Want to retire early? Here's the real secret.

[Singuy]

Children are expensive. I am not talking about formula and medical expenses. I am talking about the sudden reduction in income due to the spouse wanting to stay home. That's the real damper for any early retirement planing. A simple paternity leave of two months cost us 35k...Which is more than what a I paid for my daughter's prepaid 4 years of University. That is 35k less in my vanguard account...Which it may grow into 100k at retirement. The opportunity cost of not working is still a cost.(for financial planning purposes).

[Gailete]

A simple paternity leave of two months cost us 35k

Are you kidding? Do you mean that is the loss of pay for 2 months? Because any kid costing you $35K for two months immediately after birth would be a very sick child to have to spend that much on it.

I'm not sure I spent $35K per child from birth to HS graduation. There are ways to raise children without huge outlays of cash. One of the cheapest ways is the use of reusable diapers and breast feeding. I saw a young lady with a whole bunch of formula in a grocery cart at Walmart one day. I was only curious since I hadn't used formula (except a can of powdered for emergencies) and asked her how much it cost per can these days. She had no clue. She had WIC checks to pay for all the cans she was getting. I was happy at least to see that she was buying it at a store where It was probably less expensive, but still., wow! I can't fathom buying some at a store without checking the price even if you have a check to get it for 'free'. Only free to her, as it is our tax dollars that provide it. She had at least 10 cans. Anyone want to take a guess at the cost?

[disneysteve]

I can't fathom buying some at a store without checking the price even if you have a check to get it for 'free'.

If you are getting something for free, why would you care what the retail price is?

I'm not sure how WIC works but I suspect that there is some limit on how much the store gets reimbursed. That's pretty much true of most free coupons.

[bigdaddybus]

We debated hard about my wife becoming a SAHM when my daughter was born 16 years ago. She made $30K at the time and half her after tax income paid for daycare. A year later we had our second and all her income went to daycare. Last year she made just over 100K and we really appreciate that income raising 4 kids.
Are kids impacting my ability to retire early? Sure, if we lived a minimalist lifestyle I am sure we could have retired multimillionaires by 40 if that was our priority, but its not.

I think retiring early is way, way more complex than the decision to have children. Heck even with 4 kids my wife and I can retire at 55 if we want because we both have pensions. I think 10% of current workers having a pension vs. around 50% for boomers has more to do with a comfortable retirement than the cost of children.

Interesting topic

[Gailete]

If you are getting something for free, why would you care what the retail price is?

I'm not sure how WIC works but I suspect that there is some limit on how much the store gets reimbursed. That's pretty much true of most free coupons.

Whenever I get something for free at the store, I always want to know how much I saved. A WIC check if they are still like they used to be had a dollar amount on it and what could be purchased with them. I never used them, I only saw them as a grocery store cashier. I just thought it odd when talking to the young lady, that seemed so oblivious about what she was getting. Her mom/grandma was there and seemed to know more about the formula than she did. Reminded me of a new mother and her aunt being discharged from the hospital after having a baby and birth certificate lady was there asking the baby's name and the mom turned to her aunt to ask how it was spelled! Some things I find odd, that's all.

[Singuy]

Are you kidding? Do you mean that is the loss of pay for 2 months? Because any kid costing you $35K for two months immediately after birth would be a very sick child to have to spend that much on it.

Yes I was talking about lost wages.

If my wife decided to be a sahm, the child will cost us 300k/year in lost wages. So we are talking about the difference between retiring at 45 with generational wealth, or retiring at 60 using 401k with perhaps enough to get by.

So when they say a child cost 385k to raise till 18yo...well that really depends on your lost income....

[Singuy]

Yes...a freeloader...did you never hear of that expression?

Case in point...have a friend who is an international lawyer...she speaks 3 languages fluently...lives overseas, high paying. Her boyfriend is a "photographer." He doesnt make enough money to feed himself...he lives off of her. Has been doing this for 8 years...shes dumb enough to provide for him. He is a freeloader. Not sure how else you could sum that up. But then again more power to him. He's working her over.

I wouldn't necessary think a mother or someone who makes very little a freeloader. As long as the individual having a full time job(taking care of the kids or working at a diner)..they are still contributing and it's the best they can do.

DS, you know what's the secret to retiring early? Having a culture in which grandparents take care of the kid while both parents work. Too many people in this country doesn't take advantage of the free daycare and move thousands of miles away from their parents. Also grandparents are never expected to take care of the grand kids here which is totally opposite compared to other cultures.

Perhaps because grand parents are not yet financially ready to just sit around at home and raise grand kids. Not so in our culture. Most grand parents retire way early due their frugal ways throughout life.

