When we think about early retirement, we tend to focus on the money. That’s natural because we need money to retire early. Building up a portfolio is a crucial step to early retirement. When I was trying to retire early, it was all about how much we spend and how much passive income we need. However, it takes more than money to retire early.
We have done well over the years and saved up a good amount. That’s true for lots of people. There are over 11 million millionaire households in the US now. Most of these millionaires are still working hard. Clearly, money isn’t the only requirement for early retirement. Finance is a big part of the equation, but there is more to early retirement than that. I thought it’d be interesting to see what that elusive something is. That’s why I’m starting this new interview series. It takes more than money to retire early. I’ll interview bloggers and regular people to discover what that elusive quality is.
Today, we have Jim from Route to Retire. Jim recently retired from his corporate job last year. He is wrapping things up in the US and his family plans move to Panama this summer. Wow, that sounds exciting! Will homeschooling work out? Will they enjoy living in Panama? I can’t wait to read more about their adventures. Enjoy the interview!
Interview with Jim
Hi Jim, Can you give us a brief background about yourself? What career did you retire from?
I’m 43 and have a wonderful wife and 8-year-old daughter. I started in IT in 1999 as a Systems Engineer and later became the manager of the engineers.
As time went, on, I started to realize that there had to be more to life than living in an office. I took a week off when my daughter was born in 2010 and it crushed me when I had to go back to work.
I eventually stumbled across a blog – this blog – Retire by 40. I realized that he was me – his life mirrored a lot of mine. That was the turning point for me and changed everything… thanks, Joe!!
My wife and I figured out ways to cut expenses and bring in additional income. We reached financial independence last year and I retired from my job at the end of 2018.
I now have more time that I get to spend with my family without always thinking about other things I need to get done. It’s wonderful.
We currently live in the Cleveland area, but we’re planning to move to Panama this summer.
[Joe: Wow, it’s very gratifying to hear I made a difference in someone’s life. That’s exactly why I started blogging. I took 2 months off when our son was born and had a hard time going back to work as well. Having a child can really bring life into focus.]
Early retirement means different things to different people. Lots of people don’t think I’m “retired” because I blog a few hours per day and I’m a stay-at-home dad. That’s perfectly fine. Everyone is entitled to their opinion.
What does early retirement mean to you?
That’s definitely one of those hot topics that have been around for years. I’m currently reading old Mr. Money Mustache articles and he tried to squash that whole thing years ago.
Unfortunately, the word “retirement” conjures up images of old folks doing nothing. But it doesn’t mean that you’re required to just sit on your butt in a rocking chair all day watching Wheel of Fortune.
To me, early retirement means you’ve left your regular 9-5 job and you’re now free to move onto something else. In some cases, those things you enjoy doing may actually make money. And, you know what… that’s Ok.
Even though I left my job, I guarantee that I’ll be doing things along this new path in our life that’ll bring in some money. My blog, Route to Retire, is bringing in a little income now and guess what – I still consider myself an early retiree.
All I know is that we’re now financially independent and no longer have to work if we don’t want to. I can now spend more time with my family, get involved in new projects, and try out new adventures. I call that “early retirement” but you’re free to call that whatever makes you happy.
[Joe: I might have to remove this question. I fear it might detract from what we’re trying to focus on in this interview series.]
What were your financial goals and how long did it take you to achieve them?
For us, I’m big on the 4% rule. We can argue whether or not the 4% rule will work until the cows come home, but for me, it’s good enough. There are three reasons for this:
- We planned our costs around living here in the U.S. However, we’re moving to Panama where are expenses will likely be much less.
- We’re willing to be flexible. If we need to cut back during a bad economy, we’re Ok with that.
- A little extra income never hurts. We have a rental property throwing off some money that we didn’t even count into this formula. Additionally, like I mentioned, we’re likely to do some things over the years are bound to bring in some sort of income.
The key was that I needed to be done with my regular 9-5 as soon as possible. Joe talks about how his physical and mental health were starting to be affected. I wasn’t quite there, but I was closing in fast and could see that happening as well.
My wife and I have generally always been pretty frugal and savers, so we had a decent foundation when we started on the path to financial independence. We just needed to up the ante, so to speak, to make it happen sooner than later.
