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