Pursuing the Dream of Early Retirement
As a 39-year-old government employee with a net worth of $1.3 million, I’m considering taking the leap into early retirement. With a combination of real-estate investments and a thriving stock portfolio, I’ve seen my wealth grow significantly over the past few years. Now, I’m weighing the pros and cons of leaving my job to explore new horizons in Italy or Spain, where the cost of living is roughly half that of the United States.
The Allure of European Living
The idea of taking a year-long sabbatical to travel and experience a new culture is tantalizing. With my financial adviser actively managing my accounts, I’m confident that I can maintain my current lifestyle while exploring new opportunities. Moreover, the thought of living in Europe, where property taxes are lower and healthcare costs are more affordable, is incredibly appealing.
The Importance of Financial Freedom
However, I’m also aware that retirement is not just about relaxation; it’s about having the financial freedom to pursue my passions. As I consider this significant life change, I’m mindful of the need to balance my desire for adventure with the importance of securing my financial future.
The 4% Rule: A Guiding Principle
One approach to consider is the 4% rule, which suggests that I can withdraw $52,000 annually from my $1.3 million portfolio to cover living expenses. This would provide a comfortable income in Spain, where I could potentially work part-time or pursue entrepreneurial ventures. However, I must also consider the implications of early withdrawal from my Thrift Savings Plans (TSP) and the potential impact on my Social Security benefits.
Peak Earning Years Ahead
As I enter my peak earning years, I’m aware that retiring early could affect my Social Security benefits. According to the Social Security Administration, stopping work before receiving benefits can result in a lower benefit amount due to the averaging of low-earning years into the calculation.
Prioritizing Happiness and Financial Security
Ultimately, my decision will depend on prioritizing my happiness while ensuring financial security. I recognize that taking a year-long break to explore new opportunities can be a valuable investment in my personal growth and well-being. By carefully considering my options and weighing the pros and cons, I can make an informed decision that aligns with my values and goals.
Leave a Reply