(GCC: The transition from “earning and saving” to retiring (early) and “spending” is daunting for many and terrifying for some. We analyze, examine, cross-examine, think, over think, and then analyze some more… So what happens when you ultimately pull the trigger? 3 years ago I provided some feedback* to Mr & Mrs NYC as they were going through these mental gymnastics. Now, let’s check in with them as they hit their 2-year and 3-year early retirement Anniversary, respectively, and see how they managed that transition and their Escape from New York. tldr: After reading their story, I’m super jealous. What a truly amazing and rewarding life!)
(* If you haven’t read it yet, the post Reader Financial Review: Escape From New York is still one of my favorite posts on this site.)
Hello, Mr and Mrs NYC here.
A few years ago, we were in our early 40’s, married with two cats, living in NYC, and working high-pressure jobs in careers where we achieved success but not much personal fulfillment. GCC performed a financial review for us and opened our eyes to an opportunity: if we sold our Manhattan condo and moved to a lower cost of living location, we could quit our jobs immediately and live off our savings — according to the math behind the 4% rule, at least.
Canyonlands National Park
We struggled with the idea of moving away from an area where we had deep relationships, but the enticement of ending our jobs and traveling a lot more (including traveling back to the NYC area to visit friends and family) was too much to pass up. It was agreed: Mrs NYC would quit her job first and we’d put our apartment up for sale – and we’d allow the timing of the sale to dictate our move and when Mr NYC would give notice. In the weeks following her retirement, the once ever-present tension caused by work melted away from Mrs NYC, and any brief moments of regret about quitting were dissipated whenever her former co-workers shared their recent work stories of frustration and stress.
As Mrs NYC took charge of putting the condo up for sale, we made the decision of where our next home would be: Chicago. Chicago’s not known as a low cost-of-living city and Illinois is not among the lowest-tax states, but it was more of a “if we can make it there, we can make it anywhere!” kind of thing, with respect to sticking to our annual budget of $85k/yr in spending. If we couldn’t “make it there”, we’d learn from the experience and we would find a lower-cost location to settle. But Chicago was appealing because it offered many of the lifestyle options that we desired: public transportation is reliable so purchasing a car wasn’t necessary, an international airport, excellent museums and other cultural attractions, excellent restaurants are available for the occasional splurge, the bands we enjoy tour there, etc. In addition, Mrs NYC also had some friends in Chicago in part because she resided there in her 20s.
After a successful sale of our NYC condo, Mr NYC gave notice at work, and we moved to Chicago. We found a charming below-market rental apartment (now $1,590/mo for a 1200 sq ft 2BR) on the north side of Chicago in a great neighborhood with restaurants, bars, groceries, a pharmacy, our dentist, and our veterinarian all within a few walkable blocks. We chose this neighborhood so we could continue to live happily without a car. After working remotely for one month, Mr NYC had his last day of work. We were both now retired.
Home sweet home
Lifestyle (Or: What do we do all day???)
In retirement, we’ve upped our frequency of travel quite a bit. Since the day Mr NYC (or is he “Mr Chicago” now?) retired two years ago, we’ve gone on 28 trips together (9 of which were visits to friends and family back to the NY area) plus there have been 9 trips where either Mr NYC or Mrs NYC traveled with friends. So far we have mostly chosen to go on trips lasting 3-7 days, with one 2-week trip per year. We’ve found an excellent cat sitter that we (and more importantly our two cats) like a lot, but we don’t want to leave them for extended periods of time too frequently.
We initially assumed that we’d travel nomadically or would be gone from home months at a time, but early in our retirement, we decided that wouldn’t work for us. The idea of not having a “home base” to return to left us feeling disconcertingly unmoored. We also didn’t want to feel stuck on the other side of the world at the time of a family health scare, we didn’t want to travel with cats nor leave them for months at a time, and we’d rather not have our cherished items in a storage facility or a friend’s/family’s attic. Instead, we decided on a permanent US residence and frequent vacations. After additional travel experience, we decided that we prefer vacation destinations that offer unique beauty, either entirely natural (for example: Zion National Park) or a combination of natural and man-made (Chichén Itzá, Santorini’s cliffs). But we’re not getting the same level of enjoyment out of visiting bustling world capitals right now.
Santorini Sunset
After she “retired from full-time work” as we sometimes call our current situation, Mrs NYC started putting a lot more of her time and skills into volunteering with charities she’s passionate about. She now has three steady shifts per week at our local food pantry where she distributes food to clients, unloads food delivery trucks, stocks shelves, and assists in the office, as well as one shift per month at another charity in which she facilitates arts and crafts activities for hospitalized children.
