Investing in My Future: Steps I’m Taking to Retire Early
Let’s start with your "why." Why do you want to retire early? Some people want to slow down and relax after a stressful career. Others may dream of starting a second career, traveling, or spending more time with family. Once you identify your "why," the next step is defining your vision for daily life. For me, these two questions are deeply connected. My "why" is tied to my vision: I want to travel, spend time with my kids, focus on hobbies, and maybe even pursue a socially active second career, to do all that I cannot be tied down to a full time job.
To retire early, I need a plan. If you’ve read my blog on planning, you know I believe success comes from intentional action, not chance.
Setting My Retirement Timeline: When Is the Right Time?
Once I had my vision, the next step was making sure the numbers worked. Until about a year ago, I had a vague idea of when I wanted to retire but nothing more. I believe that a goal without a plan is just a dream, so I started researching and setting a realistic timeline.
My pension allows me to start withdrawing funds at 61 years 9 months without a penalty. Until I started mapping out my retirement, I assumed I could retire at 59. But research revealed a significant penalty for retiring before 30 years of service. I am very thankful that this blog has spurred research in this area so I did not have an unrealistic number in my head for any length of time. Lesson learned, realistically look at things to help define what is possible and what is not.
At 62, I can start withdrawing from social security. I could defer social security until I am older if my financial situation is strong enough at retirement to increase my monthly payment. This decision will be made when I am nearing retirement based on my monetary needs. Between my pension and social security I will have a lot of the money I need for day to day living in retirement. Soon, we will talk about the extras and how I hope to fund those.
Health is another key factor. I’ve had back issues since I was in a car accident at 22, leading to two surgeries affecting my mobility. Since traveling is a priority, I want to retire before physical limitations make it harder to explore the world.
Another consideration is my children. Both will finish college within six years, but I don’t know when/if they’ll marry or if I’ll have financial obligations related to their milestones. This uncertainty plays into my planning and the money I may need after I retire.
I have a mortgage that will be paid off when I’m 62. Whether I keep my current home post-retirement depends on my needs at the time. If I travel extensively, downsizing might make sense. I could also sell the home and buy something smaller, taking some of that equity and putting it aside for my future.
Based on the above, I think that my timeline is firmly between 61 and 9 months and 62 years of age, which is just over ten years away.
Funding My Retirement Dreams: Saving & Investing Wisely
Employer 457 Plan
Before we dive in, a quick disclaimer: I am not a financial advisor. I’m just a woman with a vision who believes that, with the right steps, any dream can come true.
To fund my retirement beyond the groceries and place to live I will need money to travel and do other things. I’ve been maxing out my 457 retirement account for years. I review my investments annually, checking returns and risk levels to ensure they align with my goals. If a fund underperforms for two years while the market thrives, I stop investing in it. If a fund is highly volatile, I assess whether I’m comfortable with the risk.
I didn’t always maximize my contributions. Early on, I prioritized household expenses, childcare and homeownership before retirement contributions. I’ve since learned the importance of investing early and have taught my kids about compound interest. They’ve already started their own investment accounts, a decision I wish I had made earlier. I plan to continue to educate them and help set them up for retirement while a lifetime of compound interest is still in front of them.
While my pension ensures long-term security, I needed additional short-term flexibility. That’s why, four years ago, I began bi-weekly stock market investments. This has built additional financial stability to cover immediate needs like college costs and weddings while supporting my early retirement goal.
Stock Market Strategy
Investing in the stock market can be intimidating, so I educate myself. I read or listen to an audiobook on investing each month, which has boosted my confidence. I also talk to others about their financial decisions to gain new perspectives. But I have learned the most from my actual investment, the winners and losers both teach me things about the market and about the risks that I am willing to take.
My investment approach includes:
Consistent Investing: I invest the same amount bi-weekly, buying at different market levels.
Buying on Dips: I look for stocks that had a bad day and may be “on sale.”
Limit Orders: I set a maximum price I’m willing to pay for a stock, and if it hits that price, my order automatically executes.
Selling for Gains: I typically sell a portion of a stock when it rises 30% to recoup my initial investment.
Cutting Losses: If a stock is performing poorly long-term, I sell and reinvest elsewhere.
Reinvesting Profits: I don’t withdraw market gains; I reinvest them to keep my money working for me.
I also transfer extra savings into the market once my emergency fund exceeds my needs. This ensures my money grows rather than sitting idle. This strategy works for me, but every investor has different risk tolerance and financial goals.
Additional Considerations
To free up more money to invest, I made one tough but strategic decision: selling my hybrid-electric car. While I loved it, redirecting that money toward investments should help support my retirement timeline. I used the equity in my car to pay for a different car outright. I took some of the difference and upped my contributions into the stock-market.
Designing My Ideal Retirement Lifestyle
This is the most exciting part of retirement planning! I envision a life filled with travel—to visit my kids and for leisure. Since my children are still unsettled in their careers, I may need flexibility in where I live. Ideally, I’d spend six months near my son and six months near my daughter, possibly using short-term rentals instead of owning two homes.
I also dream of a second career in environmental work. If I retire early without all my finances worked out, I’d need to replace some income, but significantly less than my current salary. There is also a cap on how much I can earn and draw a full pension. It would feel satisfying to give back to this world in a meaningful way, although my current job is fulfilling I would enjoy working for some bigger purpose.
Health and routine will be essential. I already prioritize my mind body connection—biking, yoga, journaling, and meditation. In retirement, I plan to expand my hobbies, such as gardening and blogging. Ideally, I will learn something completely new to keep my brain active. I am a routine driven individual and know that it is important to have interesting and engaging routines to stop myself from becoming a couch potato.
Maintaining friendships and family connections is another priority. If my kids move far away, I’ll need to ensure I don’t lose my support system. I see strong relationships contributing to a fulfilling retirement for me. Hopefully my friends and I will be able to age near each other and support each other's goals.
By maintaining friendships, activity and travel I hope to have a full plate in retirement. Ultimately, retirement isn’t just about money. It’s about crafting a life that excites me every day.
One Life, One Retirement—Making It Count
Has reading about my journey made you think differently about your own retirement plans? What considerations do you have that I haven’t mentioned? If you haven't really started planning maybe this can be your inspiration to take a baby step toward your goals. Do you have an employer matching retirement account option, if you do I highly recommend taking that advantage of that option.
Planning for retirement doesn’t have to be overwhelming. Start small—set a timeline, review your savings, or just reflect on your ideal future. I’d love to hear: What’s your biggest motivator for retirement?Life is short, and we only get one shot at it. I want to make the most of both my working years and my retirement. Share your thoughts and strategies for accelerating your retirement timeline!
Comments
Post a Comment