It’s been 4 years since I quit my engineering career and I have settled into early retirement quite nicely. I feel really good about my life. We are doing well financially. Our marriage is great and we just celebrated our 17th anniversary last week. RB40Jr is a happy and healthy kid. The blog, Retire by 40, is doing relatively well. Life is good and I hope it continues this way for many years to come. There are some challenges of course, but things are going very well overall. Okay, let’s go through a few topics in detail.
Early Retirement Finances
My biggest fear with early retirement is that I’d have to go back to work for a corporation again. What if we run out of money and can’t pay our bills? I don’t want to be a Walmart greeter when I’m 65. Going back to work for someone else would be the worst case scenario for me. I don’t think I can take being told what to do anymore. I don’t mind working part-time for myself, though. Self employment suits me much better than being an employee.
Things are going well so far, but retiring early means 50+ years of retirement and that is a long time. The early years of retirement are crucial because if you start off with a big loss, your retirement fund can take a hit that it won’t recover from. That’s why my goal is to keep increasing our net worth (or at least keep it stable) while we are still in our 40s and early 50s. Once we reach 55, I would then be more comfortable with drawing down our accounts.
We have been very lucky because the stock and housing market have been on a roll since I retired in 2012. Our net worth increased by 66% since I quit working full-time. That’s amazing! We have Mrs. RB40 to thank for this. Her income has been increasing and that has enabled us to save over $50,000 every year since 2012. I’m very happy with our finances and I’m confident we could weather an economic recession at this point.
Looking back now, I think I may have retired a bit prematurely. Our finances were good, but not great. If the stock market had crashed right after I retired, we might not have been able to handle it. Early retirement is working out because our investments did quite well over the last 4 years. Now, our finances are solid and I have high confidence that my early retirement can go the distance.
Here are the things I’ve done to keep our finances on track.
- Dry run – We saved all of the income from my old job for one year before I retired. This gave me the confidence I needed to retire early. It also acclimated us to living on a more moderate income.
- Part time self employment – I make some money from Retire by 40 and that income is very helpful. I highly recommend working part time on something you enjoy. It brings in some extra income and it keeps life interesting.
- Mrs. RB40 still works – Mrs. RB40 enjoys her job so that’s a great advantage for our family. Recently, she is starting to feel the urge and she is planning to retire by 2020.
- Keep track of our cash flow– I track our income and expenses in detail every month. I don’t want to start depleting our funds yet so our income needs be higher than our expenses on the average. Tracking your monthly cash flow is a very useful exercise for everyone. You can evaluate your expenses monthly and see if your purchases really increase your level of happiness.
- Monitor our retirement projection –I have been using Personal Capital’s Retirement Planner to monitor our retirement plan. It takes all our real expenses and investments into account, then calculates our chance of having a successful retirement. Things look great for now, but it can change if our expenses increase too much or if too many investments go belly up. This is a good way to look ahead so you can make adjustments as needed. You need to be flexible with early retirement.
I feel very fortunate that our finance is doing well, but it has only been 4 years. We need to be vigilant so our retirement fund can remain healthy over the next 50+ years.
Early Retirement Purpose
Actually, finance is probably the easiest part of early retirement once you have settled into a routine. For us, we just need to make sure our cash flow is positive and to keep investing regularly. We will continue to save and invest as long as Mrs. RB40 is working. Once she retires, then we will probably stop saving.
The tougher part of early retirement is to find a purpose after leaving your career. Last week, I met up with my old friends from work for lunch. One of them said he is looking forward to doing nothing after he retires. I guess doing nothing would work for some people, but most of us need more than that. You need to have some projects to keep life interesting. Sitting at home all day is a quick ticket to Depressionville. Luckily, I have a couple of long term projects that keep me extremely busy.
Stay at home dad – Being a SAHD has been an eye opening experience. I never thought it would be so challenging. When I first quit my job, our kid was 18 months old and he was so easy to handle. I had to change diapers, wake up in the middle of the nights, and deal with baby food, but those were all routine tasks. It got more difficult when he turned 2 and started to assert himself. RB40Jr is a very active boy and he seems to get into trouble constantly. Long time readers would know that I love being a SAHD, but I had plenty of complaints, too. Now that he is 5 years old, it is starting to get easier again. He is getting better at listening and controlling himself. He hasn’t been in timeout for weeks now so he is getting into trouble a lot less. Also, he will start kindergarten in 2 months. I will have a lot more time to work on my other projects soon. I can’t wait!
My take on kids
- Age 0 to 18 months – A ton of work because babies can’t do anything.
- Age 18 months to 2 years old – The best time. Kids are super cute at this age and they are a lot less trouble than babies.
