First Retire…Then Get Rich

If you’ve ever told a non-Mustachian about your plans to become a very early retiree, you’ve probably had to deal with a volley of skeptical questions.

“How can you be sure you’ll have enough money for such a long period?”

“Why did you quit working so early, when you could have had hundreds of thousands more with just a few more years of work?”

“Sure, you may enjoy a frugal lifestyle now, but what if your tastes change in the future? Or if you eventually have expensive medical needs? I wouldn’t want to be locked out of a high-wealth lifestyle in my golden years, just because of a choice I make right now.”

Questions like these make sense, and because they are genuine attempts to learn rather than just complainypants statements, they deserve real answers rather than just punches in the face. I got a lot of them after posting the article about how we saved for retirement in 9 years on two regular engineering salaries.

Although I will never lose my love for an efficient and simple lifestyle, I’ve actually got a secret plan to get quite a bit richer over the next 40 years. It’s secret, because I don’t want this blog to become one of those Big Income Big Spender (BIBS) blogs that everyone else writes. But it’s not complicated – the trick is simply that I’ve been maintaining a positive savings rate, even in retirement.

To understand the implications of that, check out the following two examples:

Jack and Jill are two single MMM readers in their mid-20s. They are both planning to retire by 35, and each has determined that their his or her annual spending level is about $20,000 per year.

Jack follows the popular “4% withdrawal rate” guideline, and determines that he needs $500,000 in assets to fairly reliably generate that income for him for life. As soon as he hits the $500k mark, he quits his job.

From that point onwards, he resolves to devote all his efforts to charity or beach-sitting and never earn another dollar. He also decides to keep spending $20,000 per year whether he needs to or not. Just for fun, let’s say the stock market conditions are worse than average throughout his retirement, so he slowly uses up his nest egg and when he dies at 108 years old, he spends his last few thousand dollars on a scholarship for his great-great-granddaughter. Not too bad a life story, but it was a close call, financially.

Jill has also estimated that she’ll need $20,000 per year in retirement, so she also works and saves until she has $500,000. At that moment, she is financially independent just like Jack. And she has grown tired of her corporate job, so she’s ready to hang up the keyboard. But like Mr. Money Mustache, she has a secret plan to end up much wealthier in her later years. How could this happen, even after retirement?

To find out, let’s follow Jill after retirement to see how things go.

For the first year, she is in recovery mode from putting up with 15 years of corporate work. She spends her weekdays doing projects around the house and getting back into shape, her weekends visiting her still-working friends and family, and several weeks taking a few of the trips she had been postponing. Whew, that was great. The whole $20,000 budget was spent and she earned nothing. But by spending so much of her newfound free time socializing with friends, she learned of several interesting opportunities in her dream field of being a kayak instructor. A tour company was looking to hire guides, and some paddlers were looking for lessons. Someday, she might follow up on those.

By the second year, her house is nicely fixed up and the desire to travel has been somewhat fulfilled. And since she’s an MMM reader, she is occasionally tickled with inspiration towards living a simpler and more efficient life. A few interesting ideas come up, and she tries them out:

The original $20,000 budget had assumed that she’d keep her fairly new Honda CR-V and drive it 10,000 miles per year at 25MPG. Now thanks to the Little Car article, she realizes that a Toyota Yaris is more than big enough for her, allowing her to cash out about $4000 of capital. And with some moderate hypermiling techniques, she gets over 40MPG. Also, she has started riding her bike more, reducing annual mileage. Driving costs have dropped by $2,000 per year, or 10% of her pre-retirement budget estimate.

She also decides to quit her gym membership and join a rotating workout-with-friends circle instead, loses some of her taste for gadgets or perhaps another of her more expensive hobbies the next year, and realizes that all around, she now lives on $15,000 per year.

Meanwhile, the simpler lifestyle proves energizing and frees up time. She starts kayaking more, and teaching lessons on the side. This turns into a regular class she offers through the local community college, which brings in $1250 every time she runs it. To avoid feeling like it’s a real job, she does only four sessions per year, bringing in $5000 (and netting her a nice tax deduction for any kayak equipment as well).

One day, one of her kayak students is a guy named Jack. He’s a handsome early retiree who has a lot in common with her. As luck would have it, he’s actually a closet MMM reader! Once they discover they have Mustachianism in common, it is inevitable that they fall in love. Jack’s solitary fate above has been changed, and now they live together, and eventually end up married with combined finances. (Don’t worry, when two Mustachians live together, the joining of finances is far from a source of potential relationship friction, it’s more of an aphrodisiac)

Paired up, they are able to share one house and car. Despite traveling much more together, their yearly expenses drop to $30,000, while they still have passive income of $40,000. On top of that, Jack rents out his old house for a $5,000 per year net profit, plus there’s Jill’s teaching income of an extra $5,000 per year. That leaves a savings of $20,000 to be re-invested annually.

Over time, this $20,000 stream accumulates and compounds at 5% after inflation, and raises their combined net worth by an additional $1.329 million over the next 30 years. This is on top of the $1 million they already had, automatically growing with inflation while also pouring out $40,000 towards their living expenses each year that also adjusts with inflation. They end up with a total ‘stash of $2.329 million by age 65 or so, just in time to start enjoying the additional (but totally unnecessary) boost of Medicare and Social Security benefits.

It’s a fully fictitious example, of course, but it’s not a far-fetched one. I’ve already told my  own story many times of retiring, but then ending up finding I needed less to live on than previously estimated (we originally expected to spend $32,000 per year). Then we both ended up working part-time during various intervals, and will probably take on even bigger projects when our boy grows up.

Since retirement in late 2005, we’ve still ended up saving even more than the $20,000 per year described in the example above, meaning we’re on track to have several million extra dollars saved by age 65. If you do your own retirement planning with a reasonable safety margin built in, making conservative assumptions on both the income and expense side, the same thing is very likely to happen to you too.

But you don’t have to be insanely conservative, working for year after year to ensure a gigantic starting nest egg before daring to retire. I don’t know a huge number of early retirees, but the ones I do know have always found that:

  • expenses drop more rapidly than expected after retiring, and continue to fall through the years.
  • income ends up being larger than zero, even though your conservative estimates didn’t depend on this bonus.

Once you quit a full-time job, you just need a small positive savings rate to stick around and keep trickling into investments. This will automatically become a cash snowball as you go about your daily retired life. By the time you’re old enough to need it, it will be bigger than you can possibly need.

So don’t think of the date of your Early Retirement as “The last dollar you’ll ever earn”. It’s just the First day of the rest of your life!

  • Johonn May 14, 2012, 6:42 am

    This was great to read. Having almost no savings currently, getting married within the last year, and already being 27, still needing to raise a family (I know, what am I thinking? Any punches in the face will be deserved), I was beginning to think I’d be in it for the long haul… But it looks like as long as I’m somewhat conservative on my estimate of our yearly expenses, I can use it all for a few years if need be, and then scale it back as the kids grow up and start earning their own money, which means I’ll be able to continue to grow the ‘stash as the years go by. The best thing by far is my wife is reading the blog along with me and we’re both equally on board with the idea! :)

    • Landor n Stella May 14, 2012, 6:57 am

      Don’t be down on yourself. You’re still just 27, raising a family is nothing to be worried about. You’ll be fine. Just be glad you found this blog when you were still in your twenties instead of 3-4 years from a traditional retirement age- after having worked for 30+ years and have little to show for it.

    • Rebecca June 20, 2012, 10:56 am

      We’re in the same boat! with debt to boot! It’s definitely good that we’re reading this now and have time to adjust..

  • mugwump May 14, 2012, 6:47 am

    I’m finding that to be somewhat true in my case. My goal was to have enough invested to match my husband’s pension if something happened to him. I reached that a few years ago at age 53, but since he is still alive, thank heavens, I don’t need to draw on the money, and it continues to grow. I also worked part-time for a few years. Now I’ve developed some expensive hobbies, so we’ll see how that pans out.

    I keep myself entertained financially by setting new goals and artificial budget constraints (see expensive hobbies, above), but they are not necessary. But my mother just went into assisted living at age 93, and I am realizing a substantial pad in your late years is a very good thing.

