Hello everyone! Thanks for stopping by The Green Swan. Today’s post is from Matt at Distilled Dollar. Matt is a 27 year old CPA living in Chicago with his girlfriend and cat, Pebbles. He started his blog earlier this year and is also on the path toward early retirement. I haven’t built up the courage yet to share my early retirement plans with the in-laws, but Matt and Mrs. Distilled Dollar did so with his future in-laws earlier this year. Enjoy!
Our Experience Revealing Early Retirement Plans to Family, Accidentally
When it comes to discussing retirement plans, I typically shy away. After all, money is one those taboo topics that rarely is brought up. As a CPA, I probably find myself in an above average number of conversations relating to money, but I was still completely shocked when our early retirement plans ended up being openly discussed with my girlfriend’s parents.
For the record, the conversation went smoothly and each party spoke respectively of the other. Often times, we associate a disagreement with an argument, and that was not what we had during our dinner conversation. While everyone had a different opinion to bring to the table, the final resolution was a healthy discussion on the topic.
To provide some background, My girlfriend and I plan on reaching Financial Independence, or FI, in our mid 30s. FI for us, means our income from accumulated assets can cover all of our expenses. In this sense, we can effectively declare, ‘early retirement’ and never have to work again.
If you’re familiar with the early retirement or financial independence community, then you’re already aware of dozens of examples of people in less than thriving circumstances who are faced with more obligation, yet they are still able able to reach FI or, aka ‘early retirement,’ in their 30s.
I use quotes for, ‘early retirement’ because the term denotes a lot of different things to different people. When I think of ‘early retirement,’ I think of the example left by Ben Franklin, where he worked hard every day until the age of 42. At that point, his business was built up so large that he stopped focusing on work so that he could pursue his interests in politics and science.
Ben understood that, “lost time is never found again,” and so I too feel like living a good life will only be enhanced by financial independence.
Even though pursuing financial independence is a deep belief my girlfriend and I share, we’ve held it close to our hearts until recently.
Before having that late night conversation with her parents, we recently had our plan “approved,” by a financial advisor. This was someone who cold called me out of the blue, so I took him up on his offer to walk through a few things.
For the first time for either of us, we were telling our plan to a “professional.” While I was confident in my own forecast, I was seeking some reassurance from an independent third party. Plus, it is always helpful to have a fresh set of eyes to spot any potential blind spots.
After hearing we were well on track, we had no intention to bring it up with anyone else again for some time, but it basically slipped out during a recent dinner conversation.
My girlfriend’s father had mentioned the trouble he faced with saving for retirement over his career. My girlfriend then mentioned how we are doing a great job today by saving a lot. One thing led to another and she mentioned we are on track to reach, “early retirement” in our 30s.
The initial reaction was that this was a foolish plan because it was impossible.
Being an engineer by trade, my future father-in-law asked for some numbers. I provided the often cited 4% rule and mentioned we would need to save in the ballpark of 25 years worth of our expenses. I also mentioned our annual expenses might actually drop after we leave the workforce because we can avoid many of the expenses related to working a full time job.
Again, despite our plan of being on track to reach our goals, the response was that it was impossible because of two reasons.
First, no one else had done it. I tried to explain there are various examples online of others who have accomplished what we are seeking to do, but without any real reference points of experience, we simply weren’t on the same page…
We quickly agreed to disagree on this point.
Second, was lifestyle inflation.
To some degree, I’ve already accounted for some lifestyle inflation in our plan because I do want to live in a nicer place, travel more frequently, and dine out more. I have no plans to eliminate many of my other frugal hobbies such as cooking, but I would like to vary it up more often.
A point on which we all disagreed was where we would see our lifestyles inflate. My girlfriend and I believed we would spend extra money on travel, or more wine and cheese nights. My girlfriend’s father believed we would spend much, much more on a larger house and cars.
We were not opposed to buying a home, but we definitely did differ on how much space we need to be happy.
Given the focal point of the counter argument against our plan was an unknown factor in the future, we basically resolved to see what happens in five years time. This will be the ultimate test to see if we were right all along.
Overall, I’m glad we briefly discussed the topic of pursuing financial independence at dinner because we all learned a few new things. If I had to do it over again, I would still maintain my shy approach. Even though we are excited about our plans, we are in no place to bring them up unsolicited with other people because others will often think of their own financial problems or stresses. Even when asked directly, I still prefer to say as little as possible because discussing early retirement involves peeling away many private layers to have a honest conversation.
Have you ever discussed early retirement plans or your pursuit of financial independence with others? How did the conversation go? If you stay away from topics about money, are there any situations where you do bring things up?