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There's a new movement in America these days. In many ways it's always been with us, but it has been growing rapidly in recent years as adherents find each other through the internet.

On my web site,, I call it "pretirement," although others have simply called it “early retirement” or just “financial independence.” When you throw around terms like “financial independence”, however, visions of massive wealth fill our heads and we feel like that’ll never be us. “Early retirement” makes us think of young dotcom millionaires, who got rich early and left the corporate rat race. But many of us -- those of us on the political left, especially -- don’t want to spend our lives chasing dollars at the expense of our families, communities and country.

But what if there was another way?
The pretirement movement is about using simple math, science and logic to unlock the secrets of financial independence WITHOUT being a millionaire.

I am no expert and I actually still have some distance to go on my own journey. But I wanted to share my perspective with the DailyKos crowd, many of whom could benefit from a fresh look at their own financial lives. (I’m a longtime Kossack under a long-abandoned user ID. I’ve even taken a trip or two to the rec list many years ago!)
To me, pretirement is a (sort of) new stage of life. Back in the day, workers (mainly dad) would head off to work each day, return home for a homemade dinner with the family and zone out in front of the TV until bedtime (or some variation thereof). This would repeat until this man was old and then he would be able to retire and he’d enjoy his sweet corporate pension and social security.

Those days are long gone. Not only is mom also working today, but dad’s pension is also gone. And the idea of working for a single company for an entire career is almost unheard of. To make matters worse, companies are often way too happy to shed their older workers. The glut of 50+ workers who are unable to find full employment is unprecedented. Even workers in their 40s often feel they have a target on their back already.

So if the old paradigm was school>work>retirement, the new path looks like school>work>pretirement>retirement.

Pretirement doesn’t mean you don’t work. It means you don’t HAVE to. It’s about choice and freedom.

The first step in reaching pretirement is to challenge some conventional thinking. For example:
- Challenge the idea that investing just a small portion (10% or whatever the financial planning industry is pushing these days) of your income over the years is enough to actually reach your goals.
- Challenge the idea that a long commute to work is normal or sane.
- Challenge the consumerist mentality that you need to keep up with the latest and greatest.
- Challenge the perception that everyone needs to own a house or that it’s a path to wealth.
- Most of all, challenge the idea that buying anything but a house with credit is anything but insane.

The next step is to do some math.
First of all, if you have credit card debt at all, stop reading right now and go get rid of that. The following is for people with enough financial sense to try advanced mode.

The math we’re going to do right now is fortunately very simple. Add up your monthly bills. Then cut those expenses down to the bare minimum. That means excluding your cable TV bill. Your iPhone bill. Your eating out dollars. Once it’s down to your food, housing, utilities and similar costs, you know your freedom number. Multiple by 12 to make it into a yearly number.

Next compute how much money you’d need to have invested to generate that number. I'd say counting on earning 5% is reasonable in today's world, but if that's too aggressive for you, pick 3% or 4%. Now you have a savings target.

Finally, scrimp, save and work as hard as you can to reach that number. You won’t get there investing 10% of your income. And you definitely won’t get there investing zero, as many Americans do.

But I can’t afford to invest – I’m barely making ends meet as it is!

Nonsense! Look, we’re living in an era where consumer goods are CHEAPER THAN THEY EVER HAVE BEEN. I’m not going to get into the sickening behavior of American companies and the government who have exported well-paying jobs wholesale at our expense. I’m just saying as a matter of fact, you can buy many household goods cheaper than at any time in history. Unfortunately that has turned into Americans into a weird consuming machine, rather than discriminating customers. “Oh these socks are on sale for 20 for a dollar? Oh, well, if I don’t like them, I’ll just throw them out and get new ones.” That’s largely where our money is going, buying stuff we don’t need with money we don’t have.

I say buy quality, buy local if you can, and buy things just one time and let everyone else spend away their futures on disposable garbage. But more importantly: Don’t buy at all if you don’t have to!

By opting out of the consumer waste treadmill, you’re going to instead channel those funds into building up your freedom fund, otherwise known as your Fuck You Money. As you take on that more sophisticated approach to using your dollars wisely, you’ll build up your pretirement fund quickly.

And never again will you have to work because you have to, it’ll be because you want to. Maybe your own business, maybe part-time, maybe just in your garden or raising your kids. The point is, it’ll be up to you. By defying the experts and the American consumerist mindset, you’ll have set yourself free.

