The last four years have been long ones.
Not bad. Just long. This journey started well before the blog did. Back in the fall of 2014 I was tired, stressed, and felt trapped in a career I had come to depend on for our livelihood. Let’s distract ourselves and learn how to prepare for early retirement.
Talk about first-world problems, right? Luckily I came across some very good writers with blogs that opened my eyes to many new possibilities. Extra luckily, I had already started up a real estate rental side gig to (initially) help us pay for nanny wages. Five houses and four years later, we’ve got a solid foundation of cash-flowing assets.
Things come up of course. Like the new roof, we had to put on our own house earlier this spring. Chalk that one up for $5,750. And before that, one of the rentals decided it needed a new furnace right around the middle of a Minnesotan February. Another $3,000 CHA-CHING! So yeah, best-made plans, right?
My 5 Year Plan to Retire Early
I originally devised a four-to-five-year plan to exit the rat race. I set up my spreadsheet models and went through our spending with a fine-toothed comb.
We changed insurance plans, dumped cable, switched cell phone plans, dumped the Keurig, and started bike commuting a few days a week. Craigslist and minimalism became new norms, and pivotal in our quest to focus less on stuff, and more on relationships and growth.
With my five-year plan, I had to guess about raises and bonuses at work, and the growth of our rental and chiro businesses. Total thumb and saliva. Early retirement expert, right? But all in all, we’ve been pretty much on track since that fateful fall of 2014. Ahh, the good old days… That was the lovely autumn when I hit my wife over the head repeatedly with Mr. Money Mustache… Hoo boy…
I’ve been through three bosses and three work campuses since the journey began. I’ve turned down promotions twice, though I have one likely in the works for later this year. The ability to say no and to take control of our future by saving more income led to more confidence at work.
There’s a lot I’d say I owe to Mr. Money Mustache. It’s probably good he wasn’t home during our recent visit to Longmont, or he’d have experienced an awkward bear-hug from a complete (albeit grateful) stranger.
Why Early Retirement Is Appealing (My Reminder)
The kids are growing up fast. Another reason for staying focused on the mission at hand. Too often we spin our wheels managing dueling careers, only to turn around and see our kids already off to college and moving out of the house (or not moving out of the house and not paying rent). Getting to spend more time with the twins now, during their grade school years, will remove a YUGE potential regret later.
Life is a finite reel-to-reel tape of learning. You can learn a LOT at any stage of life, early retirement expert, or not. Having time back with early retirement allows me to figure out this gardening thing. What a riddle, even with the best manuals on my bookshelf. (I blame the two-week Minnesota growing season.)
Pick up the guitar again? Sure! Maybe master the French language (a life goal I’d abandoned not long after returning from a visit to Paris)? Why not?? Heck, I could even learn how to write!
My health is important not only to me but to my family as well. I want to be the dad who can still chase a ball around the yard, and suffer through a few tackles in the snow. Exercise gets a chunk of my time these days, but I can feel the need for more, as this 40-something body starts to hit those pesky reality checks. Oh, and stress sucks too.
Relationships need constant grooming. My wife, Mrs. Cubert, has been working super hard since before the kids came along, and it’s only picked up more over the years. Price of success? Yeah, her business ROCKS because she ROCKS.
Problem is, there are only so many hours in the day. Between my full-time job, the rentals, and this lovely blog, my ability to take more of the burden off her shoulders is less than. Early-retired Cubert can step in to help take on chef duties, grocery shopping, and kid chauffeuring.
Mrs. Cubert is almost 10 years younger and will have an opportunity to retire early in her mid-40s if she so chooses. For now, she’s pretty content with a 30-hour-a-week gig and part-time hours at the gym she loves.
I imagine it’ll be loads easier once she can rely on me to help with more of the household duties. Don’t assume I’m not pulling my weight – I have lawncare duties! With just one year left until retirement, I feel I’m ready in these departments.
How Much Money Do I Need to Retire at 45?
I’ve got to get hot on this. I know how I can spend a good chunk of my day, with the tasks mentioned above. But there’s a healthy part-time amount of hours, maybe 20 a week, I could put to more productive use. One option that’s a possibility is joining a property management company here in town.
The realtor I use to find investment properties runs quite an empire with three other partners. Flips, rentals, sales, you name it. I might just go gang-buster Bigger Pockets and jump into THAT arena. I do not mind getting my hands dirty.
I won’t go over the ground we’ve covered a few times already here. Suffice it to say, I’m still dead set on making early retirement happen next year. If by some odd chance I’m so happy with my cubicle job that I could do an Irish Jig come next July, well, maybe I will stick around long enough… Long enough to pay off the $60K in student loans we still owe. Even at 2% interest, debt is debt. Right?
Here’s what the forecast ledger looks like in retirement. This will be how we live, more or less, until the old man money kicks in at 59.5, in about (gulp) 13.5 years. (For a companion post, I might share our 2018 expenses next week. Stay tuned…)
Now, I’ll be the first to say “What the heck, Cubert! $63K annual living expenses? Really?!?” Yes, yes, it’s awful, I know. But hey, I’ve got bills to pay! Strip out the student loans and we’re at least down to $60K. Not bad, right? Oh, and never mind the $100 weekly dining-out allowance. Remember, we live in the land of milk and mom-and-pop restaurant honey.
