Is Early Retirement A Smart Goal? (Bestie Ep) #1015

Summary

Podcast Summary: How to Money – "Is Early Retirement A Smart Goal? (Bestie Ep) #1015"

Episode Details:

• Title: Is Early Retirement A Smart Goal? (Bestie Ep) #1015
• Hosts: Joel and Matt
• Release Date: July 28, 2025

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Introduction to Early Retirement

In this episode, Joel and Matt delve into the concept of early retirement, exploring whether it is a viable and wise goal for the average person. They dissect various facets of early retirement, balancing financial strategies with personal and psychological considerations.

Notable Quote:

• Matt [02:55]: "We are talking about early retirement or retiring early. Depend. I think we're going to refer to it as Financial Independence, Retire Early."

Understanding the FIRE Movement

The hosts discuss the FIRE (Financial Independence, Retire Early) movement, highlighting its popularity and the diverse approaches within it. They acknowledge that while FIRE offers a structured path to early retirement, it may not suit everyone.

Notable Quote:

• Joel [03:20]: "There are all sorts of different people in the FIRE movement and different takes on retiring early."

Financial Mechanics of Early Retirement

Joel and Matt break down the financial requirements for early retirement, referencing the widely accepted rule of thumb: 25 times your annual expenses. They emphasize that while this provides a foundational target, it may not account for variables like inflation and unexpected expenses.

Notable Quote:

• Joel [26:34]: "The math behind early retirement is actually not terribly complicated."

They also discuss the importance of saving more than the 25x annual expenses to cushion against unforeseen financial strains, such as rising costs of living or healthcare.

Notable Quote:

• Matt [28:20]: "If you really want to retire before your peers, that it is important to save more than you think you'll need."

Investment Strategies and Tax-Advantaged Accounts

The episode covers various investment avenues critical for building a robust portfolio for early retirement. They highlight the significance of Roth accounts, real estate, taxable brokerage accounts, and HSAs, each offering different levels of flexibility and tax advantages.

Notable Quote:

• Matt [37:18]: "But quitting work altogether like cold turkey right about now, even though we likely could, that doesn't sound all that great."

Risks Associated with Early Retirement

Joel and Matt address potential risks, including sequence of returns risk—the danger of withdrawing funds during market downturns, which can deplete retirement savings rapidly. They caution listeners to plan for market volatility and encourage maintaining a financial buffer.

Notable Quote:

• Matt [35:31]: "That's sequence of returns risk."

Non-Financial Considerations

Beyond finances, the hosts explore the personal aspects of early retirement. They stress the importance of having hobbies, interests, and a support system to ensure a fulfilling post-retirement life. Joel and Matt caution against the common misconception that retirement equals endless leisure, highlighting the need for meaningful activities.

Notable Quote:

• Matt [43:42]: "Think through your time and how it is that you're going to be spending that right."

Different Paths to Early Retirement

The conversation highlights various pathways within the early retirement framework, such as Coast FIRE and Lean FIRE. These different strategies cater to varying financial situations and lifestyle preferences, offering flexibility in how individuals approach retirement.

Notable Quote:

• Joel [21:56]: "But let's talk about something else that early retirees have to think about, and that is sequence of returns risk."

Psychological and Social Impacts

The speakers discuss the psychological readiness required for early retirement, including the courage to step away from a regular job and the potential social isolation that might come from retiring earlier than peers. They advocate for gradual transitions, such as reducing work hours or taking sabbaticals, to better prepare mentally and socially.

Notable Quote:

• Joel [51:21]: "Take it back just a little bit. Work a couple hours less each week first before calling it quits."

Alternatives to Full Early Retirement

Joel and Matt suggest easing into retirement through practices like mini-retirements or part-time work. This approach allows individuals to test the waters and adjust their lifestyles gradually, reducing the abruptness and potential regret associated with full early retirement.

Notable Quote:

• Matt [52:18]: "There are ways to ease into retirement instead of deciding that you never want to work again."

Balancing Financial Goals with Personal Well-being

The hosts emphasize the importance of not solely fixating on financial independence at the expense of health and relationships. They warn that excessive focus on savings and investment can lead to burnout and missed life experiences, advocating for a balanced approach that values personal well-being alongside financial security.

Notable Quote:

• Joel [61:16]: "Those interim years until you reach that point, they become kind of a slog, they become kind of hard to remember."

Conclusion: Weighing the Pros and Cons

Joel and Matt conclude by reiterating that early retirement is a highly individual decision. They encourage listeners to thoroughly evaluate their financial readiness, personal interests, and support systems before committing to this path. The episode serves as a comprehensive guide, urging a well-rounded consideration of both the benefits and challenges of early retirement.

Notable Quote:

• Matt [62:44]: "If you pursue early retirement while you neglect your health and relationships, it's not going to be worth it."

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Final Thoughts:

This episode provides a balanced exploration of early retirement, blending financial insights with personal reflections. Joel and Matt equip listeners with the necessary tools to assess whether early retirement aligns with their individual circumstances and long-term happiness.

Additional Resources:

• Show Notes: howtomoney.com
• Friend Resources Mentioned:
  • Rachel Richards
  • Wes Moss
  • Coach Carson

Listen to the full episode here.

Transcript

[Matt]

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[Joel]

Hey, it's Joel and Matt from How To Money. Matt, you and I, we do a decent amount of traveling. So what's a place that you think lived up to the hype?

[Matt]

That one is tough, but immediately what comes to mind is Scotland. The scenery in particular was insane. I'm specifically thinking about when we went and hiked Old Man's Store.

[Joel]

Oh, yeah.

[Matt]

Felt like we were on a completely different planet. It was otherworldly.

[Joel]

Sure was. Yeah. Yeah. And our Airbnb on the Isle of Skye, man, it looked straight out this field into the sea. Total tranquility. And the castle gardens that we saw, man, it felt straight out of a fairy tale.

[Matt]

It's true. Yeah. That trip showed us how big a difference the right place makes. And if you've got travel plans, don't let your place sit empty. Airbnb's co host feature makes it easy to earn a little cash while someone else manages the day to day.

[Joel]

That's right. Find a co [e-mail] host. Where do you see your career in 10 years? What are you doing now to help you get there? The sooner you start enhancing your skills, the sooner you'll be ready. That's why AARP has Reskilling courses in a variety of categories like marketing and management to help your income live as long as you do. That's right.

[Matt]

AARP has a bevy of free skill building courses for you to choose from because the steps that you choose to take today will help you to love what you do in the future. And that's why the younger you are, the more you need AARP. Learn more at aarp.org skills welcome to how to Money.

[Joel]

I'm Joel.

[Matt]

Hey, I'm Matt.

[Joel]

And today we're asking the question, is early retirement a smart goal?

[Matt]

We are talking about early retirement or retiring early. Depend. I think we're going to refer. I was realizing as I was thinking through this episod, you've got the financial independence. Retire early or is it financially independent? Retired early. There's so many different ways of saying and that obviously that's the acronym fire, which I think a lot of folks might have been introduced to the idea of early retirement via FIRE specifically.

[Joel]

There are all sorts of different people in the FIRE movement and different kind of takes on retiring early. But yeah, we have had different conversations about this in the past, Matt, but we want to talk about a whole lot of different things when it comes to retiring early. Whether it's a good goal to have and then, yeah, may how to skin.

[Matt]

That cat, if that's what you're going for. We like to talk about you and I as we are planning and thinking through the different topics we're going to discuss. We always come up with different metaphors and examples and I feel like fire, like early retirement is just one of those things that folks have heard about. It's kind of like in the background, it's in their subconscious. They've seen maybe different articles floating around, but they don't know exactly what it is or how they should be thinking about it right now. It kind of makes me think of AI, like that's all the rage right now.

[Joel]

And is it coming. Is it coming from a job or is it just a cheap trick?

[Matt]

Exactly. Is it a good thing? Is it a bad thing? I don't know. But before you 100% go after something and say that this is going to solve all of our problems and in this case we're talking about early retirement, it is worth thinking through the different ramifications that it might have on your life.

[Joel]

Yeah.

[Matt]

Why we're going to talk about it.

[Joel]

Today with 100% assurance. ChatGPT is not going to solve all the problems at ALS. It might help on the edges. It might make Some differences. But it can't fix the pain in my back or anything like that.