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Comment Preferences

  •  Safe Sox (5+ / 0-)

    The socks you point out are a great example.

    We have become so damn tired of buying new socks every year or so, that we have decided to spend considerably more, for the most part, and buy socks that should last for years.

    We generally get outdoors or hiking socks at REI or a similar store. Yes, they cost $12 or $15 per pair, but if that pair lasts 5 years, or more, then we've made out just fine.

    I especially like the Darn Tough Vermont socks. They have, get this, a lifetime guarantee. Anything goes wrong, if they ever get a hole in a toe, just send them back for a new pair. How can you beat that?

    And they're all made in the US, so we can feel good about that, too.

  •  If this way of living works for you, great. But (3+ / 0-)
    Recommended by:
    Uncle Cosmo, Senor Unoball, grover

    I'm not interested in being quite that barebones.  I'm focusing on buying only what I truly want, rather than the items that will give a temporary high and then be junk laying around and never buying anything  because others suggest I should have it.  But I enjoy traveling and see no point in completely cutting that out, for example, in order to save for a future I might well not have.  

    Finding a balance is key, in my mind.  Choosing a few items or activities that truly add enjoyment to life now, while putting away a reasonable amount for the future.  That's worked out pretty well for me, since I've never had much desire for a lot of material things or a highflying lifestyle.  It would probably take a lot more discipline for someone who has a hankering for the "finer things in life".

    "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

    by gustynpip on Wed Apr 10, 2013 at 02:05:30 PM PDT

    •  Ah yes... (3+ / 0-)
      Recommended by:
      Senor Unoball, terabytes, greengemini

      But then no one is saying you shouldn't travel or buy nice things, right? I'm just saying people need to think about what they buy, examine whether they really need it and THEN go ahead. (Usually we don't really need it.)
      If you're Richard Branson and can afford three international trips every year and a shiny new iPhone every time they come out, that's great! Go for it.
      But if you're texting your friends about how you hate your job on your brand-new iPhone, you may have some self-examination to do.
      It's not about living like you're poor, it's about deciding on YOUR comfort level and investing to reach your freedom number.

    •  This is how I've planned life for 30+ years (2+ / 0-)
      Recommended by:
      gustynpip, mimi2three

      When I started working in the 1970s I took a long hard look at demographics and age distributions & concluded it was doubtful Social Security would be around by the time I retired, & highly unlikely it would provide enough to live at any level above the catfoodish.

      I also didn't see much prospect of spending my working career as a math/stat/IT type with one (maybe 2) firms with solid pension plans. Even when the demand for those skills was pretty high relative to supply--management typically would pay top dollar to get someone in the door but then skimp on raises, counting on workplace inertia to help hang onto the staff, & it quickly became clear that the only way to earn what you were actually worth was to change companies every few years, when you may not even have gotten vested for a pension. (In the end, I had 7 employers in 36 years of real work, only 2 for more than 5 years--& have a tiny pension coming from one of them & the remnants of a 401k from the other.)

      So I concluded I would pretty much have to fund my own retirement via savings & investments.

      You start, as the diarist properly notes, by drawing up a survival budget: Housing, food, heat, electricity, water,  medical, transportation. If you're going to be raising kids, you add in the necessities for that.

      Everything else is optional. But some options are less optional than others. What do you need to make your life pleasant & enjoyable enough to feel like you're really living? And then you work those things in, judiciously & occasionally (noting that you will, e.g., enjoy a meal in an upscale restaurant much more if it's an occasion rather than a daily occurrence). This is your living budget.

      I figured out (pretty much in chronological order) that I liked to read (& learn things by reading), to dance, and to travel. (Among other things, I was happy to avoid for 11 months of the year fancy restaurants & pricey special events that I could easily have afforded when I was working, in return for spending the 12th month hopping trains in Europe.) So I budgeted additionally for books (& later for a computer & internet access), for a night or two out each week, & for a trip or two each year. This is my living budget, & I've been living within it for over 30 years now.

      Since I turned 50 I've kept my financial adviser up to date on that living budget for planning purposes. So when I got bounced from my last job (soon after turning 62) all we had to do was change gears--& short of a general societal collapse, I should be OK for however long I'm around to be a PITA for the powers-that-be...


      by Uncle Cosmo on Wed Apr 10, 2013 at 05:24:38 PM PDT

      [ Parent ]

  •  I largely agree with the jist of your diary. (5+ / 0-)

    But you should have posted this under your "abandoned" UID, if you do have one, because this feels really spammy.

