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Re: Frontload and then down shift?
« Reply #17 on: May 29, 2015, 12:23:47 PM »
This is our plan, too, and we are sort of living it.  We did consciously save as much as we could in order to be able to save less later (but this was all pre-MMM for me, so "as much as we could" wasn't that much to be proud of).  Still, it allowed me to leave a more lucrative career in the financial services a year ago in order to take a part-time (80%) job at a non-profit.  DH still has a fairly lucrative corporate job, and we're adding to the stache, but his job is not necessarily stable and he's not necessarily happy, so we are considering a job change for him. 

Yup, this describes exactly what I want to do! I would love to take up non-profit work - where I actually support the purpose of the company. But still have freedom to pursue personal goals as well.

ender

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Re: Frontload and then down shift?
« Reply #18 on: May 29, 2015, 04:08:36 PM »
The nice part about saving a lot of money in your 20s is that, if you change your mind and decide you want to spend everything you make and work till your 65, you will still have a bunch of money then.

Or if you want to quit your job and work part-time or scale back career (which are more likely here).

We're absolutely stuff money into traditional accounts right now taking advantage of the 20% or higher tax savings and will likely lower our savings rate dramatically if/when we have children (because of lower income and higher expenses).

Bearded Man

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Re: Frontload and then down shift?
« Reply #19 on: May 30, 2015, 11:59:00 AM »
The thought has crossed my mind. I recently posted a thread on at least one other forum about potentially moving to Cambodia, having a 10 year adventure, then returning to the US once you hit millionaire.

Alas, since I'm going to grad school and doing good right now, I'm going to keep the momentum going until either they've had enough or I've had enough. ;-)

Nothing wrong with having more money.

kpd905

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Re: Frontload and then down shift?
« Reply #20 on: May 30, 2015, 12:34:17 PM »
I'm frontloading now before kids come along, because I am sure our savings will downshift a bit when that happens.

I'd like to hit $500,000 or so and then go half-time at work if possible.  Although it would also be tempting to just work a few more years full time and have enough to be done completely.

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Re: Frontload and then down shift?
« Reply #21 on: May 31, 2015, 04:45:50 AM »
This is a strategy we have seriously considered. My wife and I are 34 and 32 and will reach a net worth of $600,000 (Canadian) in just over a month. We have a one year old, and work overseas. We have no house, and no interest in staying where we are or keeping our careers.

When you look at FIRE plans they will always stress how young you are in your mid 30s and how you have all of those years left to live. While that is true, most also gloss over the fact that if we leave half a million and don't touch it, it will compound for those same decades. A 65 year old retiring with that much has the 'advantage' of fewer years ahead (ie. dying before it runs out), but doesn't have the same compounding options.

Plus, we know we will earn income again doing odd jobs, and things we like. What we are really doing is contemplating the option of slowing down and experimenting with lifestyle design, businesses, etc. and living a more minimalistic lifestyle. If it fails, we can always work again. But doesn't that kind of money saved and growing count for something? Doesn't it give you an 'out'?

The other annoying things is always reading how people who downshift from high paying jobs can't make the financial adjustment. We have always been frugal, and a lot of the high-income, high-spending life style has always gone against our own morals and interests. I am an introvert my nature, and have many low income hobbies and interests. I know it would be hard, but I think people on this forum can handle it.

Hey It's Me

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Re: Frontload and then down shift?
« Reply #22 on: May 31, 2015, 06:08:21 AM »
I'm in my early 20s, and at the rate I'm saving I could purchase retirement at a traditional age after only 3 years of working and saving. If my goal was to retire at 65, I would never have to save another penny in my life.
Heck, even if I worked and contributed till just 30, I would end up with a six figure income at 4% SWR at 65.

This just boggles my mind...
« Last Edit: May 31, 2015, 06:15:49 AM by moe_rants »

thedayisbrave

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Re: Frontload and then down shift?
« Reply #23 on: May 31, 2015, 08:41:07 AM »
This has been my plan as well.

Ahhhh... the beauty of compounding :)

begood

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Re: Frontload and then down shift?
« Reply #24 on: May 31, 2015, 08:44:18 AM »
I want to do this for our daughter - sock away $50K in a taxable account when she turns 21 and let it grow untouched for 30-40 years.

