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I’VE ALWAYS BEEN a saver, and perhaps even pathologically frugal. Growing up, it pained me to spend money, even on food when I was hungry. Today, I have more than enough money, but I still resist paying full price for food.
Perhaps I’m just genetically frugal, or perhaps my feelings about money reflect my parents and my upbringing. My mom once shared that her aunt predicted that she’d make lots of money, but it would be like grains of rice and slip through her fingers. Meanwhile, my dad handled the family finances, but money was never openly discussed. I never knew how well we were doing.
I have one vivid, recurring image of my childhood in the Philippines: I’m still hungry after eating dinner. To quell my hunger, I would ask for a banana. If I was given one, I’d eat it with any remaining rice. I’d eat everything on my plate. Every single grain of rice. Nothing was slipping through my fingers.
There were other memories. After we moved to the U.S., I recall gasoline prices doubling overnight, from 25 cents a gallon to 50 cents. I’d wait in the car with my parents to fill up the tank, sitting in a long line of cars that snaked around the block.
Coming home from school one day, I found my dad at home, repaving the garage floor instead of being at work. He didn’t tell me why he was home. But words like unemployment and recession soon dominated the news. Such memories are the basis of my money beliefs, and I had to untangle them to be financially free.
I consider myself lucky. I haven’t been affected by natural disasters or serious accidents, and I’ve never been a victim of violence. I graduated from college debt-free, thanks to working three summers with Amtrak in a unionized job and thanks to choosing an affordable in-state public university.
I also had the good fortune to marry the right person. She’s a saver, and has the knack and patience to get the best deal on anything, especially airfares. We’ve had health setbacks, but nothing catastrophic. We moved to Silicon Valley in the mid-1990s and bought the worst-looking house in an affordable yet safe neighborhood—just before property prices skyrocketed.
We only needed one income to pay the mortgage and property taxes, which was just as well, since I lost my job right before the closing. I found other work, but we didn’t let that affect our lifestyle. We stayed in the same house, drove the same cars, ate at modest restaurants and travelled on the cheap.
Soon, we had an interesting predicament. After paying our living expenses, the leftover dollars sat in our checking account. The balance eventually grew to six figures, but the money was earning 0% interest. Intellectually, I knew I had to invest this money. Behaviorally, I was stuck.
I was afraid of losing the money. Afraid of losing my job again. No one I trusted invested in the stock market. My wife deferred to me on financial decisions, and she’d literally fall asleep whenever I talked about money.
One day, I read about John Bogle. He explained index investing and that Vanguard Group is like a credit union, run solely for the benefit of customers. The firm’s purpose was to make its customers rich, not the other way around. This was my aha moment.
I finally contacted three certified financial planners, and chose the one who’d create a financial plan for us for a flat fee. Though I didn’t follow most of the planner’s recommendations, I did open a Vanguard account, and bought several Vanguard index-mutual funds and exchange-traded funds, building a 60% stock-40% bond mix.
It didn’t happen overnight, but opening the account, living frugally, staying employed and automatically adding new savings allowed us to become financially independent. The plan I constructed took into account my money beliefs. It was conservative on purpose. When the markets inevitably crashed, my reaction was no action. Stay the course. Nothing to see here.
Going to church regularly, I became aware of time. Fellow parishioners would die, or I’d see their children grow from infants to young adults. During services, I’d think that maybe today is the best day of my life. Tomorrow, I might not be able to tie my own shoes.
I could have continued working and accumulating. But instead of waiting for the next severance package, I voluntarily left the workforce at age 57. My wife is on her own timeline and, for now, she’s still working.
I think about paying it forward using my time, talent and treasure. Perhaps I can do something fun and have an impact. We’re putting a niece through college. We talk about spending more on ourselves. Yes, it’ll be a journey to go from saver to spender. But I need to buy those cherries now, instead of waiting for when they’re on sale.
Venicio Navarro was born in the Philippines but grew up among the cornfields of Illinois, somehow surviving the heavy-metal rock music of his teenage years. He jumped into retirement and currently spends his time being a tourist, golfing and working on his health.
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I too retired at 57, and my wife still works. We will have small pensions and a TIPS ladder to help us through the years after she retires and before I collect Social Security at 70.
Venicio, I enjoyed reading your story! As many author’s on HD have written, it’s interesting to learn about the path one takes that enables them to retire when they are ready. All the best to you and your wife.
