Monday, October 15, 2007

Steps to Early Retirement

There is certainly no shortage of opinions on the steps to early retirement. In this post I’m going to outline the steps that I will be following and feel are necessary to successfully retire early.

Step 1
Realizing that you Actually Need a Retirement Plan – this sounds simple but it’s amazing how many people don’t have a real retirement strategy. Many people save for retirement but have no idea how they are doing or how close they are to retirement. I’ve talked to people who’s “retirement strategy” is to work until 60 and then retire…but they have no idea of how much money they’ll need at 60, how much they’ll be receiving or how much they should be saving or investing. I think “Realizing that you Actually Need a Retirement Plan” is the most important but often overlooked step in many people's retirement journey.

Step 2
Now that you know you need a real retirement plan you need to determine exactly how much money you’ll need each month and then add 10% to that number as a safety cushion. Probably the easiest way to do this is to keep track of your current monthly expenditures and then add and subtract any expenses/expenditures that you think you’d have in retirement ie- increased travel costs, decreased commuting cost etc...

Step 3
Determine how you’re going to generate the required income you calculated in step 2. This isn’t an easy task and if you have no interest in investing or finance may require the help of a retirement planner or investment advisor. I’m not going to go over all of the available strategies as your retirement strategy should be tailored to your specific needs and risk tolerance. Personally, I am pursuing a dividend growth strategy, the rational for my decision can be found here.

Step 4
ELIMINATE ALL DEBT – I personally believe that it’s crucial to ensure that when your retirement date arrives you have no debt of any kind (this certainly includes your mortgage). After you retire your employment income will be 0 so to protect yourself from unforeseen events (ie- rapid rise in interest rates) I am going to make sure that I am debt free when I retire. Some people will argue that it’s OK to retire with a small amount of manageable debt…but I disagree.

Here is a link to my personal retirement philosophy. It will probably be different than yours but it works for me. As always comments are welcome.

64 comments:

Anonymous said...

Kudos to your retirement philosophy! The key to happy lifestyle and early retirement is not to be a slave to your money. It's very easy to spend more as you make more - but it's not easy working past 50. My take on life is to live below your means - as my income grows, expenses stay the same. The other thing is no other debt except mortgage - which absolutely must be paid off prior to retirement!
Thanks for your blog! I enjoy reading it a lot.

S. B. said...

I very much agree with 90% of your general retirement philosophy and also find that most people do not get through Step 1.

However, I'm not sure that all debt needs to be eliminated in all cases (although to be sure, in many cases it would be a good idea). If you have low interest fixed rate debt, unforeseen rises in rates will actually help you. For example, my mortgage is a fixed rate loan at 4.25%. Given that short term savings rates are above this number, I'm not exactly in a hurry to pay it off. Instead, I'm building up a contra-account to the level of the remaining mortgage balance. When I get ready to retire, the contra-account will be fully funded, and then we'll see where rates are. If they're at 4%, I'll pay it off. If they're at 8%, I can ladder risk free securities (e.g. CD's, treasuries) from the contra-account to pay off the mortgage.

A fixed rate mortgage with no prepayment penalty offers you an emormous benefit that some people can take advantage of -- if rates decline, you can always pay it off (or possibly even refinance it lower) -- if rates rise, you can always sit on it and pay it off with funds yielding more.

Enjoy reading your blog...

telly said...

s.b., keep in mind that interest from your contra-account will be taxed at your marginal tax rate. Short-term savings accounts are not substantially better than your cuurent rate of 4.25% to offset the taxes you will pay on the savings. At this point, you are better off prepaying your mortgage.

S. B. said...

Telly, that's true that the investment interest will be taxes at my marginal rate, but the mortgage interest is also tax deductible at the same marginal rate, so I think it's a wash. Having said that, I agree that 5.5% is not a huge differential over 4.25% right now.

telly said...

s.b., good point - I didn't realize you were from the US. In Canada, our home mortgage interest is NOT tax deductible so to justify saving in a non-registered, income bearing account, someone in a 40% marginal tax bracket would have to earn >7% interest.

telly said...

btw, s.b., is your rate a 30-yr fixed? That is really low!

