Home > Five Years

Five Years

June 30th, 2020 at 01:45 pm

A few years ago, I read a financial article, book, or blog (I can’t remember unfortunately.) that had an impact on how I prepare for retirement.

Before then I had just focused on a number to achieve for my retirement account – one that would support a ‘retirement phase’ budget with a 4% annual withdrawal. My thought, like many others, was that my retirement date would be the day I achieved that number. I could project that date but not count on it. The article made me rethink the approach and instead think more about my remaining time and its value. So, make the DATE the goal, not the AMOUNT. After reading, I decided to set a deadline for my retirement start date and then work to make that happen. There’s a mental shift, at least for me, in having a “deadline” instead of a “target date”. A target is something that I work toward and hope it works out, but know it might not and that’s okay. A deadline on the other hand is something I work toward with some sense of urgency because if it doesn’t work out, I have to resort to a back-up plan that isn’t as nice. When I have a deadline, I tend to make sacrifices earlier if necessary so I won’t miss it.

June 30, 2025 is my retirement start deadline. I will be retired on that day. It makes me excited just to type that! That makes today a milestone – my retirement is a maximum of 5 years from today. What if I don’t have the magic number in the retirement account? Then I will adjust my retirement lifestyle, but I will not change the date. One thing that has reinforced my view has been this site, where I see several of you in retirement living quite well without a huge nest egg. There are so many accounts too of people who had a sudden disability that resulted in that date being selected for them and they weren’t prepared. And others who achieved their magic number but have the ‘one more year’ syndrome for several years because they worry about the potential flaws in their calculations. I also encountered one of those Monte Carlo simulators that included the probability of being dead along with the probabilities of being broke or wealthy. That drove home the concept to me: I want to control how I spend the rest of my life.

2025 is the year I turn sixty. I can access my retirement account without penalty then. I won’t qualify for Medicare yet. My youngest boys won’t be finished with college. All those factors are included in my planning.

I set a list of prerequisites that must be met if I voluntarily opt to retire before June 30, 2025. In order to allow myself to retire earlier, I have to have these things accomplished:
(1) Retirement account on target for 7 figures on 60th birthday
(2) College savings on target for full funding
(3) Mortgage paid off
(4) Savings of basic expenses until 60th birthday set aside
(5) No consumer debt

I track my progress against those prerequisites each quarter. I have a countdown set too – today I have 260 more Mondays until my deadline.

6 Responses to “Five Years”

  1. Creditcardfree Says:

    Thanks for sharing! Sometimes I think I know what we are doing and other times freak out. Lately, we have had talks about if my husband chooses not to make it to 20 years in military. No pension, actually there would be a small one, he made 20 as a reservist. Or what if our government tanks, or hyperinflation! But like you mentioned, I know we will adapt lifestyle to the income we do have.

  2. ceejay74 Says:

    This is great! I have some retirement goal trackers but haven't thought about what it would actually take to pull the trigger on retirement--mine is generally focused on that retire at 65 idea but I have no idea if I'll be in a position to actually retire then or earlier or later or ? . So I really enjoyed reading how you're approaching it.

  3. Wink Says:

    I'm certainly an example of deciding to retire on a very modest budget! As you mentioned, this was what always played in my mind: "I want to control how I spend the rest of my life". I remember sitting in various retirement seminars at work and hearing over and over that I would need at least 75% or 80% of my working monthly income, and some huge number in my retirement accounts before I could retire. That just wasn't going to be my reality and I didn't want to work until I was 70! So I formulated a plan that worked for me and set that date! Now, here I am, enjoying the rest of my life, retiring at 59.5 years old. You have a great plan that will get you there too.

  4. CB in the City Says:

    I agree with Wink. Retirement seminars frighten people with recommended numbers they can't possibly reach -- but they are aiming their pitch toward people who don't live like we do. Just being frugal and financially responsible is a huge asset in retirement.

  5. rob62521 Says:

    Like already commented, so many of those retirement seminars and such want to scare people into not really retiring. My dad retired at 62. It was hard on them, but his body was basically worn out. He had worked very hard in so many jobs. He at least had a few years of not having to work so hard. A friend of his worked at a nursing home and most of the residents told him that they had wished they had retired at an earlier age instead of trying to hold out and retire at 65 or later to get full Medicare. Most said they could have had some sort of enjoyment while they still were able.

    Way to go for setting the date. I set a year that I would retire and we worked to get things ready. We saved what we could. I took a major hit on my pension by retiring early, but with the way things were going in my school district, my health would have suffered greatly. I have had time to enjoy life, spend time with my older husband, and appreciate things. Funny thing, other than our bills and expenses, I don't feel the need to buy a lot of things. I do buy presents and things for folks, but for myself, I basically buy necessities. I'm not trying to keep up with anyone. I have found pleasure doing things I didn't have time for like reading voraciously, crafts, and socializing with others. Don't get me wrong, I still spend money and will buy myself things, but I can really evaluate what I honestly want instead of rushing and getting something.

    I do think a frugal lifestyle makes a world of difference. I have a friend who makes more on his pension alone than my husband and I do together. DH and I are pretty pleased with what we have. We have enough for our bills, have some money saved, and right now have no outstanding debts other than things like power, water, etc. We save for things. My friend, on the other hand, is always wanting more and more and more and has gotten loans, home equity and personal, to pay for past vacations and now is so strapped money wise, that even if they could travel (limited because of the Coronavirus), they can't afford to travel because they still owe big money on those loans.

    Anyway, good for you for picking a date and looking forward to that. Wait until the last year when you start realizing it is true!

  6. LifeBalance Says:

    Wink & CB, those retirement calculators (and advisors) that use income instead of expenses to estimate the money we need for retirement are one of my pet peeves! My 401k provider has a little dashboard on its webpage that's supposed to allow evaluation of how I'm doing. But it won't allow me to set my retirement income needs to less than 50% of my current income. It's programmed not to allow it! As I get older, I realize that the institutions that my parents believed to be credible aren't really. As a result I don't take money advice from financial planners nor health advice from doctors.

    Rob, it's exciting to me that you followed this strategy too. Set a date and "work to get things ready". You (and Wink and CB) are some of the bloggers here that seem to have comfortable retirement lifestyles.

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