Woohoo! It’s been five 6 years after I retired early and I still love it. Early retirement really came together in year 5 and there haven’t been many changes in year 6. That’s why I’m updating this post instead of writing a new one like I usually do every year. Life has been really good these last 2 years and we just need to hold steady for a while. The big change was in year 5 when our son started kindergarten. In year 6, he went on to first grade and our lifestyle was pretty much the same. The biggest QOL improvement already happened in year 5. My early retirement life is remarkably stable now. Anyway, everything is going very well. Read on to see how I’m doing in early retirement.
*Early retirement recap – Joe retired from his engineering career in 2012 when he was 38. He became a stay-at-home dad to his 18 month old son and blogs about early retirement on Retire by 40.
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 handle being told what to do after 6 years of autonomy. Part time self-employment suits me much better than being a corporate employee. I can follow my own agenda and take my time on projects. I really hate being told what to do after tasting freedom.
Things are going well so far, but retiring early could mean 50+ years of less income. That’s a long time to be retired. The first few years of retirement are crucial because a few bad years can do irreversible damage to 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 be more comfortable with drawing down our accounts.
We have been extremely lucky because the stock and housing market have been doing very well since I retired in 2012. Incredibly, our net worth doubled since I quit working full-time. A large part of this is due to Mrs. RB40. She is still working and this has enabled us to save and invest over the last 6 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 have done very well over the last 6 years. Now, our finances are solid and I’m ready for my wife 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 ourselves in a position to succeed by investing and minimizing expenses since I started working in 1996. Here are the things we’ve done to get here.
- Early retirement 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. At this age, you don’t want to stop using your brain.
- Mrs. RB40 still works – Mrs. RB40 likes her work and hasn’t been ready to retire yet. Over these last 2 years, 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 our income. At this point, we are very comfortable with this level of expenditure. 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 to 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 expenditures 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 6 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 fail. 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 6 years have been good financially 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. However, I’m pretty sure we will continue to have excess cash flow as long as I keep blogging. Finance was actually the easy part of early retirement for us because we didn’t have to change much.
The tougher part of early retirement was to find a purpose after leaving my engineering career. Many retirees feel adrift after they stop being a part of an organization. Personally, I think all retirees need to have some projects to keep life interesting. Doing nothing all day long is a ticket to Depressionville. Luckily, I have a couple of long term projects to 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 easy to handle. Sure, 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 have plenty of complaints, too.
It is very hard to spend the whole day with our son. He needs constant attention and it is exhausting to respond to his needs all day long. It’s much better for both of us to spend about half a day instead of the whole day together. This is why the school year was so awesome for me. I had more time to exercise, work on the blog, run errands, 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 anymore. That helped us financially. These past 2 years has been great on the SAHD front. Now, being a SAHD is definitely easier than working full time as an engineer.
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 period 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 the game changer. My QOL improved a bunch during the school year.
- Teenage years – I don’t know, but we’ll find out soon enough. I’m dreading the teenage years already.
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.
School was great and it gave me the time I need to write better posts. It’s been about 2 years 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 now. More time means I can put more effort in each post and the quality has improved vastly. It was the right decision to cut back. I don’t want blogging to become a chore.
Now, it’s time for the good news. My blog income has increased tremendously in 2017. Retire by 40 made $65,388 in 2017. That’s almost the same pay rate I had as an engineer. (I worked about twice as much and made about twice as much as an engineer.) It’s amazing. I never thought blogging would generate this much income. When I retired in 2012, I was hoping for about $12,000/year. That would already help a lot. 2018 has been going extremely well too. We’re on pace to beat 2017, but you never know. Summer is always a little iffy. I’m pretty sure 2018 will be better than 2017.
Thank you everyone for following my early retirement journey and making this blog a success. I really appreciate all your support.
*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.
Being a SAHD/blogger keeps me very busy, but I’m embracing some new projects too. Life will get stale if you do the same thing for too many years. I’ve got 2 big projects in the next few years that will change our lives.
- Mrs. RB40’s early retirement. She plans to retire by 2020. This will be a big change for our family. 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 find something to do.
- Travel around the world. We 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? What are we going to do about our home and rentals? Do I need to consolidate our holdings and channel our money into real estate crowdfunding? It’d make life much easier in the long run. 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 2 years 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’m going to put the gym on the back burner until school starts up again in the fall.
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 is a very emotional kid and loses control sometimes. He improved a lot in first grade. This year, Junior got in a lot less trouble and he’s getting better at controlling his emotions. He also has a serious hearing impairment in his left ear. You can read more about this in the first grade recap. Luckily, the hearing loss doesn’t seem to impede his studies and he’s doing well in school.
2018 challenge – My mom is getting older and she needs a lot more help. She lives with us about 9 months out of the year and spends the rest of time with my brother in California. It’s been tough because her mental capability is deteriorating. We’ve seen a neurologist and it’s inconclusive at this point. It seems like mild Alzheimer’s disease to me. She is just 70 so this really sucks. This is why I think retiring at 65 is a terrible idea. You don’t know if your mind will be healthy in your 70s. It’s better to retire earlier and enjoy life while you have a healthy mind and body.
Other than these issues, life is going relatively well.
2018 Summer schedule
This summer, I’m going to try something new. I’m cutting back from 2 posts to just 1 per week. We’ll travel a lot this summer and I won’t have much time to blog.
I’ll spend a lot more time with RB40Jr this summer. We’ll skip summer camp and spend time exploring Portland and various local attractions instead. It should be a fun summer.
Early Retirement is Fantastic
All in all, early retirement has been fantastic so far. The last 24 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 6 years really flew by. It’s hard to believe it’s been that long since I left my engineering career. If I hadn’t made the decision to retire early in 2010, I’d probably still be stuck in the same old gray cubicle. That’s the real key to early retirement. You make it your goal, and then put all your effort into it. 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.
Sign up for a free account at Personal Capital to help manage your investments. I log in almost every day to check on my accounts and cash flow. It’s a great site for DIY investors.
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.
Disclosure: We may receive a referral fee if you sign up with a service through the links on this page.
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.
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