This month we reached our 10-year anniversary of early “retirement”
It’s been a fun ride.
To celebrate, ask me anything in the comments. Life, money, politics, curiosities…. whatever. See our FAQ and Reddit AMA for inspiration.
To get things started, here are 10 observations I’ve made along the way.
10 Observations from 10 Years of Early Retirement
Here are 10 things I’ve noticed in my decade of whatever it is I’m doing. Some of this may be applicable to others and some may just be my personal experience.
In no particular order…
1 – Having to think about money sucks
Money is a hobby of mine – I enjoy thinking through and optimizing complex systems such as investments and taxes.
But having to think about money, that sucks – adhering to a strict budget, questioning purchase decisions (is this really a need?), and having money-related anxiety are terrible things to experience long term.
It took maybe 2-3 years post retirement before I really stopped thinking about money in a real way. That transition from accumulating to withdrawing from a portfolio is a real mind-f*#k. Give yourself time.
Now everything is pretty much on auto-pilot. We’ve stopped tracking expenses and finances are just something that kinda happens in the background, like weather.
2 – It takes years to decompress from a high intensity career
You know that cliché dream where you are standing in front of the class completely naked? I did that with work for several years.
6 months after leaving the office I would still think about office politics and unsolved problems, probably daily. It took at least a year before I stopped dreaming about work. By year 3, I didn’t think about it at all.
The typical 2-3 weeks of vacation per year is not nearly enough. Whoever thought we should stop having summers off after graduation was clearly not interested in mental health.
Again – give yourself time.
3 – Retirement doesn’t guarantee happiness
Retiring does one thing and one thing only – remove time and location obligations. Will that make you happy? Maybe.
The expectation that quitting will solve all problems will probably result in some disappointment.
I mean, retirement is fantastic, but don’t expect it to be a magic cure-all.
You now have some extra freedoms, but also some consequences.
For example….
4 – Work friends are friends at work
The odds are extremely high that work friends will forget about you. Work friends are just that – friends at work.
I had a fairly time consuming job and worked with many of the same people for 10+ years. An intense work environment, long hours, and lots of international travel meant strong bonds were created.
I have no doubt that if I were in dire need and asking for help, they would be there. Or if dropped into Seattle and asked people to cancel plans to meet up with me, they would.
But… in 10 years I’ve met up with more people from work that I knew only tangentially than with the people who often referred to me as family. I created a lot of this, of course, simply by not being in the same city. Still… it is interesting how fast the wall went up.
If a large part of your social network is work friends… be prepared to expand your social network in retirement. [ I love you guys though :) ]
5 – It is impossible to be bored
“Don’t you ever get bored?” and “I could never quit my job, I would be so bored!” are two very common statements by people heavily invested in their careers. Maybe it isn’t boredom you are afraid of, you are just traumatized (see #2.)
I honestly can’t think of a single moment I have felt bored in the last 10 years. There is just so much to do! For example, naps. And bike rides.
And learning things you never would have considered when your brain was lost in work thought. If somebody told me I would write a lot one day, I would have laughed in their face… but here I am, writing and enjoying it.
My observation – give yourself time to decompress. Then let that time fill naturally. It will. (there is clearly a theme here)
6 – Having an extra 40-60 hours per week is wonderful in every way.
Perhaps an extension of #3… but wow, where does the time go?!
I tried to think through this in reverse -> I really have no idea how I could cram 40-60 hours of extra obligations into my existing life… I guess I would have to cut out time with the wife and kids, reduce sleep time, increase caffeine consumption, and sacrifice long-term health? I dunno.
Think of all the things that you would like to do if you only had the time, and then realize the time is there it is just occupied by work.
7 – The Retirement schedule is the best schedule
When I walk into Costco at 10:30 on a Tuesday, the average age of the customer base drops. It’s just me and a bunch of other retirees with no lines.
The bike trail is way less crowded on Monday than Saturday.
Jr’s school lets out at 2:45… it is often me and a bunch of other stay-at-home parents hanging out in the parking lot on a sunny afternoon (more and more with bikes!)
Perhaps a similar life experience is possible with new work-from-home arrangements, but I’m pretty sure the retirement schedule is the best schedule.
8 – Plans Change
We retired to travel. Jr was in 48 countries in his first 48 months if I remember correctly. We travel less now… kid #2 has been to 2 countries in 2 years. Plans change.
It’s good to have a plan. It’s even better to allow plans to evolve how they need to.
Committing to never change a plan is a recipe for toil and trouble.
Maybe I’ll get a job someday, who knows. Decisions result in change. And then other decisions –> more change.
9 – There is no right choice and there are no special prizes
In the era of social media, people like to argue and critique others. This is right, that is wrong. That’s cool, if you are into that sort of thing.
In the context of retirement, you see people trying to get clicks and likes by saying things like, “I would never retire, because <some reason.>”
(Often that reason is boredom, see #5.)
If you prefer to never retire for some reason, then don’t. Easy. You will get no argument from me. Congratulations on knowing what you want and thank you for paying taxes.
Similarly, a lot of people view retirement date as some sort of competition. There is no special prize because you retire at a younger or older age. There are no trophies for spending more or less than another person.
A special prize I just gave myself
10 – Let it go
We have been retired for 10 years and according to all of those Top 10 lists I’m supposed to have 10 things to say. But I don’t, and I have no boss to complain that I haven’t met my externally imposed obligations.
