The ideal time to start is yesterday and the second best time is today!

beer can with koozie, stating "this $1 beer cost me $88)"

The best time to start what you ask? Saving and investing for your retirement, of course! That title captures some wise words, I hope you agree – or soon will. It’s certainly never bad to start saving at any time, but playing catch up can be expensive – both in terms of increased dollars needed per unit time to achieve one’s goals, as well as the tradeoffs you have to necessarily make to save more. If you have designs of early retirement as I did, it’s crucial to think about this concept sooner rather than later and to act accordingly. It is effort that will pay off many times over.

Multiplication is our favorite mathematical operation

I’ve mentioned my favorite financial podcast, The Money Guy, before. I was lucky enough to score one of one their insulated can koozies in the past, hence the picture you see here. Most people who would read a financial / early retirement blog understand the power of compound interest. However, the sheer magnitude of it can still surprise even the most informed person when they are presented with the data. The photo here is a great example. It’s represents that considering the projected S&P 500 index growth over time, every dollar invested in an associated index fund by a 20 year-old can be predicted to manifest an $88 value by the age of 65. Now that is powerful multiplication! For more info on this topic including the multipliers for different starting ages, check out “How Powerful Are Your Dollars?” on their Resource page . That resource and this post are great to share with recent high school graduates, those still in college, or those off to their first job. The message is simple: the dollars you save early on are powerful and should be prioritized!

Getting started: Don’t leave stacks of cash on the table!

I’m often asked how to get started, particularly right out of college or in that first job after high school (though knowing what I know now, I would have started contributing to a Roth IRA as soon as I had earned income in high school!). Many people will state they simply aren’t able to save very much – and certainly not to the tune of 15-20% of income that many in the financial advisement community rightfully recommend. The first concept I always raise is to not leave “free money” on the table. By that I mean if you are fortunate enough to be at a company with a 401(k), 503(b), or other retirement vehicle with an employer match – do whatever you reasonably can to contribute up to the match! Otherwise that free money offered up for you will not be in your investment portfolio.

Deferred gratification is your most powerful tool

OK but how can you contribute enough to realize that match? Of course you have other expenses competing for dollars: rent, bills, perhaps student loans. This is where the concept of deferred gratification comes in. It’s worth evaluating your full spectrum of options. Do you “need” a new car or truck right out of school? Of course not. You could drive your existing car longer, buy used, or maybe you don’t actually need a car, because you have other transit options. Maybe it makes more sense to rent vs. buying a home? It’s tempting to fall into the trap of lifestyle creep just because your income “allows” it. Take it from me – it’s better to drive that clunker a little longer, because the investment dollars in those early days are worth so much in the long term. I drove my old Dodge Dart, followed by my base model Saturn (read: no power steering) for years before I finally bought a new car. And I didn’t buy a “nice” car until I was in my 40s. Why? I wanted to save more for retirement and I didn’t “need” a nice car. These are choices, of course! But delaying those bigger ticket items longer means more ability to save when the impact is the greatest. On this topic, if you haven’t read “The Millionaire Next Door” by Thomas Stanley, I’d recommend it.

The earlier you get comfortable with the concept of deferred gratification, the better. I recommend you make it your practice to increase your investment contributions every time your income increases. Some retirement plans have an option to do this automatically when you get a raise, which is great! Otherwise, the inevitable lifestyle creep can rear its ugly head. That means spending more just because you’re able to do so, which is completely in conflict with any goals of early retirement. It’s not a race to “keep up with the Joneses” after all, right?

So life is just toil and NO fun, is that the key to success?

Of course not! We all get to decide every day how we allocate the dollars we have coming in. I merely suggest that I believe it’s important to really think about your priorities and ensure that your savings match those intentions. For my family, we decided long ago that experiences were valued much higher than “stuff”. So we were elected to put our money towards a nice vacation once a year, along with less costly trips (National Parks visits, for example) in between. We have always felt that the return on our “invested” dollars for vacations was huge! This is something we absolutely will continue to do in retirement, and for which we have budgeted explicitly. You need to decide what is most important to you. As far as I know we get one shot at living so of course you need to enjoy it in the ways that make sense to you.

