Is it Possible to Retire Early if You have Children? – Frugal Confessions

Is it Possible to Retire Early if You have Children?

Amanda’s Note: The articles I recently completed on early retirement extreme were very popular. I received several questions as to whether or not you could do this with children. Since Paul and I do not have children, I asked my blogging friend Joe from Retire by 40 to guest post about his own experience and thoughts. I hope you enjoy!

early retirement extreme

According to a recent Gallop poll, 70% of workers are unhappy with their jobs. If you are reading this article, then there is a better than even chance that you are looking for an exit strategy. One way out of a dissatisfactory job is to find another job, but another way is to exit the workforce completely. Early retirement is a dream for many of us, but is it even possible if you have a kid or two? It’s hard enough to retire early and take care of yourself.  Would children eliminate that possibility?

In my opinion, it is still possible to retire early even if you have a dependent or two. It just depends on how you look at it. Let’s say you know someone who quit her career and took a 10 year hiatus. To me, that’s retiring from a career. If and when she comes back to work, then I’d say she is coming out of retirement.

If you have a kid and decide to stop working to be a stay at home mom/dad, then that’s an early retirement to me. I know firsthand that being a stay at home dad involves a lot of chores and headaches, but it is still a 100 times better than going to a job you hate every day. When you leave a career, it is retirement. Why does it matter if you become a stay at home dad or beach bum afterward?

OK, having a kid means more responsibilities. You have to take care of them until they are ready to face the world on their own. It’s expensive, but most of that comes from the daycare expense. If one parent stays home, then a kid wouldn’t cost all that much until they reach the teen years.

Here are some ways that a parent can retire early with children

  • Live way below your means so you can save a lot of money to invest. You need to prepare alternate income streams for when you stop working. Dividend stocks, rental properties, bonds, and other income oriented investments are good ways to generate some income when you retire.
  • Delay having children until you’re financially secure. Children aren’t cheap and they can take up a significant portion of your paychecks, especially when you don’t make much. Delay having children until you’re financially secure and have some significant active and passive income. That way, you can focus on making money early on as a DINK team.
  • Generate some side income. There are many ways to make some money on the side. You can freelance, blog, open an online store, photography, tutoring, teaching, and more. This one is a bit tough to defend because you’re still working part time and aren’t fully retired. Many retirees work part time though so I think it’s still a valid way to pass your time while in retirement.
  • One parent continues to work. It might seem unfair to have one parent work, but many of us enjoy working. Where in the retirement rule book does it say that both members of a couple have to retire at exactly the same time?
  •  Think creatively about college costs. The big whammy when you have children is the college cost. Advanced education already costs an arm and a leg. In 15 years, it will be ridiculously expensive and it will be hard to help your children out if you’re retired. One way is to front load the college savings when your children are young. You can invest $50,000 in their 529 account as soon as they are born and this should give them a huge head start in paying for college. Going to community colleges for a couple of years is also a good way to cut costs. The kids always could get student loans if you really can’t help them.

Of course it is also possible for both parents to retire early, but it requires an even higher level of dedication early on.

I left my stressful computer engineering career behind after 16 years and it’s the best thing I could have done. Now I’m a stay at home dad and I make a little money on the side with my online business. I will have a lot more free time when my kid goes off to school full time. At that point I could get a job and come out of retirement, but my plan is to stay unemployed (not work for anyone else) and continue to work on my online business. It’s not retirement in the traditional sense, but it works very well for us.

I know many readers disagree with my definition of retirement so let me have it. Stay at home parents in particular are very offended when I say I’m retired.

28 comments… add one

  • I don’t think it should be a problem to retire early with kids, you can choose homeschool, have time to cook healthy meals without spending too much on fast food and time to go to the museum on free days, time to look for free hand me downs etc. Then college like you said you can get scholarships or just let the kid decide. Kids are not cheap but they can be pretty affordable if you don’t fall for the things marketing people sell you.
    Pauline recently posted..Graduate College Debt Free

    • FruGal

      Hi Pauline!

      I would agree with you…but then again, I don’t have any kids. Do you have any?

      P.S. I love free days:).

