Part 1
When I retired in my early 50’s, people either ask “Aren’t you too young?” or “How did you do it?” To the first question, I say you are never too young to retire from one career to find purpose in another. My career was right on track, but it was on the wrong track for where God wanted to lead me. To address the latter question, start by living debt-free and saving like crazy.
1. Live under your means.
When my wife and I married when I was 30 and still had student loans and bad credit. Then I heard about an author named Larry Burkett who taught Christian Financial Concepts based on the advice of Proverbs and parables of the bible. Later on, Dave Ramsey started teaching similar principles, but more pizazz, and of course his attitude and politics. Take that with a grain of salt.
We budgeted everything, bought a house that we could afford, drive cars until they had well over 100,000 miles, gave up cable TV, and have a no-frills phone package. All those little expenses add up to a surplus to help the next step.
2. Live debt-free.
You can read about Dave Ramsey’s baby steps and ‘debt snowball’ for the how-to on paying off debt quickly. We knocked out the small stuff first, credit cards, student loans, and cars. Then we took all those monthly payments and rolled them towards our house. That made us debt-free many years ago. Read more at RamseySolutions.com
3. Pay yourself.
Save like crazy! Start by using your employer’s 401k to get their match because it is free money. If they match 5%, put in that much in and get the match. Next, max out an IRA depending on your tax situation. Finally, if you can, go back to the employer plan and put in unmatched money. While I had my consulting firm, I was able to set up a self-employed 401K with a profit-sharing match. We also set up separate annual savings accounts towards other goals (school, vacation, taxes, etc.) so money would be ready for large expenses.
Look down the road 25 years and plan to have three buckets of money: Tax-Exempt Retirement money in a Roth, Taxable Retirement money such as a Traditional IRA or 401k, and finally personal savings with no tax advantage. You will draw on those buckets at different times to allow tax flexibility. A tax advisor or financial planner is recommended for this kind of planning.
I’m a guy, so I generally don’t ask for directions, but this is an exception. Learn from others and get solid financial advice. Some of my employers offer free onsite financial planners during the workday, which is a great benefit. Find and meet with a financial planner every year or two so you keep focused on the goal. We also used Mark Skousen‘s newsletter, ‘Forecasts and Strategies’ for decades and have fared very well. He is one of many advisors out there, but the main thing is to seek advice from experts in the area of investing.
Some people have asked, “How much do I need to save for retirement?” I can point you to two very good online retirement calculators:
Then there is the decision in the US as to when we start collecting Social Security to maximize what we get during our retirement. I’ll leave that discussion to this article from Fidelity.
Set your goals, and be consistent as you work toward them. Trust me, you can find life after IT.
Come back soon for Part 2 about finding purpose. Wishing you lots of success in your dreams!
Disclaimer: This article is about what worked for us. However, this does not construe financial or legal advice. For your situation consult a professional financial planner. No referral fees are generated by the links in this article.