Advantages of Early Retirement With Kids
Not having a full time job was very convenient the past few months. Here in North Carolina, when it snows, everything shuts down. Including the schools. It snowed a few inches and schools were closed for four days. Back when I was working, it was always a scramble to figure out who was going to take care of the kids and how we could get to work with icy roads. During these snow days, all the kids were able to stay at home and enjoy playing in the snow. What a difference from the working days!
In my previous article, I discussed whether kids will be okay when their parents retire early. In this article I present the advantages of retiring early with kids.
Some parents want to home school their children, but can’t find the time because they have to work all day. Although I don’t think we will home school our children, that’s a great option to have if it ever makes sense. We have the free time, so it is a possibility if the kids (and us parents!) ever want to give it a try. So far they are happy in public school.
If you have been paying attention to our posts lately, you’ll know that we hope to do some extensive travel with our kids this summer. I’ve been following a few other bloggers like Buck at Bucking The Trend who is planning some serious travel. Much more ambitious than us, he’s moving to Spain for a year with his wife and two kids. We could potentially do the same thing, and enroll the kids in school overseas or try out home schooling for a year. Another great option to have if life in the States gets too mundane and we feel like a really long adventure. It would be hard to not learn the local language of wherever we end up. Immersion in a foreign language is a great way to gain rapid fluency.
Whether we travel for a month or a year, I’m definitely looking forward to the “slow travel” lifestyle instead of the action packed week long vacation more common for those working full time jobs. No longer will we rush from shuttle bus to plane to another plane to shuttle bus to hotel to attractions to restaurants. We’ll have the time to take it easy, relax, and live a little more local. We can rent a lakeside house for a week or two, explore an area, do some hiking or boating, and make our own authentic adventure.
The biggest benefit of retiring early with kids is that you get to spend lots of time with your kids. You get to actually know and interact with them as other human beings seven days per week instead of only seeing them for a few hours each day during the work week. Working tends to cause stress and exhaustion, and that interferes with the ability to establish high quality deep relationships with your kids.
I know when I was working, I needed time each day to decompress from the workday. During the week I wasn’t really “there” one hundred percent in the evenings after work. Now I’m able to walk to their school and take a nice stroll back home with them, and they get to chat with their friends on the walk back.
I also have way more time to help out at my kids’ school. I recently visited their school on two different days to help out with their engineering projects. It’s nice to have the leisure time to pass a few hours with your kids and their classmates and pass on a little wisdom while you’re at it. And I’m always up for chaperoning field trips. I love seeing how all the kids are wowed by the different museums and sites they visit! No more telling my kids “oh, I’m out of town for business that day. Sorry, can’t be there for your field trip!”.
Retire early and cut kid costs?
You can save a lot of money on kid-related expenses if you aren’t working. The biggest savings come from being your own daycare and preschool. With monthly prices often exceeding $1,000 for one child, a family with multiple young children can easily spend $25,000 per year on childcare. As the kids get older, costs usually go down (if you can find a good free public school), but before- or after-school care and summertime care can still cost a small fortune.
Other than day care, there are still more savings to be had from retiring with kids still in the house. You will have way more time to do things yourself instead of outsourcing to others. For example, instead of dropping a few hundred dollars on a birthday party at a local entertainment spot, you can spend $50-100 on pizzas and party favors and bake a cake yourself. You might even have more fun, since you can entertain guests all afternoon instead of rushing through the two hours at the skating rink or jumpy house places (or Chucky Cheese!).
There are lots of free activities during the weekdays that I’m now able to take advantage of since I’m no longer working. Our local library just up the street offers story time for different age groups two or three times per week. The community center next door to the library offers two hours of free open play for kids up to age five twice per week. The community parks, hiking trails, greenways, and pools are also great free (or almost free) places to take young kids during the week. These places are like ghost towns when all the other parents are at work.
Cooking at home can save a ton of money and tends to lead to healthier cuisine. These cost savings are available to the early retiree whether they have kids or not, but the savings are multiplied when you have more than two mouths to feed. You can spend $10 on great ingredients and make your own awesome dinner instead of dropping $40 on take out for you and your kids. With more hungry fridge raiders, leftovers are less likely to go to waste. Yesterday’s dinner might make a great snack the next afternoon.
All of these savings are available to any stay at home parent taking care of the kids, just like they are to an early retiree who is also a stay at home parent. If you are thinking about having one income earner stay at home with the kids, these cost savings are part of the equation. The loss of income might not be as bad as you think after accounting for these cost savings and other costs avoided by not working.
I wrote about our $150 income tax bill on our $150,000 incomes, and in that article I noted that our three children knocked $5,500 off our tax bill. The tax savings from kids really add up. For each kid, you get a $3,950 personal exemption deduction (in 2014) and a $1,000 child tax credit. If you are still working, you can contribute to a child care flexible spending account pre-tax.
If you plan to pay for part of your kid’s college expenses, then contributing to a 529 college savings plan can lead to state tax advantages. Our state of North Carolina used to allow up to a $5,000 deduction for contributions to the North Carolina 529 plan. They eliminated this deduction in 2014, however.
Changes in spending patterns with kids: Some expenses go up, others go down
After you have kids, your kid-related expenses go up while your other non-kid expenditures might drop. When we had kids, we noticed our restaurant expenses dropped. Instead of packing three kids into the car and trying to keep them under control at a restaurant, dining at home makes meal time much simpler.
Without kids, we would probably take more expensive vacations out of town. With kids, we can’t easily pop off for a quick weekend trip or overseas vacation with long flights. This summer, we had to tame down our long term travel plans a bit since we have a 2 year old (and a 7 and 8 year old). Thailand and Central America fell out of the plans in favor of a five week trip up the east coast and into Canada.
We won’t be flying this summer, but on other trips, plane tickets for five can add up. So far we have been able to get free plane tickets through credit card rewards and sign up bonuses.
The kids’ school schedule constrains our travel budget, making it hard to travel nine months out of the year. We also tend to travel a little slower. For our trip this summer, we are planning to rent an apartment for a week at a time instead of a hotel room by the night. The cost difference between a one bedroom apartment and a two bedroom apartment (to accommodate our three kids) is negligible.
Kids tend to consume a lot of time, so we don’t have as much vacant space in our schedules to fill with other activities or hobbies that might cost money. This may sound like a complaint, but it isn’t, since we generally enjoy spending time with our kids.
I may have painted an overly gloomy picture of the radical lifestyle alterations caused by kids. But I don’t think it is necessarily a bad thing. You just have to take life at a slower pace when they are young and admit that you can’t do everything as easily as you could when you didn’t have kids. It’s a temporary phase of life, and worth the sacrifices in my opinion. Sure, you’ll spend more money on your kids, but you’ll spend less in other parts of your life.
Do you see any cost savings related to having kids?