About 25 years ago the Physical Therapy practice that I worked for was bought out by the local hospital. I had a small pension and profit sharing total that I now was in control of. I said to my brother who at the time was doing his own investing online (rare at the time) that my plan was to contact a member of my church who was in the finance field. My brother’s response was you have a brain (a major concession from my fraternal twin), and a computer.
He provided me with a website that would allow one to screen mutual funds. I screened for funds with the highest 10 year returns, the same fund manager for those 10 years, and most importantly the lowest costs. Not surprisingly (now in retrospect) the vast majority of funds that showed up were Vanguard funds.
I researched Vanguard and discovered John Bogle and read his writings on investing. I am not very smart, but believe I have a lot of common sense. What he wrote made sense. “Don’t try to find the needle in the haystack, buy the whole haystack”. “Ignore the noise (of financial talking head- I’m talking to you MSNBC)”. “Stay the course (through markets downturns)”. “Costs matter (and the structure of Vanguard- like a cooperative)”
Needless to say John Bogle was my financial demigod. He is a major reason that I and millions of others (apparently as well as you Venicio) are now financially comfortable in retirement, (along with my being frugal).
Thanks for sharing! Very reinforcing.
Vinicio, well done. I enjoyed your article, and hope you don’t let the fact that it sparked a debate deter you from writing more.
Vinicio: I was so excited when I read read your story, and wanted to share some of my experiences that I forgot to say what a nice, down to earth, and description of your life journey you provided to us! Best of luck to you and your family in retirement!!
Venicio,
What an awesome post!
I love to read the many, many ways other people do things to enjoy their lives.
Of course my way is the proper way to do things … but only for me 😄
Please consider writing other posts too.
One more thing. I invested the max in my company’s 401k plan as soon as it was offered all the way through retirement, and invested in traditional and Roth IRAs every year for both and my wife!
I happily retired at age 51, have absolutely no regrets and never looked back! I was offered an early retirement with pension (and took a 100% joint survivor benefit for my wife) and healthcare after a corporate merger.Took SS at age 62 (and no regrets) because of family history with heart issues. But with today’s medical advances, we’ve been pretty healthy so far! We just celebrated our 50th anniversary. Hope did we do it? Saved and invested in index funds! Paid off mortgage early in 10 years–and have lived in the same adorable cape cod home for over 45 years, never paid a dime in interest or had any credit card debt, put both kids through college with no debt, drove slightly used cars for almost 20 years each, do many of the chores around the house ourselves (saved money and gained satisfaction) and had (and are still having fun every day!). Traveled and enjoying life every day. Take nice vacations at the shore every summer. Started saving when I was 8 by mowing lawns, shoveling snow, painting for people, delivering newspapers all the way through high school–I always tried to learn something new and keep busy. Worked hard in college and earned a mechanical engineering degree while gaining valuable technical work experience through a co-op program. We’ve had a great life together and would recommend the path I took to everyone!
“do many of the chores around the house ourselves”.
I have a philosophy of never paying someone else to do something (such as house renovations) that I can do (better) myself. Example-paid someone this spring to power wash my four story (with basement and attic) house.
Have probably saved, and invested tens of thousands of dollars, with the resultant investment gains.
The question is how did you do it all by age 51? As they say, what’s the rest of the story? I did virtually all the same as you describe (except I went to college nine years at night on veteran benefits) and was nowhere near the ability to retire at 51, regardless of lifestyle.
Richard: I’m almost 75 years old now, and wife almost 74. We’ve always been frugal (not cheap) and thrifty–one of the points in the Boy Scout Law, and are very generous tippers! We saved and invested, didn’t purchase needless items or ever waste money on junk. We aren’t on any social media–I like to fly ‘under the radar’ so to speak. We still have the beautiful kitchen/cabinets that were built with our home in 1950, and never had to do a remodeling project except appliance upgrades over time–we love our home as it was built and still love its design and layout. We did all own landscaping and shrub/tree plantings and changes, painting, etc. I always made sure that my wife and children would be financially fit and secure if anything ever happened to me. It wasn’t hard for me, and my wife has similar values. And yes, we are very financially secure today with my pension, SS, and RMDs. In fact, things have been so good since I retired over 24 years ago that I haven’t had to touch any of our non-retirement or retirement investments (with the exception of required RMDs which started several years ago). We have financial ‘freedom’! Money doesn’t buy happiness–it gave us the freedom and options to do anything we wanted and will do in the future.
More credit to you. Being retired 24 years and still living off a pension eroded by years of inflation – even a decade plus before RMDs and SS is quite an accomplishment indeed.
