the cost of time

when we think about our early retirement, we don’t think of it in money terms. we think of it in terms of time. how much more of our life can we reclaim? how much of the world can we see before climate change alters the landscape irreparably? how much can we do while we’re still young and healthy enough to enjoy it?

but, of course, money is kind of a big deal when your goal is to quit working altogether.

here’s our philosophy:

we value time over money. we value people over money. we value experiences over things. we’re willing to live on a whole lot less than we currently earn.

fortunately, that last point (being willing to live on less than we earn) is also great for saving. we haven’t actually spent what we’ve earned in about a decade. we wish others would get in this same mindset, and avoid all of the traps of consumer culture and the financial industry. it really doesn’t take a big income to save, which we’ll for sure write about down the road. of course, earning more can mean saving more, if you keep your spending in check. and for us, as our incomes have increased, we’ve tried to avoid increasing our spending, and that has greatly accelerated our ability to save and pay off our house over time.

but back to the money part. we aren’t going to share actual dollars here, because everyone’s situation is different — different costs of living in different places, different expectations about what’s worth spending on and what’s not, different income levels to save in the first place, etc. it’s also just the one personal detail that we want to keep to ourselves. but here’s some structural info.

we’re planning to retire well before the legal retirement age, but we’ve also been saving for a long time in our 401(k) plans, which we will be able to access down the road. so we have our plan set up like this:

  • taxable savings $: to get us from age 41 to age 59 1/2
  • 401(k) $: for 59 1/2 onward
  • house paid off before retiring
  • (note: we are not planning to receive anything from social security, and if we do one day, that’s a bonus.)

we are believers in the 4 percent rule, which says roughly that you are safe withdrawing up to 4 percent of your total savings in any given year without depleting your principle investment. so technically, as long as our taxable amount and 401(k) amount together have enough in them that we can withdraw 4 percent per year and live on that amount, we should be good to go. in our case, it’s not quite that straightforward, because we have actually done really well putting away money into our 401(k)s, and have more there than in our taxable accounts. so withdrawing 4 percent of the total each year would deplete our taxable accounts before we can withdraw from our 401(k)s without penalty.

instead, we’ve built out a plan that assumes a three percent rate of growth in our principle each year (we should expect to earn more than that most years, but are also adjusting downward for inflation), and a certain level of withdrawals that feels right to us after careful budgeting. and those two factors combined have told us what our taxable savings total needs to be before we can quit our jobs. for us, it’s about 10 times what we plan to withdraw each year, to get us to age 59 1/2.

of course, if we need to push beyond our target date of december 2017, then we actually need a little less, so at a certain point, we’ll make it happen, even if it’s not completely on-time.


3 thoughts on “the cost of time

  1. I’ve just found your blog and love your perspective. I haven’t read much of it, so perhaps someone else has point out to you already the concept of the Roth IRA conversion ladder? This allows you to roll money out of your 401(k), pay income tax on it, and let it sit for five years in your Roth. At the end of the five years you can spend the amount withdrawn without penalty. This can cut down the amount you need to save in taxable accounts considerably! I’m not sure who to credit with this concept but I believe the Mad Fientist covers the concept in detail in his blog.


    1. Hi there — Thanks for this tip! We’re definitely familiar with the Roth conversion ladder, and it’s one of our many backup options, but we hope not to need to do this! :-) Thanks for commenting.


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