A Real Life Example of the Benefits of Maximizing Retirement

As many of you know, we are experience people versus things people. We typically spend our time and money being social, traveling and meeting new people. So, when we were invited to spend some time with Mr. and Mrs.1500 of 1500days.com we jumped at the chance. Because they had guests in town, we also spent time with the faces behind both JohnnyMoneySeed.com and MyShinyNickels.com.

We whipped together a spring orzo salad and headed to Longmont CO for a dinner party/picnic with some great personal finance bloggers and their friends. We were excited to attend. Even though we know there’s a whole world of personal finance bloggers out there and, in fact, work with several, it often feels as though we live and work in a personal finance vortex. This gave us a chance to meet others face to face who do what we do. It’s a great help financially when you spend time with others who are on the same financial path as you.

At the dinner party, we talked a lot about when each of us finally “saw the light” and got our finances in order, personal money management and personal finance blogging. We met some well-established personal finance bloggers and some just starting out. It was cool to hear about the varying degrees.

What most intrigued us was a 36 year old man who came with a personal finance blogger. He’s an IRS auditor who lives in Denver. He shared that he will retire within the next 365 days. Did you get that? He’ll retire at the age of 37!

This fascinated us and we were eager to find out how he would make this happen. He told us that when he was 18 his parents talked to him about investing in an IRA and putting aside money he earned from his part time jobs. When he got his first job out of college, at the age of 22 as an IRS agent, his parents advised him to contribute the maximum allowed into his retirement plan. They told him that if he started this before even cashing his first paycheck, he’d never feel as though he lost something by increasing his retirement contributions at a later date.

He did as they advised. He contributed the maximum allowed, $10,500 annually in 2000 and $18,000 annually today, into his government sponsored Thrift Savings Plan (TSP) account. He’s maximized his retirement contributions since he was 22 years old and maintained a well-diversified portfolio.

RETIREMENT SAVINGS PLAN

He’s now calculated that he’ll have more than enough money to take care of himself until he’s eligible for Social Security and his government sponsored pension. He admitted he won’t have an extravagant life, but his life will be his. He won’t have to answer to someone else. He did say he was considering starting a blog, maybe even a personal finance blog, when he retires. We could all learn from him.

Of course, this made the two of us consider our past financial mistakes. We’re very happy with where we are financially. We’re on track to have a very comfortable retirement even without Debt Free Guys’ income. We’re not limited by what we can do.

Despite that, we did consider how things might be different had we been fiscally responsible at the ripe age of 22. It seems like a lifetime ago and a lot in our lives have changed over the past 19 and 22 years.

We’re happy with where we are, but a lot of that is due to seeking out and taking advantage of opportunities, hard work and perseverance. We want to share the message with all 22 year olds that our IRS auditor friend’s parents gave him. This way, more 37 year olds will have the option to choose to retire if they wish to do so.

P.S. – Consider that if you are a 22 or a 37 year old reading this article:

Had you invested $10,500 annually in a 401(k) starting in 2000 and earned a modest 7% return, your 401k account would be worth approximately $310,000 today.

Is the awesome life you always dreamed of
still somewhere over the rainbow?

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Comment List

  • Uncle Cheese-it 24 / 08 / 2015 Reply

    I’m trying to retire at the age of 40. I’ve always stayed out of debt. But I know that if I was better educated about investment, I could have done a lot better by now. So I consider my responsibility to help young adults not to wait to be smart. But it’s not easy to convinced them sometimes 🙂 Thanks for encouraging others to do the same!

    • David Auten 24 / 08 / 2015 Reply

      Absolutely. Glad that you got the bug to retire so young. I wish I had. We are well on our way to a nice early retirement, but then again, we love the DFGs gig so much, we could do this for years to come. Having the option to earn in retirement is a good thing too. 😉

      Do you have any specific retirement goals?

  • SavvyJames 28 / 08 / 2015 Reply

    Enjoyed the read. I would love to have the opportunity to be in a situation where I could dine with other PF bloggers and others interested in PF. I’m sure there was some great conversations.

