Simple Financial Concepts Helped My Friend Retire Early

Today I went to lunch with a couple friends of mine. One is someone that I currently work with and the other is someone that I worked with for a few years until he retired last year. I’m only 36 but by talking to my friend, I could just tell I’m going to really love retirement. My goal is to get there at 50. My friend, who we’ll call Jack, has no idea how inspirational he is to me. He retired at 50 and is having the time of his life. Every time I see him I do my best to pick up new tidbits of how he got there at such a young age. We talk about personal finance a lot when we get together so I’ve managed to pick up a few of his tricks. Here are some of the fundamental things he has practiced during his working life and now continues to do in retirement.

1) Spend less than you earn.
This seems so basic and is mentioned on just about every personal finance site there is, but it is SOOOOO true. Jack is living proof that simply living below your means can drastically speed up your retirement. He made an average living his whole life and simply made sure that he didn’t spend everything he made.

2) Find pleasure in the simple things.
Jack told me something today that really stuck with me. We were talking about traveling and while he likes to take 1 to 2 day trips around the Pacific Northwest, he said he also likes to enjoy the sights closer to home as well. He told me today, “If you look around, you see tourists that have obviously traveled great distances to visit places around here. I get to visit the same places without all the cost”. So true, so true. There are a ton of places that I haven’t been to in the Pacific Northwest. I need to do some research and make a list of all the places I would enjoy. I can think of a few right off the top of my head and there are no long road trips or expensive airplane tickets involved. Last time I talked to Jack he told me about his travels to some of the college towns in the area. He and his wife enjoy seeing college theater productions and are able to take in some great shows on the campuses. They love to stay in the campus housing when they can and eat at the dining halls on campus. The prices are cheap, and it’s a fun adventure.

3) Own cars that make financial sense.
Uhhhh yeah, this is a great lesson for me. I’ve pulled more than a few idiot moves over the years when it comes to cars. Jack joked that back in the 70’s he used to drive a Datsun 1200. People that he didn’t know would walk up to him and say, “That car is horrible. It’s unreliable, is a death trap and is not worth driving”. People literally would say things like that to him and they didn’t even know him! A few years later, during the gas crisis, new people started asking him questions about the same car. “What kind of gas mileage does that get? Have you had any trouble with it? Would you recommend a car like that?” I couldn’t help but draw parallels to the current gas crisis. The people out there a few years ago laughing about how their huge SUV or pickup could eat a Honda Civic for lunch, are probably thinking about snacking on a nice small Civic or Corrolla themselves now. Any way you slice it, 35 miles per gallon is sexy these days. Anyway, back to Jack. Today he drives two very fuel efficient, small cars. It’s just one more way that he lives within his means and is able to enjoy retirement now.

4) Minimize non-essential spending.
I was dumbfounded to find out that Jack doesn’t have an internet connection or computer at home. There is a library near his home that they go to every few days to check email and do online research and other computer related tasks. The library even offers laptops that you can check out while you are there so that you can sit comfortably and do your thing. A quick math calculation tells me that Jack is easily saving more than $500 per year on internet connection costs and PC related costs. Cut out a few things like that each year and it really starts to add up.

5) Maintain absolutely no debt.
Jack paid his home off years ago. He and his wife live in a nice two story house that doesn’t even come close to a McMansion and would definitely be considered modest by most people. The only housing expense he has is upkeep and taxes. That’s a huge game changer when you want to retire early. They own both of their cars and have no payments on them as well. Not having any debt puts him light years ahead of most people. Houses and cars suck up so much of a family’s income that it’s easy to see how they are a huge hurdle when looking at retirement.

You can bet that next time I talk to Jack I’ll be listening for those subtle clues on how he and his wife live their life, to pick up any solid tidbits about living economically without feeling like I’m missing out on life. The thing about Jack is that he is so at peace with life. He mentioned that it was nice to be able to go out to the beach last week when we had a record low tide to explore all the sea life that is normally not visible. That was all over the local news last week. He pointed out that during his working career he could have never done that. Because he retired early, he thought nothing of driving out to the beach to spend the day exploring with his wife.

If you haven’t picked up on the theme of this post, I’ll be more blunt. The bottom line is that Jack and his wife are feeling excited and alive because they didn’t spend their life accumulating useless crap that was paid for on credit cards or with home equity. By following some pretty simple concepts of living below their means, watching what they spend, and obviously saving all the extra, they have been able to take control of their futures and do what they want each day for the rest of their lives. By living this way their whole life, they were able to find the beauty of the simpler things in life. They didn’t need to spend their way to some sort of materialistic satisfaction and now that they are retired at 50, they can continue to live that way and do it by their own rules.


  1. money_wise says

    These are great principles to follow to live a a fulfilled life. I guess you probably don’t know that, but I wonder what Jack was making annually and how much he was able to put away and what tools did he use to be able to retire at such a young age? Did he use a Roth IRA or a combination roth/401K. Did he have to save to send his kids to college? It would be interesting to see how difficult or easy it was for him and his wife to accomplish this feat!

  2. Hazzard says

    If I had to guess, I’d say he probably worked his way up to about $75K per year over his career. After being at the company for over 25 years, I’d bet he started below $15k. I’d consider it an average income. I do know that he paid for his daughter’s college and he only had one child. I’m sure that he maximized the 401k at the company that had a 6% match. He also gets a pension from the company, although that is intended to only replace about 40% of his income in retirement. I’m sure he had a significant penalty retiring early.

  3. ladyroo says

    That’s great, assuming they both are blessed with good health. I knew a doctor and his wife who scrimped and saved all their lives for the traveling they would do in retirement. In the 80s she was still wearing her 50s dresses and hats, afraid to spend a penny. The doctor dropped dead of a massive heart attack one day during his hospital rounds – at age 60. I sometimes wonder what became of the wife and her dreams. My point is that a lifetime of frugality can easily backfire, so I’m trying to balance mine with some current but not extravagant enjoyments.

  4. Hazzard says

    I completely agree. That’s why I have the tagline: Living for today – planning for tomorrow

    It’s all about good choices and moderation!

    And yep, they are both healthy and enjoying their retirement at 50

  5. Alex says

    The think the truth is to save the 25% of your earning and make it work for you in another place, industry. I retire at 40 and for me has been a the must wonderful thing I accomplish in life, to be with my daughter all the time I want, quality time.
    I do work some things in my computer during my trips around the world to be updated.
    If can do it of course you can.

  6. says

    It’s terrible that some people feel they have to spend money to have a good time. In my opinion, grilling at the house and playing music is the most fun I can have. And it only costs around $20 for everyone to have fun.

  7. Hazzard says

    Just a quick update on “Jack”. He has been retired for a few years now and was just diagnosed with prostate cancer. I think he has a relatively good prognosis. I’ve found myself thinking, “Did he sacrifice too much through his earlier years in anticipation of a long retirement, only to be facing a much shorter life than he envisioned? Should he have spent more money earlier to enjoy himself more? I still think he made the right decisions because, a) he’ll most likely make it through this and live many more years and b) regardless, he found joy in life without subscribing to the materialistic ways that so many people practice. I don’t think he would have been one bit more satisfied with life if he had opted to spend more and save less, in fact, I think it would have just added more anxiety to his life in the earlier years.