  • RichUncle EL May 14, 2012, 7:02 am

    Great Post, it seems like Jill is Smarter than Jack. Who knew? Ha Ha. Aside from the occasional emergencies, people should always go about to look for ways to cut their annual expenses. Unfortunately not everybody thinks this way, and then if they save somewhere then they spend in another area of life. I was just having this same conversation with my Mrs. yesterday.

    My Quote: If you live frugally, then thrifty follows.

  • Matt May 14, 2012, 7:47 am

    Slight typo, second to last paragraph: “One you quit a full-time job, you just need a…” I believe that first word should be “Once”.

    • Mr. Money Mustache May 14, 2012, 8:55 am

      thanks Matt, fixed it now

      • Peter V September 26, 2016, 10:15 am

        Another typo, “…plus there’s Jill’s teaching income. $50,000 per year.” I think you meant $5,000 a year.

        • Aaron H February 26, 2017, 4:37 pm

          Spotted the same and thought to myself, “Wow! That kayaking business REALLY took off!”

          Then I did the math and came back down to earth ;)

          My theory is MMM was just testing us to see if we were paying attention.

        • Kev P June 26, 2017, 3:41 pm

          The $50,000 is $20,000 of passive income from each person, plus the $5,000 each for teaching and rent.

  • sideways8 May 14, 2012, 8:02 am

    Oh I love this. I feel a bit less nervous with the idea of quitting my day job before the traditional retirement age. WAY before that age hehehe!

  • sandy May 14, 2012, 8:08 am

    Thanks for the note… I was hoping to stay at my job for another 18 months to save enough stash to get to 4% SWR… but looks like I might get laid off before then with only 15-20 years of expenses saved up instead of 25… I hope I have the courage to just take a year, or five, off and see where life takes me… I wasn’t really mentally ready to do that but I’m trying to be.

    • butterandjelly213 May 15, 2012, 12:12 pm

      I’m in a similar boat, wondering whether to jump ship before my ‘Stash is complete. I have no doubt that I’ll earn income in years to come, it’s just hard to anticipate how much and whether that’ll be enough to cover expenses. Of course, worst case scenario is just going back to the 9-5 grind for a couple of years.

    • Dean September 19, 2014, 8:21 am

      It’s been two years since you posted this message. How did everything turn out? Are you still retired or did you return to “work”?

  • Joe @ Retire By 40 May 14, 2012, 8:23 am

    I don’t think counting on reducing expense is a good idea. It is hard to reduce expenses after you retire. On the other hand, I completely agree with making money in retirement. You can take up part time jobs or work on other self employment projects. We only need to make a few bucks to come out positive because the expense is already low.
    The thing I worry about the most is health care cost.

    • Mr. Money Mustache May 14, 2012, 9:03 am

      Joe – I guess it depends on where your expenses start out and your mentality as you grow into retirement.

      When you quit working, you’ve suddenly got more time to figure things out – there is no time pressure to use money to solve problems instead of ingenuity. Your material desires should also start to fade away more. For example, I used to think I would only be happy in a house bigger than 2500 square feet. Now I’m looking forward to downsizing that by at least 1000 sometime in later life. I used to be excited about having really new cars. Now I’d be excited to try owning no car at all for a while.

      Until you get down to REALLY low expenses (well below mine right now, for example), it’s always pretty easy to reduce your annual spending – and come out happier as a result.

      But as I said in the article, there’s no need to COUNT ON reducing your expenses after retirement. Design your savings and income assuming no reduction is possible. Then you can be pleasantly surprised when it happens.

      • Joe @ Retire By 40 May 14, 2012, 1:55 pm

        That’s great to hear. I’m looking forward to reducing my expenses post retirement!

        • Tamara May 15, 2012, 9:13 am

          While I’m not claiming to be as low to the ground as MMM is with regard to annual spend, still we have lowered our anticipated withdrawal % from 4% to 2.75% over the last 12 months, and still feel we will be living incredibly well even on the lower adjusted %. I retired last year, one year ahead of my spouse, and I concur that within my first year of retirement we were able to cut thousands and thousands of dollars out of our anticipated run rate simply because I now had the time to analyze how every dollar was being used and make adjustments. Everything from using the library instead of buying books and DVDs, to cutting cable and utilizing free internet streaming instead. Our quality of life went up as our spend went down, because we were more deeply satisfied with how we were allocating our spend, and spending our time.

          I also found many of my stress induced spending behaviors quietly went away, the biggest of which was shopping for recreation rather than need, and dining out rather than cooking at home.

          Our favorite activity in retirement is now biking to the beach and back every Wednesday, about 35 miles RT, and completely free. We feel so good, and are so relaxed when we return home, we are content to spend the rest of the day in quiet pursuits at home. Multiply this type of activity driven lifestyle by 7 days, and it’s easy to see why/how expenses really can go down in retirement.

          Regarding medical – we purchased a bundled medical/dental/vision high deductible plan from a major HMO player in our state for a combined total of roughly $200 a month per person. We have the annual deductibles built into our run rate, but given our current good health we are optimistic we will rarely need to tap them, and should be able to “return” the deductible allocations to our portfolio at the end of each year.

  • jlcollinsnh May 14, 2012, 8:35 am

    great article, Mr. MM and it reflects my experience.

    each time I’ve sat on the sidelines my portfolio actually grew in value, mostly because more often than not it returned more than my needs and, for that matter, more than 4%.

    and expenses are always flexible.

  • skyrefuge May 14, 2012, 8:38 am

    One slight issue I have is that simply reading this blog entry could cancel out the purported benefit. Sure, Jill (can I get her number before she meets that Jack fellow?), MMM, and some of MMM’s early-retiree friends overestimated their actual post-retirement expenses, but that’s because they never had the chance to read and learn from the awesome MMM blog! In contrast, for us pre-retiree MMM-readers, the cat is now out of the bag, and we will use the experience gained by our trusty trailblazers to predict our own post-retirement expenses/income more accurately than they could. I mean, c’mon, we’d all deserve a face-punch for being terrible MMM readers if we still believed we’d be driving 10,000 miles @ 25mpg in retirement! So it seems like we’re less likely to be pleasantly surprised by our net yearly expenses, and are more likely to end up like Jack, smoldering through our nest-egg exactly as we thought we would. Which, as MMM points out, is still a pretty sweet way to live the last 63 years of your life. But this news has essentially removed one layer of safety margin for us.

    I guess an alternative is to attempt to wipe this blog entry from our memories, and continue to believe that we’ll need $20,000/year and wait to retire until our ‘stash is big enough to produce that, even though deep down we’ll know we’ll actually end up spending only $15,000/year. “Fooling yourself” doesn’t sound particularly Mustachian, however. In the end, it’s probably better to just consciously include this particular safety margin if we want to, rather than having it be a “surprise” like it was for MMM. Especially for people who would prefer to trade the chance at an ever-increasing ‘stash for an even-earlier retirement.

    • Mrs. Money Mustache May 14, 2012, 8:54 am

      Haha! That’s an interesting point.

      What we found is that working created a lot of expenses. When you work every day, you end up driving more, spending more on clothing (and other things to try and look good), going out to lunch, going out to dinner since you feel too busy to cook, potentially going on bigger trips to “get away from it all”. As soon as we both stopped working, we suddenly spent a LOT less than we used to. Since every day seemed like a nice vacation, we didn’t feel the need to travel as far. It’s something that few people think about…

      Also, we ended up working quite a bit more than we expected and both enjoy different types of work from time to time. This was also unexpected, especially since we had a young child. As our son gets older, we seem to be interested in working more, but this need fluctuates quite a bit and we might work for 2-3 months and then not work for the next 2-3 months.

      It’s also true that opportunities seem to come knocking almost constantly. Maybe it’s because you have the chance to actually talk to people and get to know your community? For example, I walked into a children’s consignment shop a couple of years ago during the day and was talking to the owner and suddenly she was asking me if I wanted to do some bookkeeping work for her, since I had experience in that area. It was totally random (and I didn’t take the job), but when you slow down you see opportunities everywhere.

      Another thing to consider, is that you can easily move around when you retire as your job is no longer tying you to a potentially expensive area.

      It’s been a really interesting time and we’ve done many things we never would have predicted. I really don’t think you can know what will happen, but it will most likely be Excellent! :)

      • Marcia @Frugal Healthy Simple May 14, 2012, 12:09 pm

        I was just going to make a similar comment. While I’m not retired and don’t plan on it soon, the one experience I have that is similar is maternity leave.

