I’m writing this one to share my perspective on early retirement. The next time someone complains about my brand of early retirement, I’ll just point them here. First off, this is just my opinion. Feel free to disagree and define your own early retirement. There is no one right way to do it. It’s your life so you should take the reins. Now that’s out of the way, let me share what early retirement means to me.
Early retirement from a profession
I look at early retirement as retiring from my primary career. I went to college for an electrical engineering degree and worked as a chip design engineer for 16 years. Engineering was my professional career. I still see myself as an engineer after almost 6 years away from the field. It’s my identity.
Nowadays, I’m a stay-at-home dad, blogger, landlord, and investor. Those things are great, but I don’t see them as careers. They are all temporary side gigs. Blogging is a fun hobby that turned into a self-employment opportunity. It isn’t a career (to me) and I don’t plan to do it forever. Also, I’m not looking for a new career. We’ve achieved financial independence and I prefer to work less. A career requires too much commitment at this point in my life.
If this doesn’t make sense to you, then let me offer a comparison. Let’s look at Shaquille O’Neil, a basketball superstar. Shaq retired from the NBA in 2011 after 20 years in the NBA, but he didn’t stop working after his retirement. He works as game analyst, acts in movies, promotes products in commercials, makes money on social media, and invests in many businesses. To me, Shaq is still a retired basketball player. That’s his identity, his core competency, and what he is famous for.
Engineers should consider early retirement
The FIRE movement is a blessing to engineers everywhere. I think FIRE is custom made for us. Engineers need to learn about FIRE when they’re young and keep it in mind as an option. Why is early retirement such a good fit for engineers? I have a whole post on why engineers should retire early. I need to go back and update that post soon, but here is a short summary.
- Engineers love technical work. We all went into engineering because we love the technical aspect of engineering. Nobody goes into engineering because they want to be a manager. Technical work is great at the beginning of the career, but you can’t keep doing it. Why not? Because management expects engineers to contribute much more than just the technical work when they’ve been part of the company for awhile and move to more senior positions. Engineers need to transition to a different role after 15-20 years.
- High stress and time commitment. Engineers are expected to work much more than 40 hours per week for no extra pay. This is fine when you’re young and single, but it really sucks when you have a family.
- Supply is high. There are many new engineers every year. Young engineers don’t mind working long hours and they’re cheaper than senior engineers. Experience doesn’t count for much except in a few esoteric areas.
- Good pay. Engineers make above average income. If they save and invest diligently, then financial independence is a real possibility.
- Career change. Most of my college buddies are not in engineering anymore. They moved on to marketing, managing, entrepreneurship, and more. Engineering is not fun as you get older. Ageism is a real problem especially in the Bay Area. It gets harder and harder to find a new job as you get older. If you’re an engineer, please let me know in the comment section if there are older engineers at your company.
That’s why I think early retirement is a really great option for engineers. You can call it quits if you’ve reached financial independence or change careers as you get older. Being an engineer until 65 is much more difficult today than it was 30 years ago.
There are a few ways to look at financial independence. The easiest one is to use the 4% safe withdrawal rate as a guideline. Basically, you can withdraw 4% from your portfolio and it should last for 30 years. This means you should have at least 25x your annual expense to retire early. A little less is okay if you’re willing to work for some income after retirement.
Currently, we spend about $55,000 per year. Our investible asset should be able to support this level of withdrawal. If we both stop working completely today, we’d still withdraw less than 3% from our investment. We have achieved financial independence and that gives me the confidence to say I’m retired early. At this point, we don’t have to work if we don’t want to.
Work after early retirement
“If you’re still working, then you’re not retired.” People who say this are stuck in their job or have some other issue. Working on something you enjoy after retirement is a really good thing especially when you’re young. Work gives you purpose, fills your schedule, and brings in a little active income. These are all positive things. Not working at all is just about as bad as working too much. Everyone needs to find their happy medium.
To me, work after early retirement must be very independent and flexible. That’s why blogging is such a good fit. I can work whenever I have time and nobody is looking over my shoulder. At this point in my life, I wouldn’t work for other people unless I really have to. Someday, I’ll stop working completely, but that’s way off into the future.
Being a stay-at-home dad isn’t early retirement
Sure, I can see that. Being a stay-at-home parent is a lot of work when you have young children. However, the job description changed a ton after our kiddo started kindergarten. If I wanted to go back to full time work, I could have done so. Most kids at school go to an aftercare program until about 5:30 pm.
When I quit working full time in 2012, being a SAHD was job number 1. Our son was just 18 months old and he demanded a lot of attention. Blogging took a back seat until our son started school. Now that he is in first grade, I can spend more time on blogging and other projects. Being a SAHD is much less time consuming now so early retirement is more valid at this point. Someday, our son will go off to college and that responsibility will come to an end. Life changes.
Wife still working
Mrs. RB40 isn’t quite ready for early retirement yet so she is still working full-time. I don’t see why this is a big deal. She could quit working whenever she wants. She chooses to work for her own reasons. Why does it matter anyway? Most couples retire at different times. It doesn’t make any sense to tie my early retirement to her.
Also, our life is pretty much perfect at this point. I’m not sure it will get better when Mrs. RB40 retires early. If it works, stick with it, right? Anyway, we’ll find out soon because she plans to retire in 2020. That’s not set in stone, though…
Early retirement is freedom
Early retirement is freedom to do what you want, when you want to. Early retirement doesn’t have to mean stop working completely. But if that’s your choice, feel free to relax in the pool all day. I don’t think that’s healthy. Try it out and let us know.
What’s your question?
Alright, now let’s hear it. What’s your question? Tell me your criticism and I’ll respond to it here. This way, I don’t have to explain myself via email anymore. Anyone can read this and see my perspective on early retirement. Let’s keep it PG with the comments, though. My site, my rules. 😉
Image credit: Aaron Burden
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.