Retirement Strategy Revisited

retirement strategyBack in September 2013 when I started this blog, I wrote a short post about retirement strategy. It was my third post, and it listed out my basic retirement strategy while serving as an outline for what I’d write about on the blog. This post is an updated version digging deeper into my strategy.

A Side Effect of Blogging

Blogging about finance has a valuable side effect. Before sharing written words with the world, I make damn sure what I write makes sense. I think through my financial decisions thoroughly before taking action, and when I write about them, I know what I write is the best strategy for me while readers can compare it to their own situations. To put it simply, blogging about my retirement strategy and progress makes my strategy and progress better.

A case in point, while writing a previous blog post using the Roth IRA for early retirement, I learned that even though my wife no longer has income, we can still open a spousal Roth IRA in her name, doubling the amount of money we can save using that tax-advantaged vehicle. Before writing the piece, I thought she needed income. Through this research, BOOM – an extra $5500 of tax advantaged savings is available to us every year. Had I not written that blog post, I may not have figured that out and would have missed an opportunity to save more.

Retirement Strategy

Below is the list of subject that I consider paramount to reaching my retirement goal.

Smart Debt Usage (formerly Minimizing Debt Usage)

Early on I wrote a post about the history of my debt usuage. I haven’t had any consumer debt for the last 10 years or so. The debt I carry is for my home and rental property. Both are at healthy levels.

My debt usage is conservative, so I’m open to taking on some more debt to purchase another rental property. I’m exploring the use of a HELOC on my home as part of this rental purchase. Buying the right property would be smart debt usage, and the opposite of minimizing debt usage. In fact, it would be maximizing debt usage.

Update – I have recently taken on some debt to pay for a home improvement project. I’ve considered using home equity to invest, but have not found a viable investment worthy of going into more debt for.

Spending Less Than I Make

Plenty of writers focus extensively on this subject. I’ve created a spreadsheet to calculate my monthly savings rate and it averages somewhere around 50%. I’m happy with this percentage considering our house payment is quite high because of the area we live in. Frugality blogs are plentiful, so unless I have some kind of tax-advantaged way of saving money to share, or savings on a larger scale than couponing, you probably aren’t going to read a lot about that here. Nonetheless, it’s an integral component of financial independence.

Dividend Growth Investing (DGI)

This is a topic I cover frequently on this site. It is the foundation of my strategy to achieve my retirement goal, but not an exclusive tactic. You can look at my most recent monthly update on the investment income tab here to see my current holdings. Many of the blogs I follow focus almost exclusively on DGI, and its a good strategy. But I want to continue to diversify into other income producing investments and ventures. Expect to read a lot more on DGI as I aim for my goal to own 20 stocks by the end of 2014. You can check out my blogroll of other like-minded investors here.

Real Estate Investing

I met with a real estate agent last week to talk about starting a serious search for a rental property.  Done correctly, this could be a great development in my retirement plan. Done poorly, it could ruin it. From the looks of things, my local market is tight and investment opportunities are scarce.

Everything there is to know about my current rental property was covered in the post entitled The Details of My Rental Property. My tenants continue to pay on time without any issues. The unit has a roof leak, but that is an issue for the condo association to address. The condo association kept our HOAs flat for the year because they are in a strong financial position. They are completing a lot of needed maintenance work and updating some of the trim outside the condo this week. Every few months I get a minor headache from something that goes wrong there, but it usually goes away after a few days. Having excellent tenants is a big help.

Parenting and Family Planning

When our son was born, we had so many questions about his health. He was 100% healthy, but being new parents we were still nervous and clueless. Our pediatrician told us that the easiest way for parents to impact their child’s health in a positive way is to have a healthy marriage. Fortunate that our children were born healthy, we now need to provide a healthy environment for them to grow up in.

This is another topic I don’t write about much here because I think my readers come for other information. I’m still a new Dad with my oldest being just two years old. Being a Dad is part of this blog’s narrative, and I think it’s useful for other parents and those hoping to be parents one day to read it in that context.

On days I’m in the office, I see my kids for 3-4 hours almost every night. Days I work at home I see them throughout the day. I’m learning a lot, but always keeping in mind that everything I do and say will affect their futures.

We plan to raise them to be completely independent by the time they are in college so that we can travel. Family problems can derail a retirement. I wrote about this in the post Learning From Your Coworkers Who Cannot Retire where I describe a guy who worked until his mother died at age 95, because he had to. His situation, and others I’ve encountered, shape the way I think about raising a family while planning my retirement.

Meticulously Tracking Progress and Forecasting

I like spreadsheets. Some are overly elaborate. In a recent spreadsheet I forecast financial independence by age 51 or 52. Since my goal retirement age is 55, I was happy to see this. However, it was just one model of financial independence, and subject to endless tweaking. Someday I may adjust my retirement date, or redefine retirement, or enter some kind of pretirement. But for now my retirement date holds steady.