        I took a few months of maternity leave with my son, where I was on disability and family leave, paid at about 50-55% of my income. I was worried that we’d eat into our savings.

        What I found is that we ended up saving the same amount as we did before. I can’t pinpoint exactly the reasons. A lot of it was that we didn’t need to “get away” like before. For one thing, I was too tired. :) But also… I spent much of my maternity leave watching the Food Network (that will not be an option with this 2nd mat leave, as no more cable, but it’s not like i don’t have 100 cookbooks).

        My “entertainment” became cooking. I would walk every day, and a few days a week it was the 1.2 miles to the grocery store and back (with the baby on my chest) to buy a few items needed to round out a recipe. We ate like kings. We never felt the need to eat out because I treated my husband to new tasty meals 4x a week at least. Also, I ended up doing the chores and the laundry during the week (instead of the weekend push). Weekends, then, were for relaxing family time – walks and hikes, beach, library.

        I think having active and passive income streams are useful also. I wonder sometimes how much your work ethic and networking help when you are retired. Both my husband and I could take on side jobs or consulting this minute (in addition to our FT work jobs and parenting) if we had the energy (and we don’t) – in part because we know people in our industries who know our capabilities. That probably helps a lot – if you are known to be someone who can really get things done.

      • bogart May 14, 2012, 3:13 pm

        I think this is a definite YMMV area. Post-DH’s retirement, our household expenses have increased in a number of categories; I buy a lot more coffee (he used to drink his at work, where it was provided by his employer), and we no longer (in effect) abstain from heating/cooling the house during the day. His driving expenses have remained about constant (the golf course is further from our house than his place of work was, waaah waaah), and our travel expenses have gone up too (we travel more, again, cue the tiny violins). Also, we can no longer make use of the tax-sheltered flex spending account to cover preschool costs, and have lost 50% of our access to tax-sheltered medical flex spending accounts — our dental expenses alone this year and last have exceeded the maximum my employer allows, which is $4k, and my broken arm exceeded that amount (by a lot) the year before that.

        • Tamara May 15, 2012, 9:49 am

          This is interesting, as we had the exact opposite occur when first I, then my husband retired. We no longer needed to drink coffee all day to stay energized, as we are filling up our energy tanks instead through outdoor activities. We’ve also become acclimated to a home that has fresh air continually streaming through open windows, and our utility costs have dropped dramatically as a result. (I should qualify that we do live in S. California, where the weather fluctuations are fairly mild year round.)

          Like you and your husband, travel is our primary priority in retirement, so a very positive motivator to look for easy areas to reduce expenses is that every single dollar not spent on coffee or on utilities gets redirected to our travel line.

      • FullyBearded JuniorMustachian December 8, 2019, 8:10 am

        Well I’m only 7 and a half years late so I’m sure you’ll be reading this response promptly (not), but I still felt like replying because of some of the EXCELLENT points you made here about the COSTS of having a job. My job requires being tied to a very expensive area, but also it’s in an area with no “nature” qualities. It’s in the heart of a big city and even if I took a weekend trip out of the city, I’d be in flat, dry, boring nothingness unless I drove completely out of state. (Northern Texas has nothing I’m interested in doing in nature and nothing scenic to look at) so our vacation costs are high because I’m constantly aching to escape this place. Working long hours leads to difficulty cooking in the home, that’s some costs… You brought up some really excellent points that highlighted for me how much money I could actually save by NOT living here and doing this job. Really eye-opening; thank you.

  • Tyler @ Dividend Money May 14, 2012, 8:49 am

    Excellent article.
    Most of the mainstream media articles on retirement always assume that no extra income will be earned beyond the returns from the investments.
    While, it might be nice to imagine doing nothing, the reality is that every retired person I know (under the age of ~80), that is still in good health, is engaged in some activity that earns at least a small income. The prevailing attitude seems to be that they have to do ‘something’, so they might as well earn a little income from it.
    Even the ones that volunteer often receive small gratuities or gifts in kind from the people/organizations that they help.
    Keep up the great work!

  • Chris May 14, 2012, 8:58 am

    Hey, this is a great article because it puts together the main ideas of Mustachiansim together into a more big-picture plan. The individual ideas – biking, living frugally but happily, the Safety Margin, etc. – are all solid gold in themselves, but are even better when combined into a cohesive picture so we can get a good perspective on where everything fits.

  • Chase May 14, 2012, 10:42 am

    I like this blog and find a lot of the information informative and useful, but I am confused by the whole “extreme early retirement” movement.

    I happen to like my work. Sure, it’s frustrating at times, but I find that what I get out of it (mainly some mental aerobics and the money) are worth my time. I still have time in the evenings and weekends to spend time doing things I enjoy.

    I’m one of those people that goes crazy after a couple of days if I’m not making progress towards some goal.

    Assuming most people are like this, can you point me to a post or some posts about what the goals of people are post early retirement?

    • Brian May 14, 2012, 11:08 am

      The point of financial independence is to get to a point to where you don’t have to go to a job you don’t like on a daily basis. If you enjoy your job then just keep adding to your ‘stash! One day you will want to quit the daily grind and be prepared to do so.

      • Chase May 14, 2012, 11:23 am

        I agree.

        I plan on having an “eff you” fund by the time I’m 45 for just that. Then if I get tired of the grind then I can quit and do volunteer work or find more part-time work.

        I’d still be interested in seeing what some of these “early retirees” are doing 10-15-20 years after they retire.

        • andrew May 14, 2012, 11:29 am

          I don’t know what early retirees do 10, 15, or 20 years after retiring. But if you consider that non-early retirement starts around age 65, most of these folks are dead 10, 15, or 20 years after retiring. I suspect the early retirees are mostly still alive and enjoying life.

          • Chase May 14, 2012, 11:41 am

            You can still enjoy life and not be retired. It’s not a binary situation. Someone who works full time (say a total of 50 hours a week including commuting) still has 60 hours a week to “enjoy life” with a full night’s sleep.

            I think the biggest hurdle to enjoying life while working is finding work you can enjoy most of the time and finding an employer who lets you be flexible with those 50 hours of your time.

            I agree with piling up savings and gaining early financial independence, but I think that early financial independence should be the goal, not early retirement. I think that we’re talking about the same thing, but we have different ideas of what we want to do once we reach financial independence.

            • Mrs. Money Mustache May 14, 2012, 12:40 pm

              I don’t know if you have a family or not, but I find that working really gets in the way of raising my child. When he’s older, I think it would get in the way of visiting family and generally doing a variety of things that I really enjoy.

              Early retirement means you get to do what you want. I’ve found that ANY full time job (whether I thoroughly enjoy it or not) is WAY too much time to be spending working on a single thing. I’d rather have the flexibility to move around, spend the whole summer with family in Canada, volunteer at my kid’s school, work on a variety of projects (and maybe a single intense thing for a year), etc.

              The way working life is structured is very limiting. I think it’s hard to notice when you’re just starting out or even 10 years into your career or if you don’t have a family. Once you leave, it becomes very apparent.

              In fact, I’ve been thinking about writing an article about how people can actually work full time AND raise a family. It seems like work becomes a huge inconvenience during that time in your life…

              Now, there are people that would not know what to do with their time if they were not working a full time job. Sometimes I think these people, more than anyone else, need to stop working for a year and figure out who they really are. I think it would be a pretty enlightening experience.

            • Chase May 14, 2012, 12:57 pm

              Thanks for the reply. I do not have kids yet and I imagine that that changes the situation and how you view things dramatically.

              I do agree that the structure of traditional working life is very limited. I was very lucky to have a father who was a professor, which allowed him to have a flexible schedule and be there when I came home from school at 3 in the afternoon.

              I’m spending a lot of my time now trying to make myself invaluable to whoever I end up working for. Hopefully in doing so I will grant myself more flexibility later in life by negotiating for more flexible schedules. Or possibly my skills could be used to start my own business, which would take a lot of time, but allow me to set my schedule.