Bringing it home

Prioritizing saving was definitely central to my own path towards early retirement. I also didn’t stop with my 401(k). I started contributing after-tax dollars to a brokerage account as soon as I could, along with increasing my 401(k) as my income grew. I did this because for me and my family, my retiring early was a priority. If it is for you as well, I encourage you to do a few things: evaluate your budget, and see where there might be opportunities to increase your savings rate. Look into automatically increasing your investment rate as your salary increases if this is an option. Consider whether that big ticket item you’re considering truly is a priority now, or if it can be deferred for a later date. If this is all a big ball of confusion, consider talking with a financial advisor – one with a fiduciary responsibility to you. You don’t have to go it alone.

Good luck! If early retirement is your goal, take a look at your own situation and what you can do to achieve financial independence (FI) sooner!

I achieved financial independence. Now what?

what's next in scrabble tiles


You’ve worked hard, did all the right things, and can retire now if you want – because you achieved financial independence (FI)! Should you retire? How do you know that you are truly ready? Even if you are certain, what do you do next? There are a whole host of questions that come to mind, either because I’ve worked through them in recent years or because others often ask them of me. My aim here is to touch on a few of these items, some of which could (and likely will) be their own post at some point

I’ve checked the box on FI – should I retire?

As I’ve written before, a key milestone in the decision making process about retirement is when you achieve financial independence – that is, when you are able to fund your expenses through the end of your life without your career income. See my linked post for the math behind that decision. But just because you’ve achieved FI doesn’t mean you should retire. That’s a very personal and impactful decision (though not irreversible!) and one that warrants sufficient thought. If you love your job and feel fulfilled by it, perhaps you’d like to continue on a bit longer. Saving even more for retirement, having more money in the vacation fund, or putting a down payment on that RV you want for when you do retire, all become that much easier if you don’t stop working right away. FI simply means that you now have the freedom to retire when you are ready. It’s an important distinction.

A related note: many people choose to “ramp down” working once they nearly achieve FI or once they reach it, to maintain some income. You may encounter terms like “barista FIRE”, in reference to leaving your primary career for an “easier” job or perhaps one that’s part time (like working at a coffee shop, hence the name). This is certainly an option and one that could mean you still have employer-sponsored healthcare in the US. That’s a handy way to delay or eliminate the expense of out-of-pocket health insurance premiums, something my family has elected to pay given that I am no longer working. There is no “best way” to proceed here – you need to choose what works for you and your family.

I’m ready to retire but have no idea what I will do when I stop working!

First , to quote a favorite book of mine: “Don’t Panic!” This sounds to me like a great time to start brainstorming. This is a pursuit best started at least a year before you leave the workplace. If you don’t have any idea of what you will do in retirement – no bucket list, no clear list of hobbies or volunteer opportunities you’ve been setting aside for years, you are in luck! There are few things more rewarding to start thinking about what you are going to retire to once you stop working. Some people have a very clear idea of this and will skip reading this section entirely – and that’s great! But the rest of us need to spend the time on this key point. However, don’t feel like you need to architect an amazingly detailed plan with a clear timeline and a stack of accompanying spreadsheets (but I totally approve of using spreadsheets to capture your brainstorming!). Start high level in your thinking. Are there things you used to enjoy doing but stopped and don’t know why? Are there trips you and your family always hoped to take but never seemed to put it together? This is a rewarding line of thought and one that it’s great to engage your partner or family in as well!

Yes, I’ve got a long list of interests but is that really enough?