[Matt]

It won't. But before we get to that, man, I've got a question for you. Because I was talking with Kate the other day and she made me aware of these shoes. I'm pretty sure they're by a company called Golden Goose, which is incredibly ironic as listeners will soon hear if they already don't know what these shoes are all about. But these are some really, really expensive sneakers, right? And here's the thing. I'm not against spending some money on some sneakers, right? Like in particular, if they're really high quality shoes or if they have like a lifetime warranty, like no matter what, just send them back in and we'll resole them for you for the rest of your life. Or if you like, if they're specialty shoes, right. But no, they're just, for the most part they're just normal looking white sneakers. But here's the kicker. They come pre manufactured with dirt on there, I guess. Like I think they just print it onto the rubber. They just print it onto the, to the leather. Make it look scuffed to make it look scuffed. These are normal looking shoes otherwise. And these things cost upwards of 400 bucks. I saw some, some pairs are like I think 6 or $700 for these silly Golden Goose sneakers. But I want get your thoughts, like what are your, what are your thoughts?

[Joel]

Like I think you know my thoughts. I think you know my thoughts. I think it's ridiculous and it just makes me think of what is it like Neiman Marcus and some of those kind of expensive retailers selling you pre ripped jeans, right? Sure. That costs or with like paint splatter all over them. And it's like you can do that to your jeans yourself if you want to and you can just buy a pair that cost less upfront. And like you said, like I'm willing to pay more sometimes for nicer goods. Like my jeans aren't $20 jeans. I found out early on that buying the $20 jeans meant I wasn't going to wear them. And they became mich. Yeah, they'll shred. Yeah. So I like, you know, to buy, I don't mind buying $100 pair of jeans because I literally have been wearing the same jeans for 10 years. Right. The same pair of jeans. So I don't mind spending a little.

[Matt]

More or the same pair of jeans for one year straight. You can't wear them like all the time if you wear them for two years.

[Joel]

No, I've got like three pairs of jeans that I rotate. Right. And one of them I have had for a decade. But it's. It's one of those things where I'm just.

[Matt]

Everyone's picturing like Joel's ratty jeans and feeling bad for him.

[Joel]

Yeah, no, I'll get new jeans if I need them. Okay. I can make that happen. But no, I think this is just kind, like it's really. It's an attempt to signal that, yes, the cool goods.

[Matt]

That's. That's 100% what it. So that's conspicuous consumption.

[Joel]

Yeah.

[Matt]

Right. Like there is no additional value that you're paying for. It's just proving that you have the funds available in order to buy some of these. These shoes. It's signaling. And that's the part that feels wasteful. Like, that's the part like, I don't.

[Joel]

And that doesn't mean I don't want to go to Walmart and get the $10 pair of shoes. Okay.

[Matt]

Like a middle ground somewhere. And again, I like, I don't want to yuck on someone else's yum. But I have a hard time getting excited. I have a hard time getting behind someone who's going to say, like, yes, I'm going to buy these shoes that intentionally come dirtied up. Like, that's the other silly part. Because if you buy ripped jeans, well, that's a real rip when it comes to these sneakers. These shoes, they're not like rubbing real dirt on there. It's just, it's like it's pre decided. It's designed dirt and it's printed on there. It's. Okay. What makes you think of Zoolander? It's like the derelict campaign.

[Joel]

Yes. Okay. So one time my mom bought me some. Some Commerce all Stars, some Chuck Taylor's classic for my birthday because I like Chucks. They're great. And they're a pretty inexpensive shoe. Like 35, 40, 45 bucks. Right. Depending on the make and model you're getting of Chucks. And she said they actually came pre scuffed. And she's like, I cleaned them before I gave them to you. Because I thought that this was like a flaw or something. I didn't know if they were pre worn or whatever. And I was like, I think that's how they can. I don't know.

[Matt]

It's weird. Funny.

[Joel]

Yeah.

[Matt]

Are you sure that it wasn't just a returned pair?

[Joel]

It could have been. That's what I'm saying. I don't know.

[Matt]

It's like getting good zone on now you're getting more and more things that you can tell somebody has, like, yeah, oh, they tried it on.

[Joel]

Or, like, they didn't look worn on the bottom. So I just, like, cleaned up the white part real quick.

[Matt]

But you're like, oh, mom, no, I don't care. All the cool kids, their shoes are already stuffed like that.

[Joel]

I'll go scuff up myself if I need to.

[Matt]

Anyway, all that being said, if you are somebody who really likes those shoes, I'm certainly not going to hate on you. But it's. Yeah. Not my cup of tea.

[Joel]

Yeah, exactly. All right, Matt, let's move on. Let's mention the beer we're having on this episode. This one is called Ferris Coffee Imperial Stout by New Park Brewing. This one was donated to the show by listener. Matthew, we'll get to our thoughts on this one at the end of the episode. Yes, but let's get into it. Let's ask the question. Is early retirement a smart goal? And we've all had someone tell us to kick the tires before buying a car or to look before we leap, before we make a big decision. It's all good advice. Yeah. There are all sorts of, like, slogans that caution us to perform our due diligence before we make a big decision. And I don't know why. Matt, this got me thinking about the movie Cinderella and, like, the.

[Matt]

The one from the 80s. Was it the 80s? The animated?

[Joel]

No, it was before that.

[Matt]

Gus.

[Joel]

Gus, it was like, 1950s, maybe even. Was it. Yeah, it's really old.

[Matt]

Yeah, I guess it makes sense.

[Joel]

Yeah, no, it's, like, super. It's like one of the original.

[Matt]

I remember watching it as a kid. It was one of my favorites.

[Joel]

I want to say 57.

[Matt]

That's all about those mice. Yeah, I thought they were awesome.

[Joel]

Okay, well, here's the thing. It's a weird story when you actually think. Stop and think about it, right? Cinderella and the prince, they dance for one night, and then he ends up sending his goons around town to find the girl whose foot fits the glass.

[Matt]

Slippers perfectly normal so they can get married.

[Joel]

It's like, whoa, dude. Me thinks maybe you're getting attached a little too quickly. You don't even know her yet. And she might not be who you think she is because, like you said, Matt, she talks to animals. Okay, so she could be a little wackadoodle in the brain, but there's, like, a reason that you go on dates for at least a few weeks before you propose, and hopefully even longer than a few weeks.

[Matt]

But sounds like before you leave, right?

[Joel]

Exactly. And so it's a matter of due diligence, really, when we're getting to know somebody, you know, to ensure that the person isn't a psycho before we commit to spending the rest of our lives with them. And similarly, early retirement, on its face, I think can seem like the best pursuit. It can seem like a good idea and a worthy goal. And it might be for some folks out there, but we would say not before thinking it through on a bunch of fronts.

[Matt]

That's right. Yeah. You might find out that early retirement is the perfect pursuit for you. More power to you. But definitely do your homework before deciding that this is the end goal that you want to achieve because it's going to come with some significant ramifications. Not quite as significant as, you know, the person you choose to marry if you're the prince, but if you're going.

[Joel]

After your life, and let's be honest, she was a cat. She's a great girl.

[Matt]

Sooner or later, if you're going all in, though, on early retirement, before performing that due diligence, you might be in a world of hurt. So we're going to offer our thoughts on how to decide if retiring sooner than your peers is going to be a good goal for you. We're going to tackle a number of questions, both financial and math related, but also questions more on the personal front as well. We think that these factors, considering all these factors and answering these questions are going to help you to decide if early retirement is going to be a goal worth pursuing.

[Joel]

Yeah, and I think some folks might get to the end of this episode. They might say, hey, that sounds like my cup of tea. I want to join the early retirement movement. And others might say, yeah, doesn't sound like it's really my jam, but it.

[Matt]

Can go either way.

[Joel]

I think, like, Internet articles often make it sound, though, Matt, like early retirement is the bee's knees. And I think that's true. That's part of the problem is they're selling a bill of goods or making it sound like it's just the greatest thing since sliced bread. And there was a recent headline I saw on market watch and it read, this fire couple retired at the age of 29. For them, it's always a weekend. And boy, that sounds appealing. I read that when I was a weekend 29. I'm 10 years too late to pursue this goal.

[Matt]

What a slacker.