    If you ARE a longtime Kossack, then you know there is a way to approach this community, and jumping in to sell your own personal website under a brand-new UID is not the way to do it.

    And BTW, calling us a "crowd" tells me that perhaps you're not hip on our "community" dialect, so I'm all the more dubious.  And you might have actually given a nod to the many members of this community who are barely surviving on less than $10K per year...that is, if you were a longterm member of our community.

    But that's just me being skeptical....

    Too bad, actually, because what you say makes a lot of sense for many middle (and upper middle) class Americans: not that they'll be able to quit their jobs, but that they should stop buying crap they don't need and should saving for emergencies and their senior years. If they're able to find early financial independence in doing so, all the more power to them. If they're simply able to find peace of mind and a sense of security, then that's a great thing too.  

    Ah well. If I'm wrong, I apologize in advance.  I guess I've just read too many reports about 20-25% of all Americans skipping meals. And your diary just glosses over the reality of what many Americans are doing to survive.

    Many Americans are already surviving on less, and buying almost nothing new.  It might be helpful to acknowledge that.

    I dunno.  


    © grover

    So if you get hit by a bus tonight, would you be satisfied with how you spent today, your last day on earth? Live like tomorrow is never guaranteed, because it's not. -- Me.

    by grover on Wed Apr 10, 2013 at 02:13:48 PM PDT

  •  Investing in the stock market (0+ / 0-)

    may just be our biggest mistake.  I took it all out, paid bills and invested in rentals.  My Roth is still in the market and has earned nothing despite the booming market.  I like how we lose a third or half when it tanks but we never get it back when the markets go up.

    Everyone! Arms akimbo!

    by tobendaro on Wed Apr 10, 2013 at 02:28:14 PM PDT

  •  I bought Schubert symphonies (1+ / 0-)
    Recommended by:

    A CD edition of all of them, conducted by Neville Mariner. Back in the 1980's I bought the same recording on tape casette.
    Is that consumerism? I bought it on a credit card, but I pay that off monthly.
    I get plenty of phone calls from political fundraisers. OK, that creates jobs, but I have a budget to keep. I have been telling DCCC I would rather donate to individual campaigns of my selection.

    Censorship is rogue government.

    by scott5js on Wed Apr 10, 2013 at 02:30:17 PM PDT

  •  already there; it still sucks (1+ / 0-)
    Recommended by:

    I make $20k and spend it on rent, food (probably the only thing I "splurge" on), gas (because I can't afford to live near where I work), insurance, and the internet (which is pretty much my sole leisure activity).

    Fun costs money.  

    •  Well... (0+ / 0-)

      My general rule is if you don't make enough money to build your way to freedom (generally probably $60K or more), then you need to put your effort into increasing your income. That may mean additional training, moving, etc. There is no reason to be loyal to a $20K/year job.
      Also, I'd question your point about not being able to afford to live near work. If you really look closely at the cost of commuting, you may find paying a little more rent and trading the car for a bike could get you where you need to be. And you'll be happier! And it'll be better for the planet to boot!

      •  so live frugally and you'll still need $60k? (1+ / 0-)
        Recommended by:

        Pardon me if I don't think you're being particularly helpful.

        •  Let's see... (0+ / 0-)

          Let's start with some real information:
          - how old are you?
          - what are you goals? (when would you like to be "pretired" for example
          - kids/debt etc?

          •  OK ... 29yo, single, no debt, no kids (1+ / 0-)
            Recommended by:
            Pretired Nick

            Goals?  Be able to approach life in terms of what's out there to do and what of that I feel like doing ... rather than what I have to do to keep myself alive and what I can actually afford.  In terms of a dollar amount, that's likely to be far far more than $60k.  When do I want to "pretire"?  The sooner I can quit working, more life I'll have to live.

