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Hey folks,

I’m new to the idea of retiring early, and just recently discovered this board (along with the others on this theme). While I’ve fantasized in the past about retiring early, only in the past few weeks has it become less of a fantasy, and more of an idea…an idea which may well evolve further into an actual plan. So I’d like to describe the idea I have, provide some details of my financial circumstances, and see what you guys think.

I’m 47, single, no kids. Salary is about $98K. I’ve been working for the same company for 17 years, and expect to keep working there until I retire early. When I say “retire early,” I mean getting off the day-to-day treadmill of going into the office every day at a full-time job. I don’t actually hate my job or anything, but I’d certainly like it a lot more if I could only do less of it. So what I hope to do is make a transition about 5 years from now (when I’m 52), from full-time salaried status to part-time hourly status (or perhaps to self-employed, independent contractor status). At that point, I hope to work significantly less than half-time (say, 500-800 hours a year).

Here is where things stand financially:

My Current Assets:

Retirement Savings
401K (95% is in stock mutual funds): $154K
ESOP stock (company is employee-owned): $114K
Roth IRA (100% stocks/ETFs): $36K

Nonretirement Savings
Money market/checking: $7K
Stock mutual funds/stocks/ETFs: $79K

Home equity: $125K on home worth about $330K (condo unit in Wash, DC)
Car: 1-year-old Toyota (paid for), which I expect to keep at least 10 more years.

How will things stand 5 years from now, at age 52? Well, my crystal ball is no better than yours, but assuming realistic expectations of future contributions to savings, a conservative return from the stock market, and virtually no increase in home value, I think my assets may look something like this:

Retirement Savings (total): $450K
Nonretirement Savings (total): $130K
Home equity: $132K

Now here is what’s key to the idea: I live in Wash., DC where housing is quite expensive, and commute out to the suburbs in Maryland every day for work. I’ve recently come to realize that I could sell my condo and with the profit/equity move out to a reasonably charming/historic small town of northern/western MD and purchase a small home outright, mortgage free!!! I would not want to make such a move while working full-time, as the 1-2 hour commute (stretched out further during rush hours) would be deadly. But I’m thinking that if I worked part-time, did some of my work at home, and drove in to the office only on as as-needed basis….well, that could be a hell of a nice life.

Of course there are other key considerations, that I’ve given some thought to. I’d have to remain very disciplined with my spending, which I’m not worried about. I’ve been living below my means for years, with an annual trip to Europe being my only real splurge (one that I don’t plan to give up). I’ll have to remain disciplined with my investments…I’m happy to say I did not panic and get out of stock market during the turmoil of the past year, so I’ve enjoyed the recent huge run-up, as I hope you have. I think I have finally overcome by stupid habit of investing in risky biotech stocks and other trendy things, now taking satisfaction from boring and relatively conservative funds, most of which have treated me nicely enough over the years. I’m healthy and have no need for regular medical care, but I realize that once I take the plunge into early retirement I’ll need to protect myself from financial ruin should my health change for the worse. I’ve learned a bit about high-deductible health plans – it seems one can them for as little as $150/month.

The final big key concerns just how much work I would get from my employer once I make this transition. Obviously, that’s something you guys can’t help me with. But I expect that five years from now I could make maybe $40-50 per hour (after taxes), and I so I’d only need to work about 500 hours a year. Actually, I’d need much less than this to cover expenses (lacking a mortgage), but I would want to be able keep socking some money away for long-term retirement (not to mention those trips to Europe).

So, what do you think? Does this sound at all realistic? Or should I plan on slaving away for a few more years and get a bigger financial cushion underneath me before retiring early? Or given my current financial situation, should I just plan on working full-time well into my 60’s (the horror…)?
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