That said, it probably took us about 7-8 years to reach FI once we purposely set forward on the goal. When I retired at the end of 2018, our net worth was about $1.2 million. Our annual expenses in Panama should be less than $30,000 while living a more than comfortable lifestyle. But if we move back to the U.S. (maybe Tennessee?), that number will likely be closer to $45,000.
[Joe: I’d love to read more about Jim’s budget once he moved to Panama. I imagine $30,000 per year would fund a very comfortable lifestyle there.]
When I was planning my early retirement, I was consumed with the money part of it. I didn’t put much effort into the other details. I’d say it was 90/10, financial/non-financial. What about you?
Did you put much effort into the non-financial side of early retirement planning?
Funny enough, I think a lot of the non-financial plans were actually a result of the financial planning.
I focused a lot on doing everything I could to make early retirement happen sooner than later. In fact, that’s where the idea to move to Panama initially came from.
I figured that if we moved to a lower cost of living city, we would need less of a nest egg to live on. Then the thought occurred to not limit our search to the U.S. and that’s when we found that Panama met a lot of what we were after.
Why not pick a place that had the qualities we deemed wonderful? Let’s find a “paradise” and make that part of our retirement. Because of that, we spent (and continue to spend) a lot of time planning to make this transition as smooth as possible. So we’ve been planning the details of this move religiously for years.
I also created the Route to Retire site with the intent of building up an audience over the years while working so I’d have something to do while retired. The importance of having an overlap from working to early retirement is something that Tanja at Our Next Life talks about and I agree wholeheartedly. You need that bridge or it’s going to be one big shock to your system when you leave your job.
All in all, I’d say I was probably 50/50 on the financial versus non-financial planning.
[Joe: 50/50 is really good. I didn’t plan that much, but I had two big activities built into my early retirement already. Being a stay-at-home-dad and blogging took up a ton of time when our son was young.]
Most people retire around the traditional age – late 50s to early 70s. Their children are grown, their partner and friends are stepping back from work, and their parents may have passed. In short, you have a lot fewer obligations at a later age. To go against the grain and retire in your 30s or 40s can be lonely and challenging.
Where are you in your life cycle? Do you think it is difficult to retire early with all these obligations?
We’ve had to think about this a lot over the past couple of years, particularly with the Panama piece of our plans. Without kids, picking up and leaving would be a lot less complex.
However, we have to plan for schooling while there (we’re homeschooling for the first year). That’s a big piece of time and energy that we wouldn’t have to think about otherwise. She’s worth it though!
Then there are the plans of what we’ll be doing. We’re not going to be able to go out and party all the time – you can’t leave your kid at home normally, much less in a country that’s foreign to you, right?
But on the flip side, I’m more than happy with this – I’ve done my share of partying. Not only that, but the big reason for my early retirement was to spend my time with my family. And we have a blast doing things together – partying (albeit “kid style”), camping, vacations, etc.
So yes, it’s definitely different than it might be otherwise, but I think it’s different in a good way. Most parents don’t get the opportunity to have these years to spend with their children as they grow up.
[Joe: Midlife is tough. I’m struggling with kid and parents too. It’s true that we have more obligations now, but I think early retirement actually helps. I wouldn’t be able to spend as much time with my son or help my parent if I was working full time. Last year, I went to Thailand for 5 weeks to help out. That would be impossible with a full-time job.]
Now let’s focus on the intangibles. To be blunt, lots of people have more money than you. Most of them aren’t retired. They still work and contribute to the economy.
What makes you special? How can you retire when almost everyone else in your position continues to work? Why are you different?
Special… yeah, right…
That’s funny because I don’t consider myself to be a special case. I’m just an average guy who realized that early retirement isn’t just some made-up dream. It’s a possibility for most folks to be able to do.
The key difference is that most people don’t want to believe that it’s possible.
Many love to say things like…
- I don’t make $250,000/yr.
- Well, I could do this too, but I have kids
- I didn’t come from money – I needed to do everything myself
- I don’t want to live like a pauper – I enjoy the good life
The problem is that lines like these are just excuses. Most people that say things like this aren’t looking to change. They don’t want to change. They just want to justify how they’re currently living and that they don’t want to change.