Educational Saving and Investing

I have chosen to pay for my kids’ college. This will be a huge expense and will likely delay my retirement date by a few years. But in my mind, it’s worth it. My Dad has always said paying for his kids’ college education was the best money he ever invested. I tend to agree that the right degree, at the right school, for the right price is a great investment, and one of the most generous gifts a parent can give.

I started a separate page on this blog called Virginia 529 Simplified that I developed during my own exhaustive research. I continue to update it regularly when I learn something new or a link changes. Just the other day I found out the tax-advantaged limit I was using was wrong because the law can be interpreted a different way.  If you live you in VA and have kids you may find this page very helpful.

Opportunity Savings (formerly Emergency Savings)

My cash account is relatively large because I am saving for a rental property. I recently read a blog post by J.D. Roth about Opportunity Savings. This post inspired me change the way I think about this bank account full of cash. It is more of an opportunity savings account than emergency savings. I’m well past the 3-6 months of recommended emergency savings, so this money will more likely be used for good opportunities that come up, be it a rental property, undervalued stocks, a business opportunity, P2P lending, or some other place I can get a return on my money. Read that article, it will change the way you think about your cash stash.

Healthy and Happy Living

This isn’t a health blog. But I do think that financial independence and peace of mind is good for your heath. What good is retirement if you don’t have your health?

Someone I know is undergoing treatment for a serious illness. Her inactive lifestyle has never been healthy. Now in her late fifties, she still needs to work to pay for her standard of living, even though she may not have much time to live. Her sad situation is a daily reminder how important it is to reach financial independence, and do so with personal health intact.

What to do When I Retire
The primary driver of my desire to retire at age 55 is travel.

I don’t read travel blogs, but I’ve tinkered with the idea of starting a travel tab on my menu. That said, I don’t know what I’d write about specifically because I am not traveling much now with two young kids. I did travel quite a bit in my 20’s and before having kids, and enjoy reminiscing about the 45+ countries I’ve visited. Maybe I’ll add some of my favorite photographs, or perhaps write about some places I’ve visited when they become relevant in the news (like Ukraine).

Ideally my wife and I will travel for 20-30% of each year when we retire. That leaves a lot of time to do things at home. The hobbies that come to mind immediately would be reading, investing, yard work, home improvement projects, fishing, skiing, swimming, and cultural performances (theater, ballet, etc).

Travel hacking is a popular blog topic, particularly for those seeking financial independence. I’m currently not all that interested in this subject because of the hassle of opening multiple credit cards. My family is a few years away from taking any significant vacations where we fly. I suppose it never hurts to start saving miles. As much as I love to travel, travel hacking may not be something of interest until we get closer to our retirement date. But the more I read about travel hacking success, the more interested I become.


Revisiting my original strategy is a chance to rehash over everything and refine my plan. I hope to make this a semi-annual post so that certain topics don’t get lost. Savings and investing is the primary driver to reach my retirement goal, but retirement planning is multifaceted, especially compared to our previous generation’s retirements.

Do you have a written retirement plan?  How frequently to you refine it? How have recent life events changed your perception of retirement?

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19 Responses to Retirement Strategy Revisited

  1. EL @ Moneywatch101 March 26, 2014 at 10:24 am #

    This is a very detailed plan, congrats. I know you can find some deals in today’s market on dips, but I would hold off the majority of funds for a future correction in the market, as most stocks are close to all-time highs. Good luck in your early retirement efforts.

    • retirebeforedad March 26, 2014 at 12:02 pm #

      Thanks EL. I’m feeling the same as I try not to buy at market highs. But then again, markets go higher, so you have to be part of the party. I’m in buy the dips mode, but we’re not getting many!

  2. JC @ Passive-Income-Pursuit March 26, 2014 at 11:48 am #

    When I first started my blog I was thinking it’d be more of a general PF/frugality blog with an investing tilt but obviously you can see which part won out. The investing side is just a lot more interesting to me. Keep on keeping on because you’ve got a solid plan in place. And glad to see that the FI date has been reigned in some, even if that’s bound to change.

    • retirebeforedad March 26, 2014 at 12:06 pm #

      This site could go more in that direction too. Right now I’m writing whatever flows. Investing certainly is a big part of that. I want to keep the plan in view so I don’t lose sight of the complete picture. As for my FI date, I’d like to move it up earlier, but I think it may be more about redefining retirement than not working at all.

  3. My Money Design March 26, 2014 at 8:35 pm #

    Nice layout of your plan. You’ve obviously done a lot of thinking here and considered a lot of angles. I can commend you on trying to reach your goal in your early 50’s. I have personally backed my goal from 55 to 50 all the way down to 45.

    BTW – If you’d like to see a really cool financial planning spreadsheet, then check out the one I posted here. Hopefully you’re impressed!