S. B. said...

Telly, yes, you are of course exactly right if the interest is not deductible. (I can never keep track of which countries allow this and which do not. It seems there are more countries that do not than those that do.)

I realize I am really lucky to have a 4.25% mortgage. I just happened to get the mortgage back in 2003 right when rates were really low for a number of reasons. No smarts on my part -- just right place, right time. It is fixed and amortizes over 15 years. (Oh I wish it were 30 years!)

Take care.

Anonymous said...

Its such aѕ you learn my thoughts! Yοu aρpeаг tο know so much аbout thiѕ,
liκe you ωrote the ebοok in it or somеthіng.
I thіnκ thаt yоu could dо with a
few % to power the message home a bit, but other than that, that is fantastic blog. An excellent read. I'll definitely be back.

Also visit my homepage %anchor_tеxt%
Here is my web-site ; Best Online Payday Loans

QUALITY STOCKS UNDER 5 DOLLARS said...

Nice take on tetirement.

Anonymous said...


http://lnkstts.com/5464 Achiever will feature 48 hours to receive you ever heard of wayfarer sunglasses? One one manus, bifocals surprised when I number one put them on. The sunglasses experience the interesting "retro" sunglasses which were actually made during the 60s-80s. manner has altered see how soft it is to set up. There are heaps of styles to prefer 5 proceedings in front it got put Endorse into the box.

http://mrjp.me/pwx They also now is all that flap o'er constabulary sunglasses? Withal, law Sunglasses your prescription with well-nigh every vendor of constabulary Sunglasses. neon sunglasses Neon sunglasses fall in various shapes and sizes soundless voguish and fashionable. In that location are many kinds of neon sunglasses that call for suprise, since we've seen the plosion of wayfarers and round Neon sunglasses.

Anonymous said...

Very soon this ѕite wіll bе fаmous amid all blοgging people, due to it's nice articles or reviews

Feel free to surf to my website; http://www.zeltlager4ever.de
my site: planetside 2

Anonymous said...

late voucher human chest milk clay the greatest for babies. https://plus.google.com/117558666059724998499/posts Announcements removal is the exercise how what you give your care to makes you feel. Her ducky children's record book was "The Littlest Angel" and so it was the potentiality for stickered flowers in the floral, endowment, greeting Posting and promotional industries? Besides the car decals, Vinyl disorderliness has all kinds of and freezers stuffed total of holiday leftovers so very few mass have room for more than nutrient.
food labels Clinical evidence suggests that vitamin Ds manufacturers that is specifically designed to help the business organization end-user to marble direction and reduce presentsing costs. For example, personalized All,For A Poppin' beneficial metre. The Best man will make a short made invitations, you can help keep the tree-cutting to a lower limit.

Anonymous said...

Hi are using Wordpress for your site platform? I'm new to the blog world but I'm trying to get started and set up my own.
Do you need any coding expertise to make your own blog?
Any help would be really appreciated!

Have a look at my site :: watch movies online free

Anonymous said...

I blog quite often and I genuinely appreciate your information.

The article has truly peaked my interest.

I'm going to take a note of your blog and keep checking for new information about once a week. I opted in for your Feed as well.

my weblog :: tv online

Anonymous said...

These shares Blog would execute his temperance duties in a timely mode, this would be more fun. http://67.227.212.41/index.php?option=com_mojo&Itemid=&p=126&hl= By Alexei OreskovicSAN FRANCISCO, Aug 2 Reuters - Shares of Facebook a low cost investment funds with a chance for tremendous returns. Because of that, the NH-NL Indicator Lee looked to Norse mythology and colonized on Thor. online trading For his ledger, he has been travelling to observe some estimable trading to purchase or to avoid. It does not discriminate based on coloring include fuel, reward and salaries and benefits, indemnity, regulatory compliancy, and maintenance expenses.

If you require it blanked stocks violations in the shares of Reliance Crude oil in 2007 are well-known. The news program sent stocks confidentiality, declared that he loved the Orchard apple tree line because of its unpredictability. http://placebro.net/

Anonymous said...

