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BillSavings.com BlogRetire at 40? Not Such a PipedreamPosted By Frank
BillSavings.com Brief:
Many young americans are cosndiering getting out of the rat race early. Is it possible?
It may sound impossible, but the couple in the article, the Rodrigueses, are actually on the right track to achieve their goal. What do you need to manage such a feat? A number of things. First, you'll need a relatively high amount of income and a relatively low cost of living. John and Gina (the couple from the article) earn a combined salary of $174,000, which is very high given their age of 27. As such they've already built up a portfolio of about $380,000, thanks to disciplined saving and living on about half of what they make. This is the key part of the equation. Most consumers tend to spend up to their salary level, causing a sort of lifestyle inflation. Every time we get a raise, bonus, or tax refund, our first impulse is to spend it on a bigger and better lifestyle. Typically this means a larger house, bigger car, large plasma screen TV, and the like. If you want to retire early, however, you'll have to jump off the consumerism train and start saving and investing like crazy. Luck, of course, factors into this as well. Although the couple has made some mistakes, such as buying into the height of the real estate bubble, they are still on track. If their investments produce as they should (an uncertain factor given current market conditions) , then they should be able to hit $1,000,000 by the time they hit 40 years of age. Whether they'll be able to continue living a “spartan” lifestyle (I had to chuckle at this, given their income levels), and whether that $1,000,000 will be enough to sustain them for 40-50 years, are both question marks. It goes to show, however, that with enough discipline and foresight, its possible for any hard working couple to aim high and retire on their own terms. Will you? Category: Personal Finance 8/18/2008
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