Well folks, today marks five years of early retirement for me. Flashback: on August 26, 2013 I spent the morning sitting in my office at work, catching up on emails after a week long vacation. Then my boss walks in, says “you’re fired”, hands me the dismissal paperwork and I’m on my way. I spend the rest of the morning at home puzzling over my spreadsheets to verify that I am, in fact, financially independent.
Analysis result: I was financially independent. Our initial budgeted spending of $32,000 per year was only three percent of our total investment balance. In other words, way less than the 4% rule dictates.
Fast forward five years and here we are. Five years older and five years wiser. Our kids were age 1, 7, and 8 when I retired and now they are 6, 12, and 13! They are very different people than they were five years ago.
Right after I quit working, I was still in production mentality when I started this blog. I always wanted to do something internet-y and the blog was the first thing that came to mind. After a weekend of googling “how to start a blog” and other extremely basic search queries, I had figured it all out. I registered the rootofgood.com domain name and published my first article on September 11th, 2013.
The first ever comment on my blog came a few days later from Joe at RetireBy40.org. He’s still doing his blog thing five years later and still stopping by Root of Good on occasion! We must have traded messages dozens of times over the years. Joe, along with many of you, have been a part of my early retired life these past five years whether it was a casual comment on the blog or an email, or an in-person meeting at some point.
In the blink of an eye, I transformed from an unemployed 33 year old jumping into retirement three decades prematurely to a 38 year old early retired pro. During that time I’ve picked up on a few things. Here are the five lessons I’ve learned after five years of early retirement.
Lesson 1: More Money is Better Than Not Enough Money
So don’t quit work too soon. If your job isn’t too bad, keep going until you are comfortable with your early retirement finances.
I think it is better to work a year too long and have plenty of money rather than quitting a year too soon and never having quite enough money to let you enjoy all your free time. The feeling of living on a strict budget is no fun, and not something you want to subject yourself to for the next several decades. You have to budget for fun stuff, entertainment, travel, recreation, or whatever brings you joy.
The one caveat to this piece of advice is if you plan on earning income during early retirement and don’t mind the burden of NEEDING to work a little to cover your living expenses.
However, some people are stuck in horrible work environments or horrible industries and just need to escape even if they aren’t 100% able to fund their retirement expenses from their portfolio.
Maybe jumping ship early makes sense in that case. It’s not worth suffering extreme hardship when you can transition into a much higher quality lifestyle that also requires you to earn a modest income for a while.
I personally enjoy writing the occasional article for this blog and talking to a few clients each month in my Early Retirement Lifestyle Consulting practice. But I don’t need the money.
It’s very liberating to engage in those pursuits that are fun and rewarding without the pressure to bring in a certain level of income. If I get tired of blogging or the lifestyle consulting biz, I can put things on pause indefinitely and move on to other interests. My investment portfolio does the heavy lifting by covering all of our basic living expenses plus a high level of discretionary spending.
Lesson 2: Early Retirement IS The Rest Of Your Life
So make the most of it.
After a few months of early retirement, it suddenly struck me. “This is the REST. OF. MY. LIFE.” I thought. I worked until I was 33 and I will (most likely) be early retired till the day I die!
I need to focus on the things I enjoy and want to accomplish right now.
Part of focusing on the things you DO want to accomplish is saying “NO” to the things you don’t want to do. I’m getting much better at saying “no” to blog-related requests that might benefit me financially and bump up my traffic stats but don’t interest me very much. I’m not in it for the money after all.
I also say “no” to some volunteer opportunities, which can be harder. Our kid’s school needs help with a lot of things and it could literally turn into a full time (but unpaid) job. We help out where we can but we have to pick and choose which activities we participate in.
I’m about to diverge into YOLO-land for a minute. YOLO, for those not down with what “the kids” are saying these days, stands for “You Only Live Once”. It’s the catchphrase for impulsive self indulgent behavior. As in “Hey, looks cool. <insert zero analysis of whether it’s a good idea here> Screw it, let’s do it. YOLO!!!”
I’m taking a lesson from the YOLO-ers. You only live once and the future starts right now. All those bucket list items need to start happening before you get too old to do them. In our case that has mostly been travel. Lots of big month(s) long trips across the country and around the world.
I YOLO-ed on a smaller scale when I decided to get a bike back in the spring. I enjoyed riding bikes as a kid and I never replaced my bike after it was stolen during college.
Fast forward 20 years. I wanted a bike but I never spent the time to research what I wanted to buy or how I would use it. I looked at several options and got bogged down in all the choices related to buying a bike. Screw it, YOLO! I didn’t spend a ton of money but I didn’t buy a $20 used bike off of Craigslist either.
As it turns out, I’ve ridden the bike many hours since I got it and enjoyed it very much. I’m outside more, getting some exercise, and saving a few bucks on gas by running errands on my bike. In my case, I have a line item in my annual budget for “entertainment” to cover things like bicycle purchases. No need to run any “can I afford it?” analysis since I’ve already built it into the budget.
Lesson 3: Work Stress Disappears; Other Stress Remains
Stress reduction might be one of the biggest benefits of early retirement. I went in for a physical shortly after retiring and my blood pressure had dropped 10 points compared to when I was working. I was back down to the normal range!
