What if I told you that my wife and I are planning to retire early at the end of the year, and we won’t have a million saved? Well, that’s the deal. We aren’t waiting around for a million before we call it quits, and there’s a good reason for that…three, in fact.

Pinterest: Why we don't need a million to retire earlyThere’s no question about it: Admission into the double-comma club is great (or so I’d assume). It’s another one of those milestones that feels wonderful to achieve. Imagine it: a million bucks.

It’s like becoming debt free, “mission accomplished”.

It’s a wonderful milestone, but we don’t need to reach it before retiring early. There is nothing inherently magical about the million-dollar figure, aside from all those zeros. It’s a completely arbitrary number. In fact, we may never need to reach it to keep our jobless dreams alive, and here is why.

3 reasons why we don’t need to be millionaires to retire early

1. Three years of living expenses in short term savings

Upon retirement, we’ll have a solid three years of living expenses in our Ally savings account. Living off of this cash will allow our investments to grow during the onset of our post-retirement life. We won’t begin to withdraw from our investment accounts until our savings dwindles down to the point where all that remains is reasonable emergency saving.

Arguably, the first decade of early retirement is the most crucial. If your net worth increases (or at the very least, doesn’t shrink), then your chances of long-term success increase significantly. Our plan to use short-term savings the first three years will help to ensure our wealth continues to build.

With two full-time paychecks currently, my wife’s after-tax earnings fund our Ally account. My paycheck funds our current living expenses. Additionally, both of us max out our 401ks at work. Any additional money gets funneled into our Vanguard brokerage account and pads our retirement stash.

We track all this beautiful money using Personal Capital. Check out their wicked cool retirement planner, BTW.

2. Our frugal post-retirement lifestyle

Our lifestyle is damn cheap, and it’s about to get even cheaper. This year, we sold both of our homes and bought an Airstream RV in cash. We live in Charlie full-time at a campground in Tucson until the end of the year, at which time we quit and start traveling.

Our Airstream, Charlie, under the stars
Our Airstream, Charlie, under the stars

Our planned post-retirement spending budget is in the neighborhood of $25,000 to $30,000 a year. We will do this by boondocking as much as possible on BLM land, which is free government-owned wilderness to call home – usually for a maximum of 14 days before you need to move on. Find a spot, park your rig and enjoy nature. Of course, no hookups available, so you’ll have to provide your own power, truck in water and hold onto your waste products or dispose of them safely (thank you for making that job easier, Mr. Composting Toilet).

Our soon-to-be-installed solar power system will enable off-grid living for extended periods of time, reducing our living expenses significantly. We are 100% debt free. Both my wife and I understand what “enough” means to us, and we’ve built a smooth and streamlined lifestyle that we both enjoy, and one that doesn’t require a ton of cash. Light on spending, but heavy on fun and exploration.

3. We remain completely flexible and willing to change

I tout our flexibility a lot on this blog, but it happens to be a critical element of our post-retirement lifestyle. If things don’t work out exactly like we planned, we change. We find a solution. It might include us working a seasonal job or two. Or, maybe we look for ways to reduce our spending. Choosing a lower cost of living area is another idea, to include overseas travel to areas like Thailand and Costa Rica.

It is amazing what the impact earning $10,000 a year doing odd jobs has on our long-term probability of success. When your expenses are low, every earned dollar is that much more valuable to your lifestyle. Earning an extra $10,000 a year for someone who spends $100,000 is nothing. But, an extra $10,000 a year for a couple who doesn’t spend a penny over $30,000 suddenly becomes meaningful earnings.

It won’t take much for us to make up for any stock market losses. A frugal lifestyle has a profound effect on how resilient we can be during periods of sub-optimal growth in our investments.

To us, a million is just a number. We’ll have close to a mil at retirement, but we won’t be there – and that’s just fine. We honestly don’t care. Our probability of success without a million remains extremely high. We’re capable and willing to take on work here and there as the mood strikes us. We won’t touch a dime of our investments for at least the first three years. And, we’re flexible people.

What say you? How many have determined their net worth goal at retirement? Anyone think they need over a million to retire comfortably? Do share!

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