And I’m fine with that. I’m not pushing anyone into financial independence. Not everyone wants to make changes in life and that’s their prerogative. If you’re happy, then I’m happy.
However, for those who would rather find out how it’s possible, then people like me and others who have been there might be worth hearing out.
And in response to those excuses I mentioned…
- We had an above average household income, but it was not doctor/lawyer pay and was a far cry from $250k – enough of a difference that you’d probably re-think this line.
- Meet my 8-year-old daughter, Faith – she’s one smart cookie. She’s in gymnastics and also eats our food. And she never slowed our path to FIRE.
- Lisa and I started from the ground up. I left school with plenty of student loans and, unfortunately, almost $30k in credit card debt. Lisa was smart enough that she didn’t have any consumer debt. She had some help in paying off her student loans from her parents, but she paid off a lot of the debt as well. Both our careers were just us finding our way.
- We enjoy vacationing, particularly cruises, probably more than most of our friends and family. We’re frugal, but we don’t really want for anything.
In other words, FIRE isn’t for everyone, but I do believe that it’s possible for most. And, I really don’t think you need to be rich to make it happen unless that’s what you’re aiming for in life.
You can change…
And in some cases, things change. When we first started down this path, my younger brother wasn’t interested in following suit. He enjoyed his job and a spendthrift lifestyle. With the exception of their 401(k) plans, they didn’t save much from their high-income jobs and instead spent it on a beautiful house, fine dining, and new cars. They’re wonderful hosts, too!
Recently though, they decided to change their plans. They now want the choice to be able to retire in ten years if desired. They’re scaling back and just making some small but intentional decisions with their money. When all is said and done, they’ll be able to keep a lifestyle similar to what they have now, but without the requirement of their 9-5.
For us, we never made big-time money like they did, but we have always been naturally frugal. But that doesn’t mean we live a no-frills life either. It’s been a matter of balance for us.
We lived in a 2,400 sq ft house in a very nice development on our path to FI. Looking back, the house was more than what we needed, but the point is to convey that we didn’t live in a tent in a field somewhere.
Our cars were bought new in 2009 and 2011, but we later realized that new cars aren’t that important to us. So we still continue to drive them today. Unfortunately, we’re selling everything before we move to Panama, so those motor friends will have to make other folks happy (and put a little cash in our pocket in the meantime!).
We’ve continued to do a yearly vacation or two, but we let the prices drive some of the specifics. We enjoy cruises, but we wait for a good deal on one we want to do to show up. A balcony is important to us so we splurge on that. We don’t need the add-ons like the premium alcohol package so we skip it. Excursions – no thanks, we’re good. Souvenirs… yeah, right – that’ll be the day!
Aldi is where we go for most of our groceries. The food from there tastes just as good as other places but at a fraction of the cost. And if there’s something there that we don’t like, we get it elsewhere – no big deal.
Along the way, we also started to build up our income. I followed-up every year to ensure I was getting raises based on good performance at work. We bought a duplex in 2015 as a rental property investment (we had another rental house at the time as well). I don’t want to be a landlord though so we’ve always used a property management company.
I also started a couple of side hustles along the way. I’ve written and published a couple of technical books and, of course, I started the Route to Retire site.
By the time I left my job at the end of 2018, our personal savings rate was around 60% – all without feeling like we were sacrificing anything in our lives.
Learning and action…
To circle back to the original question of “How can you retire when almost everyone else in your position continues to work?”, I think it comes down to three things:
- I realized it really is possible.
- I continued to learn (and still do!).
- I took action (and still do!).
Step one is obviously important, but two and three are the keys. Spending less and making more are obvious ways to be able to have more money left over to save.
But the way to accelerate the process was by learning and taking action.
By continuing to learn new ideas and strategies, I began to understand how to grow our net worth both faster and more safely. And by actually doing something with that knowledge, the path to financial independence was inevitable.
My knowledge grew more and more rapidly by following blogs, reading books, and listening to podcasts. Then I would try to implement one thing I learned that fit my situation at any given time. One small change per week kept the nest egg growing faster and faster. Maybe it was something as simple as switching us from Verizon to Total Wireless (same network, much lower cost!). Or maybe it was using Personal Capital to figure out that we were spending way too much in 401(k) fees and making the changes to save $50,000 over a ten-year period!
