On March 8, 2017 I celebrated five years away from Corporate America. I also finally collected 100% of my remaining severance package payment on March 31. To celebrate, I’d like to share some insights into what I’ve learned since leaving the rat race.
Initially, if anybody asked, I told them I had retired. However, I soon realized how obnoxious it sounded for a 34 year old to say he was retired. I could sense their resentment, so I decided to say I was unemployed and following my dream to be a writer instead.
When they heard I was jobless and pursuing a highly unlucrative career, people’s attitudes changed. They offered advice and introductions to other people. Some even invited me to stay at their vacation homes out of pity. It was interesting to observe how much more empathy people have when they perceive you not doing as well as they. Related: Are You Smart Enough To Act Dumb Enough To Get Ahead?
Nowadays, few consider me an early retiree because I’m busy writing and doing so many other activities. This post may be particularly useful to those who can’t break free due to the one more year syndrome. However, I suspect there’s something here for everyone.
Reflecting On Five Years Of Early Retirement
1) Early retirement gets easier over time.
During my first year after leaving Corporate America, I often wondered whether forsaking a steady paycheck and a growing career was an optimal financial move. This was understandable because I hadn’t been away from the workplace long enough to appreciate fully what else was out there.
But as each month passed, I became more confident about my decision. My severance package was still getting paid out once or twice a year and I was doing things I could not do while working full-time e.g. consulting in fintech, writing more openly online, traveling for more than three weeks at a time, coaching high school tennis, managing home improvement projects, etc.
During years two and three of early retirement, while I continued to feel fear and uncertainty, I was also experiencing excitement and hope. The door for returning to full-time work continued to be left open, even if now it was only a crack. By the time year four rolled around, I’d found acceptance and clarity. It was the first time I resolved never to go back, especially after a terrible interview experience with a life insurance startup. After five years, I’m feeling tremendous joy because I’ve come to fully embrace the early retirement lifestyle.
The inflection point came when my wife joined me in early retirement in 2014. We made a pact when I left in 2012 that if I still felt the water was warm by the time she turned 34, she’d jump on in as well. There was some initial adjusting we had to do as we weren’t used to seeing each other 24/7. But we made things work and she’s now the CFO/COO of our company. We both get the intellectual challenge of doing something exciting while also having the ability to spend more time raising a family. I could not ask for a better life partner.
2) You won’t believe you worked so hard and took so much risk.
Looking back, I find it crazy I on average worked 60-70 hours a week at my corporate job for 10 years straight out of college, plus an additional 20 – 30 hours a week on the side during my last three years after I launched FinancialSamurai.com. It’s no wonder I had so much chronic pain in my back, jaw, elbow, and foot! When you’re desperate to change your life, you tend to do everything you can to achieve your goals. Nowadays, I feel working 25 hours a week on things I enjoy is the ideal amount of time for maximum happiness.
It now seems incredibly risky to take on a $1,220,000 mortgage at the age of 28. After purchase, I could have been easily laid off or fired from my highly cyclical finance job. Further, after the $304,000 (20%) downpayment, I was left with no cash buffer for emergencies. I actually had to borrow some money from my grandfather to seal the deal in December 2004. I paid him back a couple months later with interest once I got my bonus in February 2005.
What also surprises me about my housing purchase back then is that 10 years later (2014), I bought a 18% cheaper house with a much smaller mortgage, despite being ~8X wealthier! Normal folks would have probably upgraded to a nicer house in a fancier neighborhood. Not us. We wanted to move to the western part of San Francisco where we could see the ocean and avoid the madding crowds.
Today, I would never invest $60,000 in a single private company like I did in Bulldog Gin as a 29 year old, especially not if the company was led by a first time entrepreneur. Today, the maximum I’d ever invest in an individual company is $25,000 because I’ve seen way too many failed businesses to be an angel investor anymore. Being naive allows you to take more risks!
As a retiree, I like taking minimal risk. Give me a bond that holds its value and pays a 4% or higher gross yield a year and I’m happy. Life is better when you don’t expect too much.
Work hard when you are younger because you won’t want to when you are older. Take many calculated risks when you are younger because you won’t have the guts to do so when you’re older.