Incidentally – I have met 100s of GCC readers for coffee in various places around the globe. One experience comes to mind – we had been chatting about 30 minutes, and this guy stops mid-sentence and looks at me a little sideways, and says, “You are the most chill dude I have ever met.”
So there you go, #10 – be chill, let it go.
And also – give yourself time :)
Ask Me Anything
The comments are open.
I retired 2 years ago.
It’s funny how #5 is so very true, yet people find it so hard to believe.
Still think about work or nah?
We were in a bull market for the first 8 of your 10 years. Do you find yourself thinking more about money (again) with the market down? If not, how/why?
This is an excellent question, thank you.
I do think about money now more than I did 3 years ago because we made a big transition (expats -> US residents, renting -> owning, bike/Uber -> bike/car, etc…) But now that we are done with the change things are mostly just humming along…
Probably the most stressful money event in recent memory is the covid downturn. I didn’t really like the experience of losing $1 million.
For whatever reason this current market isn’t really phasing me despite having less flexibility. It’s probably a combination of exposure therapy and having the benefit of those 8 years of bull market behind us.
Losing $1M can feel worse than losing nearly all but home.
Aus home owner couple government Age Pension (non-contributory welfare) with non-home assessable assets of:
. $A419k -> pension ~$A40k / y.
. $A935k -> pension ~$A19k / y (at deemed yield)
COL ~$A20k / y.
Bunging all but $419,000 into a low maintenance home with ~7% / y tax free capital gains (and save ~$A20 / y for ‘entertainment expenses’) and claiming the full Age Pension appeals. Serene Simplicity.
https://www.servicesaustralia.gov.au/assets-test-for-pensions?context=22526
Great post. Now that you have to pay property tax I’m curious if you have an interesting way to optimize/hack the payment. For us, it is almost $7k twice a year.
We have property taxes due at end of November. I just applied for 2 new credit cards to use to make that payment. That should get us about $1,600 in benefit for maybe $300 in fees (annual fees and transaction fee.)
When I retire in two years, at the age of 62, I have to make a choice from the company I work for. 1.Lump sum of $400,000, Or 2. Lifetime annuity paid out to me of $2,500 per month and if I die my husband would get it. If I would have had this choice a few years back, I would have taken the lump sum, but now I’m not so sure. I know what the financial planners would say, but what are your thoughts Mr.Cracker? We both have IRA’s that have done well.
What would the financial planners say?
This is probably a 30 minute conversation as there is more to it than just looking at money now vs money over time. Is the annuity inflation adjusted? How much other money do you have? Is the $400k 1-time distribution fully taxable on receipt? How is your and husband’s health and family history? What is your plan for the money? (will spend it, leave for inheritance, etc…) What are the current market conditions at time of receipt of $400k (because of where it would be invested.) What is the financial situation of the annuity provider? Etc..
If inflation adjusted, great health, long-living family, husband is younger than you, $400k would be taxable on receipt, you have plenty of money otherwise…. the annuity looks nice (7.5% yield / 13.3 years to break even.)
If not inflation adjusted, etc… maybe lump sum.
In the last 5 years, what new behavior or habit has most improved your life?
Hmmm… cutting out screen time is a big one. Also making exercise a thing I do first thing in the morning (bike rides, swimming, etc…)
Holy cow your 10 years went by fast! Here’s a toast to the next decade.
The Internet would probably only give financial bloggers partial credit for writing a post that just says “Give it time and chill, dude.”
20 years after retiring from my military career, I still have that nightmare of the Navy discovering that their records were wrong and I still owed them one more sea tour. But I get lost on the submarine, I can’t find my berthing, and then I realize… I’m not wearing pants.
The good news is that I only have that dream annually now instead of quarterly.
What type of employment has tempted you the most during your last decade? Other than spousing, parenting, napping, bicycling, and chilling.
> The Internet would probably only give financial bloggers partial credit for writing a post that just says “Give it time and chill, dude.”
That is a completely reasonable critique. Although it is the same as my investment advice :)
I wouldn’t mind working on grid storage solutions… grid-scale batteries or pumped storage hydropower. Fascinating stuff. It would have to wait until our little one is in school full-time though, at least 3 more years I think.
I no longer have any work-related dreams that I can remember, but they were pretty intense that first year or so.
Nords, I can imagine a dream of yours involving your surf board on a submarine with the XO talking to you about a regulation haircut.
I’ve been out of the Army for 11 years, and I still get those dreams. It’s weird; even though I had some terrifying experiences, the nightmares are about having to stand in formation and fill out needless paperwork!
The upside is I’m extremely happy when I wake up and realize I’m not back. Now that I FIRE’d from another career, I’m getting a fun mixtape of dreams from both former workplaces. Will I start getting mashup dreams of drudgery from both places? Things to look forward to 😉
Thanks for the post Jeremy. I’m only 6 months into this retirement thing, and I definitely need the reminder to chill more while I get used to it. I find myself missing the comradery and purpose. Plus I can honestly say the being a SAHD is more stressful than being shot at.
How many people you know have kids after they retire?
A handful. And more who retired shortly after having kids (<2 years old.)
What was the transition from 1-2 kids like? I currently have a 9 month daughter and go back and forth on whether to try for a second. One is tough already and I like the simplicity of one but I always wonder if I will regret it.
It is more than 2x the work. A big part of why we made crazy decisions during covid lockdowns is because we were stuck home with 2 kids.
