Couple in Their 40s Quits City Jobs to Retire to Their Paradise

A couple shares their story of how they raised a family then retired early to retire young and pursue their dream of a life on a panoramic mountain in an income-tax-free state. They tell how they did it, and how others can too.

Teresa and Russell both retired at 46 years of age, and have graciously offered to do this interview after they stumbled upon my article titled "15 Years to Financial Independence-Retire Early" at http://aclnk.com/ar1463568. By some incredible coincidence, the lifestyle, financial plan, and retirement plan of the fictitious "model family" used in that article closely matches the lives of Teresa and Russell's family. Thus, they excitedly contacted me to let me know how well a similar financial plan for early retirement worked for them. Teresa and Russell have asked that their last name and exact location not be used in order to protect their privacy.

Q: Let's begin by asking how you happened to be here for this interview. What actually prompted you to talk about this?

A: [Teresa] A few weeks ago we were searching the Internet for some information, and we happened to find your article on how to retire in 15 years. The family, the financial plan, and the lifestyles described in your article were amazingly close to our own reality. While reading your article, it felt like we were reading about our own lives-a very strange feeling! Since your office is right on the way to our son's home in Pennsylvania, it was very easy for us to stop by during our trip East. Actually, we were thrilled to do this.

Q: How long have you been retired?

A: [Russell] We were both 46 when we retired 4 years ago. We waited until we were finished helping our third and youngest child finish her Associates' degree when we were both 42, then we worked another 4 years to save up as much as we could. After that, we both quit our city jobs and retired to a cabin in the mountains in an area that we consider our paradise. We wake up to breathtaking scenery every morning.

Q: What types of jobs did you hold before retiring? It sounds like you must have had high-paying jobs.

A: [Teresa] Not really. Russell was a high school math teacher, and I was an office manager for the same company I had done bookkeeping for since graduating from high school.

Q: What about college-do both of you have degrees?

A: [Russell] No. With both of us working and raising a family, it was impossible for both of us to go to college, so Teresa and I decided that I would go to college and get a teaching degree, because Teresa's bookkeeping job paid a fair wage, and was secure. Back in those days, you could get government assistance for college financing if your family income was below a certain income range, and luckily we just fit into that range with me being in school. I only had to pay a fraction of the actual cost.

Q: Since both of you are too young to receive Social Security, how do you have enough money to live?

A: [Teresa] When we retired and quit our jobs 4 years ago, we put our savings into 20-year CDs that pay 8%, and they pay monthly, pretty much like a paycheck. We were so thankful we did this before the economy got bad. Plus, Russell is able to draw a partial retirement from his years of teaching.

Q: If I may ask, how much money did you put into 20-year CDs when you retired?

A: [Russell] About $400,000.

Q: How did you come across that much money working as a teacher and having to raise a family and pay for college?

A: [Teresa] When we were first married, we really stretched ourselves thin to put $300 a month into a savings fund that accumulated with monthly compounding interest. Each year, we increased our monthly payments by $50. So, by the second year we were putting away $350 a month, and so on. We did this for several years, then found we were able to increase the monthly payments by $100 instead of just $50. All-in-all, we did this from the time we were 18 until the year we retired when we were 46. We saved for 28 years, which is much longer than the 15 year plan in your article, but we made much smaller monthly payments to our savings plan.

[Russell] Also, after we sold our home and paid for the new property and cabin, we had some money left over that we added to our savings to come up with $400,000 for investing in CDs.

Q: How difficult is it to live on the interest you get from your CDs?

A: [Teresa] Extremely easy. We make about $40,000 a year with the CD interest and Russell's retirement. After Federal taxes, it's around $32,000, because there is no personal state income tax in Wyoming. It is very easy for us to live on that amount, because our total living expenses only come to around $6,500 a year. This includes property taxes, home and auto insurance, medical insurance, gas, utilities, and groceries.

Q: What about medical insurance? How can medical insurance possibly be included in $6,500 a year for total living expenses? Being able to afford medical insurance is probably the most common reason that people cannot afford to retire early.

A: [Russell] Our medical insurance costs each of us $108 a month, and we have a huge deductible that we hope we never have to use. It's United Healthcare Insurance through the Golden Rule carrier. Because we eat a plant-based diet, we don't have cholesterol, arthritis, cancer, or any of those chronic conditions that require expensive drugs and medical care. We started this diet years ago after I was diagnosed with high cholesterol, which was actually a blessing in disguise. Today, my cholesterol stays around 125 with the plant-based diet. Not having to buy meat means our grocery bill is much less than the average, plus we don't have the medical expenses we would normally have if we ate the "average American diet" of dairy, fatty meat and fried foods.

Q: How can you pay utilities out of only $6,500 a year in total living costs? You live in a mountainous area that gets snow 4 to 5 months out of the year. How can you heat your home and stay within the $6,500 expense amount?

A: [Russell] Our cabin is small, and is very easily heated with a wood stove. There is an abundance of firewood in the forest on our property. If we run out of chopped firewood or get lazy and don't feel like chopping any, our electric heat kicks in, but we try not to use it.

[Teresa] Our roof contains photovoltaic panels that generate enough electricity to run lights and small appliances. We are connected to the city electricity, but with a small home, we really don't use much. Our appliances-refrigerator, washer, and dryer-are small, energy-efficient models, and we usually hang up the laundry outside to dry, because most days are sunny. Our cell phones are probably our biggest utility cost--$39 a month.

Q: So, after paying $6,500 in total living expenses from your $32,000 after-tax income, you've got $25,500 in cash to do anything you want with. What do you do with this extra money?

A: [Teresa] We fly each of our children's families to our home once a year, because they live so far away. Then 2 or 3 times during the year, we drive to their homes. We're retired, and we have the time to make long trips. Also, some of our monthly income goes into savings we keep for emergencies and property upkeep. We have hobbies, too, that we spend a little money on. It's really a comfortable life for us.

Q: You're retired with extra money to burn, living in a scenic paradise, and you'll never have to work another day for the rest of your lives. Many people have a difficult time even imagining such a perfect situation. What do you do with your time? Give me an example of what might be a typical day for you.

A: [Teresa] We live 4 miles from town, so it's easy for us volunteer one day a week in the school kitchen. I volunteer at the hospital one day each week. Also, we're very involved with our church, so that ties up one full day plus one or two evenings each week. We go to the library a lot, and enjoy reading. We both have hobbies that keep us busy. I do a little woodwork, but not as much as Russell does. I knit, do crafts, sewing, and bake. Russell is currently building a hammer dulcimer for the school's music department because they have a school group that plays folk music. He has a woodshop in our basement.

[Russell] In the summer we garden. It's something we've both always enjoyed. We're planning to build a greenhouse so that we can start our garden earlier in the year, and also grow plants into the Fall. We live a relaxed pace, and keep as busy as we like. It's a good life.

[Interviewer] Russell and Teresa, thank you very much for allowing me to interview you to find out just what it takes to make a dream come true for the average family. Probably, the main point that we have learned from your success is that we need to put money away each and every month, and not touch it. You have shown us that we don't have to be rich in order to follow our dreams.