It’s difficult but not impossible to retire with kids.
Your typical personal finance blogger is a straight white male in North America. There are some exceptions, of course, but my phenotype is incredibly prevalent in the blogosphere. Sometimes, those bloggers have families and kids. Very rarely, you’ll find a blog that’s run by a couple. That begs the question: is it even possible to retire with kids?
I hope you like acronyms, because this article is all about SINKs and DINKs. SINK stands for “Single Income, No Kids.” That appears to be a common, if not the default, status among those who pursue early retirement. DINK stands for “Dual Income, No Kids.” That’s a big umbrella term that covers same-sex couples, couples who choose not to have kids, couples whose kids have moved out (the so-called “empty nesters”), and couples who want to retire before they have kids.
Even though there seems to be an overabundance of SINKs in the FIRE (Financial Independence, Retire Early) community, the people who make the most progress toward that big finish line are DINKs. If you have a likeminded partner who shares your goals, motivation, and work/investing ethic, you can get a lot farther much faster than your SINK competitors. If nothing else, you’d both cut your housing expenses in half by living together, and get more opportunities by pooling your money. (Buying real estate, opening a margin-trading account, and so on.)
And then, of course, there are kids. It takes at least 18 years and nine months to get them from a glimmer in your eye to a legal adult: as time investment goes, that’s huge. The upside is that the often-flaunted factoid that it takes $250K to raise a child is probably blown out of proportion. This 2015 USDA report concluded that “middle-income, married-couple parents of a child born in 2015 may expect to spend $233,610 ($284,570 if projected inflation costs are factored in) for food, shelter, and other necessities to raise a child through age 17. This does not include the cost of a college education.”
If you dig through the report, you’ll see some strange one-size-fit-all assumptions about the cost of raising a kid. The well-meaning bureaucrats claim that over the course of 17 years, each kid would cost you $66K in housing, $35K in transportation, and $38K in child care. I will be the first to admit that I am not a parent, nor do I intend to become one (I have three nephews, and that’s plenty enough), but those numbers seem rather inflated, especially if you have several kids whose expenses (housing, etc) will overlap. I guess USDA’s ideal kid would take Uber to and from the kindergarten, and wouldn’t have any grandparents/neighbours/siblings to babysit them.
To their credit, the USDA acknowledges that their numbers might be a tad iffy:
Expenses vary considerably by household income level and composition. The large variation in expenditures on children underscores that there is not a standard cost to raise a child in the United States. The direct and indirect costs of raising children are considerable, absorbing a major share of the household budget.
That’s the bureaucratic version of “schmaybe” – a copout in case the people who don’t fall into their idealized cookie-cutter shape raise objections. (I still can’t quite get over the $35K transportation line item.)
Just because most personal finance bloggers don’t mention (or don’t elaborate on) their plans to have kids, doesn’t mean that’s impossible. There are some bright exceptions and great case studies. Kristy Shen is a Chinese-Canadian personal finance expert based out of Toronto. In her great book, “Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required,” Shen tackles the topic at length. She interviews three bloggers who retired with kids, and describes the concept of world schooling: educating your kids (home schooling, local schools, online classes, etc) while the family travels the world. The world schooling movement is small (with 53,500 members in their Facebook group) but they’re growing and sharing their best practices.
Among the bloggers Shen interviewed for her book are Jeremy Winnie from GoCurryCracker, who travel the world with their kid Julian. The interview on Shen’s blog is long, detailed, and educational – check it out for yourself.
As I’ve already said, I have little experience with children, and I don’t plan on becoming a parent, for a number of reasons. I know my limits, and giving out parenting advice is definitely not something I’m qualified to do. (I like to think that sets me aside from most bloggers with no kids out there.) That’s why I’ve decided to outsource the FIRE-parenting advice to these personal finance experts who managed to retire with kids:
FinancialPilgrimage’s Is Financial Independence with Kids Possible?
Parents.com’s How to Retire Early Even If You Have Kids
HackYourWealth’s video interview – How to retire early with kids (and not go broke)
MadFientist’s How to Retire Early With Kids (14 of Them!)
And then, of course, there is the hardest difficulty level of them all: being a single parent. If you’re in that boat, you’re a certified badass, and you’re operating on the hardest difficulty level of them all. That’s the polar opposite of the easiest difficulty level – DINK. I don’t have much advice beyond the obvious: seek out and develop support networks. Groups that can help with babysitting, local online parent communities that could help with toys and kids’ clothes, etc. I was, and am, and likely always will be an analyst, and the only unique piece of advice I have to offer is to upgrade your skillset (if you can find any free time) by learning Excel, which should help you get an entry-level analyst job in a lot of tech companies, which often have great benefits for parents. Far from the best advice, I know, but that’s also the only kind I’m qualified to give. Hang in there.
Life likes to wreck and mock our greatest plans. No matter what brilliant stratagem you devise, it might not survive the contact with reality. Even so, from the purely financial perspective, the most efficient way would be to combine your DINK powers to grow your net worth, acquire enough money to either fully retire or have just one partner working part-time, and have kids afterwards. (Which is similar to what the most famous personal finance blogger, Mr. Money Mustache, had done.)
That is, of course, an idealized approach that likely wouldn’t work for most people who want to retire with kids. (Especially if you discovered the FIRE movement later in life and already have one or more kiddos.) The good news is that there’s a path ahead for all of us, though some are obviously harder than others. I’m well aware that, as John Scalzi put it, being a straight white male is the lowest difficulty setting there is. I know that there are many other factors at work, but even so, I hope my advice is helpful and doesn’t come off as utterly insensitive, eh.
What about you? Are you also in the “no kids, only nephews and nieces” camp? Do you plan to pursue your retirement goals while raising your kids, or before, or after? Sound off in the comments and share your thoughts!