early retirement

  • Tommy, an early retiree who runs the blog Leisure Freak, left his corporate job at age 51, shortly after the stock-market crash in 2008.
  • He never earned a six-figure salary, but said he focused on paying off debt, maxing out his retirement accounts as often as possible, and investing his savings.
  • In hindsight, he wishes he kept more than $20,000 in cash reserves and paid off his mortgage before retiring early — the benefits would have been more mental than anything, he said.
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There are many ways to achieve early retirement, and it can be done without going to extremes.

For Tommy, an early retiree who runs the blog Leisure Freak, the path was as “ordinary” as it gets, he wrote in a recent post.

“Automatic payroll deductions, compounding interest, reinvested dividends, stock growth, consistent dollar-cost averaging, it works when given enough time,” he wrote. “My motto — Saving anything is better than saving nothing.”

Tommy — who only goes by his first name online — retired nearly 10 years ago at age 51, after a more than three-decade career in telecom. He never earned a six-figure salary, but focused on saving consistently since his 20s and living frugally with his wife and three kids, he said.

“I started only saving the minimum for the full company 401(k) match and concentrated all extra money on debt payoff,” he wrote. “Once debt free I stayed debt free other than our modest mortgage. I just piled all extra money into maxing out the yearly allowable 401(k) contributions and Roth IRAs.” He said he was able to save, at most, $20,000 a year.

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It wasn’t until age 40 that he decided to retire early and met with a certified financial planner. He spent the next decade following an “aggressive but realistic 10-year early retirement plan,” saving up to $30,000 a year before the stock market crashed in 2008, causing him to delay his retirement.

Tommy finally retired a year later with more than $500,000 invested in retirement accounts, he wrote, which he was able to access without penalty through a strategy that allowed monthly distributions from an IRA. He also had $20,000 in cash, a proverbial “emergency fund,” but now wishes he’d had double that amount.

“Looking back at my financial journey, my desire for investment growth had me underestimated how much having sufficient cash reserves can calm one’s retirement transition. Believe it or not, retirement can mess with your mind after spending decades in the rat race trenches,” he said.

In hindsight, Tommy wishes they’d paid off their mortgage before retiring early, too. They didn’t prioritize it because they assumed their investment returns would exceed any mortgage interest saved. But when the stock market crashed, their returns weren’t what they expected.

They finally wiped out their mortgage balance within a few years of retiring. “So much of our having a great retirement is mental. Being mortgage free certainly adds another level of mental freedom,” he said.

But Tommy’s version of early retirement isn’t devoid of work, it’s simply living a life in which he doesn’t need to work to survive. Over the last decade, he’s worked a few different “second-act retirement jobs” fueled by his own interests and passions. 

“When you spend decades in the rat race it is all you really know,” he wrote. “I can’t explain how different, rewarding, and enjoyable it is to work doing something you really want to do for only as long as you want to do it.”

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