This one I’ve been struggling with for a while.
How do I get my grown kids to save/invest more? They are pretty good at saving money in their bank accounts but won’t take the extra step. My lessons about compounding have fallen on deaf ears.
They are 100% reluctant to invest in the stock market – maybe because everyone keeps talking about a recession or bubble. It’s a good thing they didn’t listen to me or they’d be down ~25% or more this year like I am. ;^)
How do you make any adult do something they don’t want to do?
I would have them read The Simple Path to Wealth, have them look at a long-term growth chart of the SP500 (all the dips look pretty small), and then give them some examples of everyday people who have done incredible things with just index funds… for example, our investments have earned more $ for us than all of our years of working ever did. With the market currently down 25%(?), that is the perfect opportunity for them – it’s on sale.
I’d echo the “Simple Path to Wealth” recommendation – I gave that book to my 17 year old this summer, and he in turn passed it on to two friends of his because he thought it both excellent, as well as eminently readable.
Granted, we’d been talking about things like index funds and investing for a few years – but the book put it all together in any easy to digest package.
Are you still happy with the move to the Sacramento area? I grew up in that area and my wife and I are considering buying our first house there in the next year and a half or so.
How is the bike culture? Are the local building departments and parks and rec departments creating better infrastructure?
The bike trails are nice – there is a lot of riding that can be done without ever crossing a road or seeing a traffic light. There are also several biking clubs that organize regular group rides. It’s not as big as Taipei but the population is way smaller.
Overall pretty happy with the area. I’m still not a fan of home ownership but what can you do?
Congrats! Can’t believe it’s been a decade. With 2 young kids, how do you and Winnie balance taking care of them vs taking care of yourself/spending time on your own interests? What does your schedule look like? I also have 2 kids under 3 and we’re looking at possibly leaving our jobs soon. I am currently home with the kids most days and working part-time remotely. My husband works full-time, also remote so we see him throughout the day which is great, but this time with little ones feels so fleeting and it would be awesome to spend more quality time together. I’m looking for insight on what a potential day-to-day looks like with both parents at home.
One thing we have figured out… the only thing better than spending 24 hours per day with your kids is spending 16 hours per day. Just a few weeks ago our toddler started part time pre-school.
Quality > Quantity.
We now have 4 solid hours each day M-F do non-kid things, as well as time after they go to sleep… although by that time I’m usually exhausted.
Glad to hear you haven’t ever been bored in retirement, that is a fear of mine. I think about my local friends, most of which are younger than me, and when I retire they will most likely still be working. Guess I’ll have to expand my social circle, volunteer, and do activities where other retired folks are. Somehow, I believe I’ll figure it out ;-)
Thanks for the great post!
It does require active effort – most of the people I know now comes through kids and bikes (aka where I spend most of my time.)
Great, honest article. Tracks with my own experience–except that for me I think my identity was more firmly tied to work so that transition was harder. Cheers!
Any words of advice for that transition? Did it take you longer or it was just more grueling?
Advice:
If you love your job, be careful about leaving. I was assured I could always come back but about a year after I left my employer changed its policy (and no longer rehired ANY people who left–after having a very open policy for decades) and so the option return vanished. My skills were very specific to that one employer.
Ask for leave without pay rather than quitting. Maintain optionality.
Ask how important “contributing to society is to you” and how important your job is to that. It is quite important to me, and I have missed that meaning since leaving.
Know exactly how you will spend your time in retirement before jumping.
Create a file with all the things you want to do once your retire. My friend has YEARS of stuff he is working on due to creating that file for many years before leaving.
I don’t really regret going, but it was a BRUTAL transition for me. My job was interesting, dynamic, and all consuming. Entire social network built around it. So it was tough!
I had dreamed of financial independence since I was 20 and got there at 42. Once I made the jump I found that the goal was emptier than I expected. Of course, seven years later, I haven’t run out and gotten a new job haha.
This is a beautiful list. I’m just going to delete this entire post and replace it with your comment
Thanks for this. I’m going through that empty feeling now, almost 8 months out from leaving my job. It’s been a challenging and very difficult transition. Your post gives me hope.
Congrats on the 10 year mark! Can’t believe your story has been inspiring me that long already!
Since it’s AMA, a couple of questions from me. :)
for #8, It’s hard to predict future and hence hard to have a plan that never needs to change. in the past decade, have you come a crossed any ideas on how to make a retirement plan more flexible to adapt to plan change especially for people who are still in wealth accumulation phase to prepare for it?
Another question if you don’t mind sharing, what’s the best and worst decisions you’ve made during the past decade?
early this year, I was quite close to retire before 2022 ends. but with the current market condition, I have to bite the bullet and keep working for another couple of years and hence the questions above are me trying to learn from you before I pull the trigger to say goodbye to corporate world.
Thanks again for sharing your story along the way!
Yeah, 10 years… it has gone by fast.
Extra money is the easiest way to provide flexibility. We got there by working longer (3 years or so) and by choosing to spend way less in the early years of retirement so the portfolio could continue to grow.
best decision – choosing to increase spending in line with portfolio growth. Things like a nanny and the country club were wonderful expenditures.
worst decisions – buying a house and moving to the US. Life was simpler / easier in pretty much every way :)
Just because the market is down doesn’t necessarily mean more work is required. Prices are just what they were a year ago and people retired then… Even when markets are up there is always another recession coming.
Tell us a little more about why it was easier outside US?
