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!
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.