[Joel]

And weekends are awesome. I'm not against weekends. I have a lot of good times on the weekends we go for Family hikes almost every weekend, or bike rides, or we get out in nature. We do lots of great stuff together. We make awesome memories. But do I really want my life to be one long, perpetual weekend? Do most folks want that? Maybe, maybe not. Maybe the weekend is so great because it marks the end of a successful week, not because it's never ending. And it just makes you think of like the. Another movie reference here, Groundhog Day. Right.

[Matt]

And another classic from the 50s, right?

[Joel]

Yeah, that was.

[Matt]

That was actually from the 80s.

[Joel]

Yes. And it's just a great film, of course, but if you recall the movie, Matt, Bill Murray, he starts to. He tried to kill himself in multiple ways because, you know, living the same day over and over actually starts to get kind of boring and ultimately kind of depressing. So I don't know, it makes me think of that. These are the kind of things that we want our listeners to consider before they say, ooh, early retirement weekends that never end. Sign me up. The reality is that most folks who decide to pursue this lifestyle, they aren't even doing it with the goal of perpetual weekends. Often they're doing it with, I would say, an even worse goal. They're trying to run away from a.

[Matt]

Job that they hate. Yeah. No, I totally agree, man. Yeah, like, they think their job sucks. And it seems that, like, that's one of the top reasons that we see folks gravitate towards early retirement as their ultimate goal. They are running away from something. Not necessarily running towards something. But if that's the case, though, you know, if that's the main reason, we feel like there are other potentially more appropriate solutions that folks might want to pursue, which we'll discuss later in the episode. But for others, it can be dreams of what retired life could look like. Right. And it's not a bad idea to have a big picture of retirement for yourself, but it is important to be. To be grounded in reality because I think the fantasy of retirement can often be more delusional than an actionable plan. And you know, Joel, earlier a few weeks ago in episode 623, we talked about ways that you can maximize your income. We are all for folks trying to find ways to maybe leave an employer that isn't going to be great for their career, maybe that doesn't have the most, like, the most healthy environment. But simultaneously, I think for a lot of folks, just by changing their. How it is that they view their work. Right. Like, I'm just talking about more of like a, like a mindset shift that might take place or just displaying More ownership. I think these are ways that you can demonstrate to yourself that it's not that my job sucks. I've just been thinking about it wrong this entire time. I think that could be in just a very simple way to help folks to realize that, oh, wow, my job actually doesn't suck all that bad. I just been thinking about it incorrectly.

[Joel]

Well, it makes me think of the show Dirty Jobs with Mike Rowe and how he would always. He would talk to people who had what a lot of us would consider.

[Matt]

The worst jobs, the absolute worst, dirtiest.

[Joel]

Worst job in the world, the crummiest, dirtiest jobs, climbing through sewers and, I mean, all sorts of nasty stuff. I didn't really watch the show myself, but from what I could tell, a lot of people that had those jobs seem to take great pride in their profession. And I think you're right. A lot of it is kind of a mindset shift about how we view our work. And it doesn't mean that you can't get out of a. And shouldn't get out of a toxic work situation or look to find something better in the future. I think growth is important, and that matters, too. But you're right. I think just running away, though, from work altogether is like, a bad motivation when it comes to pursuing early retirement. And let's talk about the origins of retirement and early retirement for a second, Matt, because, like, retirement is a pretty new concept overall. And so. Yeah, where did it come from? And how long has this been, like, a pursuit? Well, government financial support for the elderly. It started in the 1800s, late 1800s, in a country, Former country called Prussia. Right. And when Social Security was instituted in the United States, that was, like, not until, like, 1935. Right, Matt. When the Social Security act was passed. And it had a completely different goal. Not to fund decades of retirement, decades of leisure time, but really to aid the most vulnerable folks in our society who ended up living longer than the average lifespan. So that concept of moving to Florida for three decades and walking the beach with your significant other, like that is.

[Matt]

I was gonna say with your metal detector.

[Joel]

That, too. That might be your significant other someday.

[Matt]

That's. That's. That's more my speed.

[Joel]

I could see you falling in love with one of those.

[Matt]

Dude, that sounds awesome. Inanimate objects, just, like, scooping around for lost rings and watches.

[Joel]

But some people, like, I just want to make it clear, like, we are less than 100 years removed even from the institution of Social Security as a concept. And so the modern idea that we have of Retirement is so new. Right. And we're living longer now than ever before. And that's why I think Social Security has more of an impact on those retirement years. But that's also part of the reason that Social Security is bound to become insolvent. We haven't fixed any of the problems. It's pretty hard to fund decades worth of leisure for a huge segment of the population. It's becoming untenable. And our politicians don't, don't seem to want to do anything about it. They don't seem to want to fix the problem. And we talked about that back in episode 413. Matt, something's got to give. Nobody wants to address the elephant in the room. I think it's possible to find a way to make Social Security sustainable, but it's easier said than done. Especially when you're talking about elected officials who don't really have any desire to do anything. They just want to grandstand about it.

[Matt]

Sure. Well, they're not willing to do anything about it because nobody wants to be the grownup in the room. It makes me think of when you're a parent and you got kids and all they want to do is eat candy, but you have to be the parent that says no, you can't just sit there and watch TV and eat candy. You go to your room, clean your room, do your homework and also you're gonna eat real food. Cucumber right now, you're gonna eat some protein and some vegetables, some fruit. You're gonna have a real meal. At this point, that's what needs to happen with Social Security.

[Joel]

But I think that kind of just reframing and making it helping our listeners understand that this idea of retirement hasn't been around for hundreds of years. It's still pretty brand spanking new to think about it. And now it's kind of like expected. Well, sure, I need to save for 40 years of retirement. And now the early retirement community is saying, no, we want to save for like 60 or 70 years of retirement, which is even newer.

[Matt]

Sure, yeah, it is much like it seems like it's almost something that's as old as like the United States. But yeah, much, much younger than the founding of our country. It's a novel concept. And actually 1992 feels like the first time that early retirement became a popular concept. That's when the book you, Money or your Life came out. Vicki Robbins and Joe, I forget Joe's last name.

[Joel]

Joe Dominguez.

[Matt]

And actually it wasn't really until like 2012, 2013, 10 years ago. This was not that long ago that different blogs and podcasts and different books on the subject of early retirement started to be released. And so, yes, traditional retirement is pretty young. Early retirement is honestly, it's still in its infancy. And it's important to realize that because a lot of things are still unsettled within the world of early retirement. For instance, can you work at all and still be retired? A lot of Fire folks still make money doing different fun projects or starting their own businesses, things on the side.

[Joel]

But that's not the traditional view of retirement, Matt, I would say.

[Matt]

Exactly. So it's different, right? Like, are you wanting to quit work to pursue your own thing, or are you looking to travel in perpetuity? Does that make it a more legitimate retirement? Are you actually retired if you're still making money? Or at that point, are you. Are you considered to be semi retired? I think that's one of the criticisms of early retirement, and a lot of folks have voiced that. Actually, somebody reached out to us because we highlighted a friend of the show, Rachel Richards, in our newsletter. We talked about how she retired early, but simultaneously, she's busier than ever, which I see the. Maybe we shouldn't have termed it in that way because honestly, what Rachel has done, she certainly shifted careers, but she's still working.

[Joel]

I think she's working on her third.

[Matt]

Book as we speak, and she's probably working harder than ever. But it's more entrepreneurship in her case than what oftentimes folks consider to be early retirement.

[Joel]

I think when we talk about early retirement, oftentimes people are saying, like, I could afford to live a meager lifestyle and don't. Wouldn't have to work if I didn't want to. But most people choose to do something meaningful with their time because that's kind of what humans were mates do in a lot of ways. And we'll talk about that as well on today's episode. But there's also just different kinds of early retirement, right? So it's. The definition is hard to understand. But then there's different monikers that have been created for a bunch of specific routes that you can take on the path to early retirement. And these different routes attempt to acknowledge the reality that it's going to look different depending on your goals, your age, and your level of financial preparedness. For example, Coast Fire is when you've got a healthy chunk set aside in your portfolio and then you can take your foot off the gas. So basically, for, let's say 10 to 15 years, you're saving a Ton you nose to the grindstone mentality. You're front loading the sacrifice in a major way in those early years, which gives you more options to increase your spending or just to quit completely your job or, and or quit saving for retirement. At least after that initial phase, that initial stint of front loading, those contributions. Or there's like lean Fire adherents who mostly just want to amass enough to squeak by. Right? They're ultra Frugalites.