    • retirebeforedad March 26, 2014 at 8:58 pm #

      Thanks for stopping by and commenting. Your spreadsheet is elaborate and the plan is well thought out. I’m in the early stages of developing what I call a Grand FI spreadsheet. So far its given me something to work with, but I need to add in things like taxes and inflation. I’m hoping I’ll be able to reset my goal to my early 50’s sometime this year. At a minimum, I’d like to be working in an office by then, or working part time.

  4. writing2reality March 26, 2014 at 8:55 pm #

    Ah spreadsheets and financial projections… love them dearly. I personally believe that the diligent tracking and recording of one’s progress is a key component to long-term success, especially with finances.

    As for redefining retirement, I think focusing on that will be important for you over the next 10 years. As with others, I don’t envision a traditional retirement, but one where I am free to work and live how I please, and that will more than likely result in some form of additional income and entrepreneurial pursuit.

    • retirebeforedad March 26, 2014 at 9:28 pm #

      Well said all around. A whole generation is redefining retirement. That said, I really want to retire and not work at all after 55 so I have plenty of time to do whatever I want. Then again, I may want to work. Hard to say. Just need to keep on saving so I have options.

  5. FI Fighter March 28, 2014 at 12:54 am #

    I’ve written and refined my own plan many times over… It’s to the point now where I really try and not think about it too much. For instance, no where in my plan does it account for settling down and starting a family… That’s something I want someday, but I figure I’ll worry about that when the time comes. My plan is written in pencil, so I try not to sweat it too much.

  6. Income Surfer March 28, 2014 at 5:07 am #

    I didn’t realize you guys had two kiddos. That’s great. Our first was born less than a week ago. It’s going well so far, but our lives are definitely changing. I’m certain our 3 and 5 year goals will change as a result too. It will be time to adjust our plan soon :o)

    • retirebeforedad March 28, 2014 at 7:06 am #

      Congrats on the new addition! Yeah two now. Youngest is 6 months. You’ll have plenty that’s going to change, especially the amount of uninterrupted sleep!

  7. Anneli @thefrugalweds March 29, 2014 at 10:49 pm #

    Thanks for this post! It’s so awesome to see anyone’s retirement strategy 🙂
    My husband and I plan to retire at 45 to travel too – we actually want to travel and live abroad pretty much 100% of the time. Like you, we are very excited about Dividend Investing, investing in stocks, etc. We’re socking away contributions to both our 401-K and IRA’s. But we’re not necessarily investing in real estate – at least not yet. We live in LA and we just don’t want the bulk of our savings to be sunk into a down payment. Of course, we are also very open to revising out strategy.

    We are, however, big travel hackers. We travel quite a bit now (no kids yet, but we want to change that in the very near future!) We’ve found that we can continue our savings/investment strategy WHILE we continue to travel, because we can greatly reduce our travel expenses through credit card churning 🙂
    It is however, a very detailed, very time consuming process – not to mention the impact to your credit score in the short term. It’s a wonderful hobby to get into – its also something we do together so it becomes quality time too!

    Cheers and thanks for this post again!

    • retirebeforedad March 30, 2014 at 12:50 pm #

      Thank for the kind words frugalweds. Travel hacking seems like a great hobby. I cashed in some miles years ago to fly to Ecuador and it was a huge saver for my trip as I continued traveling another 8 months after that. I always think their are so many restrictions on miles, but then I hear great stories of people flying around the world business class and thinking I need to do that some day, without paying for it. So I may get into travel hacking as well. But things like expiring miles make me think a lot of research and tracking needs to be done. I really hope I have enough money when I retire to just outright buy the business class upgrade!

  8. S Arun March 30, 2014 at 3:54 pm #

    You have a great and very clear retirement strategy, I haven’t yet done my retirement plan. My current goal is to get $25 000 per year dividend from high quality blue chip companies because I am thinking $2000 per month is more than enough to retire. May be this my current retirement plan, I need to create a strategic plan.

    • retirebeforedad April 1, 2014 at 10:45 am #

      Thanks FJ. I’m going to need at least $3000 per month to reach financial independence. This will come from not only dividends, but other sources like real estate, P2P lending, and possibly some other business ideas and investments. It’s a high mountain, but financial freedom is worth the climb.

  9. Evan April 6, 2014 at 2:30 pm #

    Between rentals, your DGI account and a CRAZY 50% saving rate I bet you’ll find FI way before 51!

    • Retire Before Dad April 6, 2014 at 3:51 pm #

      I hope. The big factor is paying for my kids college. I expect that to delay retirement a few years. I’ve started early, so I hope that helps. We’ll see how the numbers look in 10 years!

  10. A Frugal Family's Journey May 3, 2014 at 5:32 pm #

    Nice blog…we have a lot of the same goals and ideas. Our family is hoping to supplement our retirement with DGI; we also do extensive tracking and forecasting; we have also decided to save for our kids college; and lastly, I too hope to retire at 55 and do lots of traveling. When not traveling, I plan to simply spend time with family and friends…something I feel many of us are deprived off during our working years.

    Our family revisits our plan every 6-months to both track our progress and/or revise it, if necessary.

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