Structurally, the US seems to do the least to promote quality of life… if there is an overall philosophy towards the typical person, it is probably “F you.”
– government systems are broken by design (e.g. DMV, health insurance, taxes) – in Taiwan, you can get a drivers license and health insurance in about 30 seconds. Taxes are largely done for you (the IRS already has all the data.) The US spends 2x/capita on health systems compared to OECD countries but gets worse outcomes (life expectancy, etc…)
– everything is car centric – public transit is underinvested, bikes are an after thought, traffic is the default
– children are an afterthought – sure, there are schools and activities, but they are all operated in a way that assumes there is at least one non-working parent. Schedules, etc, are not designed around a normal life.
– this is stressful by default – people are less patient / angrier / agitated
As a non-working household, we can navigate all of this without issue. I mean, it sucks to spend 18+ hours on the phone with the county health people in a year, but I can do it. I don’t know how the average person manages while remaining sane. I have more, but this is my general observation.
That’s very interesting, I can see how those cultural differences can be annoying. My own country clearly seems to be influenced by the US, I’m nodding along with all of your points =)
I’d love to hear more on this, and also on why you moved back and if and why you will/would stay, and what makes the US worth it for you?
We’ll be here through high school. TBD after that.
We were planning on being in the US after 2nd or 3rd grade and just accelerated that a bit when we had hard covid lockdowns in Taiwan. That’s really all there is to it.
We have American / Taiwanese kids and thought they should live and be immersed in both cultures.
Agreed. We live in Taiwan (albeit 13 years) and loved the ease and dare I say care that the institutions provided. Not to mention the kindness of the people.
Now with 2 kids in the states, the grind is so real – not to mention COVID and the related despair it brought to us (working people with young kids at home).
10 years went by quickly!
Do you think you would have done the “saving part” any different had you had kids earlier in life?
We were rocking along even with toddlers but now that my kids are in school we’ve hit a wall with savings. We moved to an area where public schools are not great but I never thought through how sending kids to private schools would increase the expenses across the board! For instance, our kids wants to play sports outside of school with their friends but none of them want to do the ymca cheap leagues etc.
Have you experienced any “pressures” to spend significantly more now with kids getting a little older? Would you send your kids to public schools even if they’re not great in order to hit early retirement earlier?
Loved to hear that you’ve never been bored in ER!
Of course. Kids are expensive. But we very specifically chose to save first / have kids second.
We have made many choices that prioritize kids over anything else. There is zero chance we would be living in the suburbs or have a house without them, but there are good schools/sports/music/etc… here.
If saving is priority #1 that means moving or saying no to private school/extracurricular activities/etc… For 99% of people, that means saving is not the #1 priority. That is OK.
Great post! Thanks for the update. I retired Feb. 2020 with a notable amount the reasoning being similar to your 2nd top 10 item. (Additionally, paying to live in AND super-commute to California was also not sustainable given the unreasonable performance review process at that company that was shunting my earning potential.)
It has been interesting watching your path from “renters forever” to home ownership so thank you for detailing that as you have.
If you’re ever up in Seattle and none of those work friends are available, I’m happy to buy/make you a coffee/pint/margarita.
I’m always up for a coffee. I’m not sure when we will visit Seattle next… maybe summer ’23, it somewhat depends on the schedule of some friends who retired last year (and are now never in Seattle because they are always traveling!)
Be bored without work? I don’t even understand what those words mean when they are in that order.
I would rather stand in a field and throw rocks at the moon than fill out whatever passes as a TPS report in my world.
There is just so much to do!
Was buying a house stressful? Were you concerned about being able to afford what you wanted/needed?
I know you hadn’t planned on buying, so I’m curious.
Yup. Especially because our home inspector shouldn’t be a home inspector and there were some issues we had to work through. Fortunately I have some good friends who are big house guys and one was able to come visit for a week and help with the big stuff.
I didn’t have any affordability concerns – we setup a budget for house / car / furnishings and set that cash aside. I think we over budgeted so the excess went back into the market.
I’m pretty sure we over paid for the house itself but the market was crazy at the time…
I feel pretty confident my investments can support my family in perpetuity. But I still haven’t fully detached from my full time job. About a year ago I transitioned to part-time. I’m fully remote (huge benefit) and work usually 5-25 hours per week (I generally can pick my own hours). I’m pretty content but am wondering if I should just cut ties and be fully done with traditional work? What’s your thoughts?
I think the main goal of quitting work should be that your life is better as a result. Only you can decide if that would be the case.
Happy? Keep doing what you are doing.
Not happy? Make changes.
Or… what would you do differently if you didn’t have the time or mental requirements of the job?
I lost my job after my company was sold in 2020. Then I had a year or so off. Then I got another job in 2022, and I only lasted about 9 months before resigning. I don’t have most of the fears anymore that I used to have about whether to retire early or not (one more year syndrome). Sometimes I cringe when I think of the incredible position I walked away from, but numbers 5,6, and especially 7 are the reason I don’t go looking for yet another job. I doubt I’ll ever find something I love to do for work, but I sure do love my freedom now. If I accidentally go to a store on a weekend or even in the late afternoon and evenings, I’m horrified and frustrated at all the other people ‘in my way’.
I’m still getting over the stresses of my last position and also trying to feel ok about not making an income, but I really do enjoy most of my retirement life so far. Not everything is great, but plenty is.
For my questions:
I’m curious if you have any thoughts about dealing with guilt or pressure (internal or external) to continue working once it’s optional.
