In 2012, Tanja Hester was a 33-year-old political communications strategist whose father was dealing with Ehlers-Danlos syndrome, a genetic disorder that causes progressively worse joint pain and mobility issues over time, impairing the ability to work.
Knowing she would likely inherit the disease, she and her husband, political researcher Mark Bunge, decided to retire early.
Hester and Bunge spent the next few years developing a process for determining how much they would need for a genuinely enjoyable lifelong retirement. In December 2017, when Hester was 38 and Bunge was 41, the couple said goodbye to their careers and set out to enjoy a life of leisure for as long as Hester is able.
Her new book, Work Optional: Retire Early the Non-Penny-Pinching Way, out Tuesday, outlines how they did exactly that and how you could begin to plan for the same.
“I don’t have infinite time to have a fully able-bodied life,” said Hester, who has since begun living with symptoms of the disease.
“I have the disability, but it’s not serious at this point,” she said. “It’ll progress over the course of hopefully a slow few decades. I have pain and issues from it, so it’s here. It’s a good thing I retired.”
When planning for early retirement, Hester and her husband had the advantage of six-figure salaries and jobs that left them with millions of travel points.
But her book takes a practical approach to this pie-in-the-sky goal however much one might earn. She outlines procedures for saving for a full early retirement but also for partial retirement or just a career sabbatical for those with fewer financial resources. She walks the reader through every aspect of this planning, from figuring out your true annual budget to where to invest for the greatest likelihood of steady passive income later on.
Unsurprisingly, full early retirement is not cheap. Hester recommends having 25 to 35 times your projected annual retirement budget in savings before making the leap.
Hester said she and Bunge got to 36 times their projected annual retirement spending by the time they retired. In addition to their savings, the couple enjoy passive income from index-fund investments and they own a rental property in Reno, Nevada that will start turning a profit in 12 years, once the mortgage is paid off.
After years working in Los Angeles, Hester and Bunge bought a two-storey, 167-square-metre home in Lake Tahoe, which they paid off in five-and-a-half years and where they reside today, a great location to indulge in their passions for skiing and mountain biking.
“We were in a position to buy at pretty much the bottom of the market in 2011,” she said. “We know how much of a role that played [in our retirement] because the prices certainly did not stay there. We also bought [a smaller home] than we could have bought, and that has been one of our best decisions.
“Buying a bigger house or a house in a nicer neighbourhood would have meant taking on much more debt, so the mortgage probably wouldn’t be paid off yet and we’d still be working. It would also have required us to devote more of our money to the mortgage rather than to investing. We took on a relatively small mortgage and paid it off quickly.”
Now, their average day seems like a split between those of more traditional elderly retirees and an endless adventure vacation.
“A typical morning is, we wake up with no alarm clock, have a really leisurely breakfast, and that’s kind of our anchor for the day,” said Hester.
“The afternoon is when we get into the meat of the day. That might be going skiing or mountain biking, or for me a lot of writing or doing some work for my volunteer position. Then we have a leisurely dinner and watch a movie, or catch up on all the TV shows we didn’t have time for while working.”
And that’s just when they’re home. In their first year of retirement, the couple saw the world, vacationing in France, Monaco, Mexico, Taiwan and around the US.
“Travel is a top priority for us. That’s something we’re always going to spend money on,” she said. “We do have about three million travel miles from work travel, so each trip we take the miles reduces the costs a bit. But that’s a big line item in our budget — to keep travelling.”
In the book, Hester recommends figuring out your life priorities before anything else. Even with no financial worries, an aimless retirement can be a frustrating one.
“I heard from a lot of readers [of my blog] who didn’t plan for the life part, they just planned financially, and they ended up more unhappy or even went back to work,” she said. “That was a lesson we tried to absorb in advance.”
Along with skiing and travel, Hester and Bunge both sought more community involvement in retirement.
