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3 Reasons a Child Can Help You Retire Sooner (And 1 Big Reason Why You Shouldn’t)

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Are raising a family and saving for early retirement compatible? Raising children costs money. There is no disputing it.

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A common narrative says having kids makes achieving a secure retirement difficult. And early retirement is a pipe dream for those with children.

I’m going to challenge this conventional wisdom by sharing three reasons having a child didn’t prevent me from retiring early. In fact, my daughter helped me retire much sooner than I otherwise would have.

Can kids help you retire sooner? And should you retire early if you still have kids at home?

Kids Give Life a New Sense of Urgency

Writing this blog gives me the opportunity to talk and correspond with many people pondering the retirement question. A common theme is getting stuck in one more year syndrome and continuing to work at a job you don’t love.

There is always a legitimate reason to fear taking the leap into retirement. Health insurance is a major challenge for early retirees. And how do you ever know if you have enough money to cover every contingency?

Having a child gave me urgency and courage to start making decisions to live the life I truly wanted. I struggled knowing that most days my child was being raised by other people during her formative years.

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Most days, the only time I got to spend with my daughter was a couple hours after work. This time was dominated by feeding, bathing and getting her ready for bed.

Weekends were the one time I had control of my time. But this required making choices between spending time with my child or doing other things that fulfill me.

I ultimately decided that the timing of my retirement was not just a financial decision. I decided to time leaving my job so I would have the better part of a year to spend with my daughter before she started school. Without that urgency, I can’t imagine leaving so soon.

Time will tell if this was a smart financial decision. But I can assure you it is a personal decision I will never regret.

Kids Will Change Your Priorities

My blogging pal J. Money recently wrote 7 ways my kids actually SAVE me money. While I agree with all seven of his points, I noted he could have also accurately titled the post “Why kids make us lame.”

When people discuss how much kids cost, they often neglect to factor in how much less expensive a lifestyle with kids can be as priorities shift and lifestyle changes.

Children come with new responsibilities. You’ll want to participate in the many joyful activities that they provide. But you still have the same finite amount of time.

Every kid means you have another mouth to feed. But having kids can make eating at a restaurant less enjoyable. It’s cheaper to feed our family of three high quality meals at home than eating at even the cheapest fast food restaurant.

Prior to having my daughter, I frequently enjoyed going to college and professional sporting events. Attending those events is no longer a priority.

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Kids activities aren’t free, but we can buy our daughter a year’s worth of swimming lessons and a season pool pass that provide our family months of entertainment for the cost of one afternoon at a NFL stadium.

My wife and I were avid travelers and adventure seekers prior to having a child. Our adventures included international high altitude mountaineering trips, scuba diving in exotic locations and annual ski trips.

We still travel and seek outdoor adventures with our daughter, but it’s more convenient to stay local and do simple things than plan a big expensive excursion with a little one.

Everyone’s situation and values before and after kids will be different. Consider your own wants and needs to determine how much having kids actually costs compared to your child free lifestyle.

Kids Can Make You Get Serious About Finances

I’ve written about how I drifted through my first decade of adult life with our finances on autopilot. While my wife and I have always been natural savers, neither of us thought retiring in our early 40’s was a serious possibility, so we never did any planning.

I got my financial “education” from mainstream sources; television news, magazine and internet articles, and personal finance gurus. We outsourced our investments to a “professional.”

Neither of us bothered picking up a book about evidence based investing or in depth retirement planning. This caused costly errors with our investment decisions and lack of tax planning.

Finding out I was going to be a parent, responsible for my child who would be completely dependant on me, flipped a switch that fundamentally changed me. This is not uncommon for new parents, especially new fathers.

Neuroscientists studying parents-to-be found that “dads-to-be focused on the future: they imagined saving money for a college fund or walking down the aisle at their daughter’s wedding.”

It is no coincidence that after ignoring personal finance for over a decade, I suddenly went deep down the rabbit hole of understanding all aspects of a financial plan six years ago. In doing so, I realized the mistakes we were making with our finances and began to address them.

While my daughter’s formative years came with new costs, those costs were just a fraction of the savings we experienced by trimming our investment expenses and tax bill by tens of thousands of dollars every year. Those savings drastically cut my time to financial independence and early retirement.

Should You Retire If You Still Have Kids at Home?

If you’ve shown enough interest in this topic to still be reading, you might consider accelerating your retirement timeline.

My recommendation may surprise you. For most people, you probably shouldn’t.

A lucky few discovered the concept of FIRE early in life and planned and saved aggressively before having kids. If you are in position to consider retirement with young children or even before having children, I tip my hat to you. But that’s the exception and not the rule.

As the idea of FIRE gains popularity, there is an underlying assumption that we should all try to achieve financial independence as quickly as possible, so we can retire as soon as possible.

In this all out sprint to the finish line, it’s easy to forget why we started running. For many people, it may be better to slow down a little and enjoy this phase of life with our kids.

Seasons of Life

We all have unique circumstances. Our daughter was born when we were in our mid-thirties. We were well on our path to financial independence by then.

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This enabled me to retire while my daughter was still very young. I still missed out on a lot in her first five years of life because I was so focused on the goal of earning and saving for early retirement.

Many, me included, get caught up in the dichotomy between working and retiring. We overlook other options available to us, like having one full-time stay at home parent, cutting back to working part-time, starting semi-retirement sooner, or taking sabbaticals.