[Matt]

And so those are the folks living in a trailer in the woods living on like $20,000 a year.

[Joel]

Yeah, they want to say just enough so that they can do whatever they want, but whatever they want has to be within massive amounts of reason because they have to live frugally because they haven't saved enough to do much beyond that. And so yeah, when you're considering whether or not early retirement is for you, it's not a one size fits all proposition either, which makes it a little trickier. You got to figure out what kind of early retirement lifestyle you want to live first before you even start to answer the other parts of that question.

[Matt]

That's right. Yeah. So not only are there different flavors of fire for folks to consider, different types of early retirement that might fit their situation the best, but we also have a number of different questions that listeners can ask themselves. We've got some specific like financial or number related questions as well as some non monetary factors that you need to consider as well. And so we will get to all of those right after this.

[Joel]

Looking for a smarter way to teach your child to ride a bike and support American jobs at the same time? Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground and built to help kids learn to ride faster. Many in just one day. No training wheels needed.

[Matt]

And here is the real game changer. Guardian's patented SureStop braking system. One lever, it stops both wheels, giving your child more control. Faster stops and it prevents those scary head over the handlebar accidents. It's so easy that even a two year old can do it. And so if you are ready to support American jobs and keep your kids Safe, head to guardianbikes.com today. You'll save hundreds of dollars compared to the competition. And when you join their newsletter, you'll get a free bike lock and pump, which is a $50 value.

[Joel]

That's guardianbikes.com built in the USA made specifically for kids. Guardianbikes.com this episode is brought to you.

[Matt]

By Navy Federal Credit Union. Navy Federal can help you find and finance the right vehicle with ease. Assuming you hadn't saved up the cash and this summer you are in the driver's seat with savings, you could get a $250 bonus when you buy your next car through Navy Federal's car buying Service. Powered by TrueCar and Finance with Navy Federal.

[Joel]

With this tool, you can find the vehicle that's right for you as you search through inventory and compare models. And you can get an amazing rate when you finance with Navy Federal. Navy Federal strives to support all active duty veterans and their families to achieve their personal and financial goals. And this partnership with TrueCar is one of many tools Navy Federal uses to help its members.

[Matt]

That's right, make your plan with Navy Federal and TrueCar today. To qualify for the $250 bonus, car purchase and financing must be completed by September 2, 2025. Terms and conditions apply and are available at navyfederal.org TrueCar Credit and Collateral subject to approval. Navy Federal is insured by ncua. Hey, y', all, it's Joel and Matt from How To Money.

[Joel]

Matt, we've had our share of unforgettable travel moments, but Scotland might take the cake.

[Matt]

Oh, indeed. That was an epic trip. Okay, so for those who may not know, Kate and I joined up with you and Emily and we road tripped all the way to the Isle of Skye. We actually had a little hiccup with the rental car. I backed into a concrete wall, but I'm telling you, dude, it was worth it for the views.

[Joel]

That's true. Yeah, that's right. Always make sure you know what you're doing with car insurance.

[Matt]

I swear that it just popped out of nowhere.

[Joel]

You know, it always does. Totally worth it, though, right? What an excellent trip.

[Matt]

Yeah. Another reason I love that trip was because we stayed at this incredible Airbnb that looked out over this field. The sheep were grazing out there. I saw it. In the mornings. You could look right out to the sea. There's like islands out in the water. So peaceful. Waking up to that view every morning.

[Joel]

You know, that trip reminded both of us how nice hosting can be. Right? Because your home might seem ordinary to you, but to someone else, it could be the highlight of their adventure. That's true.

[Matt]

And with Airbnb's co host feature, it has never been easier. A Local co host can help you to manage your guests and help to keep everything running smoothly.

[Joel]

Find a co [e-mail] host.

[Matt]

All right.

[Joel]

Matt, let's keep going. We're talking about early retirement and whether it makes sense for the average person. And it's definitely not for the average person. Right. Because I think if you both of.

[Matt]

Those instances, I thought you were going.

[Joel]

To say the average bear.

[Matt]

Yeah, well, did you ever watch that one back in the day?

[Joel]

A little bit.

[Matt]

Cannon Barbera.

[Joel]

I mean, that was. Talk about old school cartoons.

[Matt]

I know that was pretty old, too. But we're falling into this like nostalgia mindset that we need to probably stop.

[Joel]

Yeah, well, I think it's, it's definitely not for the average person because you have to be very different than average and have a different kind of mindset if you're going to achieve early retirement. You can't just kind of do what the average person does because, like, when you look at the averages, the average person doesn't have enough money to cover a $400 expense. The average person doesn't have very much money in their emergency fund. And their savings rate, the average person's savings rate is in a 3% range. So you got to be way, way, way above average if you want to achieve early retirement.

[Matt]

I think you said average nine or ten times.

[Joel]

I probably said, yeah. So yeah, don't be average. But yeah. Let's talk about the. We're going to talk about the non financial aspects here in a second of what you're going to want to consider before you set your course for early retirement. But first, let's talk about some of the money mechanics for a minute, Matt, and like, how will people know if they have enough money set aside in order to retire early? And the math behind early retirement is actually not terribly complicated. Mr. Money Mustache, who's one of the foremost prophets of the early retirement movement, he has a post called the Shockingly Simple Math Behind Early Retire Retirement. And he's right up until the point. I think the math in his post is not terribly complex. At the simplest level, the number that you need to have saved up inside your investment accounts is 25 times your annual expenses in order to not run out of money, Mr. Money Mustache, he assumes a 5% rate of return after inflation and a 4% annual withdrawal rate. I think the simplicity of that post and of his approach are really great. On one hand, they can help you visualize how few trade offs, just a few trade offs can help you ratchet up your ability to reach financial independence more quickly. But it's also far from perfect given a bunch of other factors that we need to consider here.

[Matt]

That's right. Factors that include some of the different expenses that we experience in life. And so a large part of knowing that you have enough is to forecast your expenses. And a lot of folks in the early retirement community are banking on certain things just continually being true that they're just going to remain stagnant.

[Joel]

But it is hard to predict the future.

[Matt]

So inflation, for instance, that could throw a wrench in someone's early retirement plans. It's something that we've seen recently, especially if they're opting for a more of the lean fire, like more of that lean hyper frugal lifestyle.

[Joel]

When eggs cost just double in price in the course of a year, that's going to mess up. If you're lean fire and your grocery.

[Matt]

Bill just went up 50%, is that tight?

[Joel]

Yeah, that's going to have an impact.

[Matt]

Yeah. A few months of those higher costs here and there are going to add up if you're trying to live on $25,000 a year. And so we think that if you really want to retire before your peers, that it is important to save more than you think you'll need. Don't just purely count on that 25 times your annual expenses. Again, it's a great rule of thumb. It's a great place to start. But we think it's good to have more on hand than you need. That'll give you just additional options. It'll give you some peace of mind because hotter inflation numbers, you know, they're still going to be tough to endure in the moment, but they won't completely wreck your personal finances. They won't completely throw you off track.

[Joel]

And I was kind of joking about egg prices, like wreck someone's budget to the point where it completely derails their early retirement. But that is, people's grocery bills have been affected in a major way, obviously by rising inflation. But something even more important that's going to be a bigger line item in your budget is your car insurance. And car insurance rates have been skyrocketing too. People in our Facebook group have been saying, oh, my car Insurance went up $600 this year or something like that. That's a lot of money to absorb significant expenses. Yeah, if you're not bringing in any money and you're trying to live the that early retirement lifestyle. And so it's important not just to bank on a best case scenario, you have to have kind of contingency plans right in place in case inflation runs hot for years on end and in case you're, you have to be, have that flexibility, right, Matt, like you were just talking about additional options. And if you're banking on things working out perfectly with that 25x annual expenses scenario, you might be in for a rude awakening. A pretty sobering surprise. But let's talk about something else that early retirement adherents often run up against and that's that they end up spending more than they think they will once they do retire. J.P. morgan did a study of traditional retirees and they found that those folks often experienced what they called a spending surge in the two to three years post retirement. They often spent on home renovations and fun trips. Which makes sense, like early retirees are likely to experience something similar. What's, what's the point of bagging work if you're, you aren't going to exploit your newfound freedom and go on some cool trips and do some excursions and stuff like that? You know, of course, I would say people in the early retirement community, they're likely to take those trips frugally, right? Utilizing credit card card points or hostile stays or you know, other low cost methods that are going to ensure that these trips don't cost them nearly as much as the average person. Of course, they're certainly not guaranteed to spend more, but it's something to be aware of because again, you know, more padding like you were talking about, Matt, a larger cash cushion can allow folks to increase spending for some of those post retirement excursions without completely freaking out.