            • bogart May 14, 2012, 3:24 pm

              @ Mrs.MM writes ” I find that working really gets in the way of raising my child.” See, I feel just the opposite. I find that working a roughly 40-hour/week roughly 8-5 (OK, OK, 9-6) job keeps me sane enough to raise my child (a rising kindergartener, about a year younger, I believe, than the mini MM). There is really no time in my life to date when I would less have wanted to be out of the workforce than now, and this is just one of many Mondays I’ve been glad to get back to the office so I can rest and relax (relative to spending time with my kid).

              And don’t get me wrong. I adore him, he’s a delightful person, and I’m tremendously grateful to have him in my life. But he gets up every morning at about 7 a.m. and goes non-stop until about 10 p.m. and — with occasional ~30 minute interludes when he wanders off to play with the hose, or a shovel, or whatever — is quite delighted to interact and converse with me (and to a lesser extent my DH, but I am definitely the go-to option) non-stop. I’m capable of setting limits and I know in what will seem like the blink of an eye I will be complaining that my teenager won’t speak to me and sleeps until noon, but at this stage the intensity of that kid’s desire to do stuff with me is exhausting.

            • Mrs. Money Mustache May 14, 2012, 7:15 pm

              @bogart – haha! I was mostly talking about how you would need to have someone taking care of your child when you’re not there…

              My kid wakes up at 7am and starts school at 8:25am. In theory, I could get to work in time, but then I’d have to be back by 3pm to pick him up after school. There are also late start days, holidays, sick days, etc. I have from 8:30am to 3pm to myself to do whatever I want and the rest of the time I’m raising my kid.

              The stress of having to get to school on time, while still getting ready for work would be hard enough. Then you’d need after school care that you need to pay, not to mention taking time off work for sick days, doctor visits, etc.

              Plus, there’s cooking, taking care of finances, packing lunches, swim lessons, play dates, and all that other good stuff.

              I basically have 6 hours per day to myself, which is great, but if I was working, I would probably find it pretty stressful…

            • bogart May 14, 2012, 7:44 pm

              Mrs. MM, OK, but part of my point actually is that I am *delighted* to pay someone else to take care of my kid when I am not there! Not everyone feels this way, of course, and I am fortunate to live in an area where I have a plethora of good quality child care (and preschool) options, but all the same. And yes, we’re looking forward to kindergarten starting — believe me — but all the same.

              With my hubby out of the workforce, we could use no paid childcare, but with an only child (as you have), paid is an easy way to access interaction-with-other-kids. I’m sure if we put effort into it, this could be achieved other ways, but honestly, it would (based on available experience) require significant effort and parental time. We’re not tremendously social people (by choice), so the thought of organizing ongoing “playdates” (which seem in this day and age to involve parents socializing, as well as kids) or arranging a co-op is unappealing.

              Our schedule once DS is in kindergarten will be 7:30 — 2:30 in school. Were DH still working, honestly we could pretty easily (a) have me get DS to school; (b) have DH go in early, as he used to; (c) have a grandma handle pickup 2 or 3 days a week and DH the other 2 or 3 (or I could cut back to 35 hours/week, which my employer allows and which would still qualify me for benefits, and handle 1, or honestly do that anyway and work 1 or 2 nights from home). That wouldn’t be for everybody honestly and DH and I are (were, in his case) fortunate to have flexible schedules, good paid time off, and even then, we are glad he is out of the workforce.

              But I am glad to be in it, and others who aren’t parents yet but want to become parents are reading this, and I just want to put out there that not everyone sees having a kid, even when they are very young (and perhaps especially — I enjoy spending time with DS more the older he gets), as necessitating, or even making desirable, not working full time. That’s really my main point (and I am absolutely not kidding when I say there is no interval in my life when I have less wanted to be out of the workforce than in the first 5 years of DS’s life).

            • T-Lou May 15, 2012, 6:56 am

              I’m with Bogart on this one – love my girls – but I was back to work when the oldest was 4 months – part time taking baby in with me until old enough for daycare at 6 months. Those walls seemed to be closing in on me staying home alone all day with the baby. Took the full 6 months off with the second child which was better as there were 2 to take care of.

              The first 5 years of their lives were a struggle to balance work and family and keep everything going. But the idea of staying home with them rather than putting them in the wonderful daycare we had would not have been a sane option for me.

              I work less now that my children are teenagers. My husband and I still spend one day per week at home with each other while the kids are in school.

              My dear friend who has a child of 7 feels the same way. She is an excellent mom, but perhaps more so not having been stuck at home with her son prior to him starting elementary school.

              Like Bogart I appreciate this may not be a socially acceptable response – but some of my longest hours were spent wondering how looong this “tea party” with my oldest daughter could last.

            • Liz May 18, 2012, 2:33 pm

              a couple of times I remember MMM mentioning that it really is about FI and not retirement but retirement is a funnier and more surprising word when you are in your 30s.

    • Jamesqf May 14, 2012, 11:46 am

      I agree with Chase: as a new reader here, this desire for early retirement – or any retirement at all – is the one thing that’s deeply puzzling to me. (I’ve always lived a fairly frugal life, and enjoyed it, so I understand that part.) Sure, I accumulated the “eff you” fund years ago, so now I can work in research & telecommute instead of having to show up at an office every day. I think I’ll always want to be doing something useful & productive – and the fact that people pay me to do things proves that they’re useful.

      Then there’s the cautionary tale of my two neighbors. One is 97, still works part-time, and is healthy (for his age), active, and mentally alert. One retired last year at 66, spends his days doing the 12-ounce curl in front of the TV, and is now seriously ill. Despite the 30-year difference in their ages, the worker and the retiree could almost be twins.

      • Mrs. Money Mustache May 14, 2012, 12:42 pm

        Working part-time is a big part of early retirement… the 97 year old is the Mustachian in this case. The 66 year old probably just recently retired in the conventional way.

        Being useful and productive is a big part of what we talk about here. Welcome to the blog!

        • Jamesqf May 15, 2012, 12:06 pm

          Maybe it’s just a matter of semantics, but I can’t see that working part time is the same as being retired. It’s more like the choice I’ve made not to work in Silicon Valley industry (though I could be making at least 2-3 times as much), but accept a lower income as the price of doing work I enjoy, telecommuting from a rural area, and to a great extent setting my own working hours.

          • Mrs. Money Mustache May 15, 2012, 2:18 pm

            Right – working part time by choice. Whether it is paid work or not… the point is that you don’t need to work, but choose to do so. So, working part time can be part of being retired, since you choose to do that work because it enhances your life somehow.

            If you do it because you need the money, then you’re not really retired… :)

            • Tyler @ Dividend Money May 15, 2012, 2:26 pm

              Mrs. Mustache.
              That is a good explanation, and quite clear. However, I think some get confused by the “not needing the money” part and assume that any time one works for money, it is money that they need.
              As an example, a retired couple have enough pension/investment income to meet their basic lifestyle needs, but realize that if they take on some part-time work in the summer, that they can afford to spend several months of Winter in a warmer climate.
              If they choose to take on the summer work in order to afford to snowbird, are they still retired?

            • Dean November 11, 2012, 10:09 am

              It’s all relative to the person and how they define ‘retirement…’ In my opinion, no. They should have designed their retirement plan around their ‘need’ to go on vacations.

              However, from my brief lurking on MMM, I gather they could still be considered retired simply because they don’t need to take that summer job and instead can draw a little more out of their fund since they will enjoy reduced spending over time. Or they could also plan these trips well in advance, so that they can find some areas in which to cut costs. A summer job, at minimum, will net you about $1,500 to $2,000 after taxes. You could easily save that much just by cooking all of your meals at home for 3 months and you wouldn’t have to lose 320 hours of your life doing something you don’t like.

              More semantics here but: if it’s a summer job they enjoy doing, it’s not really work anyway. ;)

    • Matt May 14, 2012, 2:14 pm

      @Chase: “…can you point me to a post or some posts about what the goals of people are post early retirement?”

      I don’t know if there’s such a post, as it differs from person-to-person. For a lot of people, it comes down to a general dislike of their job, but feel “trapped” due to their financial situation. For me, it’s less a dislike of the job, but more that the job takes away too much time with my family.

      If you love your job and have no motivation to work less, that doesn’t mean this blog, or its ideas, are irrelevant. If nothing else, understand that most typical jobs are largely not under your control. Today’s dream job could become tomorrow’s nightmare by so many things, from a simple change in management, to the new co-worker from hell, to a restructuring or even sale of your company. In my previous job I lived through that (though not quite to that extreme). I went from being generally happy with my job to wanting out pretty badly simply due to getting a new boss.

