Retiring Early On $870K In Arizona | Millennial Money
Courtney Adcock, 36, and Steve Adcock, 39, retired in their mid-30s with a combined net worth of $870,000. This FIRE couple lives off the grid in the Arizona desert and spends $40,000 a year.
This is an installment of CNBC Make It’s Millennial Money series, which profiles people around the world and details how they earn, spend and save their money.
Read more about about their budget breakdown here: https://cnb.cx/2TNfUmS
Steve Adcock wakes up at 6 a.m. every day. He starts his morning with a workout in his home gym before settling down at his desk to check emails and browse social media. By 10, when most of America’s other 39-year-olds have logged on for work, he’s getting ready to take his dog for a walk around his desert property in Pearce, Arizona. It’s a tried and true routine for Adcock, who has been retired for the past five years.
Adcock didn’t always have such a relaxed life though. He spent 14 years working in information technology, a career that “pays well, but tends to drain the life out of you,” he tells CNBC Make It. After more than a decade of work, he realized it was time for a switch.
“In my early 30s, I came to the realization that I just could not spend the rest of my life sitting in front of a computer, working 10 to 12 hours a day, writing computer code or fixing problems,” he says. “I just couldn’t do that.”
He approached his wife Courtney, now 36, with the idea to retire early. Though she was less sure about retiring than Steve, thanks in part to her fondness for her job as an engineer, she eventually came around to it. The couple formed a plan to cut their spending and save 70% of their combined income so they could quit their jobs and travel the country, living only off of the growth of their investment accounts.
Steve and Courtney retired in 2016 and 2017, respectively, with a combined net worth of $870,000. Despite not adding a penny to their investments in the ensuing half-decade, they are now worth about $1.2 million and don’t plan to head back to the office any time soon.
How the Adcocks retired in their 30s
In 2014, when Steve and Courtney decided to join the FIRE (financial independence, retire early) movement, their net worth was roughly $650,000, including the estimated equity in their home, which they planned to sell. They determined that they needed a total of $800,000 to $900,000 in order to retire in their 30s. They were bringing in around $230,000 combined each year.
Thanks to their high salaries, Steve and Courtney were able to max out their 401(k) contributions in the years leading up to their retirement. They also slashed their spending, eliminating monthly subscriptions and streamlining their grocery budget. “At one point we were saving 70% of our combined income,” Courtney says. They funneled all of the extra savings into a Roth IRA, brokerage account and savings account.
The couple also moved out of their 1,600-square-foot home in Tucson, complete with a swimming pool, and into a 2005 Airstream that they purchased for $42,000 in cash.
By August of 2015 their net worth was up to $775,000, and they eventually hit their goal in late 2016, a little less than three years since Steve decided he wanted to retire.
Courtney has always been more of a saver, Steve says, and even though retiring early was his idea, he had the harder time reigning in his spending habits. Perhaps the most drastic change they made was limiting their restaurant budget to $50 per month, a difficult task for Steve, a restaurant aficionado who says he once made a point to visit an eatery a day for a full year.
“Before we got married, I spent a lot of money. I had a supercharged Corvette convertible. I had a brand new Cadillac CTS. I had a Yamaha sportbike. I had all the toys,” he says, noting that they have all since been sold. Now, the couple shares one pickup truck, which they use to pull their Airstream when they travel around the country.
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Retiring Early Together With $870K In Arizona | Millennial Money
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I need my future husband to have as much sense as this couple otw we are screwed
Nobody can become financially successful over night. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals.