[Matt]

Exactly. And it makes, it makes sense too from I guess, the traditional retiree standpoint because oftentimes when you retire, you're not anchored to a specific location. From a geographic standpoint, you're free, right? Like you are no longer tied to a specific city, which I think oftentimes means that you can then maybe move to wherever the kids are. You can move to the beach because you do want to be on the beach with the sand scooper, metal detector. But either way, I think it is, it's smart to not necessarily count on the most meager lean existence possible. And it's something else to account for is the high cost of healthcare. And so I'm specifically talking about the premiums that we pay, that folks pay. But the same is true if you end up using your coverage, right? If you actually get sick or if you have to go to the doctor or the hospital. Makes me think of a quick, frugal or cheap that we could do about me making an Appointment Joel for a doctor's visit that I resolved myself. But we won't go there.

[Joel]

Let's not.

[Matt]

There are, there are certainly going to be ways to reduce these costs, obviously, but they're not foolproof. So for instance, there's going to be more subsidies out there for folks who are buying policies at the website healthcare.gov these days. But that may not always be the case. Health sharing companies, that can be another option that can make sense for younger, for healthier folks who are willing to self insure. But again, they're not for everyone because it's not technically insurance. Actually it can be easier to get cheaper health care if you plan to live overseas instead of here in the US here in the States. But obviously like what if you don't want to go move to Portugal with everyone else who's retiring and going abroad.

[Joel]

Who doesn't want to move to Portugal?

[Matt]

Matt it's hard to have a foolproof plan because there's just no silver bullet answer to the question of these ever increasing healthcare costs that are going to fall squarely on our shoulders once we've decided to quit our jobs.

[Joel]

Yeah, that's definitely, I mean I think if you're pursuing early retirement or thinking about it it and you haven't thought through the high cost of healthcare, then you haven't been thinking about it long enough because that is going to be one of those the most burdensome costs that fall squarely on your shoulders. Like you said, it's going to be all on you.

[Matt]

It is simultaneously it's likely not going to be prohibitively expensive. Right. Because I think oftentimes in folks minds that is a roadblock and it keeps them from even considering early retirement. But go out there and crunch the numbers, see how much it's going to cost you because yes, it's going to be expensive. In particular, if you haven't been with a company who, I mean there's a lot of new companies out there who are covering like virtually all of the healthcare costs of their employees. And if that's you, you are in for a rude awakening. But for everyone else, you know, I don't know if you've been employed by a normal company where you've had to foot some of those bills yourself, you might find that it's actually not all that more expensive than it was being employed.

[Joel]

But I think like you said, it might not be right now because of the great subsidies for so many people on the exchange, but those subsidies could go away and so, so much depends on who's in Power and what sort of legislation pass when it comes to how much you got to pay for the health insurance that you want? Sure.

[Matt]

Yeah.

[Joel]

All right, well, let's talk about something else that early retirees have to think about, and that is sequence of returns risk. So let's say you've got your expenses all figured out, you've got enough invested to be able to retire, and you can afford to spend a little extra and you can afford now that expensive health care policy. Well, it's a bull market and your net worth is growing. But the market could just as easily cool. We saw a stock market rout in March of 2020. Last year was pretty rough for investors, too. But what if the market remained in a bear market holding pattern for a few years? That complicates things, in particular for early retirees who are attempting to live off their investment portfolio. And of course, yes, the market has returned an average of 10.2% over the past 50 years. But the fact is the market is unpredictable in the short term and you might retire at the wrong time into an era of low to no growth, which if you're looking at predictions, which we don't really, we tried to stay away from predictions most of the time. You're seeing a lot of predictions for meager growth in the coming decade. And that could be a difficult thing for regular retirees to endure, even if they have Social Security to provide some income mixed with those investments. But if you retire at the wrong time and you're early retiring, you might find yourself attempting to draw down 4% of your portfolio a year, year after year at an inopportune time, draining some of that capital, straining your ability to actually retire.

[Matt]

Well, yeah, that's right. Yeah. That's sequence of returns risk.

[Joel]

Right.

[Matt]

Imagine you're going to live off of your portfolio over the next 30 years. And imagine somewhere within those 30 years, you're going to have two years in a row of returns at negative 20%. Well, if you experience those two years right after you retire, you're going to have much, much less on hand than if those two years were to occur at the very tail end of those three years. It has a massive impact on your, your lifestyle and your ability, the ability of your portfolio to hold up over that period of time. And this is also the fear that keeps folks handcuffed to their jobs essentially. Right. Like folks say that the market could tank. So I'm just going to work a little bit longer. But at some point we have to be able to confidently retire, you know, even Knowing that we can't predict the future or even knowing that our own health, what that's going to be or what the market's going to do in our first jobless decade or you know, first 20 years, first 30 years. But again, this is where having just maybe a little bit of extra wiggle room and planning for more than just that 25 times your current expenses is going to be helpful. Because you might not always want to live as frugally as you're living now. You might think, well, no, I'm always going to want to do the van thing and drive around the country. You may not, you know, you might do it for, maybe you'll get the seven year itch. Like maybe you'll do it for five, six, seven years. But at that point it might be something that you want to move on from.

[Joel]

Especially the things that you are okay with in your 20s. Like I'm, I know I'm about to broach 40 and I love being frugal, but I'm not frugal in the same ways that I was in my 20s. Exactly. I'm just not willing to travel or to do some of the things that I would have done back then to save a buck now.

[Matt]

Exactly. And that, you know, you may not need to save and invest like a fat fire adherent. Right. Like where you're just living high on the hog and you've got tons of nice expenses that you're accounting for. But the lean fire approach is kind of scary. It's a little more risky from our vantage point.

[Joel]

Yeah. Let's talk about something else too, that really inhibits your ability to retire early. Again, not that it's not possible and not that it's not a decent goal for some people, but we're kind of trying to, I guess we're like steel manning the case against retiring early here right now. But a lot of people would say I want to retire early, but I'm literally not old enough to withdraw from those retirement accounts yet, which is a big deal. We talk a lot about investing in those tax advantaged retirement accounts.

[Matt]

That's a reasonable argument.

[Joel]

Yeah. And so, well, how am I going to get my money out of these things when the government tells me I have to be 59 and a half, which is still just odd. Why half? I don't get it. But that is the age you need to be in order to withdraw funds from those accounts in order to tap them without having to pay penalties. Right. And that makes it even tougher to map out a strategy for early retirement while maximizing the most efficient buckets for investing for your future. And that's why a whole lot of early retirement adherents opt for a strategy that involves Roth accounts so then you can pull those contributions out tax and penalty free. Very nice real estate, because that gives you cash flow, not just seeing your investment grow, but you're actually making returns on it on a month to month basis. Taxable brokerage accounts, you don't get the tax benefit, but they're to the same extent, but they're more flexible HSAs, they're somewhat flexible with maximum tax advantages in addition to the regular old 401k or 403b that we love as well. There are ways to take money out of those tax advantaged accounts even before you hit retirement age. But they're not ideal. And so coming up with a strategy that allows for additional flexibility is key to making early retirement possible. It's not as easy as just maxing out your 401k for a decade and then leaving work. Right? You have to think about how you're going to be able to get the money out in an efficient manner that doesn't come back to bite you and eat away at the cash that you've so diligently saved up. So now I think we've gone through a lot of money questions here. A lot of the financial aspects of what it looks like to retire early and how. There's a lot of stuff you need to think through before you just all of a sudden say, yeah, that's my goal, I'm going to shoot for it and you willy nilly kind of start meandering down that path. You really need to kind of have your ducks in a row in from a money perspective in order to do it well. But it's not just that. Right? Let's talk about the non monetary and personal aspects of approaching early retirement. We'll get to some of those right after this. Looking for a smarter way to teach your child to ride a bike and support American jobs at the same time? Most kids bikes are just cheap imports. They're heavy, clunky, hard for kids to control. Guardian Bikes is changing that. They're assembling bikes right here in the USA with plans for full US manufacturing in the next few months. It's a commitment to higher quality and American craftsmanship you can trust. Each bike is lightweight, low to the ground and built to help kids learn to ride faster, many in just one day. No training wheels needed.