      The goals of people *post* FI (financial independence, a prerequisite for early retirement) are almost certainly more numerous than the goals for reaching FI. Once you free yourself from a 40+ hour/week commitment, you’re only limited by your creativity what you can do! You like your job now, but admit it is at times frustrating. If you were FI, maybe you could start your own business doing similar work, but being your own boss, could possibly eliminate some of the frustration. The bonus is, since you’re FI, you can focus on the work itself, and worry less about the money side of things.

      – you’re like me, where you have a diverse set of hobbies and interests—a full-time job forces you to sacrifice some of those
      – you want to travel and see the world
      – you just want to spend more time with your family
      – you want to teach yourself DIY skills, and fix up your home (or other peoples’ homes)
      – you have an idea for a new business or product
      – you want to completely switch to a new career
      – you want to volunteer more in your community
      – you want to care for an aging friend or relative
      – you want to train for some kind of fitness challenge
      – you want to be more involved in your children’s school

      The point is, FI only increases your number of “life options”—quitting a job you enjoy certainly isn’t a requirement. I’m only speculating here, but I’d be surprised if more than an odd few people pursue early retirement with the goal of sitting around and doing nothing all day.

      If you remove the *financial* requirement to work, not only will you sleep easier at night, but you should start to see your life differently. If you hit FI, but you’re perfectly happy in your life, great, don’t change anything! But it might just plant a seed in your mind—“Hey, I like this job, but the weather is so incredibly wonderful today…” and you start thinking of all the things you could be doing outside in the beautiful weather… eventually, you’re bound to think of something that trumps sitting in an office hammering away on a keyboard (assuming the typical cube-farm “knowledge worker” of today’s middle class).

      I too like to have challenges and goals, and need see some kind of regular progress. But, unfortunately, my personal goals look a lot more fun and/or interesting than the goals of my employer. That’s it in a nutshell.

      • Amonymous May 28, 2017, 11:06 pm

        Well put, Matt!

  • Marc May 14, 2012, 10:44 am

    Another way to look at it is they dropped their withdrawal rate from 4% originally to 2% by 1) cutting expenses and 2) making extra money. A lower WR is indeed a great way to make sure one prospers in retirement. Working longer and accumulating a larger nest egg is generality recommended by “professionals” in order to achieve a lower WR, but you have shown that some frugality and a modicum of work in retirement can go a long way to lower one’s WR significantly.

  • andrew May 14, 2012, 11:14 am

    What the world needs is a Mr Money Mustache dating service. It’s much harder to retire early when you’re doing it alone, or when you’re in a relationship with someone who’s finances are not as good as your own. And it’s difficult finding people who share your financial philosophy and are also well on their way to early retirement.

    • Gabrielle May 14, 2012, 11:50 am

      I agree 100%! A partner committed to the same practices is a huge bonus to progress toward FI. There are some unnecessary expenses in our household that are retained to support domestic harmony.

      • Chase May 14, 2012, 11:51 am

        HA! I would track “domestic harmony” expenses, but I’m afraid at how much that would be :)

    • GayleRN May 14, 2012, 12:19 pm

      Ah yes that magic moment in a relationship when you really get naked and compare financial statements. In wiser ages and places than ours the financial discussions were an integral part of premarital negotiations and took place between the parents not the prospective marital partners as it was universally recognized that they would be unable to make rational decisions in these matters. Anyway, I have a secret fantasy about that moment when some really smart guy figures out that the reason I don’t have the newest, latest, and greatest is because I have a shitload of money stashed away. And after the merger the biggest thing to argue about is what to invest in next.
      So there is a good side business for somebody running the MMM dating site the only one where both sexes find women’s mustaches incredibly hot and sexy.

    • Sara May 14, 2012, 1:02 pm

      Totally agree. I love my life, but I would love it even better if there was someone to share it with. I don’t meet too many people who can even understand it, although I meet several who are kind of envious.

      • T-Luv May 15, 2012, 6:03 am

        Suggestion, Blind date match-ups:
        Sara and Chase;
        Gayle and Andrew.

        Lets just hope that you live close enough to each other that you can bike there.

        But seriously, why don’t you start a thread on a Forum for singles.

    • April May 16, 2012, 2:48 pm

      I agree 100%. 25 y/o Phoenix resident: single and looking! lol :)

      • Mike June 4, 2012, 1:46 pm

        29 y/o Tucson resident: single and looking! Maybe we should talk! :)

      • Dean September 19, 2014, 8:48 am

        Babies yet?

  • acorn May 14, 2012, 11:28 am

    MMM, I am curious about what happens to Jill in this scenario:
    When Jill retired at 35, she bought a high-deductible individual health insurance policy, with an annual deductible of $10,000. She was healthy and fit, with no “pre-existing” conditions, and figured she would never spend anywhere near the deductible.
    But then at age 37, she was diagnosed with a serious medical condition that requires medication that costs $12,000 per year. For the rest of her life. And there isn’t any way to get rid of this condition (it is not “lifestyle related.”)
    What happens to Jill and her savings?
    I ask not to be a complainy-pants, but because I don’t think that you give enough consideration to unexpected medical expenses in your scenarios. These kind of things really do happen, unfortunately.

    • BDub May 14, 2012, 12:02 pm

      Wouldn’t Jill simply go back to work? Or, if should couldn’t work, she would qualify for SSI and Medicaid once her nest egg was depleted. The answer really isn’t any different than if it happened at age 34 before she retired.

      Also, she most likely would reduce her spending in other places if the illness was serious enough to keep her from traveling or her hobbies.

      What is the alternative? Are you suggesting she keeps working indefinitely until she has exhausted every worse-case scenario?

    • TLV May 14, 2012, 12:21 pm

      Trying to look on the bright side, Jill would likely live long enough that the patent would expire on the medication and the cost would drop to $120/year, greatly reducing the ongoing additional work requirement. Also, $10k/year isn’t that much to earn if it’s the only expense you have above your passive income.

      If it happens soon after retirement, Jill would probably be able to find a similar job to what she left if she had to. If she couldn’t work because of the condition – well, she’d be screwed then even if she hadn’t retired early, which is why disability insurance may be worthwhile. If it happens long after retirement, then following this article she’d have a much larger asset base and be able to manage the expense.

      I’m well aware that unexpected things can happen to completely throw off (early) retirement plans. I know a guy who had an extremely rare type of tumor, and because the treatment options were all experimental his insurance wouldn’t cover anything and he had to completely empty his retirement accounts. But that’s not going to happen to most people. And, you can’t argue that one must keep working despite reaching FI because they might need another $250k for cancer treatment – because you could make the same argument that they might need $100 million.

    • jlcollinsnh May 14, 2012, 2:18 pm

      Hi Acorn….

      you’ve already gotten a couple of good and specific responses to your question. What I would like to add is this:

      be careful in planning for worst case scenarios. such things rarely happen and so building an investment/life plan to deal with them is rarely the best use of your time and resources.

      none of us can predict the future and truly horrible things can and do happen. But usually they are not the things we planned for anyway.

      Better it seems to me to have a little faith that things will be OK and should the worst happen trust you’ll figure a way thru it then. Plan and dream your future but spend not a moment in worry. Worry is exceedingly unproductive.

      I watched my mother destroy her happiness with a relentless focus on all the tragedies that could have happened. None did but she was miserable all the same.

      • acorn May 15, 2012, 7:07 am

        These are all good responses, but I still think that MMM’ers as as whole generally underestimate the probability and potential consequences of medical issues. My husband, for example, hadn’t been sick a day in his life… until one day he was, at only age 37, from a condition he had since he was born but never knew about until it almost killed him. In fact, even though he is quite healthy again, we are out of the early retirement game completely since no insurer would now even sell us an individual policy due to this “pre-existing condition.” (And considering how often insurers reject perfectly healthy applicants for individual policies, we are not alone.)

        • Jimbo May 15, 2012, 7:55 am

          Move to Canada!

          It’s like having a collective insurance policy all the time. You know, the way it should be.