In other words, the difference between myself and most of America is that I was willing to learn and then actually made changes. That doesn’t make me special – it just makes me someone who wanted financial independence bad enough.
Anyone can and should aim for FI, whether they love their job or not. You want that option to decide your own future and not have money (or lack of it) decide your future for you.
[Joe: Wow, tough love from Jim. There are some great lessons here. You have to be willing to learn and make some changes if you want to become financial independent. The typical American lifestyle just doesn’t work in this case. You have to decide for yourself if FIRE is right for you and your family.]
*Sign up for a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on our portfolio. It’s a great site for DIY investors.
Optional questions from the readers
Why did you pursue early retirement? What made the FIRE folks evaluate life and said this path is the right one for me?
I wanted a choice. I didn’t want to work if I didn’t want to so I could be with family. I got to the point that I dreaded the day-to-day at the office and hated being there. Not because I disliked the people (I actually liked them a lot), but because there were so many other things I wanted to be doing.
Life shouldn’t be about cubicles – it should be about family and fun.
That doesn’t mean eliminating work completely but rather finding something you’re passionate about.
I’m so excited to try different projects to find out new things I enjoy as well as learn what I don’t. Some will make money and some won’t, but that’s not the purpose. The purpose is to find what you love to do and just do it without money being in the way.
Now that you don’t spend 8-10 hours working in a full-time job, what are you doing with your time?
What’s your typical day like? Do you have a problem finding things to do?
I’m a little newer of an early retiree with my last day of the 9-5 being 12/31/18. On top of that, we’re in a unique position in that we’re preparing to move to Panama this summer.
So right now, we’re spending a fair amount of time trying to sell everything we own. This is a real pain in the butt, but I’m actually enjoying it. Before long, we’re not going to have anything more than a few suitcases each. It sounds weird, but the more stuff we get rid of, the freer I feel.
That said, a typical day for me lately usually rolls like this…
- Wake up with my daughter at 7 am and spend a little time with her while she gets ready for school.
- Head to the exercise room at the apartment complex with my wife for some working out. I hate working out, but I do feel like I’m getting in better shape.
- Come back to the apartment, shower, check emails, pay bills, etc.
- Work on the blog or some checklist items on preparing for the big move.
- Faith’s home from school – hang out with her or work on some of my own things if she’s got her own plans.
- Watch a movie, play a board game or the Wii, or go on a hike as a family.
- Bedtime for Faith – read together.
- Wrap-up some odds an ends from earlier in the day.
- Go to bed, read for a little while, and then call it night.
Boring, right? Don’t worry – I’m enjoying every minute of it. Not only that, but getting my “work” done during the week means that we’re spending way too much time as a family having fun all weekend.
What was your biggest challenge after early retirement?
This is an easy one – the frustration of not being able to get everything done as soon as I retired.
I had a bit of a rough adjustment to early retirement. I had anticipated that there would be a learning curve, but it wasn’t in the way I thought.
The problem is that we all have this backlog of to-do items we plan to get to someday. Well, I thought that my “someday” was once I quit my job – like knock it all out right away.
Looking back, I realized that I had so many things that I wanted to get accomplished and struggled because I wanted to get everything done at once. I felt like days were passing and I wasn’t getting anywhere. Yes, I don’t have to work anymore, but I still only get 24 hours in each day like everyone else.
After that period of close to a month, I’m doing much better. I now just take things one day at a time. I feel like I’m getting more done within each day even though I’m spending a lot more time with my family. Eventually, I’ll be “caught up”, but it took some re-calibrating of my noggin to realize that it’s not all urgent and I’ll get to everything over time.
Would you change anything about the way you retired from your job?
Nothing major… I could have worked longer and put away more money, but why? We have enough and that’s what I wanted. Any income from things we end up doing on the side is just gravy.
I wanted out of my job, so if I could have left earlier, I would have, but I didn’t reach “enough” until I a little bit before I left. So it didn’t make sense for me to leave any sooner or stay any longer.
The only minor “mistake” I made was leaving at the end of the year – 12/31/18. It just seemed like a good end date so we’d go into 2019 with no income. That way we could do our Roth IRA conversions at the end of the year at a much lower tax rate.