[Matt]

And here is the real game changer. Guardian's patented SureStop braking system. One lever, it stops both wheels, giving your child more control, faster stops, and it prevents those scary head over the handlebar accidents. It's so easy that even a two year old can do it. And so if you are ready to support American jobs and keep your kids Safe, head to guardianbikes.com today. You'll save hundreds of dollars compared to the competition. And when you join their newsletter, you'll get a free bike lock and pump, which is a $50 value.

[Joel]

That's guardianbikes.com built in the USA made specifically for kids. Guardianbikes.com this episode is brought to you.

[Matt]

By Navy Federal Credit Union. Navy Federal can help you find and finance the right vehicle with ease. Assuming you hadn't saved up the cash and this summer you are in the driver's seat with savings, you could get a $250 bonus when you buy your next car through Navy Federal's car buying Service. Powered by TrueCar and Finance with Navy Federal.

[Joel]

With this tool, you can find the vehicle that's right for you as you search through inventory and compare models. And you can get an amazing rate when you finance with Navy Federal. Navy Federal strives to support all active duty veterans and their families to achieve their personal and financial goals. And this partnership with TrueCar is one of many tools Navy Federal uses to help its members.

[Matt]

That's right. Make your plan with Navy Federal and TrueCar today. To qualify for the $250 bonus, car purchase and financing must be completed by September 2, 2025. Terms and conditions apply and are available at navyfederal.org TrueCar Credit and Collateral subject to approval. Navy Federal is insured by ncua. Hey, y', all, it's Joel and Matt from How To Money.

[Joel]

Matt, we've had our share of unforgettable travel moments, but Scotland might take the cake.

[Matt]

Oh, indeed. That was an epic trip. Okay, so for those who may not know, Kate and I joined up with you and Emily and we road tripped all the way to the Isle of Skye. We actually had a little hiccup with the rental car. I backed into a concrete wall, but I'm telling you, dude, it was worth it for the views.

[Joel]

That's true. Yeah, that's right. Always make sure you know what you're doing with car insurance.

[Matt]

I swear that concrete, it just popped out of nowhere.

[Joel]

You know, it always does. Totally worth it though, right? What an excellent trip.

[Matt]

Yeah. Another reason I love that trip was because we stayed at this incredible Airbnb that looked out over this sheep were grazing out There, I saw it. In the mornings you could look right out to the sea. There's like islands out in the water, so peaceful. Waking up to that view every morning.

[Joel]

You know, that trip reminded both of us how nice hosting can be. Right? Because your home might seem ordinary to you, but to someone else, it could be the highlight of their adventure. That's true.

[Matt]

And with Airbnb's co host feature, it has never been easier. A local co host can help you to manage your guests and help to keep everything running smoothly.

[Joel]

Find a co [e-mail] host all right.

[Matt]

We are still asking the question, is early retirement a smart goal? And Joel, we just covered a bunch of the different financial implications, some of the different financial questions that we need to be asking ourselves. And we've looked at both sides of the equation, Right? We talked about the income side of the equation, different fluctuations in the market and how that can affect our ability to retire early, as well as some of the different expenses that we're all going to face. But now let's talk about the non monetary side of the early retirement lifestyle. Let's talk through some of those questions because we think it's worth asking a few of these questions before going all in. One of those is to think through your time and how it is that you're going to be spending that right? Like do you have enough hobbies and interests to pursue if work is no longer going to be a part of.

[Joel]

Your day to day?

[Matt]

And so in an effort to make sure that you are prepared potentially for early retirement, we want you to start thinking through what your ideal day is going to be like and what likely to spend your time doing. Friend of the show, Wes Moss, he talks about how the happiest retirees out there, how they have an average of 3.6 core pursuits. And these can be anything from like volunteering at a local homeless shelter. It could be playing music, like playing the piano. It could be woodworking or pickleball. That's the newest one.

[Joel]

So hot right now, folks are adding to the list.

[Matt]

And he's actually got a core pursuit finder over at his site that we'll link to in our show. Notes, notes. But don't expect to easily be able to find and then work on these pursuits only once you've left your job. We think it is important to prioritize them before you pull the early retirement trigger. We want this process to be something that feels more seamless as opposed to a clear partition where. All right, that was life when I was still Working and this was life after work. We want it to be something that feels more just like more organic, more blended.

[Joel]

What you're saying is people aren't just going to turn over a whole new leaf and become a new person and find awesome new Hobb once they reach retirement age. They got to start working on those things now.

[Matt]

Yeah. Makes me like you have to cultivate those interests.

[Joel]

Yeah. And so maybe you will like pickleball when you're retired, but have you even gone out to try playing once now? I mean, if not like I can see myself playing pickleball in retirement, but I've not played once yet. And so I would want to make sure I gave that a thorough go before I all of a sudden assumed that I was going to be at the pickleball court three days a week. Makes me think of my mother in law. She's retired. And they ended up buying just a giant RV to drive around in right afterwards. And they realized pretty quickly we thought we were going to spend our times RVing around the country, but we didn't like living out of an rv. And that happens to so many people. Well, that's why buying a used RV makes so much sense. Because that happens to a lot of folks.

[Matt]

Or even just like renting one.

[Joel]

Exactly.

[Matt]

Giving it a two week go and seeing how that works out for you.

[Joel]

Exactly. Like think about how you're going to spend your time, but don't just think of it in abstract terms. You use information from how you spend your time now in a non retired state to say like, well, could I do more of this than I'm currently doing? But if you're just thinking, oh, I definitely see myself doing that. Well, you don't really know until you've tried. And you can picture an ideal lifestyle, but it might not be what you think it is. And so you have to kind of, yeah, give those things a go before, like you said, pulling the trigger altogether and saying, I'm retired early now I'm going to dive into these. That is not a great way to pursue it. Another question to ask is like, what are my closest friends and family going to be doing? Because if you're honest, many of them will likely still be working. If you opt to retire, let's say in your 30s or your early 40s. Right. Are you going to be happy not going to work when the folks you want to spend more time with don't have the time and flexibility that you have? Maybe you're at the bar, but they're not. And so then now You've got a problem because now you're drinking alone and that's not a good thing. I think a lot of people envision that they're going to be spending their early retirement years with people that they love, but the truth is that is harder to come by. Right. Unless you're planning to save up enough to pay for their early retirement too, which you're probably not. So those are the kind of things that need to be considered when we're thinking about early retirement. Well, like who are we going to be spending time with and what are my days going to look like? It's not that there aren't all sorts of interesting pursuits that you can get into as an early retiree. You just have to know what they're going to be and you have to have thought through what that's going to look like before you decide to quit your job and put in your two weeks notice.