I recently heard Jillian Johnsrud talk about the idea of appreciating different seasons of life. Don’t look back on the season when your kids were young with regret, because it passed by while you were so focused on other things that you failed to realize what you were missing.

The idea of early retirement, and retirement in general, is overly romanticized. A better goal may be to use our money to buy back some of our time for those seasons of life when it is most important to have it rather than delaying gratification for a day that may never come.

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[Contributing Editor Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris' writing has been featured in MarketWatch, Doughroller, Business Insider and RockStar Finance. He is also the primary author of the forthcoming book Choose FI: Your Blueprint to Financial Independence. You can reach him at chris@caniretireyet.com.]

Comments

  1. The Crusher says

    While I admire those with big enough brass balls to execute a FIRE move with young kids at home, I do not think it always the most prudent move.

    We have 3 boys ages 17 to 24 and I just know too much about what can go wrong in life. At this point our 1st two sons are pretty settled but until our 3rd gets at least 1/2 way through college and is on a path to his success, I just can’t pull the trigger. I wish I could but I just can’t.

    Kudos to those with more guts than me.

    • Chris Mamula says

      I agree that it is scary to retire. After working so hard and saving so aggressively, many people would say we are “not really retired.” Though I left my job and career behind, my wife continues to earn enough to more or less cover our expenses meaning we have a very low burn rate with our investments, and some years may actually be net savers in “retirement.” Though I currently earn very little income, I am building potential revenue streams through my writing efforts on this blog and for my forthcoming book as well.

      So really, there is no reason we couldn’t have done this years earlier when my daughter was even younger and had this quality of life (admittedly with slightly less financial security) years earlier. It’s something I hope I can get more people thinking about.

  2. “Caught up in the dichotomy between working and retiring”. Very well said and certainly something I struggled with and have been moving away from. Buying flexibility but holding on to my health insurance seems like a good play. After all, I read a policy the other day that 32 hours at my employer is still considered full time and thus I would still qualify for subsidized health insurance. Could be a good middle ground for me. Great thoughts on the cost shifting from one bucket to another as you move from pre to post kid life. We don’t have any kids yet, but certainly something to think about. Have a good week, Max.

    • Chris Mamula says

      Agree Max. This is where my wife started in order for us to get our health insurance through her employer.

      I don’t want to get into specifics of her current work situation, but I will say that when you have the ability to walk away from a job it gives you the ability to negotiate creative employment arrangements that you may assume are not possible or are afraid to ask for if you are worried about being fired or losing standing and status in the eyes of your employer. And I would argue that employers win in these arrangements as well b/c their flexibility creates loyal and grateful employees. Win/win!

  3. Thanks and good article and I fully agree with your findings and sentiment. While I did not retire that early (56) we did adopt two boys that likely only delayed the retirement decision a year or two. You are right you end up with a totally different set of priorities, most of which are lower cost.

    • Chris Mamula says

      Thanks for chiming in David. And awesome that you chose to adopt. This is still on our radar of future possibilities to grow our family, and is a reason we continue to pursue income producing opportunities post-FI to keep our options open should the right situation arise.

  4. karen young says

    working part-time has been the best of both worlds for me

    • Chris Mamula says

      My wife had the same experience. Things worked out well for us, but in retrospect we could have both cut back sooner and been in basically the same place. Live and learn.

  5. I think you can stop work with children at home. If you have achieved what you wanted at work and have managed your finances so you have enough to live on then it is an option. As older parents who stopped working early, but not that early, our children have seen one or both of us go to work but have also seen us at home. We have been able to stop work, or work part time for a while, and spend more time with them.

    • Chris Mamula says

      Thanks for the thoughtful comment.

      In actuality, our daughter is seeing the same. She knows I write. She sees her mom working at times, especially when she’s home from school in the summer. But she also gets a lot of time and attention from both of us.

      Truly retiring in the sense of completely stopping all work and having no earned income for the household is scary. Unless you save so much that you’ll likely end up having over saved it is probably not a smart option from a risk management perspective.

      Since my wife continues to work part-time and I continue to pursue activities things that may result in making money, there was really no reason to have worked so hard to get to a set FI number that would enable retirement. I’m not suggesting a standard paycheck to paycheck lifestyle with no thought of the future that many live. I am suggesting that more people do as you did, and we are currently doing, which is to find a balance between the two extremes.

  6. Chris,
    Hope you are well, buddy! As usual, great article here. Although I have not achieved FIRE yet, for the last 3 years I live by the mantra you’ve painted here. Having control of your time to spend with your children is very important.

    At this time in my life, I’m home from work by 4 or earlier 4 of 5 days of the workweek. Beginning in 2016, this became 3 of 5 days. To be honest, I do not know how folks with children who work late hours do it. At 38 years old, I can’t tolerate that at this point in my life. So much more to life.

    I want to point out the concept of semi-retirement and other passive streams of income. Essentially, you don’t have to work yourself to death, but can still make enough money to not “worry” about your nest egg running out. It can be quite stressful worrying about having enough money to never work again. Hey, I work an average of 25-28 hours per week and basically enjoy my life. I don’t stress about money or my job. Plus I have real estate generating a passive income. It’s afforded me income replacement, and accelerated FIRE for me.

    • Chris Mamula says

      Great insight. Many (including me as noted) get stuck seeing only black and white and we miss the many shades of gray. Kudos to you for having the foresight to figure out a better way and the courage to take a different path in life!