What if I told you that my wife and I both quit our high-paying careers without a million bucks to our names? Well, that’s the deal. We didn’t wait around for a million before we called it quits, and there’s a good reason for that…three, in fact.
There’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” or something like that.
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. [Almost] four years of living expenses in short term savings
We have damn close to four years of living expenses in our Ally savings account, which is now generating more than 2% interest (not bad for a 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 dwindle 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.
Right before we called it quits, we had two full-time paychecks. My wife’s after-tax earnings funded our Ally account. My paycheck funded our current living expenses.
Additionally, both of us max out our 401ks at work. Any additional money got automatically funneled into our Vanguard brokerage account and pads our retirement stash.
2. Our frugal post-retirement lifestyle
Our lifestyle is damn cheap. In fact, we can make our lifestyle about as cheap as we want it to be.
Like you know, we sold both of our homes and bought an Airstream RV in cash. We live in Charlie full-time around the country, seeing everything that there is to see around the United States.
Our planned post-retirement spending budget was in the neighborhood of $25,000 to $30,000 a year, but due to the market and our ability to earn money, we’re spending closer to $40,000.
We 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 solar power system enables 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 (we’ve already rebounded from the end of 2018). 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 honestly don’t care about being millionaires. Our probability of success without a million remains extremely high, and we take the risks of early retirement in stride.
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!
This post was originally published in August 2016 but has been updated using the Revise and Republish content strategy.
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.