            •  Excellent! (1+ / 0-)
              Recommended by:

              Then, my friend, I have good news for you!
              Because you have been VERY wise to avoid kids and debt, AND you have mastered the skill of living on very little, you are better positioned than 80% of Americans to pretire. You can be there by the time you're 40.
              Here's how: First, because your wages are crap (sorry, they are), you need to fix that.
              I can actually speak to that with authority because I was making $19,000 a year when I was 29. I finally got smart and got a low level job in another (more lucrative) industry and worked my way up. In two years I was making $50,000.
              Next, you need to avoid the temptation to ratchet up your lifestyle with your newfound wage. ALL of that money will go into your investment account. I don't give investment advice, so you'll have to figure that out on your own, but look into index funds and dividend stocks for starters. You should be able to net 4-5% from that investment.
              Next, wait and enjoy being frugal. You'll be pretired before you're 40 years old!
              I wish I'd had someone post a comment like this to me when I was 29. Would have saved me a lot of mistakes. Good luck to you!
              PS: for more ideas, check out sites like MrMoneyMustache or EarlyRetirementExtreme which have great frugality tips and other great ideas. (I have no interest in either one.)

            •  You need to get a job overseas n/t (0+ / 0-)
  •  I agree (1+ / 0-)
    Recommended by:
    Pretired Nick

    As you can see I made the change myself in 2010.
    I jumped off the carbon intensive hamster wheel today

    Since then I have written well over 500 diaries here, making what I hope to be a more productive use of my time.  

    "Senators are a never-ending source of amusement, amazement, and discouragement" ~ Will Rogers

    by Lefty Coaster on Wed Apr 10, 2013 at 03:13:07 PM PDT

  •  Money is power (4+ / 0-)

    I hesitate to post this comment.  No one likes to hear someone go on about how much money he has or how clever he was with his investments.  But I do want to encourage you by letting you know, from my own experience, that a frugal person on a modest income can save and invest his way to a comfortable retirement (or pretirement, if you will).

    Money is power.  It cannot buy happiness, but it will protect you from the vicissitudes of fortune and the tyranny of men.  Money in the bank is the difference between an inconvenience and a catastrophe.

    And you are right about the “freedom fund,” otherwise known by the cruder expression that more accurately reflects its meaning, but which I shall not repeat.  A boss can smell fear, and if you have no money, he can sense it, and he will take advantage of you.  But with money in the bank, you will begin to exude confidence, and he will realize that he cannot push you around.

    •  Wow! (1+ / 0-)
      Recommended by:

      I wish I could write about this as eloquently as you!
      You totally nailed it. People are so buried in debt and consumption (my own sister for example) that they FEEL they'll never be able to retire, when if you look around their house you just see crap, crap, crap everywhere. Plus unneeded house remodels, car loans, etc.
      Basic frugality, a decent wage + time = freedom. That doesn't mean we should help those who are struggling, but a little financial education would go a long way in this country.

  •  Welcome back to the GOS, Pretired Nick. (4+ / 0-)

    You already know your way around the place, but I'm going to include our Welcome message in case some newcomers are lurking about.

    Welcome from the DK Partners & Mentors Team. If you have any questions about how to participate here, you can learn more at the Knowledge Base or from the New Diarists Resources Diaries. Diaries labeled "Open Thread" are also great places to ask. We look forward to your contributions.
    We've managed to stay out of debt for over 10 years, including paying off the house. A medical crisis last year threw us off, but I'm back to saving.  Look forward to your future diaries.

    Oh, I used to be disgusted
    Now I try to be amused
    ~~ Elvis Costello

    by smileycreek on Wed Apr 10, 2013 at 03:34:35 PM PDT

  •  The best thing most Americans can do is (2+ / 0-)
    Recommended by:
    Pretired Nick, greengemini

    set up a Roth IRA at a discount broker like Schwab and invest the money in dividend growth stock.  There are several hundred firms that have raised their dividends every year for decades, like clockwork.  And did so right through the 2008 crash and every other economic crisis.  In a Roth IRA you can choose the firm (and you should choose firms, not mutual funds).  Coke, Pepsi, MacDonald's, Procter & Gamble, firms that have been around a very long time pay dividends that rise steadily.  You need about 40 such stocks for sufficient diversification, but if you can sock away a bit of money each year into an IRA and buy $500 or so of stock at a time (to save broker fees), you can build up a good and growing retirement income. Look up "dividend growth" investing.  Financial advisors hate it because it works and you can do it on your own and save the cost of their fees.  Look up "value investing" also, and if you practice value investing in dividend growth firms, and buy when the market or that stock is down, you will be able to retire and see your retirement income go up with the steadily increasing dividends.  I'm on the cusp of "retiring" early for the US but late for Hong Kong where the normal retirement age is 60 (I'll hang it up here at 62).  My wife and I are starting a Net Zero energy organic farm on acreage we bought years ago.  We've saved, scrimped and invested, and you're very right that it takes more than 10% of your income saved to make a decent retirement, but even that amount invested smartly over 30 years of working will pay off very well.  But whatever you do, avoid most financial advisors who are really just interested in the fee they earn annually, not you.  My test is if they want an annual fee to advise you or manage your portfolio, and want it whatever kind of return you make, avoid them.  And it's just far better to do this yourself, working off a list of "dividend aristocrats" (look it up on Google) which is those firms that have raised their dividends every year for decades.  And don't sell such firms in a panic.  That is when you buy them, and once you learn dividend investing, you will develop a knack of gathering you dividends when the market is up and rising, and then buying stock when the market goes down because you can get a higher dividend for less money.  And you don't worry about the daily fluctuations or timing when to sell something.  Anyway, my two cents.