Upon his retirement, Mr NYC also found a local charity to volunteer with at least once a week. It’s an organization that helps disadvantaged women find new or better jobs, and Mr NYC’s role is to improve their resumes and interview skills.
During the Chicago Cubs’ exciting 2016 season and post-season in which they eventually won the World Series, both of us caught a bit of Cubs fever. The following season we both applied for and got seasonal part-time jobs working for the Cubs at Wrigley Field, where we help fans have a great time at games and concerts. We both appreciate what a great atmosphere it is to work in, where both our co-workers and our clients (the fans) are much happier than one could find in most other workplaces. We don’t do it for the money (it pays minimum wage), but besides being fun, it provides an opportunity to meet new people in Chicago, and the schedule gives our April-October lives a little structure.
Go Cubs!
Mr NYC has also worked seasonally as an usher for the Chicago Bears for the past two years, which has allowed him to see his favorite NFL team for free, while earning some spending money. In addition to a making a little money working for the Cubs and Bears, we each have also occasionally participated in market research studies that have been fun and have earned us over $1,000 per year. All those paid opportunities totaled just over $10k in earned income last year. (The cats have yet to contribute a cent to the household.)
Da Bears
If we spent every minute together for a 40+ year retirement, our marriage could become strained. (Shocking.) But between leaving one another to perform our different volunteering shifts, being apart at Wrigley Field (we rarely are stationed in the same location), and other social engagements that only one of us attends, we still spend a healthy amount of time apart.
Mrs NYC has been using her increased spare time:
- to garden in our patio and balcony planters, growing flowers, herbs, and vegetables
- to hone her cooking skills, coming up with interesting varieties of recipes
- to work out and do yoga, taking advantage of free fitness programs around the city
- to read more novels (she downloads all of her ebooks for free from the New York Public Library website to her Kindle)
Mr NYC uses his increased time:
- to do travel hacking and price-monitoring to make our frequent travel affordable
- to help his mother compile research to put together a family tree for her side of the family
- to get more involved in political activism (protests, letter-writing campaigns, canvasing, get-out-the-vote campaigns)
- to advise a few friends on their investments
Finances (Or: Where Mrs NYC nods off a little)
We’ve settled on spending $85k per year, funded by qualified dividends and long-term capital gains, and tracked using mint.com. Our investments are all in Vanguard index funds, 90% equities. The remaining 10% includes 2-3 years of living expenses in short-term investments in the hopes that we would be able to avoid selling equities in a normal market downturn. Even though we’ve burned through $85k a year and we’ve only earned a total of $10k/year at our part-time jobs, we find ourselves with a net worth nearly $500k higher than it was after our last full-time paycheck thanks to being fully invested in a strong market. Despite the large growth in assets and the unexpected $10k/year income, we’ll stick to our original budget until there’s more clarity about the future of health care costs in America.
We buy health insurance through the healthcare.gov marketplace provided by the ACA. While the site is easy to use, it has been a very time-intensive process each year to thoroughly compare the available plans. One downside is that no plans in the marketplace are accepted by Northwestern Memorial Hospital, regarded as the best hospital in Chicago. Another is that all the Silver plans have incredibly small networks. We’ve had appointments with some low-quality doctors that accept our insurance but we’ve eventually found doctors that we each like and respect. The upside is that after premium subsidies and cost-sharing subsidies, the two of us pay a total of only $234/mo with a $1,500 deductible for $0 copay for primary care, $10 copay for specialist care, free prescriptions for 5 out of the 6 medications we take, free routine dental care, and free routine eye care. (GCC: Related reading: ACA Optimization in Early Retirement.)
Besides our relatively low rent and continuing to go without a car, we have found other ways to keep our spending down. To save money traveling, we took GCC’s advice and use Raise.com (a website that sells discounted gift cards) along with Hotels.com to save on hotels, we take advantage of many credit card bonuses including our current favorite card, the Chase Sapphire Reserve (GCC: read my review) which lets us enjoy many airport lounges among other benefits, and we earned the Southwest Companion Pass. The Companion Pass has allowed us to take over a dozen flights together where we we pay for one fare using only Southwest or Chase Ultimate Rewards points, and get the second fare for free. We’ve also leveraged Southwest’s no-change-fee policy to book flights far in advance and then monitor their prices — if the the prices fall, we rebook the same flight at the lower price.