The problem is that I missed out on a couple of easy perks I didn’t think of. First of all, why didn’t I make 1/1/19 my last day? That’s a holiday and I wouldn’t have had to work… 8 hours pay missed for no reason except my naivety!
Additionally, making it the last day of a month meant I missed out on health benefits. Making my last day at the beginning of a month (1/1 or 1/2) would have allowed me to keep my health insurance through the company for the whole month of January… another amateur mistake!
And finally, I wanted to invest my entire last paycheck in December into my 401(k). That would have been part of January’s 401(k) contributions – a fresh year (I maxed out 2018). But since I wasn’t there for 2019, this wasn’t allowed to contribute into 2019. That could have been tax-free money!
So, yup, never end your working career on the last day of the month or year. An extra day or two can make a huge difference!
Did you make any big mistakes? How can we avoid them?
Having things work smoothly is nice, but it’s much harder to learn that way. I’ve made a lot of mistakes, but there are two that I consider to be big.
The first is that I bought my first rental property back in 2003. I was excited to get into real estate, which is good, but I wasn’t prepared enough. I knew some basics but not as much as I should have.
I bought in a bad neighborhood – like bad as in there was a shooting right in front of the house while we owned it. It was also an old house built in 1917. That made any repairs a pain in the butt because nothing was standard back then.
And I didn’t understand the numbers like I should have. We ended up being pretty lucky and just sold the house in early 2018.
However, looking back, I should have spent my life on BiggerPockets before doing anything. I’ve learned a ton from the site and the podcasts there since then and that helped me tremendously in the duplex we bought in 2015.
Now, that said, it’s important to take action at some point, too. Your first rental property is likely to not be your best investment, but it will be one of the best ways to learn what you’re doing. Don’t get stuck learning and learning – at some point, you just have to do it and figure it out.
The other mistake I made was more recent and that was focusing too much on trying to reach FI. I started trying to find pennies to save instead of looking at the bigger picture. I ended up losing sight of my family because I wanted to reach FI faster.
The irony of this is that I was aiming for early retirement so I could spend more time with my family. And now, here I was spending all my time focusing on things that weren’t even that impactful.
After about a year of this idiocy, I was listening to Paula Pant talking on one of her podcasts and she said something that struck me – don’t trade today’s happiness for tomorrow’s. She was right and I knew it! That was enough of a wake-up call for me to step back and find a good balance in life.
Don’t lose today because you’re so focused on tomorrow! It’s possible that tomorrow will never come.
How much time do you spend (per week or month) reviewing your finances, or reading about retirement finances/investment/etc., now that you’re retired?
Not as much as I used to! I used to spend hours upon hours in Quicken every week. Now, I’ve shifted to Personal Capital as my money management system with the intention of being a little more hands off. I let it do its thing and spend not even an hour each week just looking over everything.
I started listening to personal finance podcasts while I exercise, but not for hours a day anymore like I was doing.
And I keep falling behind in reading blogs – except for this one, of course, and a couple of others! It just seems like the day goes by too fast now.
What are you still not getting done/postponing, even in retirement? Perhaps some goal or something you said you’d always do when you have more time…
I thought I would be much further ahead with my blog. I wanted to have my site redone, my mailing list revamped, posts queued up and scheduled for weeks, etc.
Yeah, not so much.
The good news is that I’m making a little progress, but it’s slow. I’m now getting the following week’s post done usually almost a week in advance, so that’s a huge win.
I’m also planning to change how I handle my mailing list very soon.
But the site transition is going pretty slow. That’s a tough endeavor.
Maybe by the time you read this interview, everything will magically be done… fingers crossed!
Thank you Jim!
That was a great interview with Jim. I hope you enjoyed it as much as I did.
Next time, I’ll interview a regular retiree who doesn’t have a blog. It would be great to get a different perspective on these questions.
Let me know what you think of this interview series. If you have any question you’d like to ask, leave them in the comment as well. I’ll add them to the interview. Thanks!
Joe left his engineering career behind to become a stay-at-home dad/blogger at 38. Today, he blogs about financial independence, early retirement, investing, and living a frugal lifestyle. See how he generates Passive Income here.
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 DIY investors analyze their portfolio and plan for retirement.
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