3) Following your passion no longer becomes cliché.
“Follow your passion, and the money will come” is bad advice for most people. Instead, it’s much better to pursue a field you like that’s in high demand so you can build your financial empire and get out before you become too old and bitter to change.
As a retiree, you’ve presumably optimized your budget, track your finances like a hawk, earn enough passive income to cover your expenses, and have some side hustle to fill any income or time gaps. Once your finances are set you can easily pursue what you love. If you pursue hard enough, money might eventually come rolling in.
For the first two years, Financial Samurai hardly made any money. I remember high-fiving myself whenever I made $10 bucks! But that was OK because I had a steady job and some passive income. Once I left work, my online income grew rapidly because I was in love with what I did.
Today, my online income is greater than my passive income. On a weekly basis my wife and I pinch each other’s butt cheeks to remind ourselves how lucky we are to have such an unanticipated income stream. Each year we keep thinking it’ll go away, yet so far it continues to be the best performing asset.
There’s no greater professional joy than making money in an activity you’d do for free. Therefore, work on that passion project while you have a job, especially if you don’t particular like what you do.
4) You’ll naturally find your groove.
Besides the fear of running out of money in retirement (totally overblown), boredom and loneliness are the other fears many retirees deal with, especially those on the younger end of the spectrum. For so long, we’ve been conditioned to hang out with other people with day jobs. The reality is, there’s a huge ocean of people who work irregular hours and who make money doing irregular things. If you go on Meetup.com, you’ll instantly find a group that meets your interest.
Since retiring, I’ve met a plethora of other early retirees who earn income from their pensions, rental properties, dividend investments, and businesses. Further, there are plenty of people who don’t work traditional jobs and are living wonderful lives. Why else do you think big city streets are always packed during the middle of the day?
Don’t fear boredom. If you were motivated enough to retire early, you will be motivated enough to keep busy doing the things that interest you most. Many early retirees I talk to are even busier than while they were working!
5) You’ll experience a next level of happiness.
After the post, Scraping By On $500K went bonkers, a newish blogger asked “whether it was easier dealing with trolls the longer you’re online.” I was surprised by the question because I hadn’t considered anyone who disliked my article to be a troll. Rather, I thought it fascinating to observe the different types of responses. Several readers also left comments asking whether I was doing OK. OK? I felt so energized that I decided to write a follow up post about peoples’ comments on my post! See: A $500K Redo: How One Couple Got Their Mojo Back!
If I was still working or in the first two years of early retirement, I think I’d probably feel highly agitated by those authors who came from tremendous privilege twisting my message because in those days I was less confident in myself. But today, I’m ecstatic that anybody is bothering to talk about my stuff. It’s an honor I’ll never take for granted. It’s why I still comment all the time on much smaller sites who show some love.
The day you decide you have enough is the day you’ll catch yourself smiling for no good reason. It’s the same reason why it’s very difficult to tell other people to f*ck off once you have f*ck you money. You already feel bad for the person hating on you because something in his life is bothering him. There’s no need to make him feel any worse by arguing.
The longer you survive early retirement, the happier you become. And when you reach the point where you’re no longer counting your pennies, wondering whether you’ll be able to make it until your 401k pays out, your happiness will explode!
Don’t Forget Why You’re Working So Hard
Rich or poor, never forget your WHY. As long as you are clear on your reasons for why you’re making all these sacrifices, life gets easier.
Since I was about 32, I’ve had this vision of one day being a stay at home dad who could provide for his wife and child. I want to be the dad who has no problems staying up all night to swaddle, change diapers, and soothe his baby so mom can consistently get 2-3 hours of sleep between feedings. I want to be that dad who takes his baby for a stroll in the park in the middle of a weekday. I want to be the dad who watches every single one of his kid’s soccer games at 3pm because there’s no place he’d rather be than rooting for his son. Not having a job is the only way I can achieve this vision.
Early retirement is no longer about me, but about everybody I care most deeply about. There’s nothing more valuable than having an abundance of time to spend with family.
Readers, has having a family motivated you to improve your health and financial well-being? All I think about now is earning enough so that I can spend all my time being a super dad, instead of being an employee or an entrepreneur. Any other retirees have thoughts they’d like to share?