Early Retirement Runs in the Family (Our Privilege)

I stopped working two years ago, at the age of 38. We weren’t financially independent yet, but we had accumulated enough financial freedom to begin my early retirement and provide more balance for our family for the remainder of our journey.

We’ve since reached our FIRE goal. Although Mr. RFL continues to work, he plans to join me in early retirement by the time he turns 40.

Our exit from the corporate world is early compared to most anyone’s standards. And it turns out that early retirement runs in my family.

So, it’s time to publicly recognize our privilege.

Early retirement runs in the family

I’m actually a third-generation early retiree.

Although I only recently registered the significance of this, both my parents and paternal grandparents retired early, in their mid-50’s.

Retiring in your mid-50’s may not seem early to those deeply entrenched in the FIRE movement; however, it’s still a decade earlier than the “normal” retirement age of 65.

In fact, a recent survey showed that only 29% of American adults think they’ll retire by age 65. Nearly 25% of those surveyed don’t believe they’ll ever have enough money to retire, which is a really unfortunate statistic.

You don’t have to be rich to retire early

Despite modest careers, my grandparents set the stage by showing how living within your means can provide the opportunity for time freedom while you’re still young and healthy enough to enjoy it. Admittedly, I don’t know all the details of how they accomplished this. Though I’m sure the security of government benefits and pensions available at that time helped.

Whether any of us realized it or not, my grandparents showed my family that early retirement is an option.

My parents later followed suit, fully retiring in their mid-50’s, with my dad semi-retiring to part-time work even earlier.

Neither rich, nor poor

Growing up, I always believed that my family was middle class. Though perhaps we were upper-middle class, depending on how you define it. We lived in an affluent community; however, we were not among the wealthiest families living there. Nor were we among the poorest.

I would not have called our family “rich,” at least not in the monetary sense of the word. Nor did anyone inherit or come into any large sum of money that made early retirement possible.

Rather, each generation worked hard and lived well below their means. They consistently made good money decisions, or at least mostly avoided making bad ones. 

My money memories from childhood

I don’t remember talking about money much growing up, but my parent’s combined finances and exemplified smart financial decisions.

We didn’t live lavishly, but I had the privilege of never worrying about having food on the table or a roof over my head.

My parents purchased modest cars and drove them for many years. We clipped coupons and shopped the sales when it made sense to do so. We took vacations almost every year; however, these were most often road trips, splurging on bigger vacations every few years. There was no emphasis on fancy brands or keeping up with the Jones’.

Lessons I hadn’t realized I’d learned

Looking back, I probably picked up a lot of lessons about money, though doubt I realized it at the time.

Childhood

My sister and I received allowances for doing chores and getting good grades. This helped us connect hard work and effort with earning money.

We were also encouraged to save our money and spend it on the things we really wanted.   Back to school spending was not a free for all, rather we were given an amount of money we could spend or limitations to what we could buy each year. If we wanted more, we used our own savings to buy it.

College

I was encouraged to apply and go to whatever four-year college I wanted. The amount of financial assistance I’d receive from my parents was based on the tuition at our state university. I didn’t go to our state school, but I did pick a public university known for it’s academics and great value, rather than the private ($$$) liberal arts schools I’d also been considering.

Because of this, and my decision to stay in college an extra year for a graduate degree, I graduated with $40,000 in student loans. For a career in accounting, these costs were well worth it.

However, my debt might have been a lot more if I wasn’t forced to evaluate the costs and benefits of my degree by sharing in these costs. A pricier school would not have gotten me a better job in my chosen field.

In hindsight, I think this is a brilliant strategy to get a child to take college seriously and consider the costs in making decisions (before taking out a bunch of student loans and regretting them). It’s one we we plan to use for our own child.

Adulthood

After graduation, I obtained a solid job and was financially secure.

My mom continued to reiterate the important lessons, such as always paying off credit cards in full each month and contributing at least up to the employer match in a 401k account.

Because I listened to all this advice and observed these behaviors growing up, I avoided making some of the pitfall mistakes that young people often make. Getting into debt early on, especially credit card debt, can severely hinder anyone’s journey to building wealth. 

Let’s talk about privilege

Morgan Housel talks about the role luck vs. effort play in our view of achievements and failures in The Psychology of Money.

Studies show that we are more likely to attribute others’ success to external attributes, such as good luck or favoritism, while attributing their failures to internal factors, such as a lack of effort or knowledge. The opposite is true when assessing our own failings or successes. We are more likely to blame bad luck on our failings, and celebrate our successes as a sign of our hard work or superior knowledge.

Now in reality, nearly every success and failure arises from some combination of both external and internal factors.

I think this same bias comes to play when we look at the role privilege plays in our own and others’ financial success (or lack thereof).

When struggling financially, we tend to focus on the role that bad luck and biases against us have played in our outcome. In doing so, we also tend to ignore or downplay the role that any bad decisions we’ve made have played in getting us there. Likewise, when viewing others’ success, we tend to overemphasize the role that privilege and good luck have played in their journey.

That said, the reverse is also true. When we find ourselves in a position of financial strength, we tend to overemphasize the role that our good decisions, intelligence and willpower played in getting us to where we are… while downplaying the luck and privilege that also played a starring role. I’m sure we’re guilty of this as well.

The role privilege has played in our own journey

We are privileged.

It’s time to more formally state this fact. Everyone begins their life journey from a different starting point. And if you’re following our journey, than you should know where we started from.

Neither Mr. RFL, nor I, were trust fund babies… not even close. However, we had many privileges that others do not.

I had two loving parents who exemplified smart money decisions and made sure I knew the biggest no-no’s when it came to managing my own money.

I’m also a white, cis, heterosexual female, which means that I didn’t have to deal with many biases or barriers growing up. While I did see and experience some level of gender bias during my 15-year accounting career, it ultimately didn’t impact my financial position much. Or, perhaps it did, but I still ended up in a great place.

Mr. RFL is a white, cis, heterosexual male who also grew up in a loving home. Although his family never talked about money (and still refuses to), he took the initiative to figure most of it out on his own. He also had the benefit of starting the game of life from an advantageous position with no debt.

The big picture

We both had the privilege of receiving a fairly stable upbringing, with the opportunity for higher education. It has certainly played a significant role in helping us get to where we are today.

That said, I think it’s unfair to pin all of someone’s success on privilege. Success and failure are nearly always some combination of effort, decisions, luck, and privilege (or lack thereof).

We started from a better place than many, but Mr. RFL and I also worked incredibly hard in school. We chose degrees and careers known to provide stable and high-paying jobs, rather than following our passions.

During our working years we worked long hours, in a high pressure and high stress environment, and did whatever it took to be successful and get to the next level. We were rewarded with six-figure salaries, but we sacrificed a lot to earn that money.

While I wouldn’t change the path I took, because it brought me to where I am today, some of those choices are not ones I’d make again if I had to do it all over.

Neither of us made all the right decisions.

Where we are today is some combination of luck, the hard work and good decisions we made, the wrong decisions we didn’t make, and the privilege of starting our journey without a significant handicap.

Trying to raise the next generation of early retirees

That’s our story.

We’re excited to show our daughter the benefits of financial independence and living life on your own terms. I want her to grow up knowing how to manage her money, and all the possibilities for her future.

Who knows, maybe she’ll be the 4^th generation in our family to pursue early retirement.

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