There are two things going on right now that touch on the incredible early retirement movement. The first is a documentary movie playing hopefully, at a theater near you entitled ‘Playing With FIRE‘ (click here) that chronicles one couples quest to retire as soon as they are able. The second is this article (click here) How To Retire Early So You Can Work, Travel And Relax On Your Own Schedule from Business Insider that gives you a step by step account on how to actually do the early retirement thing.
One step that both entities share and boldly announce is the reality that retiring early is very difficult. It requires a lot of sacrifice and self-discipline. In other words, it is NOT an easy journey.
The road to retiring early isn’t easy. It takes time and incredible discipline to earn, save, and invest as much as you possibly can. You must live below your means.
It’s very difficult to build substantial, long-term wealth if you spend more than you earn. When you’re working toward early retirement, it’s imperative to live below your means as it’s the only way to save and invest aggressively. Focusing on reducing your biggest expenses, which are probably housing, transportation, and food, can go a long way in the effort to increase your savings rate.
In the documentary, when the wife is told that she can only spend $5,000 on a car, she breaks down into tears. She expresses the difficulty she is having driving a car of inconsequential wealth. But hey! that’s the voluntary lifestyle that both she and her husband have chosen. Giving up consumerism in order to cease employment must be a style of living you want wholeheartedly and with all your soul.
When I early retired back in 2001, I knew that in order for me to be retired, stay retired and NEVER work for ‘the man’ ever again, was to remain frugal until my death. It’s certainly not easy to live on $25,000 to $30,000 a year (this is based on MY finances. yours may be different) for like forever. But I do. Because the thought of ever going back to work is so abhorrent to me, living frugally is the better alternative. Every second at work takes me away from living my best life ever.
I’ve been retired for nineteen years now and I am estimating I have another twenty or so more years to go. Early retirement years don’t always go smoothly. Lots of things can go wrong and lots of things did go wrong. I’ve had to adjust my retirement planning many, many times. One of the most important things to establish in FIRE is to have a Plan B. And a Plan C, D E and F!
Make a backup plan
No matter how foolproof your plan may seem, consider what could go wrong. You may find you hate the unstructured days of early retirement— would you go back to work? Or the economy could tank, taking your net worth with it — would you have room to cut expenses? Running through potential worst-case scenarios is essential when your livelihood is on the line.
The economy tanked twice since I retired in 2001. I’ve been through The Dot Com Disaster of 2001-2002 and I’ve been through The Great Recession of 2008. I’ve been rich and I’ve been poor. The one thing I learned that if I continue to stay frugal, I’ll get through anything! Other things that went wrong, that I had no idea could, so I hadn’t prepared for it was my husband getting ill along our early retirement journey. Medical bills and medical insurance took center stage rather than travel and adventure. Also, relocating to a warmer clime was a huge disappointment. Again, something transpired that was unimaginable in my retirement planning (unhealthy living conditions). Each time I had to restart all over again, return to Square One (thankful that I even had a square one to fall back on) and map out a different retirement route.
If you get the opportunity, check out the documentary Playing With FIRE. It stars our very own Mr. Money Mustache and J.D. Roth, to name a few fellow finance bloggers. Here’s the trailer: