There is a great cautionary tale about retiring early, even with millions, and running out of money, from a personal finance blog I read, Financial Samurai and you can read the article here from yahoo finance.
In the article the Sam Dogen managed to amass $2.5 million by 34 and decided to retire but is now running out of money. If it can happen to Sam, it can happen to anyone.
Inflation, Taxes & Lifestyle
I recently wrote, “Your Three Retirement Demons: Inflation, Taxes & Lifestyle” where I cautioned about the things that you must manage when retiring and it seems that the Financial Samurai fell prey to some of the demons that weren’t slayed. It is one of my biggest fears which is why my wife and I are considering retiring overseas so that we can live a richer lifestyle and have lower expenses.
Planning, Forecasting, & Adjusting
Sam doesn’t provide too much detail in the article about what went wrong but clearly having kids and the underestimated expenses of those kids was a key contributor to his situation. Personally, I think waiting until your 30’s is too old to start having kids. My wife and I had our kids in our 20s and by our 40s they were essentially out of high school and into college. By our late 40’s we were mostly free of “kid” expenses.
I also suspect that inflation had a huge role to play in Sam’s predicament and while he benefited greatly from housing inflation, the other inflationary expenses took their toll on his budget.
The important lesson I took from Sam’s journey is that we all must continuously plan, forecast and adjust our financial models because even $2.5 million isn’t enough money to retire on. So the questions then are:
- What Is Your Retirement Plan?
- How Are You Forecasting Your Future Personal Finances?
- What’s Your Plan For Inflation?
Share The Wealth
What do you think of Sam’s journey? Let me know in the comments below…