Last week, I got one of those emails arguing that I can’t be retired if Mrs. RB40 is still working. Well, I’m not fully retired, but it’s not because my wife is working. The blog takes a lot of work, so I consider myself semi-retired, which I think is the best way to retire. Most people like to work a little bit so they feel productive. Not working at all is just too idle time. From what I read, many retirees have a hard time transitioning to a completely unstructured schedule and this can lead to depression.
Anyway, I’d like to clarify that Mrs. RB40 chooses to work. She can quit her full time job if she really needs to. Our expense is about $4,000/month and we can cover it without her paycheck. We can use our other income to pay the bills when she decides to retire. Here are our other sources of income.
- Dividend portfolio: $1,000/month
- Dividend from our retirement accounts: $1,600/month*
- P2P lending: $80/month
- Rental properties: $200/month
- My online income after tax: about $2,500/month (If I stop contributing to my i401k and our 529 account).
*Most of the investments in our retirement accounts are in low cost Vanguard funds. I just pulled this data from my Personal Capital page so it should be reasonably accurate. Personal Capital is quite useful when you’re going over your investments.
Our other streams of income add up to around $5,000 and that should be enough to cover our monthly expenses if Mrs. RB40 does quit. Of course, we’d have to pay penalty and tax on the amount withdrawn from our retirement account and that would reduce our total income. We also have to buy private health insurance so that will be the biggest additional cost. To mitigate these factors, we’d probably move to a cheaper location to lower our monthly cost of living. Anyway, I think we can make it work even if Mrs. RB40 quits her job. Of course, we have some safety net and extra disposable income from her paychecks. Financially, it’s better that she keeps working until we can tap our retirement accounts with no penalty.
Early retirement easier if you’re single
Okay, now that I’m done justifying my “semi-retired” status, let’s talk about early retirement and marriage. Do you think it’s easier to retire if you’re married or single? That’s a hard question because we’ve been married for almost 20 years. It’s tough to imagine being single at this point. Well, I think it would be a lot easier to retire early if I was single. Let’s see my reasoning.
When you’re single, you only have to worry about yourself. You can control all your costs and cut back when you need. I think I’d be able to live on much less than $4,000/month if I was single. I wouldn’t mind living in a small studio. I can wear my clothes until they disintegrate. I can drive an old crappy car into the ground. I can live cheaply and probably wouldn’t even mind it much. Actually, that’s pretty much how my younger brother lives now.
If I was single, I’d probably go live in Thailand and other SE Asian countries for a while. That way, I’d spend very little on rent and food.
Raising a kid costs more than $250,000 over 18 years according to the USDA and that’s not including higher education. If I didn’t have a kid, then life would be so much simpler. I can save money for myself or just spend it and not worry about our kid’s higher education. A child is a huge responsibility and the family needs financial stability. Most people take much fewer chances when they have children and quitting a job would be much more difficult at that point. Life would be much less interesting without a maniacal 3 year old boy, though.
One of our readers commented last week that he purchased a house and rented it out to roommates. The extra income pays his mortgage and early retirement is a good possibility. When you’re single, you can do that kind of thing, but it’s much more difficult when you’re married. You have to consider how your spouse feels about your money making schemes and probably throw out many of those ideas…
What if you’re married?
On the other hand, being married also has some great points.
- One person can work longer – If you think a couple needs to retire at the same time, I got news for you. It’s not true. Most couples don’t retire at the same time. There are just too many factors to consider. One person can be older, enjoy working more, or simply just isn’t ready to retire yet. There are numerous benefits to having one person work longer. For one, obtaining health insurance is much easier if one spouse is working.
- Safety net – Sure, it’s more flexible if you’re single, but what happens if you become disabled? Being married means you have a backup. If something goes wrong, there are more alternatives. Having 2 adults in the household is much more secure than just one.
- Teamwork and emotional support – If a couple has the same financial goals, then it’s easier to reach those goals by working together. A good team can complement each other’s strengths and weaknesses.
- Social security benefit, life insurance, and other spousal benefits — If you handle it right, your spouse might be able to retire early when you’re gone…
From the comments
- Married with no kids – Being married (or having a partner) with no kids is probably the best way to go financially. You can combine expense and live on less than being single. In theory, I agree, but it’s tough to find the right partner that have similar values and goals. The odd isn’t good. It’s highly dependent on the couple.
Even with the benefits of marriage, I think being single makes it much easier to retire early because you can cut costs to the bone and live on very little as a bachelor. A single person has total control of his/her life and where to take it. When you’re married, you have to consider your spouse and kids too. If you have a good team, early retirement is reachable, but forming that good team can be very elusive.
What do you think? What would you add to this list? I’ll update the article with your input.
Photo credit: flicker See-ming Lee
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.