Lake George, NY
Spending so little on airfares allow us to justify nicer hotel rooms, nicer restaurants, paying for tours and entertainment, and using Uber and Lyft to reduce our use of public transportation at our destinations. The flexibility allowed by not working full-time allows us to travel more during mid-week which translates to less expensive flights, hotels, and car rentals, shorter lines at attractions, and shorter waits at restaurants.
We also use Raise.com to save on clothes, shoes, drug stores, Uber, Netflix, and tickets to sporting events and concerts. We use MoviePass (a service that lets you see up to one movie a day in theaters for only $10 a month) to inexpensively satisfy Mr NYC’s love of the movies. All these little cost saves are mostly done for the feelings of accomplishment, not so much because the budget demands it. Our primary means to meet our annual budget is with our travel: if over budget, we can pull back by not traveling that month or by going somewhere less expensive.
Conclusions
We are thrilled about the decision we made to retire early and have no regrets. We feel so lucky to live this new low-stress and high-experience lifestyle, and to have the opportunity to put our time, energy, and skills toward worthy causes and no longer toward big companies looking to make more and more money. We are not in “the 1%” when it comes to wealth, but we are certain that we’re in the 1% when it comes to happiness. (Thank you for causing us to look at our retirement options in a different way, Jeremy, we owe a lot to you! We never would have thought our casual email to an anonymous blogger three years ago would have led to this!)
So what is our advice to others contemplating early retirement? Be open to allowing your new lifestyle to come to you over time and allowing it to change over time. Listen to yourself as you try different things: what makes you excited?, what makes you energized?, what delights you?, what’s lacking? Unless you are incredibly lucky, you won’t get it right the first time, and if you are human, it will change over time.
We’d be happy to answer any questions you have in the comments. We wish to remain anonymous, however our two cats love attention so you can follow Lucky & Kenny on Instagram.
(GCC: Mr & Mrs NYC Chicago are on yet another trip, this time to California, so responses will be delayed a few days. Slackers.)
(PS: As much as I would like to, I’m not doing financial reviews anymore. They take a lot of time and energy. As a parent, both are in short supply.)
I remember reading your story and Jeremy’s analysis a few years ago. So happy to see you took the plunge!
Same! :)
Great to hear your early retirement is working out well.
It sounds like a great balance between traveling, volunteering, and enjoying your time. Nice job!
Do you have any regrets?
The only regret that we can think of is that we didn’t apply for Cubs jobs the summer we arrived in Chicago — which is the season they won the World Series — instead of the following season. After the Cubs won the World Series, the owners generously gave each Cubs employee a World Series rings, even part-time seasonal employees! We missed out.
Chicago is a great place to retire, especially if you are a city person, so much to do. I just need to get out of town in the winter, great time to travel to warm places. Check out the Chicago Public Library, you can do the same thing with ebooks as you are with NY library and they also have magazines that you can check out electronically and read on your computer or tablet and actual books which I prefer for reading by the lake. Also make sure you are plugged into all the free concerts in Millennium Park, most you can BYOB (love all the neighborhood BYOB places) and always can bring in a picnic dinner. If the weather is good we will often just head down with our bottle of wine and picnic dinner.
We agree about Chicago! We’ve enjoyed a picnic dinner paired with a bottle of wine and live music in Millennium Park, too! Thanks for the tip about the Chicago Public Library, we’ll need to take advantage of that.
Fantastic story. It’s great to hear case studies including the application of healthcare, general spending of money / time, volunteering, etc. The elimination of two paychecks is certainly daunting and not something my wife and I are looking forward to (but being in the top 1% of happiness is)!
Yes, there were definitely thoughts of “are we crazy to walk away from these paychecks and into the unknown?… we’re totally crazy, right?” But the benefits of walking away from the daily stresses and the high demands on our time and the thinking-about-work-when-not-at-work made the decision easier. And confidence in the financial analysis, in the stock market to deliver in the long-term, and in ourselves to not panic in the short-term. Concerns like yours are part of the reason we agreed to write this post: we hope people get a little less intimidated by the thought of walking away (assuming the math works and you’ve got the discipline). Your time on Earth is finite, make it count!
Awesome and inspiring story! If you happen to make to the LA area, hit me up. Would love to meet up for coffee/beer/walk/bike ride.
Thanks for the inspiring article! It was helpful to go back to the original article to understand the starting point. It was interesting to understand the breakdown of costs especially healthcare which is often taken for granted when it is employer sponsored/subsidized.
Your mileage may vary, as they say. You can examine the 2018 cost of plans in your area at your age and at your expected retirement income here: https://www.healthcare.gov/see-plans/. But who knows what 2019 or beyond will bring. While we’re in above-average health and diet and exercise to stay that way, future healthcare costs remain our number one concern!
