The Best Way to Begin Early Retirement? Super Frugal Vs. “Normal” Spending

There’s no easing into early retirement. You’re either getting a regular paycheck, or you’re not. 

We got our last paychecks last week, which were larger than usual because of cashed-out vacation time (an appreciating asset!), and it was definitely a strange feeling knowing that could be it. Like possibly forever. (Probablynot forever, but still.)

In a perfect world built for financially risk-averse people like me, that last paycheck would stretch forever like the money equivalent of loaves and fishes, we’d never have to sell off shares of our investments, we’d all hold hands and sing campfire songs, and there’d be nothing but world peace. Except, just kidding, we’re talking about reality.

While we have a bigger cash cushion than we probably need (a little more than 2.5 X, or enough to cover at least two and a half years of living expenses) and can ignore reality for a while before we truly need to start selling shares, eventually we’re going to have to suck it up and click sell. But before we even get to that point, there’s a bigger question looming in our minds:

How much should we actually spend this year? 

Of course we have an amount budgeted, an amount that’s padded to allow it to be chopped down should we need to do so in a recession. But just because we can spend that amount, should we? Let’s dig into both sides, and then tell us what you would do in the comments!

Fundamentally, each of us pursuing this path needs to decide what kind of life we want to live, decide what that costs, and then save accordingly. While we have some good friends who are perfectly happy never eating at restaurants, not traveling much, and skipping the expensive hobbies, that’s not us. (Pop quiz: Anyone remember how many pairs of skis we own?) 😉

And that’s why we saved as much as we did, to allow us to keep skiing and traveling and going to Coachella and living in Tahoe, where the cost-of-living is borderline vomit-inducing.

That’s all good in theory, but we know that we’re unlikely to spend exactly our budgeted amount each year. J.D. Roth wrote a great post about exactly that: how much his spending has varied year to year since he quit his traditional career. It’s nice to get that report back from someone who’s lived in early retirement for some time, because I’ve argued that we can’t assume we’ll have level spending forever in either early retirement or later traditional retirement. (Most especially the latter. Health care, y’all.)

So, thinking about where we are right now, as newbie early retirees trying not to blow our funds too quickly, we have two choices of how we could spend this year:

Spend “normally,” meaning what we planned for, going on all the trips we want to take and doing all the activities we have been excited to start.


Take a much thriftier approach in this first year, spending less than we’d budgeted.

Let’s talk through the merits of each.

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