Less of a question and more of an observation – I found myself buying a lot of things this last few months. I think it’s because I finally had time to look into items or home improvements if had my eye on for a long time and now finally had bandwidth to do the projects or research the products I wanted to purchase. But having time to spend more and earning zero income sometimes makes me concerned. I think (and hope) it’s just a phase I’m going through.
That transition from accumulating to drawing down a portfolio is difficult, especially if you have a natural saver mentality. I worked through this by intentionally spending less in the early years… it is why we started traveling in Mexico/Guatemala vs Paris/Tokyo. Over time spending became easier and then I mostly stopped thinking about it. It helped a great deal to see the portfolio continue to grow despite the spending (which probably isn’t the case this year) but give it some time…
As for guilt, where is it coming from? Most of my own experience comes from catholic guilt, but I was able to ditch most of that baggage in my 20s… a big part of that was just flipping the thinking around: I am a good person deserving of happiness, and not only have I done nothing wrong (so no need for forgiveness or permission) but the things I want and value should be celebrated.
I don’t know if adopting a similar way of thinking would help others with feelings of guilt, but … JJ, look at all you have accomplished! Being able to step away from work for even a short time without negative financial impact is HUGE, something only a fraction of the people on the planet will ever experience.
Good advice. Thank GCC.
My 10 year FIREversary will be in December, 2022. DH retired earlier this year. We made a trip to Moab to visit friends, then our kids visited us there, then we just didn’t want to go home, so we’re spending another week enjoying the magnificence of Utah in early Fall. Life is so good!
Nice! Having a completely flexible schedule is priceless
Congratulations to you and Winnie on your ten years of early retirement! Patricia and I are so glad that the four of us had the opportunity to hang out and enjoy each other’s company in Mexico with you guys near the beginning of your journey. I have found that retirement from my full time day job allowed me the time to continue to pursue my passion of continuing to play music professionally and teach privately. That path has led to feelings of much personal fulfillment and enrichment. The old adage of “Find a job that is your passion and you’ll never work a day in your life” has definitely been true for me. Also, it’s so good to finally having the time to focus on consistent exercise and a “proper diet.” Patricia and I will drink a toast to you and Winnie’s success!
Hola Tom! Those were some good times in Mexico… we miss it and are talking about visiting for next Christmas.
I still hope to follow in your shoes one day with a big sailing adventure.
Abrazos y besos para Patricia!
Thanks for the great update. We dont have kids and arent big on long travel(like being near family and home). But do find that the mind wanders between being unproductive vs earning more. Especially since with earning I never thought of budget while now with withdrawal I do think about it.
My own solution was to work on something that covers the bills so that I can just let the portfolio grow till its more.
Would like the work to be more in my control, hence I like the idea of the blog, but wow that’s a lot of hard work.
Congrats on the blog for 10+ years too!
Do you think without kids + travel you would have picked up some part time project work?
The blog isn’t really that much work… most of what I write about is stuff that I am thinking about or figuring out. Having to share it with others forces me to do 100% of the work/analysis rather than 80%. It is still surprising to me, because I always hated writing when I had to do it.
I do think without kids I might do more work type things. Now that both of them are gone for several hours each day, I’ve actually considered adding some paid work into that time (I’m not actively looking, but if the right thing came along I would probably do it.)
I’ve had other retirees/pseudo-retirees say they can’t really mentally start working again because they would feel like they failed at retirement. Which I say… why? So what? Do what you want, try new things, if circumstances change, change with them… it is silly to force past decisions as a constraint on all future decisions.
you are very wise =) and adaptable =)
#5 and #6 ring most true for me (non-retiree). I always say that bored people are most often boring people. There is so much about the world/society to be explored. Which ties in well with #6; I don’t know how we all cram 40+ hrs into our schedule, especially now that I have a child. My retired mother-in-law says that she’s busier now than when she was working, a sentiment echoed by a lot of ppl I think. @GCC, in your experience, do you think it’s better to be unstructured with your time in retirement, or planned days, or combination of both?
Thanks!
My mom always said something similar (bored people are boring.)
I usually set the goal of doing one thing each day… mow the lawn, patch the drywall, write a blog post, etc… Then I can do whatever the rest of the day. But sometimes I do a big project for many days in a row, e.g. build a piece of furniture.
Winnie always has 2 or 3 things going on each day with more planning… she is by far more productive than I am. If being more productive is your goal (optional) then more planning seems to be better.
How do you feel about homeownership in general?
Any advice for someone living and working in a HCOL city thinking about retiring early to go home to MN or travel for a few years?
How do you know when it’s enough money when you expect to drastically change your lifestyle after quitting work?
Homeownership is a lot of work and expense. I prefer renting in pretty much every way.
What you describe is largely what we did. We were living the student life, spending $20k/year or thereabouts. But our goal was to spend ~$100k/year in Seattle… house, 2 cars, 2 kids, vacations, etc… So we saved for the lifestyle we wanted to have.
I use the 4% rule as a rough guide… so you need at least 25X your planned cost of living in liquid investments plus social security. We have never spent 4%… the goal of our early travel was to spend way less than we could afford in order to allow the portfolio to continue to grow, plus we were able to do some serious tax hacking that reduced our future expenses. I think this is a solid approach for anyone.