        • Ginger May 15, 2012, 8:08 am

          Certain states do not allow for refusal. For example all insurance in NY is $350/person. Or Ca (and other states) have a high risk pool in which prices vary. I agree that many people do not think about medical expenses when planning retirement. I included the COBRA cost into my monthly expenses when I budget for retirement plus I want to set aside $250,000 for unknown expenses.

        • Debbie M May 16, 2012, 8:00 am

          Don’t you have some other way to get group insurance? A professional organization? An alumni association?

  • J May 14, 2012, 1:48 pm

    The puzzlement over extreme early retirement puzzles me. I simply want to be free to place my goals and ambitions above the goals and needs of an employer. There arent many people here planning to sit in a rocking chair until they expire in fifty years.

    • Gerard May 14, 2012, 3:08 pm

      Unfortunately, many people’s point of reference for early retirement is regular retirement, because they don’t actually know any early retirees. So when they ask, “Why would you want to be retired?” they’re often really asking, “Why would you want to be old?” Crazy examples at http://canadianmoneyforum.com/showthread.php/2716-Can-a-person-retirer-with-500-000
      …which also should be in the “wall of shame” forum, for the person who asks how much of a stash they need to spend $20,000 *a month* in retirement.

      This is leaving aside for a minute the benefits of actually being old, which are also not part of mainstream discourse… actually, there’s an interesting question. Can some benefits of age — wisdom, experience — be gained faster through a mustachian approach to life? Do people have more time to gain meaningful experiences and knowledge if they’re not commuting or clock-punching? Does mustachianism let people be simultaneously old-smart and young-healthy? My mind is officially blown…

    • Heather May 15, 2012, 1:51 pm

      But, I can’t figure out what my goals and ambitions are. Going to work gives me an excuse to not know what I’m supposed to be doing with my life. :-) Also, it lets me send my youngster to daycare, where he can socialize with real human children instead of dogs, which is all we have at home.

      I took a year and a half off of work to enjoy my baby. When I started back working (gradually ramping up from 1 day a week), I thought “Wow, they pay me to do this?” It was sooo peaceful to be able to concentrate on one thing all day. Now that I’m working 4 days a week, it’s much more like work, less like play.
      I still hope that some day my self-motivation will achieve the healthy level it will need to keep me feeling useful without a “job”.

  • Ray May 14, 2012, 6:24 pm

    I dipped my toes in the ER waters a few years ago when I took a half-year sabbatical to study a topic tangentially related to my teaching job. I was lucky to still receive a nice percentage of my usual salary (slightly under half) during that time away from work. My wife and I ran the numbers before the sabbatical and I figured I’d end up spending all of it every month. But I was VERY pleasantly surprised to discover that every month I ended up banking about 40% of my reduced paycheck. Yes, it’s true, when you don’t have to go to The Job, your expenses can plummet.

  • traineeinvestor May 14, 2012, 7:42 pm

    A great article.

    I’d suggest that in reality, the person whose financials are as close to break even as the single Jack are unlikely to go the distance. Over any lengthy period of time “bad things” will happen to people who live in the real world – a few bad years of investment returns early on, illness, accident, high inflation etc etc – and the ability to get your finances back on track is (often) dependent on getting back into the work force at a time when your skills are rusty and the job market does not need you as much as you need it would be a bit of a shock.

    Keep growing your wealth or expect to get poor is the way I see it. Stagnation is choosing to become poor.

  • Deacon May 14, 2012, 9:04 pm

    Totally agree it’s about having a “positive savings rate.” If we all could only spend less than we make and save some, we would be better off for it. Great post!

    • JaneMD May 15, 2012, 7:04 am

      I notice that Jack and Jill never had kids. If she doesn’t met Jack until she is 37 and attempt until she is 40, they may find themselves facing a $25-30K IVF bill – or multiple ones for several cycles. (Of course, they could get pregnant on one attempt on a private kayaking get away)

      I think my situation would make most MMM readers have a heart attack. We have student loans of over 200K, two full-time jobs, and plan to have at least 6 kids. We have strong religious beliefs so the kids will go to private religious schools through at least 8th grade at 10K a year. (Why am I here? I hang out at FI blogs to keep my anti-consumerism commitment strong – no TV, no cable, no new car)

      • Jimbo May 15, 2012, 7:58 am

        Heart attack!

      • Executioner May 15, 2012, 10:59 am

        Six kids — yikes! My wife and I plan to have zero, so that will serve as a bit of a check on the added population growth. Hopefully some other couple out there has made a similar decision.


      • TLV May 15, 2012, 10:59 am

        If Jack never has kids, then how does he have a great-great-granddaughter to leave a scholarship for?

      • Heidi May 15, 2012, 12:26 pm

        Or if they don’t have work commitments they can go to India for an amazing 6 month vacation and get IVF there (I can’t remember the going rate there, I believe it is around $6000 last I heard.)
        Good for you for being willing to have / raise / educate 6+ kids. I would lose my mind.

      • Mr. Money Mustache May 15, 2012, 8:44 pm

        Wow! – Yup, having that type of reproduction plans would definitely change the equations of early retirement, even at the highest levels of income.

        Even the idea of an “IVF Bill” is far beyond the MMM family’s range of imagination. For us, if pregnancy had proved to be elusive, we would have said “Hmm.. I guess that wasn’t meant to be. Let’s go do some traveling instead.”

        It’s interesting to note the strong differences among people’s (possibly innate?) level of desire for children. You’ve got Jane at the top of the scale. Then there’s most people I know, who end up with two. Then there is my wife and I who feel that even two is a zoo and one is perfect for all three of us. And Executioner holding down the fort at zero.

        It is a good point that the biggest problem our planet has right now is simply too many humans. We’d do great if we could breed ourselves down to 3-4 billion someday. That definitely weighed into our decision, but I wouldn’t fault anyone else for deciding on a different number. Having kids is a pretty interesting core part of the human experience, and life’s too short to try to control the reproductive cycles of others!

        • biscuitweb May 16, 2012, 1:16 am

          Adopting is cool, too. It seems obscene to spend $20,000 to make new kids when there are plenty who need someone to care for them.

          • It figures June 6, 2012, 7:23 pm

            Except when they spend upwards of 20000 for foreign adoptions!!!

        • JaneMD May 16, 2012, 7:48 am

          Keep in mind that I am a pediatrician married to a lawyer. I’m probably more into children than the average person. We’re aren’t living barefoot and pregnant in the backwoods of West Virginia skinning raccoons. We’re professional urbanites in an artisitic district of a nice city that you wouldn’t look at twice. (Well, maybe twice since we have a newborn and 1 yearold strapped to our chests as we take our nightly walk around the neighborhood)

          While it isn’t for everyone, this is our dream and we understand how expensive it will be. We lost almost our entire family in the Holocaust and there are less than 15 million Jews on the planet, which certainly affected our decision. Besides, our (theoretical) six children will never experience cable, a huge house, fast food, or a new car. Someone has to carry the MMM dream to the next generation.;)

          If you think that plan isn’t important, just watch the movie Idiocracy.

          • It figures June 6, 2012, 7:33 pm

            I admire your frugality and commitment to raising good people for this planet!

          • Awesome possum February 2, 2013, 5:52 am

            Hi Jane. I know I’m late to the party but I just wanted to say congrats and that having kids does definitely change the numbers. We have three (surprise twins) and now I am very torn. The numbers say I can quit when the youngest turn15-16 but I find myself wondering if it would be even slightly reasonable or responsible to do so before I know what college will cost for them. We are saving now of course, but for instate public, not Yale.

            Anyone have any insights? Or should I go hunt down a forum somewhere?

      • shelly October 7, 2014, 11:48 am

        I would suggest you consider staying home to homeschool those kiddies. My SIL has 8 kids and it made more sense to do this than pay for religious education. Who better to educate about your beliefs than you and have a strong connection to your church. I have 3 kids myself, but one I receive child support so this has helped offset the daycare costs almost the whole time I have been working. This forum is about challenging your current mindset and becoming FIRE in the process. I am probably one of the few statistics out there where divorce ended up benefiting me financially. I kept my house and paid out the equity to spouse. Then when I met my new husband I decided to move closer to my parents and rent out my old house. The equity in the old house allowed us to buy 5 more houses with cheap financing. All of the equity loans have been paid off as of September this year(downpayment monies) so CF has improved to the point where I can realisitically save $60K per years plus put $11K in IRA and contribute max to my 401k(25% of income in my companies plan so no not the IRS maximum). We also have an ESOP here so this may be why we have the limitation. Managed to make a few good choices(handy husband for one to help maintain rental property). He was also relatively debt free (I say that because his only debt was his mortgage but he is renting this out to offset most of the expenses of this home. We did not want to ruin his credit doing a short sale which is what we woudl have had to do.