  • Not that my wife and I were anywhere near on track to retire early, but we just had our first son almost a year ago and I just can’t even envision trying to retire early now. I knew kids were expensive (doesn’t help living in a high cost-of-living location), but I never quite realized how much money would be flying out the door. We both want a 2nd child and I must admit, for financial reasons, I’m kind of having second thoughts! Honestly, I’m more worried about being able to retire by normal retirement age yet alone early! The article contains great suggestions though – it takes planning and diligence to achieve such goals.
    Mr. Utopia recently posted..You’re Lazy and That’s Good

    • Joe

      The big cost for our kid was daycare. Other than that, I don’t think he is very expensive at all. Now that he’s done with diaper, he doesn’t use that much money each month. It’s just food.
      Once he starts school and sports, then it’ll be expensive.
      Joe recently posted..My secrets to spending $0 on entertainment last month

    • FruGal

      Congratulations Mr. Utopia!

      When did you being saving for retirement? Was it aggressively, moderately? I am just curious as to how that would change your perspective in this discussion.

      • Technically I started saving for retirement when I was 18 and my parents had me open a Roth IRA after I landed my first job. That was ~15 years ago and makes it sound like I should be in a splendid position right now. However, I didn’t start maxing my Roth out until about 6 years ago and didn’t start a 401(k) until about 4.5 years ago. So, individually I’m doing ok, but my wife doesn’t have any retirement savings (we just opened Roth for her a couple month ago). Collectively we are behind on behind on the pace to retire at “normal” age.
        Mr. Utopia recently posted..HOAs: Good or Bad?

        • FruGal

          Well the upside is that you realized the necessity of her opening a Roth for her. Hopefully you can save the maximum now and get some retirement money socked away.

  • Not more than 30 minutes ago, our director brought our group together and announced that she is retiring at the end of the month. I said that I’d like to do that someday and one of my co-workers turned around and joked ‘But you have kids’. So, right there, I think it’s obviously tougher without kids than with kids. I guess it’s all in how you manage things and the trade-offs.
    Money Beagle recently posted..As If I Needed Another Reason To Love Honey Maid Graham Crackers

    • FruGal

      I hope your new director treats you well.

      Do you have children? Have you ever thought about retiring early?

  • Some great ideas here. A popular technique in Seattle is to take in foreign exchange students (if you have the room). I knew one family who generated their annual travel budget each year from the two exchange students that lived in their house. Also, many people prioritize post-secondary education over their own retirement. While your kids can borrow money for their education, no one will loan you money for retirement. At a looming future cost of $655,000 for two kids at selective schools in 14 years, that is out of reach for most people.
    Dana Twight, CFP recently posted..Walden on Wheels: Vanquishing the Debt

    • FruGal

      Hi Dana!

      That is an interesting strategy. We have extra rooms…do you know where to find information on housing foreign exchange students? Paul and I have been blessed in our travels over the years in different countries with people being quite kind to us and taking us to their homes, so we have discussed wanting to return the favor to foreign students who come to the US.

    • Joe

      “At a looming future cost of $655,000 for two kids at selective schools in 14 years.”
      That’s a little ridiculous. They’d better be making a ton of money once they graduate at that price.
      Joe recently posted..My secrets to spending $0 on entertainment last month

  • The short answer is “yes”! My children were 8 and 11 at the time I achieved financial independence.
    krantcents recently posted..It’s Never Too Late to Be What You Might’ve Been

    • FruGal

      Way to go Krantcents! How aggressively did you save? When did you start to save?

  • My mom will be retiring early, and she had two kids. But she didn’t pay for our educations, we did. We were expensive enough though. She just worked really hard and it was important to her. I don’t know if that’s a possibility nowadays, though.
    Daisy @ Young Finances recently posted..3 Reasons Why Kim Kardashian Has More Assets Than You

    • FruGal

      Thank you for sharing your experience Daisy!

  • It is possible to retire early if you have kids. Choose homeschool for your children, so that you can look after them and spend a lot of quality time. And you have extra money in the bank, then you don’t have to worry about it.
    SuburbanFinance recently posted..How to Improve Your Credit Score

    • FruGal

      Hi SuburbanFinance,

      Do you have children? If so, have you homeschooled? Just curious about your experience.

      Thanks for commenting!

  • My wife wants to retire in another 10 years. She will be 50 then. I am in my 50s and have cut back on my work. We take turns looking after our son. We are on track to have a good retirement and have put enough into a 529 to get him though 4 years at the University of California, Berkeley, with all expenses paid.
    Bryce recently posted..Shopping at the Grocery Outlet, Bargain Market

    • FruGal

      Hi Bryce–I had to fish you out of spam. Sorry about that!