Each is currently president of a local environmental organisation, and Hester writes a blog about early retirement called Our Next Life. She also co-hosts a podcast about women and money called The Fairer Cents, and is planning a podcast with Mark called Adventures in Early Retirement. She emphasises she takes no ads on the blog and earns from the podcast just barely over what she needs to cover expenses.
While conventional wisdom suggests people should plan to spend less money in retirement than while working, Hester finds this absurd. She said she spent considerably more now than she used to and accounted for that in her retirement planning.
“Most people spend less in retirement because they have less to spend, not because they want to spend less,” she said. “We have more free time to do things that cost money now. We couldn’t have taken all those international trips while working, and those cost money.”
As for transport, Hester drives a 2004 Honda Civic that she’s had for 15 years, while Mark drives a 2012 Subaru Outback they need for the snow in the mountains. “We’ll keep both until they die,” Hester said.
In saving for all this, the couple embraced frugality in certain key areas, cutting back on eating in restaurants or any electronics spending — Hester still uses an iPhone 6. She considers her style of financial planning similar to how Marie Kondo looks at clutter.
“We really took the approach of looking at what added value and what didn’t,” she said. “If something is not sparking joy, it’s pretty easy to let go of. We still go out to eat sometimes, but we try to keep that much more moderate. We aren’t buying a lot of new clothes or new gadgets.”
Hester and her husband aren’t planning to have children, which alleviates the future burden of college tuition, and they have factored in future healthcare costs as part of their savings plan. And while they still earn a bit from freelance work (Hester’s book advance brought in some cash), “Our plan does not rely on that,” she said.
“We made sure we had enough when we left our jobs that we’d never need another penny. We’re well insured against natural disasters, we’ll always keep health insurance to protect against unexpectedly high healthcare costs and we can downsize our home or move to a cheaper cost-of-living area if it absolutely comes to that. We’re insulated against everything short of an apocalypse.
“A lot of people have undersaved and understandably feel the anxiety of worrying about running out of money in the future. But for many others, they easily could save enough. What’s holding them back is not being able to recognise what “enough” looks like.”
HOW TO SAVE FOR EARLY RETIREMENT
In Work Optional, Hester breaks down the steps you should take if you want to ditch work — and explore your passions — at an early age.
1. PLAN LIFE FIRST
Determine first what you want retirement to look like — have a plan for how you’ll spend your days and what your long-term life goals will be. Without that, you could be looking at an aimless, frustrating, joyless retirement, which pretty much defeats the purpose.
2. DETERMINE YOUR ANNUAL BUDGET
Hester recommends saving 25 to 35 times your annual projected retirement spending. “When Mark and I first mapped out how much we’d need to save to leave our careers behind, a small voice in my head wondered, ‘Can we really do that???’” Hester writes. “For someone like me who’d never been good at saving money, I couldn’t imagine mustering up the willpower to put every one of those dollars away. Fortunately, with a clear plan in place … I didn’t need that willpower, and neither do you.”
3. CONSIDER INVESTMENTS AND PASSIVE INCOME
Hester suggests researching methods for earning additional passive income in your retirement years — from owning rental real estate to various forms of investments. She and Bunge prefer index funds, which “have grown to become a favourite of savvy investors, now comprising 29 per cent of total invested assets in US markets. Mark and I now invest primarily in index funds, and we devote zero brain space to trying to pick the right stocks or mutual funds.”
4. KEEP HEALTHCARE COSTS IN MIND
“As long as the Affordable Care Act stays in effect, health insurers are legally prohibited from charging us more on the basis of our conditions, so our insurance premiums are based only on our age,” Hester told The Post.
“Maintaining real health insurance through early retirement should be a non-negotiable part of any financial plan, as it is in ours. You can get a sense of what plans cost now by entering your anticipated early retirement income and your family factors into the calculator at Healthcare.gov or your state exchange, and then assume those numbers will go up each year.”
This article originally appeared on New York Post and was reproduced with permission