Done by 60: Case in Point


For the past year, I’ve shared ideas about how you can achieve a state of financial independence (the point where you work because you want to, not in order to maintain your lifestyle) by age 60. As an advisor, it brings me great joy when a couple delivers a highlights reel of how, on their own, they are actually making this happen.

Bob and Rick

Dual-income-no-kids (DINK) couples have a slight financial edge over the “traditional” family—higher disposable income gives them a head start to save at a young age while their friends with kids are dropping $40,000 per year into private school and a college fund (and that’s just for one child!). My clients Bob and Rick (names and some details changed for privacy purposes) are DINKs, and they have taken full advantage of it.

While in their 30s and 40s, they maxed out their 401(k) plans, made additional contributions to a trust account and purchased a rental property in Long Beach. Now nearing age 50, they don’t want to leave the work force altogether, but they do want a flexible work schedule that will allow for more time to travel. Here’s how they plan to achieve their goal of being financially free by 60.

Simplified Housing

Bob and Rick’s single-family Long Beach rental property was the low-hanging fruit in simplifying their financial life. It was now 400 miles from home and producing negative cash flows due to unusually high annual expenses. They had neither the time nor the desire to be skilled private real estate investors, so they sold it and folded the proceeds into their portfolio of publicly traded stocks, real estate and bonds.

Next they reviewed the costs associated with owning two houses for personal use. As I wrote in “What’s the Nightly Rate on Your Vacation Home?” second homes usually end up being a very expensive way to enjoy some time away, no matter how many nights you stay in them. Bob and Rick will be selling their highly appreciated San Francisco house this year, folding the proceeds into their nest egg and packing their bags for Palm Springs.

Stretching the Dollar

Does this mean they can retire? Not quite. Nor do they want to. Bob and Rick will be moving to Palm Springs with fewer personal expenses, a larger nest egg (San Fran house proceeds) and a cost of living adjustment of at least 20% (my recent blog post, “Done by 60: Final Home Destination,” covers this in detail). As a result, they will only need to work a part-time schedule for about 10 years.

Bob and Rick, now 50, can take their time in selecting work that will produce a high level of joy and flexibility while allowing them more time to travel while they are both young(er) and healthy. The best part? They can even afford to take a year off to relax and plan for the next chapter. Bob wants to start a dog-training business. Rick is ready to just sleep in for a few months and think about work later.

Some say life begins at 40, but maybe the fun really gets going at 50.

Happy semi-retirement, guys,