Joe Udo would be an easy guy to dislike but it’d be a shame to do so, because he has some great advice.
First, let’s get past the disliking bit. Udo retired at the age of 38 and is now living a contented live as a blogger and stay-at-home dad. So, he’s pretty much living many peoples’ dream life.
But he did it with some old-school smarts that would come in handy at any age, and he has some good points on how to live happily once you’re retired, also at any age.
The methods Udo used to save enough money to retire early aren’t new; they’re just ones that many people struggle with in have-it-all society, where everyone wants everything right now, regardless of whether they have the ready cash to pay for it.
He saved his entire salary for the two years before he retired. Sure, he was on six figures, but it still required careful budgeting to live on just his wife’s wage in a world where many costs are fixed on the assumption that a household has two wages coming in.
As he says in his blog, living frugally meant that he was constantly out of step with other Americans. Udo freely admits that he wants plenty of things, from new shoes to a luxury convertible, and that he’s “continually denying my desire”.
But he says they while those things would be great, they “aren’t going to make me much happier in the long term”.
And he says that two years of pre-retirement budgeting was vital because it taught him and his wife how to live on a reduced, fixed income, as they would in retirement.
Udo also moved the money he used for after-tax investing into dividend stocks, because he feels they provide the best ‘passive’ income, and he invested in rental properties that he sees as a more long-term investment that also provide some income right now.
Perhaps most importantly, he set himself a very public goal – he bravely started a blog called retireat40.org well before he planned to retire.
“This is where I planned my exit strategy form the corporate world and our readers kept me accountable,” he says on his blog. “I had to make a detailed plan and follow through.”
Now, he makes some income from his blog as well.
In 2012, Udo chucked in his job as an engineer at Intel, even though he had not saved enough to replace 80 percent of his pre-retirement income as financial advisors often prescribe. He told Bloomberg last year that he and his wife (they have a young son) live on about US$50,000 a year, which is less than the income they have coming in from their US$1.4 million in investments, US$600,000 worth of rental and his wife’s earnings. Their living expenses include costs, such as their son’s university education.
So far, pretty ‘old fashioned’ – he lived on less than his means, looked for investments that provided an income, made use of his skills to bring in extra cash (in Udo’s case, by blogging) and set himself a firm goal in a manner that would keep him accountable for meeting it.
In 2017, 45-year-old Udo remains happily retired. But as he notes in his blog, most people picture retired life as waking up late, taking the dog for a work, eating leisurely meals, doing a few chores then relaxing before bed.
“This is an awesome vacation schedule but it won’t work for retirement,” he reckons. “Most of us would feel useless and unfulfilled.”
Instead, he says retirees need one or two projects to put their energy in to, to fill up their schedule and help them continue to feel relevant – he notes, of course, that this is also dependent on your health and the age at which you retire.
He suggests picking a passion project, such as writing a book, practising some art you’ve always wanted to try, studying something new, extending your travel schedule or working on volunteer projects such as helping out in the local school system.
He also continues to track his spending and make tweaks all the time, so if he sees some big bills coming, he can adjust how much money he has flowing out in plenty of time.
He also advises remaining open to working part-time or using your skills to earn a little extra cash, within your capabilities, if need be.
And there is one more key piece of advice. Keep dreaming, Udo says.
“I recently realise there was another essential ingredient for my fantastic early retirement,” he writes in his blog. “Happiness is a journey, not a destination. Life is great now but I still dream of better days ahead. This gives me something to look forward to and work on getting there.”