[Matt]

Totally. Yeah. And I'll say you kind of mentioned this earlier, but it seems like we're kind of, we're creating an argument against early retirement. But to kind of flip that script a little bit, I think it can be helpful to maybe change how it is that we think about those retirement years as well. Because I think the vast majority of folks, they see like their working years, they see that as like the main course, like that's the bulk, like that's the feature film part of their life. And they see retirement years essentially as like the leftovers. But I think it can be helpful if we actually consider because what we're talking about here is a long period of time, given life expectancy, that we're going to continue living. And if we sort of flip that script a little bit and then view those quote unquote retirement years as the main course, I think that could essentially change how it is not only that we view relationships, but also some of the different hobbies that we pursue. Right. Like, basically, I guess what I'm saying is nobody sees leftovers as like a good thing except for me perhaps. I love leftovers. But if you change how it is that you view the, you know, the. Literally, we're talking about decades of life here, I think that might allow some folks to realize, oh, well, I think it makes some of the retirement years seem less daunting essentially because, like, we are talking about a big chunk of time. Right. Like, although Covid has impacted life expectancy in recent years, like, there's still a good chance that healthy how to Money listeners are going to live a really long time when you look at the actuarial tables. Like if we're talking about a healthy 65 year old couple couple, there is a 46% chance that one of them is going to live to the age of 95. So do the math there. 95, 65 from 95, you're talking about three decades, that's 30 years. And you know, like that's just what someone who is retiring at the quote unquote normal age is going to have to account for. Early retirees might have to plan for something like double that length of time. Right. And that only complicates the calculations from a financial standpoint. But again, right now we're kind of talking about the more the mental and psychological factors to think through. And again, this doesn't mean that early retirement is not a worthwhile goal, but it does add some important context to the equation. But I do think that by viewing those 30 years, or if you are an early retiree and we're talking about 60 years left, I still think that there's a lot of life to live. Right. Like not to discount all the friends that we've made up until the point that someone retires and not to discount the time that could have been spent spent pursuing some different hobbies before you retire as well. So honestly, it makes me think of a gentleman who is sort of like a mentor, I guess, but he is a generation ahead of me. He had kids that were closer to my age and I remember asking him one time if he felt that the period of time that when he had his kids at home, if those were like the most important years. And he was like, honestly, he's like, it's been awesome being an empty nester, like having the kids away from home. The time that my wife and I have been able to spend together has been, been so incredibly sweet. And he was still working a little bit. The work that I'm now able to do has been so incredibly fulfilling and gratifying. So I don't know, I guess I'm just putting an argument out there that the time after we quote, unquote, retire can also be incredibly fulfilling if we don't necessarily look at it like this leftover time.

[Joel]

Yeah, well. And I think if we don't think about it in just self indulgent terms, which I think a lot of people think of retirement in those, those ways.

[Matt]

As well, as opposed to like productive years.

[Joel]

Well, it's very like how am I going to entertain myself and enjoy the time that I have? And I think if we think about it in Terms of, of service to others. I think early retirement or regular retirement can take on new and deeper meaning. Let's talk about transitioning into retirement because I think it's important to mention when we talk about early retirement, we're often talking about something fairly extreme. It feels like an all or nothing sort of proposition. Well, I'm either retiring at 35 or I'm just going to keep going until I'm 65. But it doesn't have to be that and it doesn't have to be just this all or nothing sort of framework. And before or you decide that you never want to work again and that there is no alternative, you'll even consider, think about easing into retirement instead. And I think that could look like cutting back on your hours at work now. Right. This is actually a trend that's kind of starting to happen in general these days. I think people are working on average 1 to 3% less than they were in 2019, which I think is a great thing.

[Matt]

Like baby steps, people.

[Joel]

Yeah, exactly. Take it back just a little bit. Work a couple hours. Less than a week.

[Matt]

All right. All right.

[Joel]

Yeah. And so if you're like somewhere, if you're like, I'm really interested in this early retirement thing. I don't want to like work 50 hours a week until I'm 65. I get that. I get that. But why not test out working 20 to 30 hours first before you call it quits? You still have income, which is great, but you'll also have extra hours to fool around with and you'll kind of get to see, well, what, what, what, what are my days going to look like when I have, let's say Thursday and Friday free? I'm only working Monday through Wednesday. It's kind of like wading into the waters of early retirement before you just quit your job altogether. And it makes me think of my mom, Matt. That's what she did. She's working three days a week. She's about to fully retire, but she's traditional retirement age. But that kind of helps to see, well, how will I spend this day? And you're kind of going into it slowly as opposed to going from full on to completely off.

[Matt]

Yeah, it kind of depends if you're like weighed in into the shallow end kind of person or if you're more like cannonball off of the diving board.

[Joel]

You and I, I think it's important to mention this. We work half days on Fridays, so.

[Matt]

Almost forgot. It's, it's kind of gotten normal for us.

[Joel]

Yeah. And we've talked about how maybe at some point we would consider doing like, no, no Fridays at all. Or maybe half days, Thursdays and half days Fridays. And so like there's ways in which, well, especially it's easier when you're self employed, I guess, but it's. There are a lot of traditional employers who would say, no, we still want to keep you around, but you don't work on Fridays. Sure, it's going to involve, like, involve a cut to your pay.

[Matt]

Yeah.

[Joel]

But if they don't want to lose you, they'll often say, they'll sign on the dotted line and say, sure, that's fine, that's fine with us. But those are the kind of things I think that cutting back on those hours can help you see. What would I do with that freedom? Am I completely lost here or am I jonesing for more time? You know, six months into that experiment?

[Matt]

Totally. Yeah. I think this is why we're such huge proponents of coast fire, because by having done that heavy lifting early on, that coast fire gives us options to then start something like a podcast about money that may or may not make any money. You know, like five years ago we were, it was, it felt kind of risky, but we also would have been totally fine because we had set ourselves up in a decent position. Obviously we've continued to invest since then and we are in an even better position over the past five years. But essentially what I'm pointing at here is the fact that we've got options and that is absolutely 100% something that we want everybody to be able to experience. So you're talking about cutting back the number of hours we work kind of like on a regular basis. But I think looking at essentially taking our vacation days, I think that is really important as well. Honestly, this might be like the very first step because fewer workers are actually taking time off. The number of folks who are taking significant chunks of time off for personal enjoyment has been in decline for decades. You know, even with the quote unquote unlimited PTO like that is becoming a more frequent benefit.

[Joel]

That's just a dirty trick that employers.

[Matt]

Are offering out there. It's not cutting it because they know.

[Joel]

How we react and they know that unlimited PTO means we're not going to.

[Matt]

Take care of it. They're not going to do it unless.

[Joel]

There is it into not taking it.

[Matt]

Unless there's a culture set of that being the path that you should be following. And so if you say that you want to retire early, but you're not willing to even take your Vacation days off, then it might not be a great fit for you. You know, at least make it a point to take the time off that you're given at first. And again, not to point to you and me, Joel, as like, these shining, perfect examples. But this is something that I'm proud of us for improving on because I think, you know, a few years in, like, or maybe let's say three years ago, we're like, oh, the podcast is doing pretty good. We don't. It's hard to break away from it. It's hard to step away and say, all right, we're gonna. Let's take a week off. Let's take a couple weeks off for Christmas, let's take a week off. Or, you know, like a summer beach trip, something like that. But I think, was it earlier this year we kind of looked at the calendar and we might be taking something close to two months off by the end of this year. Not all at once, but kind of scattered around here and there. I guess we're. I'm tooting our own horn here, but I think that's admirable and I think it's something that's worth working towards. Not just from a.

[Joel]

You're not gonna get there overnight.

[Matt]

It's taken us a long time to.

[Joel]

Get there, but I think it's a good goal. Goal. I'm a little nervous about this year and how much time we're trying to take off, but I'm also excited about it too.

[Matt]

Yeah. But I think it's good though, because we are working on it. Obviously we've worked on it from a financial standpoint. Right. We have prepared and we are hopefully in a financial position to be able to handle that. But it also takes practice on an internal mental level as well. Even aside from the finances of it. From a mental personal standpoint, do we have the guts, do we have what it takes to step away from work? And I know that that sounds silly to say, but I think it takes more courage than people realize because oftentimes when you enjoy your work, it can be so easy for us to find ourselves, like, gravitating back towards it essentially, as opposed to pursuing some of those other things that we have identified as being so important.

[Joel]

Especially when we didn't grow up in a culture like Australia where they take like two month holidays like every single year, which is, which is awesome, mates. But that's just not the culture that we live in here. And so we feel, I think, guilty when we take our vacation time or we feel guilty by saying hey, listen, I want to work 30 hours a week and not 40. Those are the kind of things that in the US culture, those are not normal. But I think they're worth pursuing instead of saying it has to be all or none. These are like in between steps that people can and should consider and take before they get to that point. Totally for that mental reason, but also for financial purposes too. And I think many retirements are just another option. Like consider taking a full month off or longer, maybe a few months. Months. And especially with the fact that people are working remotely now in such large numbers, this is something people can do. They can work from abroad and take weeks off while they're abroad and get a taste of what it would look like to live somewhere else if that's what they're after. Friend of the show, Coach Carson, he describes mini retirement like this. And I really like this. What he says, he says any extended break that alters the rhythm and ingrained patterns of your work and home life, which is a great approach, like throw a wrench in things like it and give a mini retirement a shot, you know, and more companies are offering things like sabbaticals for employees who have been there a number of years. The you might not be able to get paid for it, but who cares? Like if you're getting to that financial position where you think you're ready for early retirement, take the sabbatical first and kind of, even if it's unpaid, give it a shot. Because early retirement is even more complicated than a two month stint off. Right. And a shorter endeavor makes sense to me, I think. Before you go all in and you say early retirement lifestyle is for me, well, how do you know? And have you taken the approach, have you tried it out yet? And we'll link to one of a blog actually that Coach Carson wrote about mini retirements I think is really helpful for people who are considering one.