Dick, you picked the wrong utility to work for. Fred worked for my old company (you know the one) back in the glory days and scored one of the incredibly rich enhanced voluntary early retirement packages decades ago. Not sure which one he took, but the most lucrative, in the early 1990s, added 5 service years to the already generous traditional pension formula and eliminated all early retirement penalties for immediate payout. Plus a lump sum of 9 months salary. Question is: would you have taken it at 51 had it been offered to you?
Ken: You are totally correct. I took advantage of the retirement offer because we had saved and invested for the 30 years that I did work as an engineer. This provided a solid financial footing for us. There were other coworkers that were annoyed that the company hadn’t told them that this special retirement offer wasn’t announced 5 or more years earlier, as then they would have started saving more. I told them that the company wasn’t providing this ‘retirement offer’ to be ‘nice’–it was being offered for them to save money, and I was totally ready to take advantage of it when it was offered. The company had offered early retirement options several times in the 1990s, and I wanted to be ready if one was offered again–and it was in 2000! I couldn’t resist the offer of my pension, health care, a lump sum 15 month salary payout which I rolled into my 401k. And we have been living ‘happily ever after’!! Thanks for your kind comments!
Fred, your comments are spot on. You were provided the opportunity to play the financial game like a fiddle, and you have proven yourself to be a virtuoso! Very happy things have turned out so well for you and your wife…here’s to many more years of a healthy, happy retirement.
Thank you Ken! Best of luck and health and happiness to you and your wife and children in the future. You are certainly astute with all the intricacies and interactions of your spreadsheets to calculate and track financial issues that you’ve shared with us in previous articles!
How did you get 15 months salary into your 401k? That must have exceeded and limits on contributions.
Comment edited as it crossed with Fred’s response below. Although I’m not sure how a lump sum of that size could have been rolled completely tax free into an IRA either.
Hi again Ken and Richard. I just looked up the literature that was presented to me with the early retirement package. To summarize: “Your Special Payment will be made from the Service Annuity Plan-the pension plan- to the extent possible in accordance with rules established under Section 415 of the Internal Revenue Code.” We were offered four options for receiving this payout (in my case 15 months salary): 1) One time cash payment-with taxes withheld); 2) Monthly annuity with a 50% Joint and Survivor Benefit; 3) Monthly Single Life Annuity; or 4) Direct Rollover to an IRA or other qualified retirement plan—this is the option I selected. The whole lump sum I received was rolled (tax free!!) into my IRA. It was a fantastic deal and has been growing for over 24 years!!
Or how it qualified as any rollover given it appears a form of severance pay.
Richard—Your are correct—not my 401k. I had a ‘senior moment’ while writing. I rolled the payout (tax free also!!) into my IRA.
No way Ken. That was a great deal back then, I’m not so sure 30 years later. We offered several similar packages and thousands jumped at them, many regretted it, some were rehired and stopped their pensions and others found other jobs.
I am skeptical of many stories of success, but that’s just curmudgeonly old me.
I knew you wouldn’t. Sure, 30 years later inflation makes a big dent in the payout, but folks eventually picked up Social Security as well. I was never offered such a deal, but I’m almost certain I would have taken it had it been offered. Then I would have found another job, with the security of having a decent floor on my income for life. I haven’t heard of anyone who regretted taking one of the old pension sweeteners. I suppose there may be a few, but most long term employees of that era were happy to avoid the “changes” wrought by deregulation.
Nice story Venicio. You demonstrate how we are all impacted by our childhood and family experiences. I remember the gas lines in the 70s. I used to wake up at 5 AM to go get gas for my mother so she could go to work. That habit stays with me to this day – getting up early to beat the crowds when appropriate. As Dick Quinn suggests below, explaining your retirement income plan is always a popular topic on HD?
Thank you for this contribution. It sounds like some of your life experiences aren’t that different from my own. I too paid for my own college education through work and scholarships. I was fortunate to be employed for thirty years straight. I invested most of my money conservatively, but it allowed me to sleep at night.
Congratulations on your retirement. Leaving behind full-time work two years ago was the best decision I ever made.
Me too!
With your mention of being part of a faith community, I have a feeling, Venicio, that your future articles will tell us about how you are using your time, talents and treasures to benefit others through volunteering and charitable contributions. When my retirement began about eight years ago, I had a few false starts when I tried helping organizations that I quickly realized weren’t a good fit. The nice thing about volunteering is that there are always worthy organizations needing help and you have the freedom to quit for any reason. Best wishes for a fulfilling and enjoyable retirement. Looking forward to hearing more about it.
