How my wife and I are retiring this year in our early 30s
Three years ago we first profiled seven Aussies who are working towards early retirement.
Money caught up with them again to find out how their plans and investments have fared during COVID-19.
NAME: Leo, Alisha, Dom, 4, and baby Ellie*
AIM: Retire this year
INCOME NEEDED: $90,000 a year
INVESTMENT STRATEGY: Vanguard index funds, shares, managed funds that align with their principles, maximum contributions to superannuation.
In 2018, Leo, Alisha and baby Dom were travelling with three suitcases, a backpack and a pram, so they could be together as a family. They decluttered their furniture and possessions.
They had no house, no car, no debt and could live wherever Leo, who works in the resources industry, was sent. The alternative was flying in and flying out, sporadically getting together as a family.
They now have four pieces of luggage, as their daughter Ellie was born over two years ago.
Their nomadic lifestyle was welcomed by employers and it made Leo more valuable than FIFO workers. He didn't have to be flown back to his family, as they went with him. They travelled to 10 cities and four countries over 2½ years for Leo's well-paid work before COVID-19 hit last year.
His unique family position saw Leo's salary dramatically rise, and they are well on the way to saving $2.8 million outside superannuation and retiring this year at 34 and 32.
They have also researched how much they will need for retirement, stress-testing it with a range of scenarios such as a major sharemarket crash. They have lifted their desired retirement income from $80,000 to $90,000 because they underestimated some of the education costs such as after-school activities.
Financial independence is an evolving process for them as they consider their changing needs as a family.
Their original plan of renting for life has changed with the prospect of their son Dom starting school. They decided to buy a home but one with an income stream, so it would give them a lifestyle plus a business. Alisha's parents did the legwork, live streaming house inspections as Leo was overseas. He was happy to buy a low-cost house that needs renovating.
"Ninety per cent of the houses didn't fit the criteria," he says. But eventually they found a dual-living home with two three-bedroom residences. It is near Alisha's parents and can allow them to provide some care to them as they get older.
Other financial decisions have been about family health insurance and setting up a car fund, even though they don't own a car. They put aside money every month for both, which they dipped into when Ellie was born.
Taking advantage of Leo's rising salary and travelling means Alisha is the full-time carer and says it is a luxury to be a stay-at-home mum.
Leo works long, stressful hours but he is able to see his kids for 40 minutes each evening and, if he isn't working, on the weekends.
"The number one reason for being nomadic is keeping my family together. There are also some financial benefits with paid accommodation, food and relocating costs," he says.
After such a hectic work life and living from suitcases, which they say they have adjusted to, they are looking forward to retirement. They aim to spend more time together as a family and pursue whatever interests them without having to consider whether it works financially.
Leo wants a life that is about doing simple things, like what you do on a Saturday or Sunday: a leisurely breakfast with the family and reading the newspaper and getting fresh produce that day to cook.
Alisha is relishing the time to exercise and lead a healthy life as well as explore interests such as craft.
Helping people through charities is also a priority. One way is volunteering as financial literacy counsellors. They would certainly have some valuable advice to pass onto people with financial issues.
*Not their real names
Saving is the key to financial independence. For many years they saved all of Leo's salary and lived off Alisha's before she stopped working.
They save at least 70% of Leo's current salary. When they go shopping everything they buy has to pass the "happiness test". Even after saving so hard, they still ask the question: what gives us the most happiness for our dollar?"
- You Need A Budget (YNAB): an envelope approach to budgeting app
- National Centre for Social and Economic Modelling (NATSEM)
- Crowdsourced FIRE Simulator (cFireSim): an online tool that calculates how early retirement plans would have fared throughout history
- Go Curry Cracker: another nomadic family's blog
- Mr Money Mustache blog and Mr Money Mustache forum.
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