Woohoo! It’s been 5 years after I retired early and I still love it. In fact, this past 12 months has been the best year of early retirement yet. Ahhh… early retirement really is like fine wine, it gets better with time. Granted, I had a lot of help and everything came together very nicely.
The stock market and the housing market did very well over the past 12 months so our finances are great. RB40Jr started kindergarten so we didn’t have to pay for childcare and I had more time to myself. With the extra time, I exercised regularly and I’m healthier than ever. Well, not healthier than in my 20s… Nothing beats youth when it comes to health. This blog, Retire by 40, is doing well even after I reduced the posting frequency from 3x to 2x per week. Life is great and I hope it stays like this for many years to come. There are some challenges of course, but they are what keeps life interesting. Let me share some details with you.
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. (Not that there’s anything wrong with that.) Going back to work for someone else would be the worst case scenario for me. I can’t take being told what to do after 5 years of complete independence. I don’t mind working part-time for myself, though. Self employment suits me much better than being an employee. I can follow my own agenda and take my time on it. I really hate being told what to do.
Things are going well so far, but retiring early could mean 50+ years of less income and that is a long time. The early years of retirement are crucial because a few bad years can irreversibly damage your retirement portfolio. This is called the sequence of return risk. 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.
I have been extremely lucky because the stock and housing market have been on a roll since I retired in 2012. Our net worth almost doubled since I quit working full-time (+93%.) That’s really amazing! A large part of this is due to Mrs. RB40. She is still working and this enabled us to save and invest over the last 5 years. 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 early 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 without some drastic lifestyle change. However, early retirement is working out because our investments did very well over the last 5 years. Now, our finances are solid and I’m ready for Mrs. RB40 to join me in early retirement.
Yes, our recent financial success is largely due to investment gains. It isn’t all luck, though. We put our finances in a position to succeed by investing and minimizing expenses. Here are the things we’ve done to get here.
- 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 after retirement. A little active income goes a long way in retirement and it keeps life interesting.
- Mrs. RB40 still works – Mrs. RB40 liked her work and wasn’t ready to retire yet. Over the last year, she has been considering early retirement more. She wants more time for herself and work is getting in the way. She is planning to retire by 2020 or maybe a little earlier if work dissatisfaction really kicks in.
- Minimize lifestyle inflation – Our spending was very low in 2012 when I retired because I cut back on everything to minimize our annual expense. It’s been increasing a bit because we are doing well financially, but we still spend much less than we earn. At this point, we are very comfortable with this level of expenditure and should be able to keep our lifestyle inflation under control. We spend about $55,000 per year.
- 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.
- Keep investing – I invested all our excess cash flow and partake in the stock and housing market gain over the last 5 years. Our net worth wouldn’t have doubled if we just stuck the money in the bank.
- 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 bad. This is a good way to look ahead so you can make adjustments as needed.
The combination of all these efforts put our finances on a good foundation that should last for many years to come. Even if the economy stumbles, I’m sure we could adapt and adjust accordingly.
Early Retirement Purpose
The last 5 years had been easy because Mrs. RB40 was working and we had excess cash flow. It wasn’t difficult to invest and grow our net worth. Once Mrs. RB40 retires, then we won’t be able to invest as much. I’m pretty sure we will still have excess cash flow as long as I keep blogging, though. Finance was actually the easy part of early retirement for us because we didn’t have to change much.
The tougher part of retirement was to find a purpose after leaving my career. Retirees can easily feel adrift after they stop being a part of an organization. Personally, I think retirees need to have some projects to keep life interesting. Doing nothing all day long 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 was 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 night, 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 gets in trouble constantly. Long time readers would know that I love being a SAHD, but I had plenty of complaints, too.