- Age 2 to 5 years old – This time is tough because they are constantly pushing boundaries. They don’t listen to anything and constantly talk back.
- Age 5 to 10 years old – Another really nice period. Kids are starting to gain some independence and bother you a lot less frequently.
Blogging – Another project that keeps me busy is this blog. I’m not a fast writer and it takes me at least 3-4 hours to write and post each article. I can’t get anything done when RB40Jr is around so I work when he’s at school and after he goes to bed. It is impossible to concentrate when he’s here. He is very disruptive, but that’s normal behavior for a 5-year-old. Kindergarten will good for both of us. Blogging is still fun, but it is starting to get really difficult to write 3 times per week. I am going to reduce the posting frequency to twice a week until school starts. It is summer after all and we should enjoy it while we can. Thank you everyone for following my early retirement journey and making this blog a success.
Retired life is busy for me and that’s a good thing. I think every retiree needs some long term projects to keep themselves busy. That’s why working part time on something you enjoy after retirement is such a great idea. You can learn something new, earn a little income to supplement your retirement, and keep life interesting. Sitting around and watching TV can wait until you’re 85 and need a walker.
Early Retirement Health and Fitness
Health is another big reason why I decided to leave my career. The job wasn’t right for me anymore. I was stressed out all the time and it was negatively affecting my health. You can read more about my health issues in this post – I handed in my 2 weeks notice. Anyway, I feel much more normal now. I can think clearly and I don’t have panic attacks anymore. It’s inevitable for our health to decline as we age, but stress will accelerate that decline. I’m very lucky to be able to age in a less stressful environment. If your job is really stressful, you need to figure out how to decrease that stress. I think high stress is bearable for 2-3 years, but not much longer than that.
My friends from work were telling me that working at Intel is ten times worse now than when I left. Intel is purging older engineers and many of people I knew are gone. They strongly push senior engineers to move up the ladder and contribute more. If you’re not moving up, you’re on the way out. It doesn’t matter anymore if you are good at your job. The company wants new blood and they’ll get it at the expense of older workers. That’s a bad environment to be in if you’re over 40. This model is ridiculous and it is unsustainable. Intel stock is doing pretty well, though. It’s time to sell the few remaining shares I have left… I’m very glad I left when I did.
Fitness is another story. I used to work out most days during lunch and that’s one of the things I missed the most about the office. Nowadays, I’d be lucky to get to the gym twice a week. It’s just a lot harder than working out at lunch. Once school starts, I’m hoping to exercise every weekday. I’ll head to the gym right after RB40Jr gets on the school bus. Exercise will be easier because it will become routine.
Early Retirement Challenges
Life isn’t static and plans will change. Mrs. RB40 liked her job and she didn’t plan on early retirement when I quit in 2012. However, she has seen how much my quality of life has improved and she wants a more relaxed life too. She likes her job, but she wants more time to work on other projects outside of work. Currently, she doesn’t have time to do anything.
I think 2020 is a great goal for her. If she can hang on until 2020, our finance will improve a lot more. We’ll see how it goes. She probably could retire in less than 2 years if the stars line up. Early retirees need to be flexible and adapt to changes as they come. If your retirement projection takes a turn for the worse, then there are many things you can do to improve it. You can work part time, cut expenses, move to a more affordable area, or even reduce your kid’s inheritance. Don’t wait until things are desperate before taking appropriate actions.
Early Retirement is Fantastic
Early retirement has been fantastic so far. I’m really glad I left the pressure cooker in 2012 before it got really bad. Sure, I missed out on the separation package, but I’m okay with that. I don’t do well in a high pressure environment and I would gladly give up some potential monetary gain to avoid it.
Also, my life is low key and I’m happy with that. Some bloggers are traveling across the globe and they are living extraordinary lives. I think that’s awesome and I get a little jealous sometime too. However, I’m very happy with my ordinary life for now. There will be more excitement when RB40Jr is a bit older. We plan to travel around the world for a year after Mrs. RB40 retires. I think we’ll take off after 4th grade so junior can come back to start middle school (6th grade). That will give us plenty of stories for the blog, right?
Anyway, the last 4 years flew by. Before we know it, I’d be retired for 10 years! Life is short and time flies. If you are stuck in a life you don’t like, then put all your effort into improving your situation. You don’t want to wake up at 60 and wonder where all the time has gone.
Thanks again for following our early retirement adventure and good luck on yours!
*See my guide – How to Start a Blog and Why You Should. Starting a blog changed my life. It provides some income after retirement and it’s a great way to build a community. Those are the two biggest problems after retirement. It’s a great way to use some of your free time.
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.