What makes early retirement possible? The following early retirees are people profiled in books I've read recently. I've changed some of the identifying details, both to protect privacy and avoid copyright infringement, but the investment/money accumulation strategies are the same. I then tried to analyze why each person was able to retire early. I used "golden parachute" as a factor for people who received a lot of money from a corporation or employer.
The results surprised me. I'm curious to find out more about people who've succeeded in early retirement and how they did it across a broader population. Did you retire early? Do you know anyone who was able to retire early? How did you/they do it?
- Saved 10% of his salary in a 401(k). The money was invested in index funds of large-company stocks.
- Post-retirement, half of his money is in very conservative "cash" investments like CDs and money markets; half is in stocks
- Bought U.S. Treasury notes at a very high rate of return
- His annual return was well over 10% at the time of writing
Secrets of His Success: Good Timing + Thoughtful Investing
Mr. and Mrs. Working Rich, retired in late thirties
- Took over his father’s chain restaurant subfranchising business (question: what the heck is subfranchising?). Eventually owned their own franchise and built it to be one of the top ten in the nation.
- Parent company bought them out with a deferred payment and regular income at age 40
- Also have unspecified “properties” and a very expensive house, which they had before the buyout, suggesting that good genes were very important
Secrets of Their Success: Good Genes + Golden Parachute + Entrepreneurship
The Millionaire Next Door, retired in his early 50s
- planned for early retirement from the start
- spent two hours a day researching stocks, focusing on compounded returns. Was a longtime investor in IBM, his employer.
- inherited a profitable family business and ran that while still working
- wasn’t fully vested in retirement plan
Secrets of His Success: Planning + Good Genes + Thoughtful Investing + Golden Parachute
The Company Man, retired in his early 50s
- Invested in stock index funds through a 401(k) with employer match
- Took a voluntary layoff of one week of pay for every year served plus health insurance until age 62
-Also had a fully vested company pension plan
Secrets of His Success: Golden Parachute + Investing
The Not-Quite-A-Company Woman, retirement age unknown
- had a pension and profit-sharing plan through a major corporation
- used money from the profit-sharing plan to finance various business ventures: a real estate/restaurant business, a sports bar, and two apartment buildings, all of which she later sold. It wasn't clear whether she sold at a profit or a loss.
- accepted an early retirement buyout for two years of salary, full pension, and health insurance.
Secrets of Her Success: Golden Parachute + Entrepreneurship
The Self-Made Man, retired in late thirties
- retired in his late thirties with a portfolio of about six times his annual salary
- planned his retirement from age 25
- does some consulting work
- over 90% of his portfolio is in stocks or stock mutual funds
Secrets of His Success: Planning + Good Investing + Supplemental Income
8 comments:
Figure out what YOU want, instead of letting the various advertising media telll you what you want.
I'm not exactly retired-at 57, I work alternating 3 and 4 day weeks, mostly because my health insurance alternative is the state's high risk pool. While some of my young and fair colleagues are on a Mommy track, of 500 people on the staff, I think I'm the only one on the Grandpa Plan.
My bride and I both know the value of TODAY. We married a few years ago, both having both lost our first spouse after 29 good years- Yes, I know I've been blessed a second time. There is nowhere you can order a case of TIME, especially time together.
We both fully funding available plans before we met. After we married, we sold the bigger house, paid off and made maintenance-reducing improvements to the 'right-sized' house. It has the amenities we enjoyed (aboveground pool and deck) with our children and grandchildren.
We live simply and debt free, in contrast to some of my even more highly paid colleagues, who appear to be on the consumerism/debt treadmill. If something will actually help us enjoy life, we can (and will) buy it. When the
15+ year old washer died and the parts were half the cost of replacing it, we didn't hesitate to replace it-life's too short to hang out at the laundromat if you have an alternative.
I think our TV sets will go dark next year, but there is no 60 inch wall mount in our future-something more modest.
I think it's great that you are planning for the future, but be prepared for things to change, you might have to consider a spouse and children in your plans.
I take a similar approach to finances and saving as you and at 46 I can tell you that it works. I'm not retired yet, but I will be in about a year.
@anonymous: Thanks for all the detail on how you and your wife are living. I was surprised that the books I got this post from didn't focus much on living below your means...frugality seems to be deemphasized in most personal finance books.
@pablo: Very glad to hear a similar approach is working for you! I know things will definitely change, but I'm not too concerned about the spouse/kids bit...R. (who I think I'm gonna marry) is on the same page as me with finances. A kid would definitely up our expenses but I've got lots of strategies in the arsenal for raising a kid on the cheap...as long as they don't need orthodontia!
Great post -- I'd love to hear more detail on some of these folks, but it sounds like maybe there wasn't much more available?
@gblogger: Thanks! Nope, there wasn't much more there or I would be happy to share more detail...
Hello !.
might , probably curious to know how one can reach 2000 per day of income .
There is no need to invest much at first. You may start to receive yields with as small sum of money as 20-100 dollars.
AimTrust is what you need
AimTrust incorporates an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
It is based in Panama with affiliates around the world.
Do you want to become really rich in short time?
That`s your choice That`s what you really need!
I feel good, I started to get real money with the help of this company,
and I invite you to do the same. It`s all about how to choose a correct partner who uses your money in a right way - that`s the AimTrust!.
I earn US$2,000 per day, and my first deposit was 1 grand only!
It`s easy to start , just click this link http://alalefiz.jamminweb.com/legogu.html
and lucky you`re! Let`s take our chance together to become rich
Good day !.
might , perhaps very interested to know how one can make real money .
There is no need to invest much at first. You may begin to receive yields with as small sum of money as 20-100 dollars.
AimTrust is what you need
AimTrust represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
Its head office is in Panama with offices around the world.
Do you want to become a happy investor?
That`s your chance That`s what you really need!
I feel good, I began to take up income with the help of this company,
and I invite you to do the same. If it gets down to choose a correct partner who uses your funds in a right way - that`s AimTrust!.
I take now up to 2G every day, and what I started with was a funny sum of 500 bucks!
It`s easy to get involved , just click this link http://zoqilocihi.freecities.com/enijesa.html
and lucky you`re! Let`s take this option together to feel the smell of real money
Post a Comment