I’m curious to hear more about your future tax hacking. Maybe one of the biggest topics I can’t figure out is tax loss harvesting. If you bought something and the price went down and you sold it while it was down instead of waiting to go back up…I get you can claim an income deduction but you still lost more money than the income deduction right? Or no? Especially because you then buy stocks with the money from the sale?Isn’t that essentially buying high, selling low?
I just wrote about tax-loss harvesting. Did you read this one? Why I Absolutely Do Tax-Loss Harvest
If a fund is worth less than you paid for it, you’ve lost money. Tax-loss harvesting allows you to get a tax deduction while everything stays 99.9% the same.
I did read it, but just re-read and think I understand where I was confused. I was thinking you just sell at a loss (take tax deduction) and that’s it but really, you sell and re-buy the same thing essentially so it’s not like you won’t hold long term and wait to go back up. Sometimes when I think of buying stock, I think of buying an actual piece of something that I need to hold on to for its whole life instead of picturing it as a single thing in time so if you sell it and re-buy when it’s down you’re still owning the same thing essentially. Trippy lol and not sure why I thought that way.
Where is the easiest place to track your basis? Every year the IRS asks if I want them to track my basis for me in turbo tax and I say no? Is that significant?
Thank you! :)
Your brokerage keeps track of basis.
Turbotax usually asks if you want them to track the basis in your IRA if you have nondeductible contributions. If that is something you might forget otherwise, it doesn’t hurt.
YES on number 5, it’s impossible to be bored, for almost everyone. Think some of that is due to the Parkinson’s principle.
I say almost everyone as I have a friend who MIGHT be bored in retirement. Got stuck in traffic with him and he was super antsy. He says, “ remember you telling me you had just broken your sunglasses. Are they in the car? Let me see them, maybe I can fix them”. He proceeded to attempt to do just that.
Took industry tests with him over the years. Would involve 100s of people from across th industry typically in an auditorium type setting and he was always the first one handing in his test. He might get bored. There are always outliers, but for almost everyone boredom is not something to be concerned about.
Do have a question-
Do you think there’s a link between ADHD and FIRE?
My wife also has a hard time doing nothing / sitting still. She is never bored either, she just learns new things – jewelry making, watercolor painting, cooking & baking, now gardening… the opportunities never end.
Having kids probably helps too :)
No idea if there is a link between ADHD and FIRE, but there are a lot of tech people that like the retire early thing. Whether that is because of personality/condition or just high income, dunno…
Couldn’t have agreed more: Whoever thought we should stop having summers off after graduation was clearly not interested in mental health.
I didn’t know you were in the Sacramento area, so am I! Well, Rocklin but sounds like you’re in the suburbs as well. Not many people choose to move here from our of the area, so curious to hear how you landed here. It’d be nice to attend one of these road bike rides.
We looked at a map and found a place with good schools that was close to skiing / biking / sailing but still had a lot of sun.
I went through the process a bit in this post: Finding Our Forever Home
That’s great to read. It’s refreshing when people find the positives in this town, even though there are many more populated places around the country.
Send you an email, look forward to meeting another Sacramentan.
Great post, thank you for sharing! When is the next time you’ll be in NYC? I’d love to meet up for coffee/tea/dessert or a meal (if possible) :)
NYC is great, but I don’t think we have any reason to return. All of the friends I had in the area now live elsewhere. But if you happen to be in northern california I’m always up for a coffee.
How is blog income going? I remember you used to post what the blog made each year. Do you think it’s worth starting a blog today with the goal of earning income?
Blog income has been ~$40k/year for the past many years. I meant to share the 2021 income but I kinda forgot. I can write that up.
I don’t think blogs are great money makers in general. People obviously do make money with them but first you have to get big… and that is part luck and timing.
They are pretty good for sharing with friends and family and building some sort of community, even without revenue. See: Everyone Should Blog
Why California? Expensive, high taxes, etc. It seems counterintuitive or contrary to what the FIRE crowd preaches. I think you mentioned your family was in Michigan or somewhere North so the family might not be the reason, is there a secret hack there?
Why do you say California is expensive and has high taxes?
How do you host the blog? DIY? Private server? Managed hosting? At what point would it make sense to upgrade? Do you upgrade to keep up with the growth or you need to upgrade so it grows (thanks to speed, etc)? Thanks
There is a link in the footer to our hosting setup. It’s just a shared server but on a speedy machine. I did upgrade so-to-speak a few years ago.
Thanks Jeremy for the terrific content!
I’m just starting out the RE part of FIRE and am setting up a LLC to accommodate part-time work and tax deductions. Are there any LLC-related resources you’ve come across that are especially helpful for people like us, especially in the tax deduction realm? And do you run your blog/business as a LLC or use another approach?
I’ve read your posts about how everyone should blog and the home office deduction but am looking for something that really digs into the full spectrum of using an LLC for (legal) tax deductions.
For most people an LLC doesn’t really do anything for you except increase your expenses. I’m just a sole-proprietor.
May I ask how much you saved 10 years ago before deciding to retire? Do you still agree with the 4% rule with the current situation? If you are to retire now, how much is enough with 2 young kids in your opinion? Thanks, and congratulations on the 10 successful years!
Let me address the underlying question. The amount isn’t really important.
The 4% rule is interesting. It is based on the worst times in economic history… wars, recessions, political turmoil, pandemics, depressions, inflation, etc… That is why it is the 4% rule and not the 5% rule or the 6% rule.
As such, the 4% rule is incredibly robust. Add in Social Security and it is about as guaranteed as you can get.
