The FIRE (financial independence, retire early) movement is getting more mainstream and there are more early retirement advocates than ever before. The funny thing is that many of us are not retired in the traditional sense. I spend 20-30 hours per week on Retire by 40 and I have some income from blogging. Most early retirement advocates are in the same boat. They are young and they aren’t ready for full retirement yet. Many of them continue to have earned income after retiring from their career in the traditional workforce. This is inspiring to many people, but it could also be discouraging. Some readers wonder – do I need to be an entrepreneur to retire early? What if I don’t have that entrepreneurial spirit?
My take is that you need to craft your own early retirement. It won’t be the same as mine or anyone else. You don’t have to be entrepreneurial, but it helps a lot.
Entrepreneurial early retirees
The reason why you only hear/read about entrepreneurial early retirees is that they are in the public’s eye. We need publicity to advocate for this FIRE movement. This is not simply saving 10%. It’s a path less taken and we want to spread the word. I’m sure we are just a small fraction of early retirees. Most early retirees probably aren’t entrepreneurial. They are quietly enjoy their retirement without drawing attention to themselves. You won’t hear about these normal early retirees unless you live next door to them and wonder why they always seem to be home. Let’s take a quick poll here to see if I’m right.
How being an entrepreneur helps early retirement
I think being entrepreneurial is a really good way to spend your time after early retirement. It solves two of the biggest problems we have.
Money – This is a big issue with early retirement because we have such a long time in retirement. I retired when I was 38 and my retirement could last 40+ years. That’s a long time for our investments to endure. Our net worth was about 30x our annual expense when I retired, but I was still wasn’t ready to draw down yet. Fortunately, Retire by 40 was generating a little income and that enabled us to put off withdrawal. Mrs. RB40 also still works full time so that makes it really smooth so far. The longer you can put off withdrawal, the longer your portfolio has to compound. A little active income goes a long way in early retirement.
Boredom – Retirement can also be very boring to some people. Fortunately, I’m not speaking from experience here. I’ve been early retired for almost 6 years now and I haven’t been bored yet. It was a lot more boring to pretend to be busy in my old cubicle at work. However, boredom is a real problem for many retirees, early or not. Mostly because they haven’t planned for their life after retirement. Being entrepreneurial can help with this. If you’re working on something you enjoy, then you will put time into it. You won’t have a chance to get bored. Being a stay-at-home dad kept me super busy before RB40Jr started school full time. I had to squeeze in blogging time whenever I could. Often, that was late at night. Now that he’s in school, I have a lot more time to work on my blog and I can finally get more sleep. Life has been quite good recently.
Being entrepreneurial worked out really well for me, but it isn’t for everyone. Maybe you enjoy volunteering instead of hustling to make money. That’s great too. Part of why Mrs. RB40 is reluctant to retire early is because she isn’t entrepreneurial. She doesn’t know what she’s going to do without a job. From what I understand, she plans to putter around and fix all the problems in our house for a while. That might take 6 months to a year, but what will she do after that? I’m sure that’s a conundrum for a lot of regular people too.
Let’s brainstorm and figure out some alternatives for non-entrepreneurial people. Here are my ideas.
Early retirement for non-entrepreneurial people
Okay, this is relatively new to me. Apparently, there is a subset of the FIRE community call the leanFIRE movement. The idea is to live on less than $40,000 per year. You’d need to accumulate less than a million dollars to fund this amount of passive income. A million bucks is still a lot of money, but it is reachable for many people.
Many in the leanFIRE community have much smaller goals. Some plan to generate passive income through rental properties which require less capital, but more leverage or borrowing. Some plan to live on much less than $40,000 per year which brings down the size of their target portfolio. This leanFIRE movement probably works best for people who never let lifestyle inflation take over. If you are a new college graduate, this would be real option for you. The leanFIRE retirement would be much harder for older people who are used to spending more money annually. It also depends on where you live. It’d be tough to leanFIRE in most of California, for example.
2. Work part time
I think working part time is a good option too. One of our readers, David Michael, works for a few months every year at the Amazon fulfillment center and takes the rest of the year off to travel and relax. This is a great way to meet new friends and augment their travel budget. They also taught English around the world when they were younger.
Another option is to work part time every week. I hear working at Trader Joe’s part time is a great side gig. Their part timers can get health insurance and other benefits. Maybe I’ll go undercover for a year and write a series on this part time gig. There is a Trader Joe’s close to our duplex. Do you think that would be interesting? I need to find out if you can work about 15 hours per week.
If you’re not entrepreneurial, then working part time seems like a good way to spend your time. Health insurance coverage would be a great benefit too. The job has to be right, though. I wouldn’t want to work too much or too hard.
3. Geoarbitrage (moving to a cheaper location)
There are many beautiful and interesting locations to live. If you are willing to consider living outside the US and Canada, a whole world of possibility opens up. You can live comfortably in Chiang Mai, Thailand for $10,000 per year. Jason Feiber’s annual dividend income is about $12,000 and he is loving life in Thailand. Frankly, I’m jealous. I’d love to live in Thailand for a year so I can reconnect with my relatives.
Chiang Mai isn’t that cheap either. There are many cheaper locations around the world. Geoarbitrage can lower your target early retirement number quite a bit if you’re willing to consider it.
Here is a good geoarbitrage post – The Cost of Living in Panama from Jim @ Route to Retire. They plan to take advantage of geoarbitrage and relocate to Panama in 2019. I’m looking forward to the stories they’ll share.
4. Early pension
The only early pension I know of is from the US military. They have the best pension plan ever. After 20 years, military retirees can receive 50% of their basic pay, full medical coverage, and a slew of benefits. The big issue here is the pay isn’t that great to begin with. The lowest rank (E1) private’s salary starts at $19,000/year. That’s not a lot of money. You’d probably need to move up the rank to survive on 50% retirement benefit. A major with 6 years of experience makes about $73,000/year. Half of that is pretty good. Check out the US Army pay chart.
This one probably isn’t for everyone either. I can’t imagine spending 20 years in the military.
5. Become van people
The #vanlife movement basically means becoming homeless and living in a van. This is beyond leanFIRE. It takes a certain mindset to go through with this. It probably works best if you’re single. I’m 100% sure Mrs. RB40 wouldn’t live in a van with me.
Of course, if you have a bigger budget, you can go with a nice RV. That sounds much better, but it still wouldn’t work for us. We’re spoiled by living in a regular home. This one probably works best if it’s temporary. You can live cheaply for a time and build your retirement fund.
Side story – I went to New Zealand in 2006 with my parents and tried the #vanlife for 10 days. We stopped at rest areas, by the lake, next to the river, and anywhere we could find parking. It was fun, but the van was really cramp for 3 people. I was glad it was over by the end of the trip. My parents didn’t mind it. They already drove around the US for 6 months in their Chevy Astro van a few years earlier.
6. Work longer
Ugh. Here’s the one that nobody wants to hear. If you don’t want to work after early retirement, you probably need to grit your teeth and work longer. This is a common solution presented by traditional financial advisers. While I don’t like it, it is sound advice.
That’s it from me. Working a bit after retiring from your career is a great thing. It helps with income and boredom. If you don’t plan to work, then you need to find something else to do with your time. Volunteering, hobbies, or working on other projects are good ways to spend some time. It isn’t good to have too much free time. You’ll be bored and early retirement won’t be a fun experience.
Do you have other ideas? What if you want to retire early, but you’re not an entrepreneur?
Starting a blog is a great way to build your brand and generate some extra income. You can see my tutorial here – How to Start A Blog and Why You Should. Check it out if you’re thinking about starting a blog.
Photo by Christin Hume
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.