I was pretty much raised by my grandmother till 6yo, and my parents are taking care of my child now when we are both at work. My parents were ready 10 years ago when they retired at 51 yo. Oh and they have no 401k..just cold hard liquid cash from savings. My next door neighbor(who are white American) also retired and raising the grand child when their kids are at work.
I'll most likely raise my grand kids as well since my wife and I will be retired way before that happens.

Just thinking out loud here..when the majority of elder Americans are having a hard time with mortgage payoff, debt, and small retirement funds...it doesn't help the current generation trying to make ends meet raising children and dealing with expensive daycare or just one household income. And then the cycle continues when the current generation grows old...

[disneysteve]

DS, you know what's the secret to retiring early? Having a culture in which grandparents take care of the kid while both parents work.

That only works if the grandparents aren't working themselves. If you have kids in your mid-20s or early 30s, the grandparents are only in their 40s or 50s so they'd still be working and not available to do childcare.

[Singuy]

That only works if the grandparents aren't working themselves. If you have kids in your mid-20s or early 30s, the grandparents are only in their 40s or 50s so they'd still be working and not available to do childcare.

Correct, and I explained why grand parents are still working themselves in their 50s....some way into their 60s. If the grand parents can retire early, then one should expect their kids to as well(due to what I said above). However, not only can't grandparents retire, they may even carry debt to their graves.

My point was, the secret to retiring early(if married with kids) is having your parents retiring early. Not only are they good financial role models, they can also provide you with the necessary help for an early retirement due to a constant stream of duel income.

[disneysteve]

Correct, and I explained why grand parents are still working themselves in their 50s....some way into their 60s. If the grand parents can retire early, then one should expect their kids to as well(due to what I said above). However, not only can't grandparents retire, they may even carry debt to their graves.

My point was, the secret to retiring early(if married with kids) is having your parents retiring early. Not only are they good financial role models, they can also provide you with the necessary help for an early retirement due to a constant stream of duel income.

So you think the norm should be for people to retire in their 40s and 50s? How is that realistic for the average person? If they work from age 21 until age 51, how can they accumulate enough money to live until they're 90-100?

This also assumes that people want to spend their retirement raising their grandchildren.

[~bs]

I know families where the grandparents are retired, and they do help out. Eventually when the grandparents are really old, the kids and grandkids should help them out.

I also know families where the grandparents are still working because they're too young, so grandparents taking care of grand kids while their kids are working isn't feasible for everyone. If there are 2 generations having kids when they're 20 years old, that makes the grandparents only 40. Even if 2 generations when 30 years old each, grandparents are only 60. And it isn't really fair to expect the grandparents to care for grandkids without them volunteering it.

[Gailete]

Yes I was talking about lost wages.

If my wife decided to be a sahm, the child will cost us 300k/year in lost wages. So we are talking about the difference between retiring at 45 with generational wealth, or retiring at 60 using 401k with perhaps enough to get by.

So when they say a child cost 385k to raise till 18yo...well that really depends on your lost income....

Most of the time when I see these charts about how much it costs to raise a child, I've been under the impression that the amounts were for the actual costs that they child incurs for the first 18 years, not for lost wages. Lost wages ca as you know, vary widely and having both parents work with a child then means a need for some daycare of some kind.

Actual costs for children vary so widely, I don't even know how they come up with the numbers. A child in need of major orthodontia and glasses is going to be costing more than a child with straight teeth and perfect eyes. And that is just two of many costs in raising kids.

[Singuy]

So you think the norm should be for people to retire in their 40s and 50s? How is that realistic for the average person? If they work from age 21 until age 51, how can they accumulate enough money to live until they're 90-100?

This also assumes that people want to spend their retirement raising their grandchildren.

No one said it's the norm here. In the U.S, what I said above is ABNORMAL. It is the norm however in China because it's embedded in our culture.

It's extremely abnormal for grand parents to want to go on vacation and not raise grand kids in China. Also extremely abnormal to not be financially independent by old age. Lastly, it's almost shameful if the parents can't pay for their children's entire education(including professional school) plus even housing/cars.

Every Chinese person we know(not people from Hongkong or Taiwan, but people from the mainland) have given their kids a full ride through med/pharmacy/optometry school in the U.S plus they all have enough to retire early. And no, they are not business owners but your every day wage earners.

I find it amusing how articles about some random student who beat all odds, paid off their student loans 5 years out of school and how amazing it is. You read about their frugal living and the way they save and it's mind blowing to the average reader here. Those kind of stories are not even stories in China..in fact on Chinese TV, they run abnormal stories about how parents blew all their money and not take care of their grand kids...lol

[snafu]

Singuy seems to be choosing to impose a different culture on the N American experience. If his parents and in-laws provide care for his children it is a very different from our expectations. His experience can be likened to 'zipperskin' oranges and our kids are 'MacIntosh' apples.