OK so you have some ideas but you don’t have a precise master plan i.e. “I want to live in my cabin, fish each morning, volunteer at Habitat for Humanity three afternoons a week, and take three, two-week RV trips each year”. My opinion: that’s totally OK! I’ll be honest – this is a big one for me. I did lots of brainstorming over the period of a year before I left my last employer. I have a ton of interests, many hobbies I’d abandoned or wanted to try for the first time, and a long list of trips my family would like to take. I’m a 25+ year homebrewer (beer) and have often dreamed of opening a small brewery and tasting room in “retirement” – this is what most people assumed I’d do once I left biotech. However, all that thinking hasn’t produced anything concrete – and I’m ok with that! I knew I’d have plenty to do at the new house, have a few interests I wanted to explore that could generate income, and of course wanted to make some progress on those hobbies! Additionally, I’ve always had the thought that I’d eventually start a small business on my own. I tried talking through this “decision” with colleagues once my impending departure was known, but without much success. Admittedly, I got frustrated with the confused responses I was getting and in the end my messaging simply became “I’m leaving this field and am not sure what I’ll do next. It will be something for myself, likely part time”. Quite honestly, I wasn’t really comfortable expressing the lack of certainty I had about my next steps even though I was OK with it. Most importantly, both my wife and I were on the same page. So why care what others think, right? Your retirement is for you and your family!

In conclusion

Retirement is the freedom to spend your time how you want! That might mean you have a very specific plan and it may not. Either way, you don’t want to take this leap without thinking through it. There are too many articles about post-retirement depression or people who return to work not because they wanted to, but because they weren’t really sure what else to do with their time! I recommend that you think through these things and have a plan for at least a good starting point once you retire. Be sure to give yourself the space to do this thinking! A family trip a couple of years ago comes to mind, where during a free afternoon I went off on my own with a notebook. I sat outside, had a couple of beers, and brainstormed. Having some vacation time under my belt really cleared my head to think through this weighty topic! That afternoon led to some fruitful conversations with my wife, some more research, and then a few more brainstorming sessions. The process continues today! But I’m much more comfortable with my lack of certainty now. Heck, I’m more apt to feel overwhelmed by all the things I want to do each day rather than concerned about not having a detailed plan! That’s a really great problem to have, and I feel fortunate to be in this position.

I’d love to hear your thoughts in the comments!

photo credit: “What Next? Scrabble” by jeffdjevdet is licensed under CC BY 2.0

Pursuing your passions in retirement

ingredients for mole negro

This morning I found myself thinking about retirement and how it provides the time to pursue your passions. Obvious, yes, but it’s another example of something that you can’t truly appreciate until it is upon you. I have always had a lot of interests and hobbies. When I take time to reflect, I realize just how many of these pursuits that I largely or wholly set aside during my busiest work years. This is something that I looked forward to changing in retirement!

One of my passions has always been cooking. I worked in restaurant kitchens during college, consume cooking shows like they are going out of style, and own many cookbooks. But when I think about it, the last ten or so years of my career were largely bereft of cooking. Even when I did cook, it was very simple dishes (thank you for your service, Instant Pot!) and largely heating up things without a lot of effort. Thankfully my amazing wife took up the charge and ensured our family always had good food to eat.

I’m happy to say things have completely changed in retirement. I now cook two meals most every day and ensure that at least one dinner a week is something special. We are following our budget, so don’t think I mean caviar and vintage champagne! Rather, I mean preparing a dish that is made of simple ingredients which prepared thoughtfully, results in something great. My latest passion is Mexican cooking. I’ve owned a wonderful cookbook for years: Rick Bayless’s Mexican Kitchen: Capturing the Vibrant Flavors of a World-Class Cuisine. It’s a fantastic resource that I can’t recommend enough. In particular I am enjoying making the famous moles of Mexico. I’ve even started a simple Notion database of the moles I’ve made to track them, one I’m happy to share with you. Please be sure to let me know if you make any of these – and share your tips!

One point of caution: I have found that even in retirement it is all too easy to be distracted by chores, things that have to get done around the house, etc. All too quickly, the hobbies and other pursuits can be put out of mind as if you were still in your career. I’ve caught myself on this already, particularly when we were organizing the garage. Whether you are retired or not, I think it’s vital that you remember to create space to follow your passions – cooking or otherwise. It is always so fulfilling, no matter how little time you may be able to allocate in a given week. And if you are retired, you have no excuse! You worked hard to get to this point and you should ensure you enjoy it!

What are the passions you intend to pursue in retirement, whether they are things you already do or not?

image credit: my own photo of all the ingredients needed to make mole negro (black mole)!