In the past, I haven’t given much thought to nailing down a specific month and year when my wife and I will finally achieve financial independence and be able to call it quits from holding full time jobs. But recently, posts like Even Steven’s (and further, one by Fervent Finance) has inspired me* to take a closer look at what our date actually is in more detail.
* And when I say “me”, I actually mean that I begged my wife to run the numbers because, well, she’s the rocket scientist (literally), not me. She has a good relationship with numbers, math and algorithms. You might say that it all just “adds up” with both of them.
But anyway, based on our numbers and goals, we are looking at a financial independence date of…
What does this really mean? Like I (and many others) discussed before, financial independence means that we are no longer required to work. It does not necessarily mean that, come October of 2018, I’ll be sitting in my rocking chair on my front porch hugging a shotgun and yelling at the neighbor’s kids to get the hell off my lawn (think Clint Eastwood in Gran Torino).
I might still voluntarily work after we’ve reached FI with all this “FU money” at the ready. Then again, I might not. Or, I might pursue part time work. Or I might devote more time to getting photography, my main side hustle, more established. Or hell, I might decide to literally do nothing but stand in front of a window and stare. Who knows, but the sky is the limit! 🙂
Let’s get right down to it and take a look at the numbers, but first, let’s get some of our assumptions out of the way.
Rate of return: 5% (VERY low conservative number)
Spend inflation: 3%
SWR (Safe Withdrawal Rate): 4%
The Money Table – September, 2018
[table id=1 /]
* Savings based on current long-term estimates
** Currently estimating $30,000 a year but want to give ourselves a buffer
As you can see, it’s party time once 2018 rolls around. I am picking September as our hallelujah month to give us at least 3/4ths of the year to achieve what we would consider our FI point. If we need all the way until December, I won’t exactly be heart broken. After all, we would have met our goal of retiring before I hit 40…three years early!
Also, you may be wondering why our savings rate is significantly higher in 2018 than in previous years. This is due to our Sedona, AZ town house getting completely paid off, leaving 2018 ripe for big time savings. This is what will ultimately kick us over the edge and into sweet, sweet financial independence land in 2018 instead of 2019.
As many of you know, my wife and I are DINKs – Dual Income No Kids – and we plan to keep it that way through retirement in 2018 to completely maximize our savings. My wife will stop working once we move up to Sedona, AZ, and I MAY stop working depending on what opportunities exist with my company and whether I feel like putting myself through more full time work.
In the mean time, we will enjoy living in a very low cost of living city in southern Arizona and stockpiling as much cash into our savings accounts as we possibly can. We have an aggressive travel year planned for the remainder of the year, including a trip to Glacier National Park over my birthday, Alburquerque for the famous hot air balloon festival and spending the holidays in Key West, FL with my family. Next year, we have an Alaskan cruise planned for the summer.
And we are doing all of this while spending much, much (MUCH) less than most Americans do in just a few months.
Now this is what I call living frugally!
Steve is a 38-year-old early retiree who writes about the intersection of happiness and financial independence. Steve is a regular contributor to MarketWatch, CNBC, and The Ladders. He lives full-time in his 30′ Airstream Classic and travels the country with his wife Courtney and two rescued dogs.