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Young Dreams of Early Retirement

Young Dreams of Early Retirement

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Many young people make the mistake of thinking the money in their current savings, coupled with their current savings rate, will allow them to retire early. I am talking about the point in life where you are single, renting, and think you can conquer the world. You may look at your savings at that point in time and think to yourself, “I’m on track to retire in my 50s,” but life has a different plan. You may also think, “at this rate I’m going to be rich,” but will your current savings rate continue?

I am writing about this because I fell into this trap about four years ago. I was single and held a steady job with good pay. I kept my spending to a minimum so I had a good amount of money saved up from my first two years of working. At that time, I crafted a plan to buy a house when I was 28. I am 28 now and I no longer have plans to own a house until later in life.

Why did I throw away the plan I made years back? It’s simple; I planned badly and missed a lot of variables. In short, the plan was invalid from the beginning.

Some Missed Variables

  • marriage
  • purchasing a home
  • maintaining a home
  • having a child
  • purchasing a car
  • raising a child

These are probably more items that should be on the list, but I am drawing a blank. The truth is that there is a correlation between different stages of life and saving money.

When you are single you tend to have fewer expenses. Once you start dating and find that special someone, you’ll have more food and entertainment expenses. Finding that special someone usually leads to marriage, which is a big expense. Once you’re married, you’ll want to build a family and purchase a home. Many lenders require a 20% down payment these days because of the state of the economy. Once you get settled into a house, the next step for many is to have a child. The safety of your child is priority one so many purchase a larger vehicle. Oh, and by the way, raising a child is not cheap.

If you are planning on doing none of the above, you can ignore this article.

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Categories: Lifestyle
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