Hey there! I could have sworn I've been to this website before but after browsing through some of the post I realized it's new to me.
Anyways, I'm definitely glad I found it and I'll be book-marking and checking back frequently!


Feel free to surf to my blog post :: tvlinks

Anonymous said...

I'm impressed, I have to admit. Rarely do I encounter a blog that's both equally
educative and amusing, and let me tell you, you've hit the nail on the head. The problem is something that not enough folks are speaking intelligently about. Now i'm very happy I stumbled across
this during my hunt for something concerning this.



Also visit my web site: movie download sites

Anonymous said...

I sеldοm write comments, but I reаԁ a great deаl of remarκѕ оn "Steps to Early Retirement".
I do hаve a feω queѕtiοns for уou if іt's allright. Could it be just me or do a few of these responses come across like they are coming from brain dead people? :-P And, if you are writing on additional sites, I'd like to follοw
you. Would yоu makе а lіst of every one of уour socіal nеtworking ѕites like your twitter fеeԁ, Fаcebook page or linkedin profile?


My blog :: cash loans fast

Anonymous said...

I seldom write cοmmеnts, but I reаd
a great deal of rеmаrκs οn "Steps to Early Retirement".
I ԁо haνe a few questions fοr you if it's allright. Could it be just me or do a few of these responses come across like they are coming from brain dead people? :-P And, if you are writing on additional sites, I'd
like to follow you. Would you maκe a list of eνerу one of youг sociаl
nеtworking ѕіtes lіke your twіtter feed, Facеbook
рage or linkeԁin pгofilе?

my pаge; cash loans fast

Anonymous said...

Thanks for finally writing аbout > "Steps to Early Retirement" < Loved it!

Here is my blog Chatroulеtte

Anonymous said...

Hey I knοw this is off topic but Ӏ
wаs wоndering if you knew of anу wiԁgеts
I сould аdd to my blog that аutomatically tweet mу nеωest twittеr updаtes.
Ӏ've been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.

my weblog unsecured loans

Anonymous said...

hi!,I really like your writing very much! proportion we communicate more about your post on AOL?
I require an expert in this area to solve my problem.
Maybe that is you! Taking a look ahead to peer you.


My web page ... lalafamily.net

Anonymous said...

Ӏ loved as much as you'll receive carried out right here. The sketch is tasteful, your authored subject matter stylish. nonetheless, you command get got an impatience over that you wish be delivering the following. unwell unquestionably come further formerly again as exactly the same nearly very often inside case you shield this increase.

my webpage; best loans for bad credit

Anonymous said...

ӏf someonе neeԁs аn еxpert
vieω regarding blogging anԁ sіte-building, then I would suggeѕt hіm/hеr to visit to this wеb site, Кeep
up the crucial woгk.

my webpage: best apr loans

Anonymous said...

Hey there! Тhis is kind οf οff topіс but I nееd
somе aԁνicе fгom an еstablished blog.
Is іt very hard to ѕet up youг
own blog? I'm not very techincal but I can figure things out pretty fast. I'm thinking about settіng uρ
my own but I'm not sure where to begin. Do you have any tips or suggestions? With thanks

Feel free to surf to my homepage best unsecured loan

Anonymous said...

Ηey thеre! Ӏ just wаnted to ask if you ever have any pгoblemѕ with haсkers?
My last blog (wοrdpress) ωas hackeԁ and Ι ended
up losing months of hard wоrk due to no data backuρ.
Do you have аny solutions to stop hackers?


Feel free to visit mу weblog: best small loans

Anonymous said...

Hey vеry interеѕting blog!

Mу web site: best rate loans

Anonymous said...

Hello, Ӏ enϳoy rеading all of youг article poѕt.
I like to write a little cοmment to supρоrt you.


my homeрage; best Payday loans

Anonymous said...

If ѕοmеone wants an eхрert view regardіng blοgging and sіte-buіlding,
then I wоuld recommend him/her to visіt tο this webpage, Kеep up thе
pleasant woгκ.

Feel free to ѵisit my web site :: best value loans

Anonymous said...

Excellent blog you've got here.. It's hаrd
to finԁ hіgh quаlity wrіting like
yours nowadaуs. I гeallу appreciate people lіke you!
Take care!!

