Retire Today

As a mental exercise I will occasionally ask myself a question: could I retire today?  The point isn’t to actually plan that option, but rather look at my current situation in a new light to see if it would be possible and what would have to change to get there.

So currently I have about $218,000 in investments, which, if you use the 4% rule, I could potential yield $8720 annually.  Not even close to my target spending of $26,000/year or even my bare bones spending of $18,000/year.  So this would be utterly impossible right.  Nope, we crack open a backup plan and I use some home equity, after all I do own my house debt free.  How could that work?

Well in my case I could sell off the current house and purchase a 2.5 story across town which has been converted into three rental units.  By renting out a unit at $1000/month and living in the rest of the house we could boost our income to $20,720, which would be just above my bare bones spending amount.  Hardly ideal, but never the less an option if for some reason I just had to get out today.

Or if I’m really desperate I could cram the my entire family into a one unit and rent the other two stories.  At that point let’s assume the rent at $1800/month in total for two units and that would boost the income to $30,320 annually, which gives the plan a much needed margin of safety.  Yet to do so would significantly reduce our living space, which while I’m ok with downsizing I’m not really prepared to move my family into less than 750 square feet space and become a landlord.

So what was the point of this?  To remind myself it is all about choice.  I’m choosing to work where I do, and I’m choosing my current lifestyle.  Yet if I’m willing to consider other significantly different options, different results can occur.  People can often feel trapped in their jobs, but reality is the trap largely exists in your own mind.  The real question is: how desperate are you to get out?  Depending on your creativity and what you can accept for a lifestyle either in the long or short term, entirely new options can be opened up in most cases.  So don’t let today be a prison, find your own way out…it might not be perfect, but it is comfortable to know the option exists.

Could you escape today?  If so, how?  If not, what is holding you back?

10 thoughts on “Retire Today”

  1. You’re assuming: have to get out today AND stay out. Why? How about something like using $22k of your investments (about 10%) for a year and using that time to find something else that makes money that you might not want to have to escape from?

    Good thought experiment, although your expenses would also be going up due to the rental. Most RE investors seem to target something like 50% but that might include a mortgage.

  2. Tim your timing is impeccable. Been struggling with the way I have been feeling about and at work. Makes you question whether or not I can get out. Lifestyle and efficiency of the early retirement plan gets called into question. Defined benefit (golden handcuffs) and salary is difficult to match with all the other benefits. I could get out but would have to go back and that is not appealing, so the hopefully temporary pain is in fact for the long term gain. Small picture vs big picture thinking. Perspective and choice can help change your view of situations so dramatically, and it is all just your frame of mind. What a powerful thing the mind is.

  3. I have been ready to go for years but $15,900 of HELOC debt and the fact that I only have $10,000 saved is holding me back. I am stuck working until I am 60 (11 years from now).

    Just hope I make it that far. I read the local obits online this morning and there were several people in their 40s and 50s who died of natural causes. You only live once and I don’t want to die working.

  4. Could I escape today? Yes, I think so… if, like Tim I choose to include LIRA’s and pension amounts in my ER “stash”, I am around 950k in investments. Add to this that my wife and I can live extremely well on $2500 per month (thanks to no debt payments of any sort), and I think we could probably pare that down to $2000 monthly if we went nuclear and ditched cable, our car, our love of good wine, gym memberships, and started doing the library thing, as many frugalites seem to do. Oh yeah, my wife wants to keep on working another 10 years at her six figure job. No kids to support. Apart from our paid off city home, we also have several paid off recreational properties. All told, net worth of around 1.6 million at 41.

    My job is a living hell. Given the specifics mentioned above, in my shoes, would anyone hesitate from quitting work? Didn’t think so… that is why after April 2014 I will take the plunge into ER. One could quibble that it is not retirement at all, since my wife wants to continue to work – whatever, I can’t wait for the next chapter of my life.

  5. Already escaped, 4 1/2 years ago. Expenses are about $1,800 a month, steady investment income is about $2,300 a month, so I have a comfortable cushion. 🙂

  6. I love this thought experiment (well, obviously, since it’s what my whole site is about). My numbers are very similar to yours and I have the same issue where if I could release my home equity, I’d be right where my goals should be. But for now, I call myself “semi-pretired” because I work 4 hours a week to cover my slight deficit. So I feel I escaped, but I may go back at some point for a little more cushion but we’ll see.

  7. I often ask myself the same thing, but truth is I enjoy my job and lifestyle – retiring now would be very difficult but technically not impossible.

    As a side activity, I calculate the comparable hourly wage that my dividend create – after taxes are taken into effect I estimate my dividend income right now is comparable to me working full time and earning about minimum wage. With each dividend I receive and re-invest and each deposit I make the picture gets better and better, which is just more motivation for me to keep on going.

    Best of luck!

    Michael

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