In the last month, I've been contacted by journalists from two national newspapers, both wanting to write an article about someone who has retired early, to show how they did it, and get tips for how others can do it too.
To the first journalist, I explained that my route to early retirement was perhaps a little different. We had a quick chat, she thought it would work, but wants to run it past her editor to decide if my experience will be relatable to their readers.
The second journalist was also upfront with the relatable angle. They want to give their readers practical tips, so if retiring early was just a result of earning a high salary, that wouldn't work for them because it might not be very relatable.
On the whole, I think I'm a fairly normal guy, and therefore I should be reasonably relatable to other normal people. But on the other hand, I have done some things differently, so am I really as relatable as I think?
Reasons why I might not be relatable
At least by the end of my career, I did earn a very good salary.
I mostly worked (and therefore lived) outside my home country (in Jamaica, Hong Kong, Dubai and South Africa), not something that people do.
I retired at 47, which is earlier than most.
I'm currently living my retired life in another country, this time it's France.
I can see that these might be viewed as unrelatable. But I also see that humans are often very good at relating to things that really ought to be unrelatable. A case in point is my running. When I run a marathon, I wear the same shoes as the top pros. If I'm trail running, I might use the same light weight carbon poles as the best trail runners in the world. In both cases, my running ability isn't on the same planet, probably not even in the same universe, as those guys, so those top athletes should be unrelatable to me. But somehow they're not, to the extent that I follow and imitate some of the things that they do. Of course, there's a lot more to a professional athlete's training and lifestyle than shoes and running poles, so I just take the bits that work for me and leave the things that don't.
So back to retiring early, if someone earns a high salary, should they be cast aside as unrelatable, or might it be that there could still be something to learn? While I ended my career earning a high salary, that's not where I started - my first job as an accounts clerk had a monthly take home pay in today's money of £876 / €1,020 / $1,112. Perhaps there was some luck in my salary growth, but I helped it along by getting my accountancy qualification (part time study while working), taking some jobs that were a risk, and working hard to swim in a role where I could easily have given up and sunk. While these examples are specific to me, there may be actions that others can take to improve their pay too.
As to my retirement age of 47, it's certainly quite early, although a quick Google search will show others who have retired earlier, at 40 or even in their thirties. However, it's true that these ages are outliers, so maybe we should look at early retirement ages in a different way. Taking the UK as an example:
The normal retirement age is 67 and perhaps it's reasonable to imagine being active and fit until the age of 75 (hopefully beyond, but realistically age will start to have an impact).
This gives 8 years of active retirement (from 67 to 75 years of age).
By retiring just 1 year earlier, at 66, we get 9 years of active retirement instead of 8 (that's a 12.5% increase).
2 years earlier, at 65, it's 10 years of active early retirement (a 25% increase).
4 years earlier, at 63, it's 12 years of active early retirement (a 50% increase).
8 years earlier, at 59, it's 16 years of active early retirement (now we've doubled our active early retirement life compared to retiring at the normal age of 67).
Retiring early by 1, 2 or 4 years seems much more doable. 8 years might be more of a stretch, but perhaps not unimaginable. These more doable ambitions really make a difference to the length of our active retirement life, potentially doubling it. If I had to choose between having an extra year of retirement aged 60 or an extra year of retirement aged 90, it's a no brainer, I'm choosing 60 because I want to have my retirement when I'm young and fit enough to do more things.
Reasons why my early retirement story might be relatable
If you're not the founder of Facebook, Tesla or Amazon, and you haven't won the lottery, your journey to financial independence will probably be similar to anyone else who has retired early. It's a well-trodden path, and it's pretty much the same one that I followed.
Start early so that you maximise the number of saving and investing years - there's a reason why Einstein said that “Compound Interest is The Most Powerful Force in The Universe.”
Know what you spend by tracking your costs (you'll probably spend less simply by doing this), and maybe make a budget.
Review what you spend - see if you can find areas where costs can be reduced.
Avoid lifestyle inflation - if you get a pay increase, a bonus, inheritance or even a lottery win, don't automatically think you should spend more.
Avoid debt - live within, or even better, below your means.
Automate the amount you want to save each month and pay yourself first by transferring this to your savings or investment account as soon as you receive your salary.
Don't panic if things don't always go to plan or you make a mistake. Getting to financial independence and retiring early takes a while which means there's time to recover if things don't go to plan.
Live a balanced life - remember to still do things and enjoy life on the journey.
