The easiest way to early retirement is to fast forward life

Fuck You by Marion Peck
Fuck You by Marion Peck
It's no secret that the older people get the more they start to save for retirement. There's a number of reasons that peoples savings increase as they get older: You start to earn more, you've paid off all your debt, you have paid off your house, you no longer have to support kids.

But I think another reason that doesn't get much credit is that as people get older and closer to retirement they start to realize that they haven't saved as much as they would have liked for retirement. When you're 30 years old most people think they have another 30 years to go before retirement. That's as long as they have lived to that point! If I had to live my entire life again before I retired I would think I had a LOT of time to figure it out before I got there. But the years start to go by, you get busy with new house projects, or your kids always seem to need new clothes because they are growing so fast! The next thing you know you're in your mid-forties and you realize, oh crap! I need to save how much in the next 15 or so years?

Sure you might have saved some by that point, you were diligent, but a lot of financial advisors are saying that for millennials their retirement will cost them 2 million dollars! Wow! That's a lot just to write. So you start ramping up your savings as you get older because you know your future self will not be able to work forever and you need to have something saved.

Once you're in your fifties you are getting into the home stretch, you can start to actually visualize the finish line so you keep making that last push to up your savings to last you the rest of your life. Most people can cut some fat from their budget, they just don't bother trying until they start realizing they need to.

And that's the secret to early retirement. It's pretty simple. Fast forward life. Save like you're 55 years old. Save like you only have a limited amount of time to work. Look for the finish line early, don't put your head down and go with the flow, that's the way you approach a marathon. If you want to reach early financial independence then you need to push like a 4x4 race. Every year you pick it up a notch until your last leg you make that sprint for the finish.

I know that you have bills to pay and other things to save for, but so do I. So do a lot of other early retirees, it's not impossible. If leasing that new car is high on your list of priorities then go ahead and do it, but don't expect to save money very quickly with monthly payments that you could probably avoid.

What do you think? Would you fast forward life? It doesn't have to be everything, I'm not fast forwarding the health problems, I can wait for that.

19 comments:

  1. Beautiful picture :). I would much rather save sooner rather than later. With the power of compound interest, you'll have to save less overall and can avoid the stress in 20 years. I want to be retired by then anyway, or at least working because I want to and not because I need to. Also, you should be in a better position to save early on before the kids come along with their money-sucking ways.

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    1. Barefoot Budgeter,

      I'm glad you like the painting, it's one of the few that I actually regret not buying back in my art collecting days!

      That's the thing that I notice with most early retiree hopefuls, they pretend that they can see the finish line. They don't try to think about how life would be 30 years down the road, they try to imagine 10 years out where they might actually still be able to visualize what life will really be like. For people in this mindset if they really think that they only have 10 years to save they work harder at it and don't waste money on things that they don't really need.

      Not all younger people don't have kids, but I think that even the ones that did would probably start to think twice about purchases if they thought retirement was only 10 years away. Maybe they would find more hand me downs for their kids, or pick up things from garage sales instead of buying things new. There's usually almost ways for people to save more money, they just have to put some effort into it.

      -Zee

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  2. Great post Zee! I agree that it is key to fast forward those savings as if you only have so much time left. Also, you must look strategically at every expense to seek what can be cut or reduced. It is good to go in one area in depth at a time and really see what the options are. For the last several weeks I have been shopping at different grocery stores to determine where I will get the best value, and maybe it is where I am already shopping, but I cannot guarantee that it is unless if I try elsewhere. I also have some other experiments brewing, it is great to see what costs can be cut to help finish the race early!

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    1. Kipp,

      Focusing on one area at a time is a great way to approach it! I've slowly tackled item after item to save more and I think that's the best way to do it. Too much change all at once becomes too much of a shock to the system and people are more likely to give up. Instead of trying to bring lunch to work, save at grocery stores, cut off cable, change cell phone plans, etc, etc. It's probably better to only tackle one until you're used to it, then go after the next. If you change a little, then get used to it then you don't really notice the differences until the next thing you know it's a year later and your a very thrifty person!

      I actually have my own experiment brewing about saving money on food, but that will probably be another 3 months from now until I can actually begin the experiment. It will be an interesting one that's for sure!

      -Zee

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  3. These are good thoughts regarding saving for the future. It's unfortunately that we don't value saving at an early age. We wait until we loose the benefit of compound interest and stock market returns. Thanks for the reminder.

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    1. Yeah, compound interest is really a huge factor in savings. For example, if you save $1,000 now, in 30 years it will be $7,500 with a 7% return. So every 10k becomes 75k, and if you can somehow manage to save 100k by the time you're 30 then by the age of 60 you can have 750k just with interest! You wouldn't even have to save a single penny more as long as you don't touch it.

      But the thing about early retirement is that you don't have as much time to save before you start touching it so you just have to get to a place where you can live off of the interest only quicker.

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  4. Well said. I think the biggest problem is that too many people are financially blind until their mid40s, when they HAVE to start caring. The key to success is to be early and ahead of the pack.

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    1. Tonster,

      I know a lot of people that are probably financially blind, I can't say for sure if they are since I don't ask them specifics on their savings but I've got a pretty good guess as to how they are doing. I wasn't completely blind to my savings, but I could have done a lot better, I just wish I started paying attention earlier. Thanks for stopping by!

      -Zee

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  5. I love the illustration. I don't know if it a symbol for FU money or not, but it is a great reminder of what you can tell your boss when you have a large emergency fund. You are right about saving like you are 55 when you are younger. Also if you live like you are 18 when you are 40 that greatly increases your odds of financial independence!