Honestly, the forecast is a bit of a wide target still, even with just a single year left in the game plan. In other words, I need to sharpen the pencil some more.
How to Prepare for Early Retirement 101
Time has flown by since I set this early retirement goal back in the fall of 2014, during one of the deepest funks of my career. Preparation is what I need to do, a little over one year before retirement.
The way I look at it, 12 months is the very least amount of runway to start retirement preparation. Considering I’ve been a corporate worker for 23 years now, I could probably use these 12 months to get myself “sorted out.”
Bigger life transitions demand a little preparation. You take the time to plan a wedding and ready yourself for marriage. You get 9 months to plan and prepare for having a child. With retirement, there are some key things to consider.
Heck, in the old days (up until the 1980s or so), men would retire without a clue what to do with themselves and wound up dead of a heart attack within just a few short years of retiring. No wonder pensions were so generous back then!
Just like we got married without a wedding planner, I’m going to do this “early retirement planning thing” solo as well. Specifically, my brain is focused on these 3 objectives:
- Knocking off Big Expenses
- Accounting for Health Insurance
- Avoiding Boredom
Big Expenses Can Hit Harder in Retirement
These are the expenses that surprise you sometimes. And when I say “Big”, I mean over $2,000 BIG. Examples include a new roof on your house (more on that one later), needing to replace a furnace, or needing a new used car.
Just this weekend, I was swimming in a financial stew. I woke up Saturday to a text from one of our tenants that the heat had gone out. They are tough cookies and were sitting through 52 degrees on a -10F sunny day waiting for me to get back to them. Should’ve left my ringer on…
I knew that the furnace at rental C was probably going to be first among our properties needing replacement. I just hadn’t planned on it THIS YEAR.
So I get over there, toting along a couple of space heaters and a few tools. I get the cover off the furnace and run through the restart sequence. It’s not working at all. The old girl just makes a humming noise. It turns out the inducer motor has failed. Dammit.
I got my furnace guy on the phone and luckily he can get the part for the over-20-year-old-beast. Best of all, he can be there by noon.
The problem with my furnace guy is that he’s honest. I knew in my gut what he’d tell a few minutes after he got there: “You should probably replace this thing.”
But, not before we install the new inducer motor, because you can’t just install a new furnace on the spot. It’d be three days before he could return to do that little project. Luckily he only got charged $200 for the part (no labor.) Normally, that part swap would’ve cost $550 with labor.
At the end of the day, I’m looking at a $3,200 expense on my rental ledger to start 2018. Yippee!!! But again, knowing that that furnace was on the brink, and would’ve needed replacing at some point, I can’t get too worked up about it.
Prepare for Retirement 101: Accounting for Health Insurance
Oh, man. I’ve got some homework to do on this one. I’m estimating that we’ll spend $500 per month in premiums for a high deductible plan, and about $1500 per year in out-of-pocket expenses.
We are a healthy-ish bunch here in the Cubert household, so my hope and intent is to avoid health being something that holds us back, but rather an enabler for living a good life. That means lots of exercise, whole foods, limited screen time, and plenty of sleep.
Even with all that noble planning, we can’t avoid health insurance. That’s just too risky. We can, however, mitigate our premium costs in a couple of ways:
- Deduct premiums from our business taxes. This is huge. Having a business allows us to effectively discount our cost of coverage by roughly 33%
- Max out a Health Savings Account. For our family of four, we can put away close to $7,000 per year. The best part? That money gets treated as an extra deduction on our taxes. The second best part? We can use those pre-tax dollars for our out-of-pocket medical costs.
The main thing is, I’m not overly worried about how we’ll manage healthcare costs in early retirement. Factors 1 & 2 above are immensely helpful. We’ll simply have to wait and see if our elected officials are eventually able to extract their heads from their collective a$$es to work together with the industry on cost containment.
Utilization isn’t the problem. It’s the cost of procedures, pharmaceuticals, and everything else associated with care. But I digress…
A Lot to Look Forward To
These are just the top three on a list floating in my head these days. What did I miss? Well, I’ll need to keep an eye on our Mortgage Pay-off Project. There’s also the notion I have of pre-loading the kids’ 529 plans.
I’ve certainly got my work cut out for me. During the next 18 months, the Airbnb experiment will bring new variables to the mix. Life itself is full of unknowns. Despite the planner in me, I know I need to be ready to accept, adapt, and adjust. For all the knowns, no better time than the present, to PREPARE.
Who knows where the health care insurance system will be by this time in 2019? More than anything, health insurance, and health care out-of-pocket costs are the biggest unknown variables in this entire scheme. Shocker, eh?
If I buckle down, I might be able to make something of this blog and generate some meaningful income. I just need to be mindful of this little project not becoming an anchor, like say, a regular cubicle job. BLECH!!!
I must be doing SOMETHING right if I’m sitting here writing to you about quitting my job at 46. (And honestly, taking hard lessons from my 20s and 30s into account, I’d have been done by 30 with a head, any head, screwed on straight.)
The best-case scenario? The blog ratchets down to a single, solid post per week, and I make a few side hustle bucks from it to donate to good causes. Not a bad retirement hobby. Would you agree, Abandon-Nation?
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