What if you wake up one day and realize you really want to retire early? Nay, make that – you need to retire early. Your job is slowly killing you can you can’t take it much longer. Okay, that was me in 2010, but you get my drift. If you’re married, then your next step would be to announce your early retirement idea to your better half. This is when the SHTF, as the prepper community would call it. It probably is not a great idea to blurt this out when your wife is pregnant. (Yes, me again…) In any case, it is imperative to get your spouse’s support if you want to retire early. This could be difficult because early retirement is outlandish especially if you are under 50.
In 2014, I had coffee with Iris, one of our readers. She was an apparel designer for a well know local company and she was very stressed out about her job. She wanted to leave, but her significant other didn’t support that. He said she should bite the bullet and keep working there because her position was very well paid. I advised her to save as much as she could and keep talking to her partner. It is much easier to work on big financial issues as a team. Recently, I met up with Iris again and she was just about to hand in her two weeks’ notice. Her husband is on her side now and she can leave without this decision affecting their marriage. She is going to take it slow for a while and work part time at the library to decompress. She is also working on a line of clothing on the side and hope to open an online store at some point. That’s really great for Iris. She is very excited to leave a stressful job situation and try to make it on her own. I could tell she was very happy with her decision. I’m also really glad that she was able to persuade her husband to be more supportive.
The natural reaction of anyone who hears that their spouse wants to quit their job is to get on the defensive. The household income would decrease and that usually means cutting back. That’s the most immediate issue, but there are other problems too. What if one person wants to retire early and the other loves their job? It’s tough to get on the same page. Let’s go through some scenarios to see what our argument would be.
Shoot for Financial Independence
If your partner is not crazy about early retirement, the best way to get them on board is to aim for financial independence instead. There are a lot of questions about early retirement. What will I do with all my time? Will I be bored? Will I have any social life without my friends at work? Will the retirement accounts be able to afford 40+ years of retirement? A lot of these questions go away if you shoot for financial independence. You can tout the benefit of financial independence and put off dealing with early retirement until you get there. This is a whole post by itself, but here are some benefits to financial independence.
- Financial security – If you ever get laid off, you can take your time to find the perfect job.
- Freedom to work on your own terms – Something funny happens when you achieve financial independence. You become emboldened at work. You can pick and choose your assignments and avoid the BS. At this point, your employer needs you more than you need them. The power balance has shifted.
- Wealth – You’ll be rich!
- Extra spending money – If your passive income covers your cost of living, then your earned income is gravy. You can use that money any way you’d like. You can invest, donate, travel more, or help your family.
- Employment optional – Financial independence means you can transition to part-time employment, self employment, or early retirement. You might not want to retire now, but who know how you’ll feel in 10 years.
I Love My Work
Here is another scenario. One person wants to retire early and the partner loves her job. A lot of people will feel that it is unfair for one spouse to work. I routinely get this. Some people say I am not retired because Mrs. RB40 still works full-time. When I quit my engineering career in 2012, Mrs. RB40 likes her job and she didn’t want to quit working. That’s great for our family because we can keep saving while she is working. Why should she quit if she likes what she’s doing?
It’s fantastic that you love your job, but that should not get in the way of saving and investing. Loving your job doesn’t give you a free pass to spend all your income. Even if you love your job, it doesn’t mean you will love it 10 or 20 years from now. In fact, Mrs. RB40’s employer went through some restructuring and work is not as fun as it once was. She is thinking about taking a year off soon to see if she will like early retirement. Things never stay the same so it’s better to be prepared and have more choices in the future.
We won’t be able to spend any money
This is a legitimate concern. Unless you’re already frugal and save 50% or more of your income, you will need to cut back. We lived modestly when I was making good income so it wasn’t a huge obstacle when our income was reduced to one paycheck. We probably would have to make some changes when Mrs. RB40 retires in a few years. Our biggest monthly expense is the housing and we could move to a cheaper location when she’s not tied down to her job anymore. We’ll see when we get closer.
It’s a trade off. Is your work more painful than cutting back on your spending? In my case, our lives improved a lot after I retired. It was worth it to cut back a bit.
People will think I’m crazy
Yes, your coworkers, friends, and family will think you are crazy. But, that’s because most people save less than 5% of their income and they will never be able to retire early. Once, I told a neighbor that I have a blog called Retire by 40. Her reaction was “retire by 40 and back to work at 50!” I laughed it off because I knew most people think like that. There are a couple of solutions to this problem.
- Don’t tell anyone you’re trying to retire early. The first rule of FIRE club is: you do not talk about FIRE club! By the way, FIRE is financial independence, retire early.
- If you talk about FIRE, then be prepared to ignore the Joneses.
Yes, early retirement is a little crazy, but there are many great examples of people making it work. Check out my list of early retirement blogs.
You can’t depend on the stock market
Early retirement usually means investing in the stock market. You can’t just stick your money in a saving account. The inflation will eat you alive. You need to invest it and eventually use the passive income to replace your earned income. However, a lot of people distrust the stock market and they think it is just a form of gambling. Yes, you can invest like you’re gambling, but you can invest more conservatively also. If you consistently invest in solid companies over the long haul, you should do well. The simplest way to do this is to invest in low cost index funds. There will be crashes and short term fluctuations, but those are the best times to buy. If the stock market ever drops to zero, I’m sure we’ll have bigger problems to worry about. Lastly, if you really can’t bring yourself to trust the stock market, consider rental properties. A lot of people retired with rentals. It’s more work up front, but it’s more tangible than the stock market.
All aboard the Early Retirement Train
So those are just some scenarios that most people will run into when they tell their spouse they want to retire early. The most important thing is to work as a team and try to get your partner on your side. It might take a while, but keep talking to your spouse and emphasize the positives. You can start off with the easy stuff like tracking your cash flow. Once you see where your money goes, you can evaluate your spending more effectively. Keep working on it and eventually, your partner will get on board the early retirement train, too.
Did you have any problems convincing your partner to get on board with early retirement? What are some other scenarios that you could run into?
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For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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