I have read the article about Obamacare, but I am still wondering — how did you manage to get such a good deal on health insurance in Chicago?
We’re relatively young, we’re non-smokers, we manage to keep to a relatively low income, and the coverage isn’t that good! As a extreme but true example, our insurance plan has only ONE dermatologist in its network in a city as large as Chicago, and the next closest is 30 miles!
Fantastic and inspiring profile! I’d love a bit more detail on how you fund your annual expenses. You state that your portfolio is 90% in vanguard index funds. Can I extrapolate from that statement that your non-tax holdings in that fund spin off $85k annually? Given the 1.7% yield of VTSAX, that would translate to an astronomical portfolio size. I suspect you’re investing in some higher-yield funds. Care to share any details?
VTSAX total return 2000/11/13 to 2018/06/30 = 213.34% over 17.626 years.
Compound rate = 213.34% ^ (1 / 17.626) – 1 = 4.38%.
$85,000 / 4.38% = $1,940,000.
We’re believers in total return, not yield alone. About a third of that $85k comes through dividends and two-thirds comes through realizing long-term capital gains. Our taxable account has a large cap US fund, a small/medium cap US fund, an international fund, and an emerging markets fund so we have some diversity among our choices. We log in quarterly and check our total asset allocation across both taxable and non-taxable accounts. If our spending account balance is getting low, we sell some shares of the fund(s) that have risen above the target allocation that we set for them.
I love the alternate parallel universe scenario aspects of your experiment … if Chicago works for you , then other places could be later tried out like Houston Texas or perhaps Little Rock, Vancouver, Portland etc…works overseas too like GCCin Taipei or myself in an Asian city of over 20 million …would be interested to hear from folks who tried it out in Germany, Austria, Switzerland or France or Australia…? Just had a friend move with his dog to Thailand … and another to Cairo… Great story…!
Aus:
Temporary resident retirement visa 405, permanent resident retirement visa 410.
Both closed to new applicants.
https://www.homeaffairs.gov.au/trav/visi/visi/investor-or-retirement-visas
This story makes me smile
This is a great post. Glad to see you are enjoying your time in Chicago (Go CUBS!). On the health insurance front, what do you do when you travel? Do you have travel insurance? It’s frustrating that some of the top hospitals are not in the plans (same situation in the city I live in). But glad that over time you were able to find providers that you are comfortable with.
-DGuy
No, we haven’t purchased travel insurance yet, though Mrs NYC has mixed feelings with the decision. We would expect to pay out of pocket for medical care while traveling. We anticipate purchasing travel insurance when we’re a little older or if we travel to a location with a higher expected chance of injury or illness.
I’m curious about your ACA specifics and how you qualify for health care subsidies. If your spend rate is $85k per year, you would have to generate pre-tax income of over $100k. For a family of two, I would have guessed this income level is well over the limit to qualify for any subsidies on the health insurance premiums?
You don’t need to have 100k/year income (or even $85k) to spend $85k/year in early retirement.
If I purchased $75k worth of stock a few years ago and sold it today for $85k, I would have taxable income of only $10k. Taxes on that would be $0.
See Obamacare Optimization in Early Retirement.
As a Chicagoan I was very excited when I read the reveal sentence! I apologize because I’m about to say a lot. I always love to see positive Chicago stories because our city gets lambasted by newsmedia ignorance or propaganda regularly. Props for already seeing past that.
Your move to Chicago is ironic because my wife and I just moved to NYC to experience the only denser & larger American city and to maximize our accumulation phase paychecks.
I have thought that Chicago would make the best NYC retirement location because the housing is so much cheaper. It’s inspiring to read the volunteer work you’re doing in retirement. I hope my early retirement will have the same by helping struggling Chicagoans. Please make sure you visit the south side too. There’s much to appreciate but the news and white suburban wisdom won’t reveal that.
Consider a motorcycle or scooter. It’s a way to utilize the road money taken from you without the expense or inconvenience of a car. Parking is particularly great in Chicago because a motorcycle medallion grants you free parking in ALL residential permit zones. This makes parking in any neighborhood super easy except for Loop and River North which still have free spots to squeeze into that cars can’t take. My insurance was $110/yr and a tank of premium was always <$5 (1.2gal tank). Not even that beats cycling though.