We did a version of this - saved from the get-go, saved bonuses when they came, saved relo expense lumps, saved raises - and then when an opportunity came up in our midforties to make a complete life shift, we didn't have to say no because we still needed to save for retirement. When we made that move, my husband didn't plan on saving anything more for retirement, but thanks to things we've learned from MMM and you fine folks, he's going to max out his 403 (b) this year, to the tune of $24K since he's turning 50.
« Last Edit: May 31, 2015, 08:46:56 AM by begood »

rubybeth

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Re: Frontload and then down shift?
« Reply #25 on: May 31, 2015, 08:47:52 AM »
Have definitely thought about this as an option. Stashing a lot now just gives us a lot more options in the future. A large stash is kind of like a huge, possibly lifelong emergency fund--it covers you from a variety of things that life may throw at you (layoffs, disability, illness, etc) like nothing else can. I like the idea of going to part-tune work in my same field, but a lot will depend on my husband's future income. I think if I could demonstrate that we could still retire by age 50 with me working part-time, he would accept it because reducing my stress would be good for both of us. 😊

sol

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Re: Frontload and then down shift?
« Reply #26 on: May 31, 2015, 09:02:51 AM »
The nice part about saving a lot of money in your 20s is that, if you change your mind and decide you want to spend everything you make and work till your 65, you will still have a bunch of money then.

The danger in this plan is that by increasing your spending rate because you think you've already saved enough, your retirement nest egg will no longer be big enough to support that new spending rate when you do quit working.  The "shockingly simple math" doesn't work for someone who jacks up their expenses late in life.

rubybeth

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Re: Frontload and then down shift?
« Reply #27 on: May 31, 2015, 10:35:31 AM »
The nice part about saving a lot of money in your 20s is that, if you change your mind and decide you want to spend everything you make and work till your 65, you will still have a bunch of money then.

The danger in this plan is that by increasing your spending rate because you think you've already saved enough, your retirement nest egg will no longer be big enough to support that new spending rate when you do quit working.  The "shockingly simple math" doesn't work for someone who jacks up their expenses late in life.

Yes, but you always have the option to cut back on expenses, too. Once kids are grown, college educations paid for, house is downsized (or sold altogether), and work stopped, your 'required' expenses can drop significantly, and you also have the option of moving to lower COL area, or doing slow travel, or living out of a camper, etc. Saving up $200,000 in your 20s or early 30s and not touching it for 30 years gives you a quite respectable stash by the time you reach your 50s or early 60s, when social security and medicare also help reduce costs that early retirees have to budget for.

Hey It's Me

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Re: Frontload and then down shift?
« Reply #28 on: May 31, 2015, 11:15:45 AM »
Yup, it's definitely not as simple as an either or, but the decisions need to be made consciously after understanding the benefits and risks of both options.

tj

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Re: Frontload and then down shift?
« Reply #29 on: May 31, 2015, 01:52:15 PM »
I've been considering this and wondering if anyone else is doing it as well.

I have about $60K saved so far for retirement. Since getting involved with MMM, I cut my expenses and my savings rate has increased a lot. I am now "scheduled" to save about ~$30,000/year.

At this rate, I'm (roughly) anticipating having $250,000 in about five years. This is just from using a compound interest calculator at a 5% interest. I know it's not an exact prediction, but my question is...

Let's say I reach $250,000 and then just let it grow without adding anymore to it. After ~30 years, at a 5% growth assumption, it would be over a $1 million by the time I'm 65. And that's if I don't put another dime in it, which is highly unlikely.

Has anyone just kind of stopped saving after hitting a certain number? And downshifted to another less stressful job/career or part-time work that would be used to cover expenses + short term savings?

I know this forum is about retiring early, but I would say I'm much more in the FI camp than ER. I'm still pretty young, so I don't foresee myself totally stop working. I would love to feel financially secure enough to pursue opportunities that are more fulfilling. Or if DH and I have a family, it would be great to not feel chained to a full-time job and free to take on part-time work. To me, that is a lot of freedom. 

Thanks for all your feedback!

I'm not married yet - and I assume that expenses will go up when that happens (particularly if I have kids)- so it's kind of hard to do this kind of long range planning. If I'm only dealing with my own personal expenses then it's fairly easy to project (assuming no major medical complications), but even if I were to hit some target number that I expect to last for a long time - I would still feel the need to bring in some amount of income which at least allows the stash to grow rather than draw from the stash at an early age....

Bob W

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Re: Frontload and then down shift?
« Reply #30 on: May 31, 2015, 02:36:19 PM »
There are way too many future assumptions here.   Best plan - save like crazy - then when you hit whatever number you pick evaluate then.  The future of the US is very unlikely to be like the last 50 years.  Very, very unlikely.

MrsPete

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Re: Frontload and then down shift?
« Reply #31 on: May 31, 2015, 07:06:16 PM »
Yes, we did that, and it was a good strategy. 

When we were young and first married, we saved very, very aggressively. 

When our kids became teens (and no matter what you do, teens are more expensive compared to children), we figured we had the option of "letting up" a bit on the savings.  We wanted to do some serious traveling, etc. while they were teens, thinking it would be the ideal time -- and it was.  However, we found that we didn't have to slow down our saving (mostly because our house was paid off). 

We had the same plan in terms of college:  Because we had already saved early, we had the option of "slowing down" our savings during the years we're paying for college.  However, that hasn't been necessary.  Starting next fall, we're going to have two kids in college, but we still don't anticipate the need to "slow down". 

