Retiring Early — with Kids?


Let me start by saying that kids are totally worth it. (There, now my daughter can relax.) If you’re the kind of person who wants to have kids someday, then feel free to start a family when you’re able to support that.

Off-topic for a second, if you just can’t see yourself having kids then don’t worry about it. It’s possible that someday you’ll want to raise a family, but don’t go through the experience if you’re not interested. Family tends to shove aside other priorities, and it certainly reduces one’s range of choices for a couple of decades. If raising a family is not on your list then there are plenty of other people in the world who can benefit from your love.

Back on topic, let’s move on to whether kids are compatible with being able to retire early. Again, as my daughter already knows, the answer is “Yes!” Once again there will need to be priorities, choices, and compromises.

I may be going out on a limb here, but it’s possible that raising a family can motivate you even more strongly for early retirement. If you’re planning to ER then you’re probably not interested in spending the rest of your life in the office pursuing a paycheck. Your family may have convinced you that you don’t want to spend all your years climbing the corporate ladder, either.

You’re already focused on saving and investing, and you’re capable of carrying out a plan. These interests & skills overlap the same ones needed to raise a family. Add in the desire to spend more time with family and wanting to watch your kids grow up. Maybe you’re a little concerned about them being home alone after school during the teen “danger zone” afternoons. (No, honey, not you. Of course we always trusted you.)

Or maybe you’ve done the spreadsheet analysis to realize that you’re just not paid enough to afford childcare, summer programs, and after-school programs. However you arrive at your conclusion, you’ve decided that your family has top priority and you’re willing to work to make it happen. Your quest for your family’s financial independence will lead you right to ER.

We human beings are sensitive to the norms imposed upon us by our culture, and one of those norms is the imperative of “setting a good example for my kid”. As we approach ER we may wonder “What will my kids think if I’m not working? How can I show that I’m still a productive member of society? How will my ER lifestyle prepare them for their working years?”

Parents, brace yourself for a bit of news: it’s not about you. Oh, your kids still care about you and your behavior– especially if it embarrasses them– but they’re largely oblivious to your social standing.

They assess your value in terms of how much time and attention you devote to them, not by how many reportables you have at your MegaCorp division or by how much you cut last quarter’s operating expenses. In a kid’s view, if your job responsibilities take you away from them too much then they may actually think less of you. And when they go out into the world to seek their own careers, the last thing a young adult wants to do is get stuck in their parent’s footsteps.  They’ll blaze their own trails.

One early retiree pioneer learned about “setting an example” the hard way. He felt obligated to appear employed for his daughter, so while she was finishing high school he kept up the fiction. He’d show up at the breakfast table each weekday in work attire and then leave in the car before she left in the school bus. After a few errands (or a cup of coffee at the doughnut shop) he’d return home to resume his “secret” ER lifestyle. Years later he confessed this subterfuge to his adult daughter, who thought it was pretty funny. She told him that she was so busy struggling through her teenage years that she never noticed what he was doing. Even if she’d noticed, she wouldn’t have cared.

What about another problem– can you afford to ER if you have kids?

The answer is still yes, although it’s difficult to forecast the economies of scale.

I’m not going to recite the media’s sound-bite statistics on how many hundreds of thousands of dollars it costs to keep the little darlings happy and thriving. You’ll figure out your own budget for your own family. You can certainly save enough money to become financially independent if you have a high-paying career.

You can save enough from most paychecks to afford ER with one or two kids. If your pay drops and the number of children rises, eventually the two lines will cross and it’ll take a lot longer to reach financial independence. I can’t tell you where that line is, but it can be greatly influenced by how frugally you raise your family. Amy Dacyczyn, one of the world’s most famous frugalistas, managed to raise six kids and still retired early.

An important aspect of raising kids with early retirement is consistency. If children’s budget rules are always changing then they’ll feel insecure about money and might even resist your attempts to save. The key is to set the rules early, live by them, and try to help your kids figure out their own solutions to their money problems. ER is not the time to impose new fiscal austerity or even deprivation.

Budget the money to teach your kids how to manage their own money, and make sure your spending reflects your values. Young kids can learn to manage a small amount of money with their own allowance, and they can just be told that there’s enough in the family budget to pay for the things the family needs. Older kids need to learn how to manage larger amounts of money (especially the deferred gratification of saving for bigger purchases) and can be shown what goes into making a budget.

Teens are old enough to manage bigger chunks of money (like a monthly allowance instead of weekly) and to find their own ways to earn money for their desires– get a job! As they approach the end of high school, they’ll be keenly interested in all details of budgeting. (Right, honey?) One of the best resources for teaching kids of all ages about saving money is David Owen’s “First National Bank of Dad”.

You can figure out how to feed an extra mouth or two and keep them in acceptable clothing. You’ll also be able to figure out how to pay for their orthodontia other expenses as they grow. Whether your ER solution involves extreme savings, a bridge career, or part-time work: you’ll continue to make family your top priority, and you’ll succeed.

Some of you are already thinking about the next question: “How can I ER and still save enough money for my kid to go to a good college?”  That’s another post. I’ll also explain how our daughter answered the question all by herself.

Related articles:
Retired at 40 (with three kids): The Neilsens
The Wandering Wahls
Thanks to Billy & Akaisha Kaderli for these next two interviews!:
The Swansons
The Greenhalghs

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WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

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