Well, not quite, but this is the first step. Like most Americans, I currently have health insurance through my employer, which unfortunately acts as a double-whammy in the event of job loss: If you quit or otherwise lose your job, you also lose your health coverage, or have to pay through the nose for temporary access to COBRA. So-called corporate health insurance therefore functions as a set of golden shackles binding people to jobs they may no longer enjoy just for the sake of keeping affordable health coverage for themselves and their families. For someone considering early retirement or self-employment, this is a giant disincentive. Continue reading
Last Saturday, after my customary cup of homemade iced coffee – as is typical for me on a hot Texas summer morning – I gazed out the window and decided it was high-time to attack the grass, which has been growing with reckless abandon since we actually had a few drops of rain recently. Rain can be a rarity in south TX, so I don’t begrudge the grass its growth, but I knew I had to do something about it.
Some of my neighbors reached the same conclusion, and before I could drain the java I could hear their yard work commence as they fired up their lawn mowers, edgers, weed whackers, and leaf blowers. Thus, the Saturday-morning noise pollution began. Continue reading
Previously I posted the content of my taxable investment portfolio. In that same spirit, it’s now time to sneak a peek inside my tax-advantaged accounts. Here’s how everything looks as of August 2012.
Roth IRA – Through Schwab
If one uses the age-in-bonds method to derive asset allocation, then the current split of 70% stocks / 30% bonds in my Roth IRA is tilted slightly to the aggressive side (I’m 33 presently). However, I prefer to consider asset allocation on a per-account basis and not worry about the whole. In my mind, if I take care of each gear, then the machine will run smoothly, and I spend little time worrying about my overall asset allocation. Each account has a purpose: my taxable investments must grow and generate enough dividends to augment my early-retirement income up to age 59.5, and my two tax-advantaged accounts will patiently wait to grab the baton and run from there. Continue reading
For the past few weeks I’ve been writing articles in which I started
fantasizing planning for an early retirement. You can read those articles here:
- Part I – Setting a Budget
- Part II – Determine Your Retired Living Expenses
- Part III – Build Your Income Streams
Especially in Part III, I discussed building a portfolio of passive investments with the ideal goal of having them yield a minimum of $500 in monthly dividends. Before I reveal my decisions about which investments I have chosen, first allow me to make a few points clear. Continue reading
Crafting an early retirement plan involves the harmonic interweaving of multiple components. During pre-retirement, we have a long period of asset buildup, which basically involves living frugally and socking as much cash into investments as we can while still drawing a salary. We examined this phase in Part I.
Once that salary ends, a new phase begins. My projected life in early retirement involves an elaborate dance between satisfying necessary expenses while still living a frugal lifestyle and building a few different streams of extra income. In an ideal situation we can continue to earn more than we spend each month, thus continuing to add to our investment war-chest, thus increasing our dividend income, thus reducing any anxiety we might feel at first about major expenses, such as a roof replacement on the house. Continue reading
In a previous article we looked at creating a budget for your pre-retirement life, as it’s the first crucial step in going down the early-retirement path. At this point we’re going to skip ahead a few years. I say a few optimistically, because it sounds emphatically better than saying, Let’s skip ahead 26 years to when you may finally be able to retire early at age 59, you peon.
OK, so let’s play a little game. Go ahead and imagine that you just retired at the ripe old age of 35, 40, 45, or whenever it is that you’re finally able to stop working for The Man. Congratulations! Feels great, doesn’t it? For the sake of this game, let’s also imagine that the mortgage is paid off as well, as I consider the lack of monthly mortgage / rent payments an integral component of our early retirement plan. Continue reading
Since I’m now getting serious about retiring early, the first step is to formulate a master plan on how to get there. Everything I’ve learned so far tells me that there is a simple formula on how to achieve early retirement: Spend less money now + earn more income however you can + invest the difference = NO MORE BOSS. Over time, your savings will compound into a big rolling snowball that will eventually become monstrous and flatten your future expenses.
Sounds simple, right? Yes, it’s such a simple formula, but the discipline to rigidly follow it is ridiculously difficult. Oh well, a journey of a thousand miles begins with a single step. Continue reading