In terms of my early retirement, the things that helped most in getting to financial independence and then early retirement were:
Saving hard - obvious, huh! But there are a couple of things still to say about it. The first is to start saving as early as possible, even though in the early days it might only be small amounts. It gets us into the saving habit, and then as our careers develop and our earnings grow, the amount we can save increases as well. My biggest saving years were in my later thirties and early forties. Also, if we get a bit of extra money, perhaps a bonus at work, save it, or at least most of it - it's easy to say that if it isn't expected then it can be spent, but that will delay your retire early date. You still have to enjoy life though, so don't spend all your time saving and then have no spending money to do things - find a healthy balance between the two.
Maximise earnings - again, not exactly rocket science...if you earn more, then you should be able to save more, and get to your retire early goal sooner. There are different ways to grow your income, such as negotiating a pay rise, job promotion, change in employer, gaining additional skills, switching career, taking on shifts or overtime, work a second job, start your own business, check your investments. These may or may not apply to you, but at least they are a reminder that there are ways to increase your earnings, and it is in our own hands to do it. At the right time, it might be okay to take some (sensible) risks to maximize your earnings, especially when you are younger when you may have less responsibilities and have time to recover if it doesn't quite pan out. For me, it was working overseas that boosted my earnings, it was a risk, and it wasn't always easy, but it definitely moved my retire early date forward.
Keep track of your money and budget - I've always kept track of our money a few times a month to see how much we're spending and what we're spending it on. I have a big spreadsheet and check where we are at the end of each month compared to the month before, and whether we're moving in the right direction. Making a budget can also help, so that you know how much you have to spend on what, and how much you are committing to saving each month. Having this focus will help you manage your money, and may naturally put a brake on spending, meaning there's more to put into savings and investments.
Controlling costs - I was reasonably good at keeping our costs under control but, when I retired, I took a little extra time to look at our costs and was amazed to find that we could have saved much more. Without much effort, I found savings by changing our TV and mobile phone packages, switched to a lower cost supermarket, started using a shopping list, found better car insurance deals, changed utility suppliers, asked for discounts, plus more. Now writing this five years later, I realise that I've fallen out of some of these habits, so I should check in on them again and not give my money away unnecessarily.
Invest money wisely - This was a tricky one for me as my investments didn't always do well. Eventually, our go-to investment became buy-to-let property. It provides us with a reliable monthly income, the rents generally increase with inflation, and we will get a capital increase as well if we were to ever sell them. We still have our properties but, nowadays, my preferred investments are low cost ETFs. I few years ago, I calculated that we'd be better off if we'd invested in ETF's instead of buy-to-let properties (although my wife refuses to believe my sums on this).
Don't try to keep up with the Jones' - For many years, our friends tended to have bigger houses and nicer cars than us. It was always tempting to try to keep up, but that would mean we would save less. We still had a decent house and car, but we mostly kept disciplined on this, which helped us save money and therefore retire young. Social media and the marketing people seem hell bent on getting us to have the latest, biggest, shiniest things, but it is amazing how much you can save if you can buck that trend.
Live in the right house - Similar to the "keeping up with the Jones'" comment, but it gets a separate heading as housing is such a big cost. The point here is to have a house that is suitable for what you need. If there are two of you, then a four bedroom house is probably bigger than you need, and will cost more money in rent or mortgage and interest payments, bills, maintenance etc, which reduces the amount that you can save towards your early retirement. For us, we had a bigger house when the kids were at home, but we downsized as they've left home and kept our housing costs under control and appropriate to the number of people in the house.
Avoid Debt - I really dislike debt. We did have mortgages for houses, and some loans for cars in the past, but nothing else. We always paid them off as quickly as we could and have no loans at all now. If we use a credit card, we pay it off in full every month. I'm a believer that it's good to save up for what you want and that getting into the habit of having loans means you are more likely to buy things that you can't really afford, maybe don't even need, and pay extra for because of the interest. Doing this reduces the amount of money that you can save to achieve your early retirement goal.
These items summarise what we did to build a lump sum of cash and investments to let us retire early. We worked hard, saved reasonably hard as well, kept an eye on our budget and expenditure, and avoided debt wherever possible. And hopefully we did these things with a bit of balance to ensure we still enjoyed our life along the way.
A difficulty with writing this post in 2023 is that we're in the midst of a period of high inflation and increasing interest rates which is causing a cost of living crisis for some. In which case, today's priority might be trying to keep their head above water and, understandably, thoughts of early retirement take a back seat for the time being. But there will be others who, although also dealing with increasing prices, still have an opportunity to make progress towards financial independence and early retirement. Whether my story is relatable to them, only they can say.