So the question is… Is the current situation worse than anything we have ever seen? Will the future be worse than the absolute worst of the past?
Maybe. Although if you believe that, early retirement probably isn’t for you. Too risky.
So… yes, I think the 4% rule is a fine guide.
That said, please read the “Foundation For Long Term Success” section in my post, What is Your Retirement Number – The 4% Rule.
Copied from that post, my outline for a successful early retirement:
Plan on a 4% withdrawal rate
Spend less in the early years, the lower the better
Minimize taxes
Travel hack for free flights and hotel stays
Minimize investment costs through Vanguard index funds
Earn a little accidental income
Be prepared to move bond position into stock in a severe downturn
Be OK with going back to work for awhile
We’ll, you did say to ask you anything, so here goes:
Early in your retirement you and your wife spent a period of time in San Miguel de Allende and seemed to truly enjoy the experience. I was particularly taken with the pictures you posted of the place you were staying.
Within the next year or so my husband and I will have the opportunity to spend extended periods of time travelling, and one of our destinations will hopefully be SMA. I have looked online for the rental you pictured in your posts, but have yet to be successful in finding it. I realize there are likely dozens, if not hundreds, of wonderful rentals in SMA, but the pictures you posted have stayed with me all these years and I’m hoping you might be able to pass along any booking information you might remember (address, landlord or booking service, contact information, etc.). I’ll understand if you no longer have access to any of the information, but the place looked so charming that I figured it was worth asking. Thanks, and congratulations on the 10 years!
Hi Janet.
In the comments on the post, Our $1000 a Month Home in San Miguel de Allende, Mexico, I had a link to the housing service we used. It appears to no longer be active, sorry. We found this place originally by looking on Craigslist
We really did enjoy SMA and considered buying some property there, and we will probably visit next Christmas with the kids.
Would you be able to elaborate a bit more on how the decision to buy a house changed from being “renters for life”. Obviously No.8 said it’s better to allow plans to evolve as needed. I’m currently in the mindset of being a renter for life myself but obviously think that plan might change if I have a wife and kids. Curious why it changed for you? As it stands now so you think you might go back to renting later on life?
I discussed this a bit here: Playing With House Money.
I’m not really planning beyond the next 16 years when our youngest finishes high school.
We’re a bit farther on the ERE while parenting kids path (ours are a bit older than yours). Agree with everything you said, esp # 8 – we ended up moving from Northern California, and returning to flexible, interesting jobs that happened to also pay. No matter what you choose next, it’ll turn out fine. Congrats on the 10 years!
Hello, I was wondering if you considered simply renting a house in Sacramento rather than buying? As I am not sure if that is common or easy there as where I live in suburbs of Boston very uncommon to rent single family homes. But if it had been do you think you would have considered it or with kids now heading into their main schooling years did you want the permanence of owning for at least thru their schooling? Just curious to your thought process and whether you even considered other options rather than buying when moving back to California? Thanks.
We did, yes. That was our original plan.
With the cash flow requirements that come with renting in the price range we were targeting, we would have needed higher realized income / cash flow, which would have meant we got much smaller or no subsidies on health insurance. See, Rent vs Imputed Rent
Two other questions if you don’t mind; first a hypothetical; if you didn’t have a blog and the blog income do you think it would have altered your investing strategy, allocation etc these say last five plus years? Please don’t misunderstand I’m not begrudging your successful blog in any way as I have learned so much from it just on taxes alone so in my view you have fully earned any income it brings in with all your work on it over the years. But would current or recent financial decisions you think would be different without it?
Also, years ago in one of your early posts you described buying a new laptop and even though you worked at Microsoft you ended up with a Macbook, but are you still a Macbook user? Or have you switched back to windows, chromebook etc. And are you extremely tech savvy? As I would guess you may be from your work background but are you a heavy laptop user or have many financial things moved to your phone and laptop much less of a factor? I know kind of ridiculous question but I always wonder how people, especially those I read who I consider skillful optimizers, utilize technology. Thanks again.
I got a Macbook Pro last year and this will be my main machine for at least the next 3 years. I don’t really use my phone for anything blog related except replying to comments on occasion and the occasional Instagram post.
re: blog income – this hasn’t really changed anything and has made some things worse.
Total income since day 1 is still only a single digit percentage of our net worth. Said another way, I’ve seen our portfolio value change over a few days by more than we have earned from the blog in 10 years. It does help a bit with cash flow.
Without blog income I would have been able to do larger tax-free Roth conversions and capital gain harvests. We have also had to pay a not-insignificant amount of self-employment taxes. As with all things taxes, we do have more $ because we’ve had more income… but it is not without opportunity cost.
What’s your best advice to protect your saving from current inflation? I have a good amount in cash and double that in index funds.
Buy more index funds with cash? My dads financial advisor says move out of index funds and into treasury notes (& cash). For him this may make sense, but I’m in my early 40s.
I’m sure you have covered this somewhere on this blog but I appreciate your guidance!
This kind of financial advisor makes me sad – the principle is when stocks go down, buy more, not sell and run to bonds.
Bonds have been absolutely hammered by the rise in rates, and even though they pay higher interest than just a year ago they still have negative real yield.
Stocks are down too, of course, but corporations have shown record profits and have pricing power… medium to long term they will be just fine.
Not advice, just a historical observation.
Congrats for your success and for sharing your wisdom with us for the past 10 years!