      That is wonderful that you have enough for retirement and to send your child to college. Great job! What is your strategy for pulling money out of retirement once you retire early?

  • Is it possible? Absolutely!

    My father quit his job when I was on the high side of 16 (luckily for him, I was his only kid). Note that he had planned carefully for retirement and made us all live like monks for longer than my little brain could remember.

    Semi-demi-exboyfriend (don’t it always seem to go…that women pick men who remind them of their dads?) quit his job while his daughters were in high school. This worked for him…but not so much for the wife, who soon became (at her behest) the ex-wife. Much later, having lived with SDXB for several years, I’d venture to guess the early retirement had little to do with her fleeing into the hinterlands. ;-)

    If you plan well and live frugally (this assumes you don’t earn a zillion dollars a year), of course it’s possible to retire, any time you figure you’re ready.
    Funny about Money recently posted..Things You Should Know About…and a Song for George

    • FruGal

      Hehehehe:). Thank you for sharing your experience with both your father and your (ex) boyfriend. I think whether or not you decide to pay for a child’s college education might have something to do with if you can retire early, unless you plan well in advance.

      • My father did pay for my college tuition and board. In those days, though, public universities were eminently affordable. I think SDXB helped one daughter through a couple of years of college, until she dropped out to marry a low-life. The other daughter married the scion of a millionaire and so didn’t need parental help to get her nursing degree. However, since both daughters form epicenters of ongoing drama, over the years he’s lent them or given them a fair amount to get them through their various crises.

        It costs a LOT less to live in retirement than you expect it will.
        Funny about Money recently posted..Uh oh… Another Boondoggle about to Come Home to Roost?

        • From your observations, I am thinking a key to early retirement (or regular retirement) is teaching your children to grow up to be financially independent. Of course they might hit hard times, which everyone does at some point. But it sounds like his daughters weren’t really in hard times defined by the majority of people.
          Amanda L Grossman recently posted..Saving Money, Even When the Sh*t Hits the Fan

  • Lucas

    Totally possible :-) I am 29, have 3 kids, wife stays at home, have always given 10% or more to charity and just reached the point where i could retire if i wanted too (not maybe at quite the life style that i want yet thought). It is very much about expenses and life style choices, which don’t preclude tons of fun!

    Also it is a lie that kids cost an arm and a leg.

    I have 3 kids and they have cost me almost nothing!! I have tracked it all as well. $500 for start up equipment and tracking right around and average of $200/month each for food/clothing/diapers/gifts etc. . .

    So so far I have spent around
    Kid 1 (5) = $300 (birth costs) + $500 + $200*12*5 = $12800
    Kid 2 (3) = $2000 (birth costs) + $200*12*3 = $9200
    Kid 3 (1) = $10 (birth costs) + $200*12*1 = $2410
    Total Spent = $24410

    But I forgot taxes!!! Each kid saves me $1000 in taxes (child tax credit) a year, plus $3600 personal exemption ($3600*.25 marginal rate = $900) . So each kid has saved me

    Kid 1 (5) – $5000 + $3600 = $8600
    Kid 2 (3) – $3000 + $2700 = $5700
    Kid 3 (1) – $1000 + $900 = $1900
    Total Saved = $16200

    Total bottom line = $8210 for 9 kid years or $912 a year per kid. Yes some of these will go up with more activities later on in life, diapers and formula will go down, savings for college isn’t tracked here, and it is difficult to quantify the added cost of a slightly larger home to accommodate my family (which is definitely the biggest actual cost). But on a recurring cost basis they are pretty cheap :-)

    • That’s neat that you track your costs for your children. Also, I like your use of the phrase “start up equipment”. Hahaha!

      Thank you for sharing with us, and congratulations on your financial independence!
      Amanda L Grossman recently posted..Small Effort, Big Rewards

  • My husband and I have a son in college and still plan to retire early either this June or next June, while he is still at school. We always lived below our means, even when the three of us were under one roof, and our son worked hard to get academic scholarships. He also takes out a student loan when needed. We feel that by him paying back his own loans, which will be minimal, will help him to do two things: manage his money in the real world, and establish credit. Both are good lessons to learn and he is already on his way to his own early retirement by practicing the adage of “pay yourself first”.

    • FruGal

      Hello Lori,

      Thank you for taking the time to share your story and experience with us. That is wonderful that you will be retiring early! May I ask what age you both are?

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