Work-related stress went away when I quit working. Even though my job was never super high stress, there were always meetings, phone calls, deadlines, details, reports, office politics (plus literal politics when dealing with our lobbyists), lawsuits, professional liability, public relations, and a handful of other things to take care of on a routine basis. Goodbye all that stuff. And good riddance.
But work stress isn’t the only kind of stress. Finances, health, family, friends, and relationships can stress you out. And those stressors continue into early retirement even if you have no job!
The good news is that without a job you have a lot more free time to take life’s adversities head on and address them. I’ve been rather fortunate to not have too many stressful situations these past five years.
But when something popped up, I was extremely glad that I didn’t have to juggle a full time work schedule in addition to the new stress-beast I had to slay.
I remember from my working days, even something as simple as taking a sick day because your kid got sick would lead to huge headaches: calling into work, rescheduling meetings, pushing deadlines out, and falling short on deliverables. You have the stress of a crying unhappy sick kid, you need to take them to the doctor, and in the back of your head you know you’re falling behind at the office too.
Now that work is a thing of the past, what used to make for a stressful time has become a simple inconvenience for me. Instead of relaxing at home for the day, I end up at the doctor’s office and the pharmacy. It’s a lot easier to breathe deep, embrace the interruption to your routine, and say “it’s okay, things will be better tomorrow”.
Lesson 4: Don’t Neglect The Social Side Of Life
A lot of people rely on their full time jobs as their main social network. Getting a beer after work with the guys from the office. Going out to lunch during the week. Golf buds on the weekend. I guess it makes sense because you spend more time at work than you do at home in many cases!
What happens when you leave work? For most people, that social network falls apart. The common thread weaving you and your coworkers together is WORK. When you no longer work with your work friends, that common link disappears. Maybe you keep in touch for a while with a few close coworkers but the general trend is that work friends seem to disappear eventually. That has certainly been my experience.
Plan for this eventuality. Start making friends outside of work before you retire.
Social isolation and loneliness can turn a financially sound retirement into an emotionally draining experience if you don’t have anyone to share it with.
In my case, I’m more socially engaged now than I ever was while working. In retirement, we have plenty of free time to nurture relationships with friends. What a great luxury! In fact, sometimes we overdo it and we feel like we need a vacation from hanging out with family and friends.
For those who want to read more, I dedicated a whole article to the topic of loneliness and the social side of early retirement.
Lesson 5: Life is Unpredictable; Plan But Remain Flexible
If you’re into the whole FIRE movement, then you’re probably pretty good at planning and forecasting. I bet you have a spreadsheet open right now, in fact.
Planning for the long term is great. For planning purposes anyway. But the reality is you have to be flexible. Times change, interests change, people change, locations change. The only constant is change.
I’ve seen a lot of changes in what we’re doing and how we spend time since I retired five years ago. When planning for early retirement, I knew we would take more vacations so I added a big chunk of change to the travel budget. I didn’t realize we would ramp up vacationing to a month or two every summer plus a couple of weeks during the school year.
To accommodate our travel plans, I adjusted course after a couple years of retirement. I bumped up our retirement budget by doubling the vacation line item to $10,000 as our portfolio grew larger. Our fixed expenses are rather low, so any windfall gains can be allocated to any spending category we wish. Right now it’s travel. In the future our priorities may change and we can adjust the budget accordingly.
Or maybe our finances won’t be so rosy. Perhaps our portfolio value gets cut in half during the next recession. In that case, we could reduce our travel spending by vacationing less. Or we could focus on budget travel destinations and get more value for our travel dollars. Flexibility is key.
Planning too many details into your future life can be dangerous. Consider the vacation-home-as-a-retirement-home purchase. I’ve seen too many examples of people buying vacation homes five or ten years prior to retirement “before they are priced out of the market”. They proceed to use the vacation home for a few weeks every year. Even if they pay off the mortgage or buy with cash, the ongoing maintenance expenses and hassle add up over the years.
Fast forward five or ten years and they realize they want to live elsewhere. Their interests have changed over the years and their ideal retirement home becomes anything but ideal. So they have to sell and not always at a profit.
It’s not always best to plan too many details really far into the future. Set yourself up for plenty of flexibility and embrace change as you get older. I’ve found that I’m very good at planning up to two years out and my window of accuracy drops beyond five years out.
Over the years, I’ve written several posts that serve as snapshots of a particular point in my post-retirement journey. Here they are:
- One Month Into My Early Retirement Adventure!
- Three Months of Early Retirement
- Enjoying Four Months of Early Retirement
- Five Blissful Months of Early Retirement
- Six Months of Early Retirement – Still Loving It!
- Loving Nine Months Of Early Retirement
- Celebrating Two Years of Early Retirement
- One Thousand Days of Early Retirement
Now that I’m five years into this early retirement thing, I have to say I love it every day. I still marvel at the fact that human beings have progressed to the point that some of us are fortunate enough to earn a decent income and have inexpensive access to the capital markets so our savings can grow significantly over time.
When we cross the four week threshold for long family vacations, I realize we’re able to do things that most families cannot. But life’s simple pleasures are no less meaningful. I love lying in my hammock reading a good book for a couple of hours on a Tuesday morning (or any other day of the week if I like). I can’t complain when the hardest decision of the day is how I spend my leisure time.
What do the next five years hold for me? Hopefully more of the same as the past five years! My oldest child will be entering college five years from now and the middle child will be a senior in high school. Without question, our lives will look a lot different five years from now. Embrace the change!
Where do you see yourself five years from now?
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