Spouse and I just retired at beginning of year and it’s been great. Biggest concern is the high inflation without earned income reduces the extra carry over and the economic downturn since we can no longer buy on sale! I’m interested to hear your thoughts on the retirement outlook of people who retired this year vs people who retired in a rising economic environment, such as yourselves 10 years ago. Would you agree that the current cohort is going to need to buckle down more compared to 10 years ago to make their retirement finances work for the duration of the retirement? Like spending less to offset the earlier erosion of the portfolio to inflation and minimizing sequence of returns risk- any others? Appreciate your thoughts!
It depends on what you mean by buckle down.
See this comment.
Thanks, yes buckle down in terms of what you have in that post but that those tactics will likely need to be used for those just retiring vs compared to the cohort who retired in the previous decade in retrospect maybe did not need to do as much buckling down (although you and many others did because you were doing all you could to ensure success especially not having the benefit of hindsight). Any buckling down done by the previous decade cohort was just putting them that much further ahead. Your post today on the 4% rule also addressed the topic well. In summary, is it fair to say that retiring this year has a good chance of working for a long retirement by “buckling down” but we may have less extra money than the previous decade using the same tactics? Thanks again for your great articles and insights! It’s important to us newbies to get off to a good start!
>those tactics will likely need to be used for those just retiring
This is a prediction. A non-optimistic prediction.
This could happen. It could not.
I am 46, and I live a fairly simple life. I drive a Corolla, and have a paid off condo. I am divorced, and have one child. I am debt free. 529 is about 50k, and the little one is 9yo, and lives with her mom. My portfolio is primarily VOO, VTI, and SCHD, and currently I can pay child support and my monthly expenses on the taxable portfolio dividends. In retirement I would have the additional expense of health insurance. I consider retirement, but my job is very generous on 401k match so I figure I can continue to grow my accounts by working a few more years. If I stay in the USA, what would you recommend for insurance? I have been healthy so far. I have also considered getting the Mexico permanente. If I were to live in Mexico permanently, what should I do with my investment accounts? Would you think getting a mailing address in South Dakota would work for the investment accounts? Also if I moved to mexico, and got residency in South Dakota before moving down, would I have to file taxes in Mexico, if I were living off the dividends in my portfolio, or would I just file taxes in the USA? Thank you, and congratulations on 10 years!
Lots to unpack here…
If you live in Mexico you pay taxes in Mexico.
The State you live in now has rules for how to sever the tax relationship with them. Getting a mailing address in SD might fit within those rules, it might not. Check with your State.
If you are in the US and don’t get health insurance from an employer, you get it though the health exchange in your state.
My husband and I currently have temporary residency in Mexico. The US and Mexico have a tax treaty about what types of US sourced income are or aren’t subject to Mexican taxes. For example, SS and withdrawals from 401k/IRA are not subject to Mexican taxes. You should probably talk to someone who specializes in expat taxes about your specific situation. You will still have to file US taxes while living in Mexico, but may not be required to file Mexican taxes.
An address for a mail forwarding service in SD will probably not be adequate for your investment accounts. They require an actual residential address. We use a mail forwarding service for our mailing address, but use my sister’s address for our home address.
What’s been the most fun about your ER??
Learning so much about taxes, of course.
But also:
World travel was fun – some favorites were Guatemala, Mexico, Spain, France, Thailand
Having kids
Loads of bike rides
Quality time with the Mrs
For 2022, my wife and I are planning to maximize our federal income at the 0% tax rate. Since our ordinary income (~$8,000) is less than the standard deduction, we will do a Roth IRA conversion in December to make up the difference between the $8K and the standard deduction.
We are aiming to sell just enough old company stock to have our dividends and capital gains reach the maximum income at the 0% federal tax rate for 2022, which I believe is a MAGI of $109,450.
We have about $10,000 in dividends from federal tax free investments (PIMCO funds) from our taxable brokerage account. I’m currently counting this $10,000 towards our total $109,450 we can earn and stay within the 0% federal tax bracket.
My question is “Do the dividends from the federal tax free investments actually count toward the total income?”
Thanks so much for sharing your details in your blog! It has been very helpful in planning for and continuing to try to optimize income and reduce taxes at the same time.
Which fund? Municipal bond interest does not count towards AGI
You can see an example of this on our 2020 tax return. (~$5k tax exempt interest goes on line 2a vs 2b.)
The two PIMCO funds are PCK and PZC. We also live in California so I believe 90% +/- of the interest from these muni bond funds are also exempt from California taxes, which is a nice bonus savings.
Thanks for the reminder about your 2020 tax return posting. I must have been focused on other items the last time I read through that one.
And congratulations on 10 years! We will reach our first full year of early retirement early next year.
Congrats on 10 years! It is an amazing accomplishment!!
You have posted some great work on maximizing ACA Subsidies, Roth Conversions and Tax Gain Harvesting. We have just FIREd this year at age 56 so we have a window of time in which we are trying to balance all three of these activities in an optimal way. Our current plan is to fill as much of the 12% tax bracket (0% cap gains bracket) with Roth conversions / capital gain harvesting as possible while getting a significant but not full ACA subsidy.
Is striking an optimal balance as simple as I am describing? Is it just a comparison of ACA payments viewed as a current healthcare tax vs future income taxes on money in a traditional IRA?
Is there some “magic bullet” that we are missing? :)
For Roth conversions, yes it is that simple. No magic :)