When you picture your retirement, what does it look like to you? Do you see yourself exploring ancient ruins or colonial cities? What about taking surfing lessons on a tropical beach? For a growing number of professionals, retirement isn’t a far-off dream — it’s something they are actively working toward and planning to take full advantage of while still young.
Retiring early to travel the world isn’t a luxury limited to the rich. In fact, by adjusting your expectations and forgoing a few creature comforts, you can have a nest egg that will afford you the freedom to travel before you know it.
An article by Time, authored by Kate Holmes, CFP® told the story of Brad and Cynthia Bowman, a couple from Los Angeles who “realized that the traditional path of marriage, children, career and retirement was not working for them. So they took drastic steps to create a whole new life they love.” The Bowmans aren’t rich, but thanks to their smart planning and a guiding sense of adventure, today they are enjoying a comfortable life in San Sebastian, Spain consisting of “lots of walking, bike riding, cooking and afternoon coffee or wine dates together.”
The Bowmans aren’t the only ones who decided to live frugal lives early on so they could retire and travel the world. Profiled in Forbes magazine, Jeremy and Winnie retired in their 30s by living frugally, paying off debts quickly, and maximizing their income by investing in stocks.
Average people with average incomes are able to live extraordinary lives by choosing to save and invest wisely. Here's the best news: you can do it, too!
Whether you plan on retiring tomorrow, next year, or ten years from now, there are valuable lessons to be learned from those who have done so at a young age. Fortunately for us, Jeremy and Winnie from the Forbes article have a blog outlining their journey to freedom and financial independence. Here’s their advice on the two most important practical aspects of retiring early to travel the world.
On Debt
“Never take financial advice from people that aren’t financially successful. Nobody will look out for your best interests better than you.” Jeremy’s story begins with a serious wake-up call. Fresh out of school and owing more than $40k, he knew that if he was to retire early, tackling that debt would have to be the first step. Taking advantage of his bank’s 12-month interest-free credit offer, he moved aggressively on paying down his student and car loans. By avoiding interest in this way, he was soon out of debt and actively working toward retirement. The lesson, he writes, was that “learning about finances and being willing to be creative could yield untold rewards.”
On Saving
“There is really only one thing that determines how quickly you could join us on the road: savings rate," the frugal couple shares. Ultimately, for Jeremy and Winnie, the math behind retiring early was simple — the more you save, the faster you can do it. To maximize their savings rate, the couple lived frugally, renting an affordable apartment, selling their car in favor of biking and public transportation, and cooking at home instead of eating out. In doing so, Jeremy writes, he and Winnie “eliminated or significantly reduced our cost of living while increasing overall happiness.”
Jeremy and Winnie have been enjoying early retirement for 10 years now but often look back and think about how they could have or would have done things differently. Spoiler alert: they wouldn’t change a thing. Ultimately, they’re really happy with their approach but offer some sage advice for folks who want to take the leap into early retirement in today’s less ideal economic environment.
The 4% Rule
A lot of people who are retiring (young and old) use this as a planning tool. Jeremy and Winnie explain that “the 4% Rule is a rough guide that says you can (probably) spend 4% of your initial portfolio value each year, adjusted for inflation, and have your retirement savings last at least 30 years.” Regardless of inflation, recessions, booming economies, and global financial outlooks, the 4% rule is a good calculator of whether and when you’d be able to retire.
The 100% Guarantee
Remember the adage “nothing is certain except death and taxes”? Without being morbid, it holds true when thinking about retiring early. There are no guarantees. If you determine early retirement is the path for you, be prepared to adjust, devise ways to earn a little incidental income, or even return to full-time work for a short time to help yourself navigate the ups and downs that may occur. Flexibility is key.
To some degree, retiring early is an incredibly optimistic act; it’s certainly unconventional! But it’s not impossible, and it’s not just for the wealthy. With the right planning, the willingness to stay flexible, and a bit of sacrifice in the name of long-term goals, you’ll be kicking back and relaxing on your journey around the world in no time!
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