Book Review: Free at 45

The book Free at 45: How to Retire Early & Happy is by Tim Stobbs, blogger at Canadian Dream. Tim  generously sent me a review copy of the book. I found it quick and easy to read and I would recommend it to most people. It does a great job of introducing the idea of retiring well before age 65, without getting bogged down in details. The tone is consistently positive, but I don’t feel that the ideas are over-optimistic. Tim includes an appropriate level of realism, which will give anyone considering this course of action plenty to think about.

The basic idea of the book is that it is possible to retire at 45. It doesn’t take a miracle, only planning and dedication. What I really like about the book is that the author starts at a fundamental question that is often overlooked when discussing money: what makes you happy? He attacks the myth that money makes us happy, and suggests that before considering retirement, we ought to find out what makes us happy. He includes some hints and tips for where to look and what to consider, while being respectful of the fact that happiness may be different for each person.

Tim continues by giving an overview of using and avoiding debt, spending less, saving money and investing. The information he shares is well researched and well presented, so that it’s easy to understand. He also recognizes that each topic could be the subject of its own book, and recommends that a reader who needs to focus on a particular area find relevant volumes in the library. There are a couple pieces of advice that I would disagree with, but only as a matter of personal preference. None of it was dangerous or misleading, such as I have seen in other books. Personal finance incorporates at least as much art as science, so it’s important to be aware of personal preference and style.

There are sections on planning, government programs and future value calculations. These are important in understanding how to estimate when you may be able to retire, given your savings rate, return, inflation and spending. It’s good to understand how the various programs work and what benefits can be expected. It’s also good to get a view of what sources of income will be available over time. Especially when planning to retire early, there are likely to be many stages of income and expenses.

One subject that is much too often overlooked is risk. Tim addresses a variety of risks and suggests putting in place at least two backup plans. He suggests what some of those backup plans might be, including having a contingency fund, selling investments, selling your house or taking a loan against it, or taking part-time work. In the end, life is nothing if not uncertain, so while it’s wise to have a plan, it’s important to remember that things won’t go exactly as planned.

Tim wraps up by thinking about problems that might crop up during the transition to retirement. This is where having a firm idea of what produces happiness for you will help to make your retirement an enjoyable one. And I really liked the suggestion to take a month or a couple months of unpaid leave while working, to get a taste of what retirement might feel like. It will also give you a chance to evaluate whether or not your plans are realistic and acceptable to you.

The book is a well written overview of the many things a person should consider when they are planning their retirement. It’s original in suggesting that by starting early and planning well, retirement could occur much earlier than most people believe. While it’s not long on detail, it does a great job of tying together the different pieces that all need to be working in order to move you in the right direction.