Some frugal or delicious recommendations:
Scooterworks sales and repairs
Cermak Produce great quality and inexpensive
Joong Boo Korean Market huge $2 bao out front
Joy Yee Bubble Tea haven’t found as good as this in NYC yet
Bridgeport Coffee
Maria’s Bar/Marz Brewing
3 Floyd’s Beer bonus points if you do the 40 mile bike ride to their brewpub
Chicago Cultural Center
Lots of Frank Lloyd Wright and Mies van der Rohe if you like architecture
Ha, we’re basically mirror images. We agree with the NYC move – if you two can excel in your fields, that’s a great place to get appropriately paid for your value. And if you can avoid succumbing to the pressures of keeping up with public displays of wealth, you can save a bundle for retirement.
Yes, everyone should give regular volunteer work a try. Mr NYC was somewhat intimidated at first, but came to find it fun in addition to very fulfilling. When we meet people who say “retirement wasn’t for me” and went back to work months after quitting, invariably, they had not given volunteering a shot. So many great non-profits need help!
Thanks for all the local Chicago tips!
When I first came across GCC a couple of years ago, I was thoroughly inspired to rethink our financial situation here in SF (I mean, how could you not!). Reading stories like this gives me hope that it really is possible if you plan it right. I feel like taking the plunge to quit the career is some what of a personal mental dilema. I’m really happy for you, and honestly would have never thought about living in Chicago, but that city is absolutely amazing. Congrats to you guys!
Thanks so much, Cody! Yes, it’s not fake news, a bot is not writing this – it really is possible! Good luck with your own journey.
My husband and I live in NYC, and we both grew up here, so we know how difficult it is to just get up and move — this is an inspiring story. We also opted to do a FIRE plan that involves moving to a lower cost city. In our case, the timing is based on our kids. We bought rental property in Florida and Costa Rica which provides passive income now but also gives an alternative location that can get us to early retirement later, when we’re ready. We have 2 kids — one in HS, (the other is launched) — so we’re waiting for the empty nest stage before making the move. Costa Rica and Florida got on our radar because we love the beach. We will not miss the NYC winters!
Good luck! Sounds like you’ve got a solid plan. Mark the calendar for the younger one’s launch. Actually, install a countdown clock widget on your smartphone for a fun and motivating reminder!
For what it’s worth, there are miles and miles of freshwater beaches in Chicago along Lake Michigan – but, yeah, they are no comparison to your two options. :)
How do you get dental care and eye care for free? For us, it’s not offered as part of ACA.
Sorry, it’s just the luck of which insurers are in your market and which of them offer plans that include dental and vision. Our insurer included the words “Dental + Vision” in their plan title on the healthcare.gov website so it was easy to differentiate, but we also read the plan details of each plan where those coverages are officially indicated – it might be listed in the detail screen but not the title. (Yes, it is time-consuming to click on each plan and scroll down to read all the coverage.) FYI, like most things in life, it’s not free: this plan’s premium was $45/mo more than their equivalent plan that did not include dental and vision.
This is a very cool story even though you were DINK’s. I’m like another commenter waiting for our kids to get older. I have hopes that perhaps I could retire (aka an Uber mom) and hopefully my DH will continue to work for a few years.
I see that you’re brave TR people. I’m wondering how you’ll handle times when the bear market hits (we keep hearing/reading that this bull party will end). Will you depend on your 2-3 year stash before selling funds then? What if the bear market goes beyond 3 years? I think it would make me nervous to sell low.
Have you moved your 401k’s to an IRA and follow 72t Rule? If so, has the tax filing become more complicated because of that?
Is it really easy to deal with all the finance paperwork to keep track of the selling shares, tracking cost basis, etc.?
Finally, what do you put on your CC applications in order to be approved? Do you say $10k for your part time work or do you declare $85k to include LT CGs, interest, and dividends?
Good luck on your journey!
This is a great question Mimoza. I’m anxious to see their response!
Hi, thanks for the questions, Mimoza!
Regarding what we’ll do during extended bear markets: Yes, we’ll exhaust our 2-3 year short-term reserves before selling any stock funds. If the bear market lasts over 3 years, we’d start selling funds. If it approaches a decade, we know we could work more than we do or move to a lower-cost location. Those options are significantly more appealing to us than the option we passed up of grinding out 5-10 more years of work in order to live off dividends alone.
Regarding 72(t) and tax-filing: No, we haven’t needed to go down that road, and according to http://FIRECalc.com, our taxable accounts are large enough such that there’s only a 10% chance we’ll have to in order to access our retirement accounts penalty-free before age 59 1/2. Vanguard’s cost-basis tracking has been accurate enough that I’ve largely stopped double-checking their math and trust what they report. As a result, our tax filing has been simple.
Regarding credit card applications: We’ve reported our “total income” (line 22 from Form 1040) on applications.
Best of luck on your journey, too!