[Matt]

Totally. Yeah. So what is it? Ever since you mentioned the Australian and you said mates, so after high school, what is it called when they take it, like essentially take a year off when they travel the world?

[Joel]

Rumspringer. No, I'm just kidding. I don't know.

[Matt]

Like there's something different. There's a term for it. But yeah, I mean, I agree. I think there's a lot of different life experiences that we should be opening ourselves up to. Whether it's after a career of having worked for multiple decades. And it's just time for us to start testing the waters a little bit and saying, oh, is this something that I Want to pursue or achieve sooner or even, you know, like right after high school. I don't think it would be a bad idea to travel the world and see all that is out there before you sign yourself up for four years of indebtedness with a high cost of college.

[Joel]

Gap year. Yeah, take a little gap year.

[Matt]

Gap year. That's what you're looking for? That's the word, yes.

[Joel]

I thought you were talking about what Australia. Australians do. And I was like, I don't know what they do.

[Matt]

No.

[Joel]

Oh, you're talking about.

[Matt]

It's just. Yeah. Generally speaking, you take a gap year.

[Joel]

Yeah, well, I mean. And well, I took three months off. I quit. I got my first job in radio. I did it for six months and then I was like, you're not really working out for me. And so I quit your case.

[Matt]

You know, you're probably, you're. You were getting to the end of your bank account basically.

[Joel]

Right, well. Well, the pay was not very high, but I'd saved up like five grand and I went on a three month trip around the United States.

[Matt]

I mean, your three months. Oh, I thought you said the three months didn't work out.

[Joel]

No, the three months was great. It was the job that wasn't working out. I was like, I don't really want to be here much longer, but I'm young enough, I can find something else when I'm done with this and I can live so cheaply in the meantime that it doesn't matter that three months well worth it. I've got the best memories from that. So I don't want people to think that this is some sort of pro work until you die episode. I hope that we've come across pretty clearly in that regard that you and I. I like, I'm planning to retire at some point. Probably I'm about to turn 40. I'm not going to retire like in.

[Matt]

My Joel's like not going to live forever.

[Joel]

Not going to retire anytime soon though. But taking these interim approach at least I think for you and me, Matt, that makes more sense for us. It's like, yeah, let's take a significant amount of time off during the year. Yeah, let's do half day Fridays. But let's also still have meaningful work that we enjoy to do with part of our lives. So I don't know, it's all about kind of finding balance and that's going to look different for everybody else.

[Matt]

Totally. Yeah. Because I mean, so early retirement going to attract a certain crowd. I think for some that goal is going to be incredibly enticing. We are all for increasing your savings rate. We're all for ramping up your financial margins so that you are going to have more flexibility and more choice in your life. But quitting work altogether like cold turkey right about now, even though we likely could, that doesn't sound all that great. You know, like we've chosen instead to pursue something that we love instead of opting out of work altogether. And so we wanted to talk about this today because we are trying to encourage everyone out there to choose your financial goals wisely because I think they're going to impact how it is that you live life now because like early retirement, it might make the most sense for you. I want you to think about some of the alternatives that will make your life awesome potentially in the here and now, before you've dedicated your life to a goal that might not actually make you happy. And you know the other thing too, if you pursue early retirement while you neglect your health and relationships, it's not going to be worth it. That's something as we have friends who are in the fire space, that is something that they have continued to come back back to. They've said that if they could do it all over again, they would possibly continue working, holding the job that they had with all the great benefits, but that they would have prioritized different things like taking care of their body meaningfully, investing in some different relationships along the way, as opposed to that nose to the grindstone mentality.

[Joel]

Well, a lot of them were working 50, 60 plus hours to achieve this goal in a shorter timeframe, which led to unhealth for a lot of those working years. And so I think that is one of the trade offs that a lot of people, people trying to pursue early retirement end up making. And so those interim years until you reach that point, they become kind of a slog, they become kind of hard to remember. Maybe you didn't get to enjoy yourself, maybe you missed out on a fun trip with friends because no, no, no. All my extra money's got to go into my 401 and IRA and HSA. Right. Because my goal is retiring early. But I think if you take that hard nosed approach to early retirement, I think you're going to retire early, early and do it well. But I think if you take that hard nosed approach to retirement, to early retirement, you're likely going to have missed out on a lot of great stuff along the way.

[Matt]

Exactly. And those are years that you may never be able to get back, you know, like youth and Flexibility and other.

[Joel]

And you and me, where are you.

[Matt]

The ability to go without a whole lot of sleep as saying this as somebody who had their kid wake up? We're already to the point four times in the middle of the night last.

[Joel]

Night, you and me, we're already to the point in our lives where we can look back on some of those years with fondness. And it's like we're removed enough from youth that I look back and I'm like, oh, those are good times. And I'm glad that I wasn't like holed up in an office working too much, trying to pursue this goal, like.

[Matt]

Too dedicated to the cause of financial independence.

[Joel]

And it's not that like, like you said, frugality and, and investing and developing more margin in your life aren't important, but man, if it means that you're missing out on the rest of the good stuff, then that, to me, I think that's a mistake.

[Matt]

Exactly. Totally agree, man. Let's get to the beer. You and I, we enjoyed a Ferris, which is a coffee Imperial Imperial Stout. This is a beer by New Park Brewing. Another one sent to us by Matthew. Thank you so much for sending this one our way. Joel, what were your thoughts on this one?

[Joel]

So this one was roasty and a little bit bitter.

[Matt]

Oh, yeah.

[Joel]

Which I kind of like.

[Matt]

It's because it was made with coffee from Jay Renee.

[Joel]

Okay.

[Matt]

I guess that's the coffee roaster. That's a local one there. Probably there in West Hartford.

[Joel]

Okay. Yeah. So I would say this was a really good. A really good stout. And I. Some people really like the sweeter milk style stouts. I prefer kind of a more bitter coffee stout. So this one's up my alley with.

[Matt]

A little more pep in the step. It's almost like an espresso.

[Joel]

Yeah, kind of like an espresso style coffee.

[Matt]

Coffee stout.

[Joel]

So I dug it. What about you?

[Matt]

Yeah, it was pretty. So not espresso from like an acidity bite kind of way. Because I would say that this drink, really smooth, like it almost was like a milk stout. Had a nice creamy mouthfeel to it.

[Joel]

There was some lactose in there or something.

[Matt]

But yeah, really well balanced. Definitely enjoyed this. And did you pick up on the label, by the way? This was called Ferris. Do you understand the. The graphic?

[Joel]

Nope.

[Matt]

Have you ever seen like magnets when they interact with like metal shavings? So ferrous is like fe, the symbol for iron, right?

[Joel]

Oh, yeah.

[Matt]

And so I think it's supposed to be like the way that metal or Iron reacts to magnetic fields.

[Joel]

All right, science nerd.

[Matt]

You get it. You get it.

[Joel]

You're the Bill Nye of pound of money, Matthew.

[Matt]

Because at first I was like, what is on this label? And then when we read the name of the beer, I was like, oh, Ferris. Like iron, not like Tim Ferriss spelled differently. Anyway, we hope that you've enjoyed this episode. If you got a lot of value out of this one and you haven't yet left us a review over at Apple Podcast or honestly, even over at Spotify. They make it so easy. Just mash. They got the five stars right there. You know, go all the way to the right, include all five stars if you don't mind. But it really does help us to get the word out. Helps others to learn about different personal finance concepts like, like early retirement. We'll make sure to have links to some of the different resources we mentioned during this episode up on our show [e-mail] no doubt.

[Joel]

All right, that's going to do it for this episode, Matt. Until next time. Best friends out.

[Matt]

Best friends out.

[Joel]

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