They look years older
I'm 61. I used to work as a Financial Advisor/Stockbroker with Morgan Stanley. In our training, we were told to advise clients that they should anticipate living to 100 or well into their 90s. Therefore, they would need retirement funds which would last for approximately 40 more years after stopping working between age 60-65. To have retired mid-30s, that would add an additional 30 years. Therefore, retirement funds would need to last perhaps 70 years. This couple featured has no children so that is a savings. However, one of the things they did not talk about which is a real concern for most working people is healthcare costs. By retiring at such an early age, they have taken themselves out of eligibility for group plans through one's job. Group plans are a form of government subsidy since the premiums are paid in full or in part by the employer who gets a tax write-off for the amount contributed to the healthcare insurance premium. Many employers continue to receive a tax write-off by establishing Health Reimbursement Accounts (HRA) for their retirees which help with premium costs. The former employer, then, contributes either a lump sum of annual/monthly amount toward premiums and out-of-pocket expenses. Over time, this couple will have to pay higher and higher premiums as they age. Should they be hit with a catastrophic illness before age 65 when eligible for Medicare, they will have major healthcare costs which could wipeout their savings because of high premiums and no Medicare subsidy. To be eligible for Medicaid, they would have to spend down and not have a house, car, investment accounts, etc. Also, their dollars they have saved now will be worth considerably less over time even when adjusted for interest, dividends, and inflation. If something should happen to one or both of them which would end their ability to drive, they would need to move closer to a town or city, which would mean an increase in spending. Also, if they should wish to return to work later, in their 50s or 60s, they would find employers hesitant to hire them for any high-paying positions as they age. Therefore, I would not advise someone retiring so early unless they are independently wealthy (i.e., family wealthy or business) apart from their own investments and savings. If people wish to have more flexibility with their time, I advise working from home in some capacity, either for an employer or starting one's own business. Retiring before age 50 could prove very risky because of the many factors involved, chief among them being healthcare costs.
holy crap hes only 39? he looks about 50.
Everything else seems fine, but the health insurance part sounds pretty risky. What kind of health insurance are they getting for that amount? And what happens as they grow older and their premium grows? Most of us in America keep working in our 50s and 60s because the health care system here can bankrupt you in a matter of days if you are on your own and run into major health issues.
If I want to retire. I really don’t think this the life
wow they are brave ritiring at age mid 30s. I thought the term early retirement is at around mid 40s but these guys are different.
I retired at 62. TUCSON on $2000 a month. I live better than the 62 past years. With "0" savings.
How about the health insurance?
how does that work with signficant amount of their nest egg in their 401k and roth IRA, which they can't withdraw from for decades?
what kind of little jobs did you do?
Wait til you have kids
This sounds dependent on decision not to have kids? Not judging, but certainly a factor!
No kids?
I want this life
I'm trying to retire early as well. Working is boring.
Wow . They are young in retirement
This is one of the few budgets in this series where it actually seems like all annual expenses are included within the monthly breakdown, glad to see it. Loving all the commenters saying this couple has a boring life, lol, please tell me…what are all of you doing that is so exciting? Watching youtube videos and leaving judgmental comments? Going to work, spending time with family and friends, doing chores, taking a vacation once in a while? Perhaps you missed the parts of the video where they talked about how much they travel and how they literally spend their time doing exactly whatever they want?
I wish them luck when will have need money for health.
My whole life I thought it was pronounced Tuck-Sun 00:35
Lol they are millenials? Nah those two people are pushing 45+ on the edge of 50. Also, I like the way at 4:15 they basically justified medical tourism…..yeah no way they are really in their 30s.
What about inflation ? 800k is not alot
I have about $3500 saved. I can retire right now, but I'll have to be either dead or homeless in about 4 weeks for that plan to work.
Geese. They look in their late 40s. Either way. That isn’t even close to enough money to retire on even in your 60s at normal retirement age. Our financial guy wants us at 2million to retire comfortably. How do you travel around the world on that?
Thanks for sharing your story!! Congratulations!!
Definitely his wife idea 💡 cute for now but when that boredom hits he will be back working 🙈😂😂😂😂😂😂😂
Probably the only honest food breakdown I've seen on CNBC Make It. ($750 groceries and $250 dining out). Everyone else is like "I live in NYC and spend $350/mo on food". 🤔 Something's not right here.
it comes down to lifestyle and for a lot of people $870K will not be enough. This is lean FIRE
Chips and burgers are their diet?
Time to make radical change . If you eat a SAD diet (standard American diet)
You will have a shortened lifespan or huge expenses for diabetes, heart disease and cancer.
870k doesn’t seem like a lot to retire on considering their age o.o
No kids.hmmm