It is very hard to spend the whole day with him. He wants constant attention and it’s exhausting to respond to his needs all day long. It’s much better for both of us to spend about half a day together. This is why kindergarten was so awesome for me. I had more time to exercise, work on the blog, and relax. RB40Jr could spend time with kids his age and learn how to behave in school. We also don’t have to pay for childcare so it helped us financially too. This past year has been great on the SAHD front.
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 less frequently. School is a game changer.
- Age 10+ I don’t know, but we’ll find out soon enough. I’m dreading the teenage years…
Blogging – Another project that keeps me busy is this blog. I’m not a fast writer and it takes me at least 4-5 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 because he is so disruptive, but that’s normal behavior for a little boy.
Kindergarten was awesome and it gave me the time I need to write better posts. It’s been about a year since I reduced the posting frequency from 3x to 2x per week. Surprisingly, the blog traffic didn’t change much. I would have gone back to 3x if it had a big impact on our pageviews. Posting 2x per week is much easier for me and I’m going to stick with this schedule for a while. It was the right decision to cut back a bit. I don’t want blogging to become a chore.
Lastly, the blog income has increased quite a bit in 2017. My online income was just under $30,000 in 2016. That’s not bad, but the income has been decreasing over the last few years. This year, I focused more on making money and was able to surpass 2016 online income in just 6 months. All in all, 2017 has been a banner year so far. Thank you everyone for following my early retirement journey and making this blog a success.
Being a SAHD/blogger keeps me very busy, but I’m embracing some new challenges too. Life will get stale if you do the same thing for too many years. I’ve got two big challenges in the next few years that will change our lives.
- Mrs. RB40’s early retirement. She plans to retire before 2020 and this will be a big change for us. We need to figure out how to keep her active and happy. She’s not the type to lounge around at home so I’m sure she’ll figure something out.
- Travel around the world. I plan to take a year off and travel around the world after Mrs. RB40 retires. There are many challenges here. RB40Jr needs to be “road-schooled.” How do we get health insurance coverage? Where will we visit? The planning phase will keep me very busy for a while.
Early retired life is busy for me and that’s a good thing. I think every retiree needs a few meaningful long term projects to stay fulfilled. 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 engineering 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.
This last year has been especially great because I could go to the gym while RB40Jr is at school. This is a remarkable improvement from the previous years. I’ve been going to the gym 5x per week when school was in session. It felt great to work out regularly again. School’s out for the summer now, though. I haven’t been able to get to the gym as often, but I’m not too worried. I’ll get back on schedule after school starts up again.
Early Retirement Challenges
My early retirement is going pretty smoothly. There are some challenges, but they aren’t anything extraordinary. One big issue is Mrs. RB40’s early retirement. We’ll work on that one together and figure something out.
The other issue is RB40Jr. He has some behavior problems and we’re trying to help him behave better. He really doesn’t like taking order from others and has a hard time following instructions. I guess I shouldn’t be too surprised because I not very good at following orders either. We’ll work on this and hopefully, he’ll have a smoother 1st grade than kindergarten. He also developed moderate hearing loss in his left ear. I’m not sure what happened and we’re following up with an ENT very soon. We already saw the audiologist. This really sucks. I just hope it doesn’t deteriorate.
Other than these issues, life is going pretty well. We’ll work on them and report back next July.
Early Retirement is Fantastic
All in all, early retirement has been fantastic so far. The last 12 months was even better than the 4 years preceding it. I’m really fortunate that it’s working out like I envisioned. At this point, life shouldn’t change too much until Mrs. RB40 retires. After that, I assume my retirement will get even better. We’ll see how it goes.
Anyway, the last 5 years really flew by. It’s hard to believe it’s been 5 years since I left my engineering career. If I didn’t make the decision to retire early in 2010, I’d probably still be stuck in some gray cubicle. That’s the real key to early retirement. You make it your goal, then put all your effort into it. If I can do it, you can do it too. Let’s not wake up at 60 and wonder where all the time has gone.
Thanks again for following my early retirement adventure and good luck on yours! I really appreciate every single one of you.