I have some friends, that we will call Juanito and Pepita, that are about 35 years old and with a young son who are beginning to think about retirement. For me, the moment in which I began to think clearly about retiring early was also at approximately 35 years old and this age was when I began to take it seriously by toying with the numbers and seeing how I could specifically achieve the goal.

I found it very interesting and a good exercise to look at their situation and how I would do things if I started from scratch, in addition to offering my humble advice.

Suppose that this couple with a child has nothing saved, also one of the two does not work because it stays with the child, so there is only one income in the household. Do not be scared, in the USA taking into account the costs of nurseries the fact that one does not work can be a great saving, instead of being seen as a lost opportunity; this without taking into account that there will be no better way of caring for a child than that applied by the parents themselves.


First steps


-Plan how you want your lifestyle to be
-Create a budget: monthly and annual
-With this amount you can start to consider the objectives and the deadline to get them

Let’s make some numbers:
Let’s suppose that this couple does not lead an extravagant lifestyle and with $30,000 / year is enough. $30,000×25 equivalent to $ 750,000, this would be a minimum amount to have accumulated and be able to get 4% for life without squandering the amassed funds.

Next steps


-Save money
They seem easy but you have to ask some questions and some consistent decisions. How much is going to be saved, are all the expenses necessary, how much can those expenses be cut, etc. All this can be turned into a game in which the limits are placed by oneself with whatever one feels comfortable and by aligning their goals with their lifestyle: MORE SAVING = LESS WORK> THE RETIREMENT COMES BEFORE. You have to look for a ratio with which you are satisfied, that is, what percentage of your income will you save to retire early without making your life a misery (20%, 30%, 50% or more ?, the 10-15 % will not take you to retire soon …).

Besides saving you have to invest, we already know that if you keep the money under the mattress (or in the bank), it will not produce any performance. Of course there are many ways to invest and each one has to decide the degree of risk that is willing to take and the type of product that best fits with their approaches. The stock market and the real estate market emerge as the two clearest vehicles, although there are more. This decision requires studying the products and implications and the possibilities and dangers (it is not the same to buy a house to rent next to your home, than in another country, it is not the same to invest in the stock market more aggressively or not). This is material for another blog post. . .

Opportunities in the future


We have already said that one of the two does not work, so the moment this changes because the children are older or because a job opportunity arises, this will generate an important source of income to add to the plan and will increase the ratio of savings vs. income, if they have adapted well to living on a single salary and can place most of that new income in for the retirement plan (this can cut years to the final goal).

The other great variant for this family is geo-arbitrage, which consists of moving to live in another (much) cheaper place in the world so that the accumulated money can spread much more. This is very viable for these friends who are expatriates like me and who have also long been nomadic and accustomed to living far away in other cultures. Imagine that you can lower your fixed costs by 25% when moving to another country, of the $ 30,000 per year now you would only need $ 22,500 and therefore the total amount of savings needed is lower, the goal can be advanced more (if we think about the amounts initials, the $ 750,000 is reduced to $ 562,500, each time it is closer …)

These two opportunities for this couple are not far fetched and would put them in an ideal position to advance their retirement age quite a lot, we are talking about years maybe fifteen years.



Many ideas and many decisions, but many fronts and possibilities appear and that is good for my friends. Of course we do not have all the data to finalize a plan, but it can be a beginning for them when considering when and how they could retire. This trip to early retirement is very fun and can be converted into a game in which levels are passed to complete it. But . . . If things are not going well, what can happen to you at the worst of times? That after 5 or 10 years of this plan you change your mind and have an accumulated amount of money that allows you to do countless things and live experiences that you did not even consider before.

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