  • Early Retirement Extreme May 15, 2012, 12:15 pm

    This all sounds very sensible and all, but according to the “internet retirement police” (IRP) which you’ll meet in various online forums it’s in gross violation of the principles they—all five of them by my latest count—have established. Namely,

    In principle you can only participate in certain pre-approved retirement activities such as the afore-mentioned beach-sitting, staring out the window, and receiving visits from your grandchildren. Traveling is also okay, as is eating “delicious food”, just make sure you didn’t cook it yourself, see below. Think twice before doing anything that’s not on this list! The IRP is watching you.

    The IRP does grant one exemption should you become bored with the activities above. You can work for a nonprofit organization. Make sure you’re not getting paid though even if you have to plead your case with the CEO to put in special exemptions. Accepting money obviously means you didn’t do your retirement-math and that you ran out of money a couple of years after retiring. After all, what other obvious explanation could there be? (Besides the obvious ones) If you can’t find a way to work without pay, it’s best to head back to the beach towel and sit on that. Just to be clear: You’re most definitely NOT allowed to be a kayak-instructor in your retirement. While it may sound like a fun job that you picked yourself even if you didn’t have to to, the keyword is J-O-B. You can, however, spend a Saturday morning dressed up as an elephant handing out fliers and free lemonade at the entrance. And if you really must instruct in kayaking, please avoid doing something more engaging than blogging about kayaks (and if you do blog, try not to make the blog popular… because … then the blog would be a job!).

    Next, I feel like I should warn MMM readers lest they stumble into the retirement pitfall of saving money. You can’t do that! According to the IRP saving money IS a full time job and—try to follow this—since you can’t have a job and be retired, you are not allowed to save money in retirement. You see, if you save money by doing your own cooking, you’re now WORKING as a cook, thus no longer retired. The IRP would like you to take this to its extreme logical conclusions, e.g. you’re working as a money manager if you handle your own investments, you’re working as a gardener if you mow your own lawn, you’re working as a chauffeur if you don’t hire a driver, you’re a pro-blogger if you have a blog, and so on.

    Disclaimer: All examples are taken from real world cases as presented to me by the IRP. They’re not kidding!

    • Ross May 15, 2012, 12:43 pm

      The InternetRetirmentPolice are not really retired. They have a massive debt hanging over their head of 100K Mustachian Face-Punches. All the money and non-working in the world can’t overcome that debt, it’s a miracle they sleep at night.

    • Tyler @ Dividend Money May 15, 2012, 1:39 pm

      I have to chime in and say that this comment is awesome!
      The IRP obviously forget that Personal Finance is … “Personal”.

    • Brian May 15, 2012, 4:06 pm

      Great stuff, Jacob. I hear a similar argument from people re: property management.

      If you have a rental property and you service it yourself, you are NOT increasing your profits on the rental, you are working a part time job as a property manager.

      Similarly, when you mow your own grass and clean your own house, you are NOT saving yourself money…you are working part time as a landscaper and a housekeeper.

      Retirement, it turns out, is a myth. :)

      • arebelspy May 15, 2012, 10:07 pm

        Hah! I love Jacob’s comment.

        Gotta disagree with Brian’s reply though.

        While managing property yourself DOES increase your profits on your rental, it should be separated out. It is profits from managing it, separate from your return on investment.

        Saying you got an 8% return on your $50K invested is different if you had someone else manage it or if you did yourself. Saying you got 8% return plus $2400 for managing it is much more accurate than saying you earned 10%.

        • Mr. Money Mustache May 15, 2012, 10:44 pm

          True, true.. I think Brian was just saying that you are still allowed say you are Retired, even if you manage your own properties.

          That’s one of the rules of Mustachianism: if someone says they are retired, then they are retired. You don’t question them, you congratulate them.

        • mikeBOS May 18, 2012, 11:15 pm

          So do the securities traders among us have to refrain from telling us they got an 8% ROI last year because they’re not deducting the hours they spent working as their own money managers?

          For some of the non-passive investors that includes making trades, reading a financial daily paper, checking industry blogs, and checking the ticker or account balances regularly. Shouldn’t they add up all those hours, multiply it by a money managers typical hourly earnings, and then subtract it from their returns?

          • ProsperityTrader December 24, 2021, 2:27 pm

            Not every active traders spends hours and hours trading. If you know what you are doing like the group I trade with, we only trade based on charts and only 1 hour per day. That equates to about 220 hours per year when you subtract out holidays and vacation time. And for that effort, we would expect far more than 8% per year, more like 8% per week.

            To me that still meets the definition of retired in a real world sense.

    • Mr. Money Mustache May 15, 2012, 8:25 pm

      That was hilarious, Mr. ERE! … especially the part about the elephant dishing out lemonade.

      I will definitely be quoting from this comment and the Internet Retirement Police concept from now on, so thanks for writing it :-)

  • Stevie G May 17, 2012, 1:22 pm

    Is that your wife in the pic? Please sign me up for kayak lessons!

  • femmefrugality May 20, 2012, 12:11 am

    Definitely an interesting idea! I don’t know if we could live on that little long term, though. And it would take us a while to save up that kind of money in the first place.

  • Ali May 24, 2012, 12:13 pm

    Great article. I wish you were less conservative with your use of paragraphs though.

    • Mr. Money Mustache May 24, 2012, 1:04 pm

      Haha.. whoops – All the paragraph spacing accidentally got deleted when I made an update to this article, due to an extremely annoying bug in the Wordpress editor that often trashes my stuff. I restored the previous version for now so it is readable.

      Great timing too – this article is getting some visitors from Hacker News today, so during the hour that I had the paragraphs missing, about 10,000 people got their first introduction to MMM as “The Idiot who doesn’t know how to use paragraphs”. It’s a sensitive topic to me, because I fuckin’ LOVE paragraphs!!!

  • Rog May 24, 2012, 4:49 pm

    So … all I have to do to be in Jack or Jill’s scenario is:

    1 – Own my own home mortgage-free.
    2 – Save $500,000.00

    Save $500,000 by 35 *after* buying a home and having no mortgage? That’s either a very high paying job or a part of the world with very low living expenses, or really both!

    $20,000 / year covers property taxes, maintenance, utilities and food? Where?!

    Any place I want to live has average rent of $1500/mo for a nice 1-bedroom and average house cost of $800k-$1M.

    If I ever decide to move to the country, I’ll keep this in mind!

    • Mr. Money Mustache May 24, 2012, 5:52 pm

      I can see your confusion Rog – you’re new to this blog!

      In most of the US, you can get a decent 2-3 bedroom house for well under $200k. Even in real non-cowbelt cities like Portland, or Austin, or Miami, or close to Boulder, CO where I live. With some lifestyle skills, it’s also very easy for a single person to live on far less than $20k (We’re a family of three living in absolute luxury in a 2600SF house on around $25k right now).

      Silicon valley is cool too – houses just happen to cost about $700,000 more than the average there. So you’d want a salary that’s at least $100,000 per year higher than what is offered elsewhere, if you want to settle there and be financially as well off. Alternatively, you can rent the $1500 apartment, save your million plus, then move out of the city when you’re ready to buy a house.

      When I was job hunting in software back in 1999, I got a job offer near San Francisco for $20k higher than the offer I got in Boulder, CO. The math didn’t work out, since the Boulder job effectively paid more after adjusting for housing. The decision paid off, I retired at around age 30, and that’s why you’re reading this blog.

      The key is just deciding on your priorities. If you want to be financially independent and optionally retire in your 30s, you either have to choose an area that’s affordable, or you have to earn and save more to compensate. It’s all very feasible and realistic – I’m not making this shit up. But you can’t live in San Francisco AND insist on owning your own place AND only make $100k per year AND plan to retire at 30. One or more of the variables has got to give. You just gotta do the math.