    MDP

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    1. MDP,

      The painting was not necessarily related to FU money, but it's a painting that I really liked back when I was collecting art. Instead of random stock photos I typically post random art that I enjoy. I don't necessarily think that stock photo's really help my posts a lot (I could be wrong) so I just post another one of my passions which is art.

      Anyways, I think that if you set a goal like, "retire by 45" will make you think you have 20 years less than the average person, so you will adjust accordingly. Even if you shoot for a goal but end up retiring at 48 instead, you are still decades ahead of the average person which is still something to be proud of. Thanks for stopping by.

      -Zee

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  6. If you had all the knowledge you needed the day you graduated from college (or hit 21), could you power save 50% or more of your income, live very cheaply and be done by 40? Most won't "wait", but I think more and more are realizing they can do it. You don't have to work until 65 or 67 or 70.

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    1. Hey Wade,

      If I knew what I knew now back when I was just out of college, I probably would be about 5 years (or less) until retirement. It's funny how older people give advise and younger people tend not to listen very closely. They listen, but they don't always take it to heart. Thanks for dropping by!

      -Zee

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  7. Great post Zee...I could have done with reading it 20 years ago though!

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    1. Thanks Weenie, I wish I realized this a long time ago myself!

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  8. That was a refreshing read Zee. Im 23 right now and i'm saving aggressively, and truthfully its hard to get support from your peers because no one wants to save. saving money is not sexy to anyone that is a from generation Y. It's sad how society thinks you should have to work until your mid 60s or that its impossible to retire in your 30s. but truth be told the naysayers are who inspire me the most! Thanks for posting this as a reminder to continue keeping on!

    Ace

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    1. Hey Ace,

      You might just be my new personal hero, if you're 23 and already saving aggressively then I have no doubt you'll be ahead of everyone else your age. If you can keep it up for a few years then you'll be able to maintain it. The key is to not burn out on your saving, sometimes getting into a new savings lifestyle is easy and interesting at first, but after a year or two you burn out. Just keep it up for a while and you will be well on your way to early retirement. Thanks for stopping by!

      -Zee

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  9. When I was 18 years old I started "aggressively saving". I worked a full-time job and a part-time job. Even though I wasn't making a ton, I put away over 1/4 of my paycheck -that was after I paid off rent and other expenses. I saved and saved and had $25k in my account by the time I was 23. This may not seem like much, but I came from nothing and was working slightly above minimum wage. In one fast swoop all of that money was gone. I Started over doing the same thing again, but decided to go back to school and again, gone. It seems like each time I came up in my life I found myself at a start line again (a different start line, but one none the less). I have found myself once again fairly empty in my bank account and with incredible loans to pay back. I do have investments, but these are not enough to get ahead. If I knew what my future looked like, then perhaps I would fast forward, but am I fast forwarding to another start line? Right now I am struggling with financial independence and knowing how that in and of itself can change our motivations, our paths, and our overall decisions. Without money it is really easy to feel stuck and feel like options are limited.

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    1. Rags2Riches,

      Money comes and goes, it is not the end all - be all answer to life. But it does give you options. If you have no money then you have to do what you can to survive, you can't really be picky about jobs and work because you need the work you can get so you can pay your bills.

      As for fast forwarding life and starting back at zero again, I think that happens to a lot of people, myself included. I started saving aggressively right after college... well not aggressively, but I didn't have expenses since I lived at my parents house for a few years while I had a "real" career job. But all that savings disappeared for me too, but the trade off was that I now owned a house.

      I think this is a common story for a lot of people. They save money and get a large savings stored up then it's all spent on something. For many people that's a house, other people that might be a new car, or perhaps it's paying to go back to school. Their savings is depleted but their position in life is overall better. It's usually not like, $25k just disappears and you have nothing to show for it, usually you've moved up your starting line and made the race seem shorter.

      I don't know your situation but perhaps that $25k ended up going to a medical expense of some sort. If that were the case then you might not have anything to show for it, but you probably aren't in a bigger hole than you would have been in had you had nothing saved in the first place.

      For me I foresee another depletion of my savings coming sometime in the future, but I'm not exactly sure when. I don't plan to live in my current house for forever so at some point I will move. I'll probably buy a new house, but it will most likely be smaller so I don't have to have roommates and can live by myself. But I'll probably pay a much larger portion of this house off when I buy it so I have little to no mortgage to have to pay every month. At this point I will have significantly less savings but I'll also have less in the way of expenses so my starting line will be moved up closer to the finish line.

      I don't know what my future holds, but I do know that changing your starting line isn't always a bad thing. Even if I have $0 but I don't have a mortgage, I will have more security because I won't have to pay as much every month to get by. If I spent a lot of money going back to school then hopefully I will be smarter and have better skills for it so it will be easier to find a better paying job.

      I've found that as I have more saved up my motivations have changed too. I don't feel like I need my job as much as they need me so I won't let myself be overworked or mistreated since that's no way to go through life.

      Thank you for the thoughtful comment. I hope you find the right path, even if it is just moving the starting line to a better place.

      -Zee

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  10. Thanks Zee. The $25k went to a wedding so I really don't have a lot to show for it unless pictures are now worth a 1k instead of words or being married is considered "moving up". Though you are right that my position in life is better, but being financially dependent on my spouse comes with a lot of unwanted feelings, the biggest one is feeling indebted to them. I have always had a strange relationship with money to begin with and have even kept my bank account separate from my spouses' for this reason. Unfortunately since my account isn't seeing much action these days, I have to rely on my spouse's income to survive. I am sure you can imagine how distressing and downright embarrassing this can be.

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