    America needs a UNION NEWS channel. We (unions) have the money, we have the talent. Don't buy 30 second time slots on corporate media, union leaders; fund your own cable news channel and tell the real story 24/7/365

    by monkeybrainpolitics on Wed Apr 10, 2013 at 03:48:18 PM PDT

    •  Totally agree (2+ / 0-)
      Recommended by:
      monkeybrainpolitics, greengemini

      Except, I will say this is really step 3. Step 1 is get rid of all debt. Step 2 is adopt a frugal lifestyle. Step 3 is everything you mentioned and I can't disagree with a single word of it.

      The only thing about the 10% invested is that then you DO have to work for 30 years to reach any sort of retirement. Who wants to do that?

      Also, I want to hear more about this farm!

      •  Order of steps is definitely true (0+ / 0-)

        if that debt is credit card or student loan debt.  Not all debt is bad, of course.  If you borrow carefully to buy land or start a business (or expand one), and do so on a fixed rate or from the seller, debt can be positive.  When the seller couldn't sell the 10 acres of farmland I bought several years ago at the depth of the crash I asked if the seller would be willing to sell it for a 10 year fixed rate about 2.5 percentage points below what a bank would finance raw land purchases for, if they would (and none would at the time, we asked).  He took it, making about 3 points more than he would on a CD and costing me 2.5 points less than it would if I borrowed from a bank.  Better yet, the bank got none of this--giving us both a better bargain.  We will have it nearly paid for by retirement (trivial amount left owing by then).  In starting up the organic farm we are looking at building a 900 square foot granny flat/garage and storage shed/workshop/greenhouse complex out of savings, then collateralizing that into a fixed rate loan to build a super high efficiency house.  We will live in the granny flat while building the house and starting up the farm.  The granny flat can either be for my wife's mother or for live in caretakers for us when we get invalid (or for visiting relatives and friends to stay in, or even for interns to work with us on the farm--lots of college kids nearby).  The main farmhouse will be about 3 times the size of the granny flat, counting basement/pantry/cellar and an attached solarium/greenhouse.  Meanwhile, income from the farm and/or from our dividend growth portfolio would cover the mortgage and leave us with enough to live modestly but independently on pesticide free, organically grown food, and still have a small margin of safety when social security kicks in 5 years after we "retire."  That's even if Obama manages to cut social security, which, if we have anything we can say about it, won't happen!  My wife told me this morning she's signing every petition she can find that opposes chained CPI and other cuts.  We're also holding onto our Hong Kong permanent identity as long as we can (we will have to fly to Hong Kong every 3 years to maintain it) since medical care here is nearly free and it's very good.  We could fly to Hong Kong, get medical care and stay in a hotel and still cost us less than hospitalization in the states, depending on the insurance we will be able to get on return to US.  We will also live literally a mile from Canada and be able to cross the border for lower cost pharmacy.  And our state has assisted suicide if worst comes to worst--and we both don't want to bankrupt the other with futile final breath expenses.  We even agree on cremation to cut burial costs and lower our footprint on the planet.  Just like you, we have planned and worked a long time to set things up for retirement.

        America needs a UNION NEWS channel. We (unions) have the money, we have the talent. Don't buy 30 second time slots on corporate media, union leaders; fund your own cable news channel and tell the real story 24/7/365

        by monkeybrainpolitics on Wed Apr 10, 2013 at 09:26:02 PM PDT

        [ Parent ]

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