The Plan

7 min read

So, what’s the plan, dude?

In all modesty, the plan is to live life to the fullest. So that when it’s time to meet the big man upstairs (I’m not religious, I just like the figure of speech), I would have no regrets.

A few years ago, it occurred to me that in order to truly do that, one would have to somehow be(come) financially independent. Otherwise, life in the hamster wheel would never really end.

In Denmark (where I live), the retirement age is currently 65 years. However, the retirement age is gradually being increased. Current projections now say that I will be able to retire when I’m 73 years old (!). I started working full time when I was 23 (I worked part-time from when I was 15-16 years old). That means that I would have to work 50 years (!) before I can retire…

I like my job (sort of), but somehow that just seem wrong! I realize that my grandparents also spent close to 50 years “in service”, but I see absolutely no reason, why I should do the same. Actually, I see more and more reasons why I shouldn’t. People are becoming more and more stressed, more depressed and more unhappy than ever before. Why is that? We actually work less hours (daily), than we’ve ever done before, so why are people simply beginning to “burn out” so early in life? We’re becoming less emphatic, less engaged, more closed and narrow minded,  and less interested in the world around us. And yet, access to information about the world around us, have never been more accessible. We’re actually being bombarded by information (relevant or irrelevant to our lives) on a daily basis.

Don’t get me wrong, I’m all for the information age! But we need to realize that it comes at a cost…

Our youngsters have more options than ever before, and yet SoMe, the tabloids and the MSM (Mainstream media) are making them (us) more and more unhappy and self loathing. I feel really bad, when I think about, what I’m raising my kid to become. Another hamster in the wheel? A slave to society.

Grow up (fast), get an education, get a (good) job, get a partner, marry, have kids. Repeat.

I want to teach my kid (and myself) that there is another way that you can choose, if you have discipline (this is an important word!). If you work hard, and you’re willing to postpone your needs (on a regular basis), you can secure a better future for yourself and your loved ones. At least, you will be able to give yourself some options (pay it forward to your future self in a way).

I plan to retire when I’m 50 years old. That’s in 15 years. I follow FIRE bloggers, who plan to retire at 35. They started on their journey extremely early, and they live extremely frugal. That’s not me. Since as long as I can remember, I’ve always been careful with my money, but I’ve never regretted spending them, once I did. I feel I’ve lived life (fully) for the past 35 years. I (and my family) have grown accustomed to a certain lifestyle (we’re not rich, and we don’t drive fancy cars, but we travel a lot and we eat good food, and we have a nice home).

I want to prove that you can become financially free, without having to save 50-60% of your income every month (which is usually a goal for most FIRE people). Yes, I have an above average paying job (I make approx. 3x the average salary in Denmark), but I also have an above average expenditure, to go with my salary. That’s usually how things work, isn’t it? The more you make, the more you spend? 😉

Money cannot buy you happiness. Money might give you a sensation of momentary freedom. But if you spend your life searching for riches, you will never be truly free. 

I found this quote in my notes on my phone the other day. I wrote it down in April, 2015. I don’t know who said it, but it resonated with me back then, and it still does. I feel the need to emphasize that the money in itself should never be your goal. Making a lot of money had always been a dream of mine.

Around the time when I turned 30, I felt like I had achieved the goal of “making a lot of money” (the amount is relative – for me, it was a lot), and yet I felt empty inside. I realized that no matter how much money I could make, the money in it self would never make me happy.

In all honesty, I doubt that I will quit my job and start playing golf full time (for example) if (when) I reach my goal of becoming financially independent. But I would most likely lower my working hours to somewhere between 10-20/week, and I would also probably switch career (I don’t know what yet, but I’ve been wanting to try something different for a while…).

So, the plan is to:

Turn 400.000 DKK (approx. $62.000/€53.000)

into 3.000.000 DKK (approx. $470.000/€400.000).

In 15 years (give or take).

Funny how the end goal in euro equals the starting point in DKK!? I didn’t realize until just now. How poetic is that? I love coincidences like this (here’s some goodies for the spiritually inclined visitors). I feel like that cannot be a coincidence. It’s like a divine coincidence! (too much?).

Anyway, the “magic number” of 3.000.000 DKK is based (losely) off of our current budget. 3 million DKK would give us enough money, to support our current lifestyle for 10 years (give or take). But wait, then you’d only be 60!? What gives?

Most FIRE enthusiasts intend to create a big enough nest egg, to support them selves for the rest of their lives, living off of the passive income generated by their savings (investments) alone.

Well, as I  mentioned in my first blog post I’m not your average FIRE guy. I’m using the principles of FIRE, to be able to accumulate enough savings, to eventually (maybe) retire from “active duty”, at the age of 50. I can do this, because I have a pension scheme from my employer (similar to a 401K for the US audience).

This pension scheme was originally created, back in 2007 when I got my first full-time job (the employer typically provide it, in my industry. But it’s also common to have private ones). I’ve had multiple employers in the last 15 years, but you can move the pension funds to your new employers pension provider – provided that the new employer offer a pension scheme of course. Otherwise, you would have to leave them with the old provider, and hope that they treat the money well 😉 until you can access them (or move them again).

The money from this pension scheme will be accessible, when I turn 60 (this is for pension schemes originally created before/in the year 2007 – the rules here in Denmark are complicated). New pension schemes (from 2018->) will not be accessible until 3 years  prior to the public pension age (which in my case will be when I’m 73, remember?).

Luckily for me, you get to “move” the old rules from an old pension scheme to the new one, so as long as you make sure to move “the original” one onto “the new one”, the same original rules will apply – to the entire amount of money that you have in the scheme – even any future deposits. I know, it’s complicated! Stick with me here!

Because the old age dependency ratio in my country is rapidly increasing (the amount of elderly that needs to be supported by the younger generations) our public pension age is constantly rising. As a result of this, I’ve actually created a private pension scheme for my 4-year old daughter. This will allow her to retire 5 years prior to the public pension age, provided that she make sure to move it onto any future pension scheme that is (I will make sure of that 😉 ). The projected public pension age for my daughter, is 75 years. – So she would be able to retire at the age of 70…I feel bad for the coming generations to be honest. Yes, we live longer, but why should that automatically mean that we also have to work longer?

Anyway, because I started working fairly early, and because I made good money already in my 20’s, my future retirement is already secured (sort of), via the original employer provided pension scheme (thanks for that btw, unnamed company!). But that’s kind of cheating, isn’t it?

Perhaps. – But, fortune favors the prepared mind 😉