Saving early with the idea that you can slow down later is a great plan. 

Dicey

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Re: Frontload and then down shift?
« Reply #32 on: May 31, 2015, 08:52:25 PM »
Besides the one about compound interest, I believe that it should be printed on every high school diploma that the earlier you save, the fewer actual dollars you will need to save for retirement. So simple and so many people just don't understand this concept. They "kill all the debt", including their cheap mortgages, thinking that they can start saving for retirement after the house is paid off. Big financial mistake.

Good on you for asking this question NOW.

IllusionNW

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Re: Frontload and then down shift?
« Reply #33 on: May 31, 2015, 11:34:18 PM »
This isn't really our plan, but I do think about it quite a bit.  I have a spreadsheet on my computer called "Enough" that shows me when we would hit "the number" if we didn't save another penny.  Right now we're 32 and 33, and based on our investments, if we blew all our money from every paycheck going forward and just let our current investments grow, we could still hit our "number" by 57/58.

While we probably wouldn't do that (blow all our money or wait until 57/58 to retire), it's nice to look at when I'm feeling a bit disheartened about my job and daydreaming about taking on a lower-paying, lower-stress job.

couponvan

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Re: Frontload and then down shift?
« Reply #34 on: June 01, 2015, 09:49:45 AM »
Yes, we did that, and it was a good strategy. 

When we were young and first married, we saved very, very aggressively. 

When our kids became teens (and no matter what you do, teens are more expensive compared to children), we figured we had the option of "letting up" a bit on the savings.  We wanted to do some serious traveling, etc. while they were teens, thinking it would be the ideal time -- and it was.  However, we found that we didn't have to slow down our saving (mostly because our house was paid off). 

We had the same plan in terms of college:  Because we had already saved early, we had the option of "slowing down" our savings during the years we're paying for college.  However, that hasn't been necessary.  Starting next fall, we're going to have two kids in college, but we still don't anticipate the need to "slow down". 

Saving early with the idea that you can slow down later is a great plan.

+1 - Although we are only at the beginning of the teen phase.  I will say that renting rooms from a couple with a ton of electronic gadgets that were going bankrupt at the beginning of our life journey really helped us decide not to have that happen to us.

"Smart Couples Finish Rich" by David Bach is my most dog eared, circled and raggedy old finance book.  We started at -$20K of total law school debt in 1998.  We're over $1M now at 44 with me staying home for over 6 years and only working part time for 6.  DH also took about 6-9 months off/PT one year to take the Bar in a new state. 

From David Bach's book.... "Over time money compounds.  Over a lot of time money compounds dramatically."  At a 4% rate of return,starting at age 25 to retire at 65 with a milliion dollars you need to save about $1,000 a month. At a 7% rate of return you only have to save $400 a month. 

DH and I started at 23 with the $1,000 a month conservative return savings philosophy.  We're 20 years into the savings wheel and are saving more than $1,000/month now.  We could afford to stop saving right now and never add another dime and retire at 65 just fine.  Down shifting will occur when the oldest goes to college in 3 years.  By then we should be at $1.3-$1.4M or so and will pay cash for college....By age 55 with compounding I think we'll realize we can luxuriously retire.

My thoughts...

- Start saving yesterday.
- Start investing today.
- Buy a house on a 15 year mortgage with no less than 20% down.  You can afford this shorter payment period by purchasing less house than you qualify for (after 15 years everything starts to break on a house, so you don't want to try doing repairs while you're still paying a mortgage).
 - Used cars, furniture (other than beds/couches) and last year's technology work just as well as new ones.
- start the kids college fund before you have kids (my one major regret is that I haven't prefunded these accounts enough).  The idea that I need to keep working to pay for college is keeping me from feeling like we can FIRE.

Don't try to keep up with the Joneses - they are broke.


mattgti

  • 5 O'Clock Shadow
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  • Posts: 3
Re: Frontload and then down shift?
« Reply #35 on: June 06, 2015, 04:20:37 PM »
@OP. yes, this is my plan! Front loading then dropping down though not out. It won't be completely to a level of no work, but rather reduced hours, interesting work, no more burning out. I want to work, but 15hrs max per week sounds like plenty.

I have some life experience that makes me yearn for this in particular. When I was 29, I quit my job for a year and traveled, studied, and did about $8k of engineering consulting work sprinkled throughout that year. Very low stress. Now at age 35, I realize I have almost enough stash that about 8k to 15k income as a supplement would meet my expenses. Do I want to work full-time for ~6-8 more years to get true FI or quit soon? Kind of similar to MMM's Retire first and then grow rich. Do a partial FI, work very part time, and have the rest of my waking ours to engage in projects and see where it takes me. On top of that, being 40+ hours in the office has just been soul crushing. I need out sooner rather than later.

This book covers the topic:
Work Less, Live More: The Way to Semi-Retirement Paperback September 30, 2007 by Robert Clyatt