  • Financial Samurai May 26, 2012, 1:31 am

    I think this is great that most people here have or can save $500,000 per person by age 35. Almost everybody I know has saved that much as well.

    Why do you think there are so many naysayers who think it can’t be done?


    • Mr. Money Mustache May 26, 2012, 6:51 am

      Because unfortunately the world still has many people who are not regular readers of Mr. Money Mustache and/or The Financial Samurai, of course!

      If you live in a world where it’s normal to borrow money for a car because you don’t even have the $5,000-$35,000 required to do so, you’re naturally pretty likely to stay poor throughout your whole life. Only once you redefine the relationship between earning and spending do things like $500,000 balances become possible (i.e., the spending must always be much smaller than the earning – and don’t forget the lesson as your earnings grow).

      • Dean September 19, 2014, 10:11 am

        When you throw around the 500K number, are you referring to taxable or tax exempt?

  • Shilpan June 25, 2012, 9:16 pm

    This article proves that if you understand value of money and live by the principle of “Never spread your legs beyond your blanked”, you can retire at an early age and live happily.

  • Alexandria August 16, 2012, 3:12 pm

    Great post. I am a big believer in saving up while young, healthy and able-bodied, and this speaks to a lot of things I think about (but no one else seems to talk about). I have observed our parents forced into retirement “before they were ready” but truth was they probably could have retired a decade earlier. Now they aren’t touching their nest eggs, which are at a level of astronomical compounding. I know their parents grew up in the depression, but I just see over over-working and over-saving. The beauty of this approach is you do the saving while young, anyway, so it’s a fairly conservative approach. Which actually jives with how I was raised anyway. Just removes some *fear* out of the equation. Which I think we already were kind of there, being from an entirely different generation. (So our parents also taught us to be super-savers, but then we ask why do we have to work until we are 50 or 60? Maybe because times have been prosperous for us – I am 35).

    I saw social security mentioned a couple of times. If you don’t pay into social security over a long period of time, it’s not going to amount to a hill of beans at SS retirement age. Not a deal breaker for the average Mustache type who probably has no intention to rely on it anyway. But I think I would remove social security from the discussion. So Jill has $2.3 Mil and a few pennies for social security… Still better than most!

  • JReyn March 8, 2013, 11:02 am

    I am relatively new reader of this site, but I particularly enjoyed this article. I definitely dream to make money off of my hobbies, but would LOVE the luxury of not caring if I did or not because things are being handled.

    To that end, I am not only striving for financial independence (paying off mortgage, saving for retirement etc.), but I am using large chunks of my free time to prepare my hobbies to work for me. My passion is gardening, so for the past two years I have been working on a long term project that should provide me with fun AND a potential income by the time I am ready to retire (specifically, I am preparing a forest garden full of fun things to eat AND crafting supplies so that I can sell small hand crafted goods at nearly no cost to myself). Since the forest probably won’t hit its stride for five to ten years, this gives me a “goal” to work towards: By the time my forest is ready I want to be financially independent so I can play with it and enjoy the fruits (literally) of my labors.

    • marciaB April 24, 2014, 5:04 pm

      I’m also new to the blog and reading through back articles. This was one of my favorites, and this quote just slayed me:

      (Don’t worry, when two Mustachians live together, the joining of finances is far from a source of potential relationship friction, it’s more of an aphrodisiac)


  • Jenny May 15, 2013, 3:51 pm

    “…plus there’s Jill’s teaching income. $50,000 per year!”

    That was supposed to be $5,000 per year netting them the 20k to reinvest right?

    Great post!


    • lentilman October 25, 2013, 4:28 am

      40,000 (passive income)+5000 (Jack rental income) +5000 (Jill teaching)= 50,000

  • Anthony August 28, 2014, 6:57 am

    Excuse my ignorance, I am a new reader and I just don’t understand how this is feasible. I do not have a big nest egg (maybe around $5,000) I am in my early 30’s. Say my income is $40k yearly and my goal is to save $10,000 a year. For me to get $500,000 it will take 50 years….

    • Mr. Money Mustache August 28, 2014, 10:14 am

      Welcome Anthony, and keep reading these articles! The idea is optimizing your spending way down and of course earning more as well. If you can save 50% of your take home pay and invest it in average things, you will have enough to retire in roughly 17 years: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

      • Ian November 21, 2014, 6:58 pm

        New reader. Great blog. I didn’t read all of the comments, but I don’t recall seeing anyone asking how putting 2 kids thru college factors into how long the ‘stash will last. By the time my kids start college in 4-5 years it’ll cost me a minimum of $15k – $20k per year.

        • Matt (Semper Fi) August 6, 2016, 5:38 pm

          Do what I did (and am still doing) — make them pay for it. There is no rule book that says you have to put your kids through college. I put myself through school with mild discomfort, and my wife and I expect our kids to do the same thing. We will provide very minimal monetary assistance on a case by case basis, and allow them to live at home if they go to the local university. That is TONS more help than I received, hahaha.

  • RyanV November 19, 2014, 7:40 pm


    First of all thanks for this blog, just by the number of comments I’ve seen already I can tell how helpful you are to more people than I could count.

    I stumbled upon your blog from Seeking Alpha and have read a few of your early articles. As a late 20’s engineer currently working to build my 401k, Roth IRA, and individual investment accounts I find your “plan” very engaging. Without going into all the details (and without me searching every one of your blogs from 2011 to now), how exactly do you make $500k work? Are we assuming that the $500k is 100% invested in dividend generating assets so that your principal is never touched? Otherwise after the initial 25 years, the $500k would be used up (assuming 4% SWR). What is my ignorant ass missing here?

    Thanks in advance,
    Ryan V, P.E.

    • IAmNotABartender April 20, 2015, 9:52 pm


      Not sure if you’ve already come across this article, but read about the safe withdrawal rate here:

      Basically, the reason it’s a *safe* withdrawal rate is that you’re earning 7% on your investment, which leaves 4% to spend and 3% to make your investments keep up with inflation, so you can live indefinitely on the passive income generated.

      • Corey January 7, 2017, 10:11 pm

        Am I right in assuming that your approach doesn’t follow the usual pattern of moving funds from higher-risk equities to lower-risk financial instruments since you’re retiring early? That way, you can still rely on a higher average return of 7% per year?

  • Tinian Crawford October 30, 2017, 12:01 pm

    I’ve read through quite a bit of your articles up to this point (I started at #1 about 2 months ago), but this is the first time I’ve read with a quickening heart rate and a desire to go do pushups. My wife and I have been on the early retirement kick for around 6 months now, and we have already managed to save up a decent amount on an average middle class income and with two kids. Having the story played out for me like this, I don’t know, something just clicked for me. At the rate we are going, I should be able to never work another day after 45 (I’m 35 now), but of course that won’t happen :). This is not in any way a productive comment, but my thumping heart pushed the flurry of my fingertips beyond my control. Thank you MMM!

  • ThisTooShallPass November 24, 2017, 6:55 am

    The $500,000 described in this article – Is that including IRA and 401k value or outside that?

    If it is inclusive, how does one manage to take $20k without penalties and such?

    Is this still valid with the raising health care costs today?

    Thanks for the article and everyone’s comments.

  • Boludo May 5, 2020, 1:46 pm

    If we consider the yield on a portfolio is about 2%, does that mean that the 4% rule actually becomes a 2% rule (4-2)? Perhaps there is a tricky thing about taxes I am ignoring here, but I am wondering whether I am close to the correct assumption or not.

  • Odd Dju January 13, 2021, 7:20 am

    Hi, just started reading your posts, getting excited! I’m starting to work after university this fall and can see myself living off 50% of my starting income, as that is basically what I’ve done while studying by getting student grants from the government. But I do however expect this to be much harder when I’ve bought a house and need to pay down the loan and very hard with eventual kids. Is this ‘included’ in the plan, and how was it for you guys?

  • Shannon July 4, 2022, 4:50 am

    Just a heads-up.
    There’s an extra zero in “plus there’s Jill’s teaching income. $50,000 per year.”

    If it were me I’d want to know.

    • Mr. Money Mustache July 4, 2022, 1:36 pm

      Wow, thanks Shannon – this post has been around for more than a decade and you are the first one to point this out – it is now fixed, and thank you!


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