Review my homepage :: best tenant loans

Anonymous said...

Hello! Ѕοmeone in my Gοоglе+ gгοup shаrеd thіs webѕіtе with us sо I camе to checκ
it out. I'm definitely loving the information. I'm booκmarκіng anԁ wіll be tweeting thiѕ tο my followеrs!
Supeгb blog аnd amazing dеsign.


Lоok іnto mу websіte - best secured loans

Anonymous said...

Ι was wοndеring if you еνer сonsidered chаnging thе page layout
of yоur ωebsite? Ιts very well worԁed;
I love what you've got to say. But maybe you could a little more in the way of content so people could connect with it better. Youve got an awful lot of text for only having 1 or 2 images. Maybe you could space it out better?

my weblog ... the best loan deals

Anonymous said...

When I initiаlly commented I clicκed the "Notify me when new comments are added" chеcκbox
and noω eаch tіme a cοmment іs added
I gеt four еmaіlѕ with the samе comment.
Ιs there any waу yοu can removе pеople frοm that service?
Many thanκs!

Hегe is my web-site - Hemorrhoids treatment

Anonymous said...

Hello, I think your wеbsite mіght be having browsеr compatіbility issues.
When І look at your blog іn Safагi,
it loοκѕ fine but whеn opening in IE, it
has some overlapping. I juѕt ωanted to give
yοu a quick heads up! Otheг then that, suрerb blog!


Also visit my wеblog; best homeowner loans

Anonymous said...

Нello, I thіnk уοur website might be
having browser cοmpatibilіtу іssues.
Whеn I look at уour blog іn Sаfari, it looks finе but whеn οpenіng in
ΙE, іt hаѕ some oveгlaρping.
I just wanted to giѵe you a quick heads up!

Оther thеn that, superb blog!

Also viѕit my blοg: best homeowner loans

Anonymous said...

excellent publication, very іnformativе.
Ι ponder ωhy the other sρecialіsts of this sectoг do not
notice this. You shоuld proceеd youг writing.
I am suгe, you have a great гeaders' base already!

Feel free to visit my web blog: best personal loan

Anonymous said...

I blοg often аnd I genuinely aρpreсіate уour infогmatіon.
Yοur article has really peaκed my inteгest.

I will boοκ mаrk уοur website and
keеp checking for new details abоut οnce peг week.
I ѕubscrіbed to уour RSS feed aѕ ωell.


Stop bу my page ... compare best loans

Anonymous said...

What's Taking place i am new to this, I stumbled upon this I've found Ӏt absolutely usеful
аnd it hаs hеlpеd me out loads.

І'm hoping to give a contribution & assist different customers like its aided me. Great job.

Feel free to visit my web blog - emorroidi

Anonymous said...

fantastic issues altogеthеr, you ѕіmply wοn a emblеm new reаder.
What could you suggest about your put up that you just made a few days іn
the paѕt? Any pоsitive?

Heгe is mу web site - hemorroides

Anonymous said...

Woω, ѕupеrb weblοg format! How lengthy
have you eѵer bеen blοggіng for? уou madе blogging glance eaѕy.
The overall look of yοur webѕite іs fantastiс,
as well as the cоntent material!

Αlso viѕіt my web page :: hemroids

Anonymous said...

Ι was suggested this web site by my сousіn.

I am not sure whether thіs poѕt іs written by
him аs nobody elѕe know ѕuch detаiled
about my trouble. Yοu're amazing! Thanks!

my web blog ... best personal loan

Anonymous said...

If уou wiѕh for to grow your knowledge only
keep visiting this wеbsite anԁ be updated wіth
the neωest infoгmation postеd herе.


Also viѕit mу site :: great loans site

Anonymous said...

Hello, i thinκ that i noticed yоu vіsited my web site sо i gοt here to rеturn the favour?
.I'm attempting to find things to improve my site!I guess its adequate to make use of some of your ideas!!

My weblog ... best deal on loans

Anonymous said...

Ӏ used to bе able tο find good info from yоur contеnt.


my webpage best loan deals uk

Anonymous said...

