Ramblings from Early Retirement

I dreamed of retiring early for years, but I never did any detailed planning to get here. Fortunately, my instincts were good and my income went up faster than my spending. What I did was:

• Know where my money went
• Have a budget
• Save, save, save and save some more
• Invest (semi-)diversely
• Got downsized with a nice separation payment, retirement benefits and pension

I've recorded every penny I spend since I was in college. I started recording everything on paper, moved to a computer spreadsheet and now use Quicken. I think when you know how you are spending your money, your spending is more controlled.

Using my expense records, I prepared a budget and monitored my spending. At least I did for a decade or so after college. Then I just put a portion of each raise into savings. I was saving at a good rate and my spending was pretty consistent, so I went quite a while without a budget plan. Now that I'm retired, I'm back to having a planned budget and making sure I'm on track.

I saved. I've been a saver since high school. The first few years after college, I was primarily saving for short term goals, but I put a little money into the company savings plan as soon as I was eligible. The matching contribution from my employer on the first 6% of salary was free money. After about 7 years, my contributions were at the maximum, 16% of salary. I also put money into a money market fund via payroll deduction. (Pay yourself first.) I was saving at least 30% of my salary for over a decade. When I paid off my mortgage, my savings jumped to about 45%. A few months later, I retired.

My investments are well-diversified now, but that's not always been true. I probably should have had more in mutual funds and less in fixed income type investments early on. My diversification improved over time, but I let a substantial amount of money accumulate in my money market fund. I got professional advice in 2003 and rebalanced the money in the company savings plan. I finally took care of the money market fund shortly before I retired. The funds that I'm invested in may not be the best ones available, but I think they're reasonably good choices.

I was fortunate to work for the same employer for 26 years and have a job with a pension plan and retirement benefits (medical, dental, and life insurance). The last couple of years were not a lot of fun, but I hung in until I could leave with all of my benefits and even got paid for being downsized. After taxes, it was enough to cover a couple of years expenses. With my pension income, the separation payment will last 4 or 5 years, stock market willing.

// posted by SusanBLuvsCrafts @ 10:39 PM