    With respect to retirement age, I’m locked into the grand old age of 60 for three reasons. First, I didn’t become ‘enlightened’ with respect to PF until I was in my early 30s. Simply not enough time to build a considerable nest egg and retire in my late 30s or 40s like I hear about others. Second, I’m fortunate that my wife and I will have three (my active duty and one each from our current jobs) pensions when we are done. (it’s likely that we really won’t have to touch money from our defined contribution plans [which we contribute the max to] as the pensions (and SS pensions) will be more than we need.) The rub is that we basically have to work until ~ 60 to get the pensions from our current jobs. Third, it seems to me that a lot of the people you read about retiring really early (mid-30s to late 40s) sacrifice quite a bit and live ultra frugally. Quite honestly, that doesn’t work for me. We ‘live’ (travel, enjoy fine dining, etc.) pretty well now on jobs we’re comfortable with and are still positioned to live very comfortably in retirement.

    While retiring really early isn’t in the cards for me, I think it’s great if someone had the foresight to start saving early and is willing to live more frugally than most to retire long before most would even consider doing so.

    • David Auten 29 / 08 / 2015 Reply

      Thanks for the comment James. We couldn’t agree more with you about the balance. We would love to retire in our 40s, but it isn’t gonna happen. We love travel and want to enjoy that leading up to and during retirement. If we change our lifestyle at retirement and spend more, we could end up blowing the whole thing before we should. I don’t want to head back to work at 70. 😉

  • Fervent Finance 16 / 01 / 2016 Reply

    Good for him! He’s lucky to have such great mentors (his parents). I need to get together with like minded people in real life. That’s something I’ve struggled to do.

  • Gwen 16 / 01 / 2016 Reply

    The one thing FI people have said to me is “I wish I had known about this when I was your age.” I started my FI journey when I discovered MMM in college at the age of 22. I’m now 25, and if nothing changes salary/expense wise I’ll be retired by the time I’m 35. I’m incredibly grateful I’ve been given this opportunity!

    • John Schneider 20 / 01 / 2016 Reply

      This is awesome Gwen! You are one of the wise ones that took advantage of advice. Good for you and best of luck retiring when you are 35. So many of your peers will be jealous. 🙂

  • Irene Haidner 01 / 02 / 2016 Reply

    I too enjoyed the read. However, I guess this advice doesn’t help those much like myself in their late 40’s but I don’t think it’s every to late to learn and start acting NOW towards whatever goal it is that you set for yourself. I noticed a few comments like SavvyJames and David Auten who mention they love to travel and wouldn’t give that up but with all the reading I’ve done, I’ve seen plenty of people travel RTW on a pretty cheap budget so I think that travel too is a matter of prospective. It’s not that you can’t travel it’s more where you choose to travel and how you will live on your travel budget. Just my two cents. Anyone who would love to share advice for the middle age on “early retirement” which is obviously not in our thirties, I would love to hear it. Cheers

    • John Schneider 02 / 02 / 2016 Reply

      Irene, we are in the same boat in that we started a bit late and are playing catch up. It’s one of the reasons we decided to turn our side hustle into a full time gig. We can make more money for our two primary goals; retirement and travel.

      You are right about the way you travel. Hostels and going on the cheap isn’t just for 20 somethings. We took the middle ground on our 20 day trip to Australia and New Zealand. We know we could have spent less, but also could have splurged quite a bit more. 🙂

  • Gail @The_KnittyKitty 30 / 08 / 2016 Reply

    I’d love to retire by 40. I’m hoping that by maxing out my Roth IRA contributions and putting as much as I can into my 401k as possible gets the ball rolling for me! I wouldn’t be able to max out my 401k contributions just yet, but I’m hoping to get there soon. I’ve got 14 years until I hit 40, so I’m getting the hustle on now! Great read, thanks guys!!

    • David Auten 17 / 09 / 2016 Reply

      Awesome goal to have at 26! I was just getting started with my 401k then as well. I did really well with the market in the late 90s, but then the dot com bubble burst and I lost over 50%. I wasn’t a savvy investor. Then I started to overspend and got myself into trouble financially. Luckily after meeting John we had our moment of clarity and now we are doing really well.

      I am sure you can amass quite a bit maxing out your 401k and Roth for 14 yrs. Keep us posted on how you are doing. 😉 Thanks for sharing.

  • Donnie Gardner 11 / 01 / 2017 Reply

    Starting early is the key! And the best part is you can start whenever you want! My wife and I plan to retire early as well. But we are taking a different approach. We decided to pay off all our debt, to include our mortgage. All the while creating passive income Businesses. Then lastly we invest into our retirement accounts. This was all done simultaneously but the emphasis went debt payoff, build a business, save for retirement. The good news is we paid off our house on Dec 30th 2016 and plan to quite our day jobs on Aug 1st 2017. I love this inspiring story!

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