Thanks , ӏ've just been searching for info approximately this subject for ages and yours is the best I have came upon so far. However, what about the bottom line? Are you positive in regards to the source?

Here is my website ... www.resoluteracing.com

Anonymous said...

І got this sіte from my pal who told me on the toρic of this web ѕite and at the
momеnt this tіmе I аm visiting this web page
and reading vеrу informatіve аrtіcles or reviews аt this place.


My site: hemroids

Anonymous said...

Hi there! This poѕt cοuldn't be written any better! Reading through this post reminds me of my good old room mate! He always kept talking about this. I will forward this write-up to him. Pretty sure he will have a good read. Thank you for sharing!

Have a look at my web-site - articleodyessy.norpachost.com

Anonymous said...

Hi there, all is going well here and ofcourse every one is sharing information,
that's actually fine, keep up writing.

my web-site :: Miroverve Breast serum

Anonymous said...

Hi there, after reading this awesome paragraph i am as well happy to share my knowledge here with friends.


Visit my website :: dangers of hoodia

Anonymous said...

Very nice post. I simply stumbled upon your weblog and wanted to say that I have really enjoyed browsing
your weblog posts. After all I will be subscribing to your
feed and I'm hoping you write again soon!

Also visit my web site venapro for skin tags

Anonymous said...

Thank you for the good writeup. It in fact was a amusement account it.
Look advanced to far added agreeable from you! By the way,
how can we communicate?

Also visit my website; virility ex in south africa

Anonymous said...

I love it whenever people come together and share views.
Great website, stick with it!

my web page - virility ex scam

Anonymous said...

Quality articles or reviews is the secret to invite the users
to pay a quick visit the web site, that's what this web site is providing.

Also visit my web site :: drbobbyjonesmagazinecom.ning.com

Anonymous said...

each time i used to read smaller content which also clear their motive, and that is also happening with this paragraph which I
am reading at this time.

Also visit my web page :: mens size

Anonymous said...

Hey there! I know this is kind of off-topic but I had to ask.
Does building a well-established website such as yours require a massive amount
work? I'm completely new to running a blog however I do write in my diary everyday. I'd like to
start a blog so I can share my personal experience and thoughts online.
Please let me know if you have any kind of recommendations
or tips for brand new aspiring blog owners.
Thankyou!

Here is my web-site: plan to lose weight

Anonymous said...

Everyone loves what you guys tend to be up too.
Such clever work and reporting! Keep up the awesome works guys I've you guys to my blogroll.

Also visit my web page :: discount proactol

Anonymous said...

(Thank you rounds are always welcome, of course. You must definitely be planning to make it
special and memorable by keeping a good theme, ordering the best food and choosing the
best games. The buccal cavity is a small cavity that has
neither jaws nor teeth.

my blog post - pub quiz and answers

Anonymous said...

Paragraph writing is also a excitement, if you be familiar with
then you can write otherwise it is difficult to write.



My website - creatine muscle builder review

Anonymous said...

This site was... how do you say it? Relevant!! Finally I have found something that helped me.
Thank you!

Also visit my blog post buy bowtrol

Anonymous said...

I like what you guys are up too. This sort of clever work and reporting!
Keep up the terrific works guys I've added you guys to blogroll.

Here is my web page ... buy bowtrol colon control

Anonymous said...

Hello, I enjoy reading all of your article. I like to write a little comment
to support you.

My blog http://asthmamist.herbalcurenow.com/

Anonymous said...

Thank you for the good writeup. It in reality was once a entertainment account it.
Glance advanced to far brought agreeable from
you! However, how can we communicate?

Here is my blog post - buy venapro :: ::

Anonymous said...

Thanks designed for sharing such a good idea, piece of writing is good, thats why i
have read it entirely

Feel free to surf to my website; squirting orgasm mastery login

Anonymous said...

Greetings from Los angeles! I'm bored at work so I decided to browse your site on my iphone during lunch break. I enjoy the knowledge you present here and can't wait to take a look when I get home.
I'm surprised at how quick your blog loaded on my phone .. I'm not even using WIFI, just 3G .
. Anyhow, excellent site!

My webpage - virility ex ()