Venicio, I appreciate your outlook. Your thoughts that “Maybe today is the best day of my life” strikes a solid chord! Perhaps one could add the words “so far…” to the end of the sentence. Keep writing and sharing your experiences.
A nice story of long term success, but I am always amazed by those who are able to retire in their 50s. Your story requires a follow up article to share the secret other than just saving and investing and being frugal.
‘’Is a dual income family the secret, what about children? What are the current sources of your income that will sustain you for decades?
I’m jealous of those who can follow this dream. Inquiring minds want to know.
his wife continues to work so that helps.
I think a much greater percentage of people who retire early are “DINKS”, (double income no kids). Raising 3 kids was expensive!
Raising four on one income even more so.
Folks retire early all the time, voluntarily and sometimes, involuntarily. Ideally when job loss occurs there is some severance to smooth the transition.
As for how to do it in either situation:
1. turn off automatic dividend reinvestments and turn on receiving the cash.
2. Consider earlier than expected social security, if you cant make it work with your current cashflow.
3. Tap your “corpus”, yes normally a trust term, but I’m taking the liberty of using it as one’s main savings and investment balances.
4. Cut back: fewer expensive trips, eating out, clothing, additional pets, beauty procedures, massages, golf outings, housekeeper, etc. Note I didn’t say zero, but fewer.
5. Seize the deals! Cheapest internet, best streaming pkg, and more cost effective cell phone plan, etc. I have to take my own advice and get our family cell plan to just my husband and I. I told our sons that when the next new cell phone needs to happen, welcome to securing your own plan.
6. Scrutinize your generosity to family, friends, non-profits, etc. Some funding you may want to decrease to be able to increase giving gifts to others.
7. Housing: downsize or delay some non-essential housing improvements. Doing most lawncare and landscaping can save a bundle and provide free Vitamin D, but please wear a hat & sunscreen. And enjoy that fresh air and talking to your neighbors!
8. Sell some possessions to make slow and steady progress on downsizing. And for goodness sake, get rid of any paid rented storage. If you haven’t touched it in years, it’s time to deal with the issue.
9. Shop for health insurance that’s a good fit for your healthcare usage and pocketbook (which is on my to do list!)
10. Receiving a Form 1099-R (after turning 59 1/2) isn’t a thing to be sad about. It’s the pot of gold over the retirement rainbow! Just remember to have enough estimated taxes made (or have taxes withheld from your payouts.)
In the absence of having no choice, or working in an intolerable job, why would anyone find that appealing?
All I hear is cut back, do with less or without, downsize, delay, fewer, scrutinize giving, sell possessions. Meanwhile the value of even the age 62 SS is declining.
That doesn’t sound like living an enjoyable retirement to me. For me retirement is a good idea when no aspect of life or spending MUST change.
What joy is there in retirement in one’s 50s only to be required to change lifestyle and always be looking for ways to make it work or keep it working for decades as inflation increases the challenge?
I also retired early, and found it incredibly easy to do. I have always been naturally frugal and content with modest entertainment, vehicles, and vacations…. Spending large amount of money on fancy things that only deteriorate would have made me miserable. Since I lived well below my means, saving close to 50 percent of my income and investing the rest in low cost index funds, the snowball rolled down the hill and my enough happened at 55. Maybe not for everyone , but life is good here in the southern Iowa springtime.
If you spend less than 50% of your income and live very comfortably and invest wisely, there is no “lifestyle adjustment” required. For a large portion of our working years we have lived on a single income. One of us does a lot of unpaid volunteer work. No kids.
We live very very well ‘cos we don’t need to spend much. There is plenty of joy in our lives. We travel internationally once or twice a year, do all the activities we like, give a decent amount to charity each year and still save over 50% on a single income. We will spend MORE in retirement if we account for healthcare costs.
They were suggestions, Dick, of how some could find a way to retire early. Some end up spending more money, buying additional properties, traveling more, etc. To each their own.
As someone who retired at 55, I don’t think it’s all that difficult to understand. Frugal is key but so is lifestyle.
I can’t count the number of times you have posted (in an article or in a comment) that you spend $12,000 a year in property taxes. That you spend $15,000 every December to vacation for a month in Florida. That you own two homes and that you are currently spending tens of thousands of dollars to remodel the kitchen in one of those homes. That you’ve travelled the world. That you funded your children’s college education and you are planning on leaving behind a substantial estate.
Not. Everyone. Lives. That. Lifestyle.
Exactly. The town I live in just scored near the top of one of those “best places to live” lists. Average property tax is roughly $4,000/year. As I’ve written before, I retired at 53 and did not change my lifestyle.
No they don’t and they don’t work until age 67 either. It is all relative.
It is not the level of lifestyle in retirement , but maintaining the lifestyle you had and enjoyed while employed.
Would you have retired if it meant cutting back and giving up your dogs? I hope not.
I guess I don’t understand your reasoning. You worked longer because you needed to support a wealthier lifestyle. I didn’t work as long because I needed to support a more modest lifestyle.
One reason I could choose to leave full-time work behind at a relatively young age was because I made choices during my working years. I chose to become vested in a state pension program when I was in my twenties. I chose to work 24 years with one particular employer because one of the benefits was having my health care premiums paid (almost entirely by my former employer) from the age of 55 until I die.
In return for those benefits, I got paid less. But being paid less meant learning to live on less. Training and competing with my dogs has been a part of my life since I was in my twenties. I chose to spend my discretionary income on dogs, not on vacation homes, whole house remodels and trips around the world.
Since I have lived this modest lifestyle for over thirty years now, why would it change in retirement?
I chose to work 24 years with one particular employer because one of the benefits was having my health care premiums paid (almost entirely by my former employer) from the age of 55 until I die.
A huge financial benefit not available to most non-governmental employees. Good for you!
This particular benefit–having my health insurance premiums paid for the rest of my life–was offered by a private sector employer. I was lucky to qualify for it since they did away with it just a few years after I started working there. The benefit they offered in place of the one I qualified for isn’t nearly as generous and requires one work there for a longer period of time.
No Kristine, I kept working to continue my lifestyle. That’s all I am saying for anyone regardless of whether their lifestyle was based $50,000 or $500,000 incomes.
A modest lifestyle while employed leading to a modest lifestyle in retirement seems like a pretty even exchange and pretty close to a even exchange in incomes and spending- ESPECIALLY over time.
What I spend on taxes is a reflection of where I live, not wealth. The young couple that bought our modest 1929 home pay the same in taxes I do now on a condo.
As you know from my writing I too worked for one employer for decades and earned a pension (no COLA). I had no mortgage by the time I retired, but I sure could not live on 50% of my income unless I wanted to give up a lot which I don’t think I would call frivolous – funding 529 for grand kids, using a portion of RMDs for charity and some travel, now largely curtailed.
When I person retires in their 50s on 50% of working income I would think that over time the struggle to keep up with inflation will become harder even beyond what they cut in spending. However, I don’t know anyone who has done it very long, but those who have must have very substantial resources or COLA based income streams.
As I have said I don’t understand the attraction of very early retirement IF THE TRADEOFF must be cutting things enjoyed while working.
Define very long. I will have been retired 24 years come October. I have not changed my lifestyle. My pension has no COLA. Social Security made up much of the difference. My portfolio is intact. The key was that I made more money than I needed, plus a pension that started the day I retired.
I think that is the unspoken key for some people. Simply the level of income while working that allowed substantial accumulation, not necessarily being super frugal or savers alone.
I read about some of the FIRE folks and when you dig into their stories often they were earning many times the median family income thus making frugality a very relative term.
If I can have freedom and reclaim my autonomy, and retain most, if not all, of the trappings of my “current lifestyle” I’m going to go for retirement. The only thing we are missing from our days of working is paying lower health insurance premiums.
Some people find self-actualization outside of their jobs and thrive.
Well if that is the goal and it can be sustained for 30+ years, go for it. My pension was calculated in 2008 and now it takes $1.41 for every 2008 dollar. Maintaining our 2008 lifestyle is more of a challenge every year and I’m only counting from age 67. Just something to think about.
No pensions here, unfortunately, except a small one from my husband’s first employer. It might buy us two nice dinners out, but we’ll happily take it in 4.5 more years.
We’re 90% in the market, so that will help us keep up. The rest is in 4-5.25% laddered cds and those “dreadful” I-bonds, to buffer against a downturn.
I love to read on our screen porch, which backs to a forest full of birdsong. On a sunny, warm day, life doesn’t get much better. Fortunately, today is that perfect day! Cost: zero!
Most of the retirees I know spend less than they did while working (no mortgage, commuting costs etc.), except for healthcare costs (in the US).
Our gasoline, clothing, and eating out are drastically down, as one would expect. Walking our beagle brings us joy, as does time with our neighbors, (and family.) Fortunately, some young families are replacing the downsizers, so there are now some joyful squeals and new friendships!
I don’t miss our big federal tax bill! That is one big reason we need less!