When we think about early retirement, we tend to focus on 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. Some people just aren’t a good fit 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 doing this interview series.
Today we have Bob from Tawcan. He immigrated to Canada from Taiwan when he was 13 years old, knowing only the English alphabet and a few simple phrases. Since then Bob has become fluent in English. Married to a Dane, Bob is currently learning Danish so he can understand more conversations whenever he and his family visit his wife’s family and friends in Denmark.
Can you give us a brief background about yourself? What career did you retire from?
Early retirement isn’t a foreign concept to me as my dad retired when he was 43. I also have a cousin that retired when he was 42 and another cousin reached financial independence in her mid-40’s but continued to work.
My dad and my two cousins have been an inspiration. I know firsthand what it’s like to grow up in a household where both parents retired early.
My wife and my retirement journey is slightly different than people that have already appeared in this interview series. Although we technically are financially independent and can retire early (i.e. Lean FIRE) if we choose to, my wife and I have decided to take a slightly longer journey.
Rather than relying on the 4% withdrawal rule by tapping into our investment portfolio, we have decided to build up a tax efficient dividend portfolio that would generate $50,000 to $60,000 a year. When that happens, we can call ourselves “financially independent.” When we are financially independent, we can decide whether or not we should continue working full time.
One of the reasons for living off dividends rather than 4% withdrawals is to avoid touching our principles. We think this would give us more margin of safety. Furthermore, it is our goal to leave a legacy by passing down our portfolio to our kids (one they have mastered being financially responsible). I also have a dream of writing a $1 million dollar cheque and donate it to a local charity one day.
After graduating from university with a bachelor’s degree in applied science and minor in commerce, I started my engineering career in a high-tech company in Vancouver. Unlike many millennials that move around companies and jobs, I have stayed with the same company for the last 15 years.
I went from a hardware engineer to an application engineer to a project manager dealing with many technical challenges and deadlines. Then, six years ago, an opportunity came knocking and allowed me to explore the business and marketing side of the high-tech world. I took the opportunity and went to the “non engineering side aka the dark side” and switched my role as a product manager.
In my 15 years with the company, I have seen a lot of layoffs. This is another reason why we are working on becoming financially independent, so we don’t want to have to rely on one full-time job salary.
We are very happy with where we are. I am grateful to have a challenging job I enjoy.
I have not quite decided whether I would retire from my full-time job once we hit the dividend income goal. Perhaps I will work part-time for a while, perhaps I will retire early so we can travel around the world. With two young kids, my wife and I have decided to be flexible with our plans.
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? Do you work at all?
I don’t think one can ever truly retire. Take my dad, even though he retired at 43, he kept himself busy by volunteering at local charities and became a Scouts leader for many years. My cousin that retired at 42 opened a restaurant with a friend to explore their passions for food. He also has kept himself busy by riding a bicycle each day and learning how to play new musical instruments.
To me, early retirement isn’t about laying on the beach sipping a pina colada. Rather than focus on early retirement, I think we should be focusing on financial independence. Once one reaches financial independence, he or she has the power to choose what he or she wants to do. Work becomes optional.
In other words, once financially independent, you can really focus on your passions instead of just being able to pay the bills.
That is why financial independence is so empowering.
What were your financial goals and how long did it take you to achieve them?
Based on our annual expenses and estimates, we think we need a portfolio that can generate $50,000 CAD to become financially independent. To give us some margin of safety, we are targeting $60,000.
We are building our tax efficient dividend portfolio by purchasing high quality Canadian dividend stocks and US dividend stocks. We also invest in ETFs to help us with asset and geographical diversification.
In 2020 we received close to $27,000 in dividend income which covered over 55% of our annual expenses. Our goal for this year is to receive over $32,000 in dividends.
It is our goal to hit our dividend income goal by 2025 when my wife and I are in our early 40s.
If you consider that we had our financial epiphany in 2011, I guess it’d take us about 14 years to achieve our dividend income goal. It’s not the “fastest” time to achieve financial independence but it’s not a race. We are enjoying the journey.
Although we set a goal of reaching financial independence by 2025, we are OK if we hit the goal a few years later. We are not in a rush to get there. 🙂 Who knows, we might hit the goal earlier!
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?
When we first started our financial independent retire early (FIRE) journey, like you Joe, I was focusing a lot on the money side. I wanted to cut as many expenses as possible so we could reach our goal as quickly as possible. This meant we were cutting back on things like groceries, eating out, coffee, treats, etc.
Although we were quite optimized on our expenses, my wife and I would have arguments occasionally over small expenses like having coffee at a local café or enjoy treats at a local bakery. Being a Dane, hygge is a big part of my wife’s daily life and she enjoys having a nice treat occasionally.
Eventually, I realized that it is not about depriving ourselves so we can reach our financial goals earlier. I realized that we need to enjoy the journey. If I am not happy now, reaching financial independence and retire early won’t magically make me happy all of a sudden. I also don’t want to have silly arguments with my wife about expenses that don’t matter in the grand scheme of things.
So we have adopted a more relaxed way of approach to our FIRE journey. We spend money on things that we enjoy while ruthlessly cutting back on things that we don’t enjoy spending money on.
We also put more effort on the non-financial side of early retirement, like enjoying our hobbies, volunteering, and planning and going on trips now rather than wait till we are retired.
Today my wife and I enjoy having coffee and chocolates together every afternoon. We’d sit for half an hour or so and just talk and have hygge together. This has become a tradition for us and we both quite enjoy it.
Where are you in your life cycle? 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. Do you think it is difficult to retire early with all these obligations?
I am turning 39 later this year and my wife and I have two kids. Currently, one child is in the second grade and the other one is in pre-kindergarten.
Both my wife and I have travelled extensively and we have realized that there are other ways to gain knowledge and perspectives than sitting in a classroom. That’s why we plan to travel around the world in the near future. Perhaps this would slightly prolong our financial independence journey, but we’re OK with that.
Since I’m originally from Taiwan and my wife is originally from Denmark, we also plan to move to these countries for a couple of years to allow our kids to learn the languages. This would give us geo-arbitrage opportunities.
Yes, life can get busy with two young kids but we all enjoy spending time together.For me, it’s all about enjoying the present moment to the fullest. I don’t want to look back ten years from now and regret that I didn’t get to enjoy the precious moments with my family.
So no, I don’t think it is more difficult to retire early in your 30s or 40s. It is all about your perspectives.
It takes more than money to retire early
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 make you special? How can you retire when almost everyone else in your position continue to work? Why are you different?
I don’t think I am special. However, I am grateful to have grown up in a family that talks about money openly and regularly. Even today my parents, my brother, and I would still discuss money and investing related topics openly.
I am also thankful that my wife and I are on the same page financially. We can talk about money openly. We share the same goal of reaching financial independence and one day retire early if we choose to.
Yes, there are many people that make more money and have more money than my wife and I. But does making more money mean you are in a better place financially?
Not necessarily, it all comes down to how much money you can save and invest so your money can work hard for you.
Say someone earns $250k a year. If this person spends $249,999 and only has $1 to save at the end of the year, then is he or she in a better financial position than someone that earns $50k a year but manages to save half of that amount?
For me, it all comes down to being efficient with our money so we can invest it and have it grow into a bigger pile.
Unfortunately, our society has put too much focus on material things. Social media has placed even more emphasis on that. People are posting fancy stuff on social media and sharing the fabulous life they’re having. This eventually led to people living in an imaginary role – a separation between their real life and their social media life.
Is having a bigger paycheque, a bigger job title, a bigger house, a second, third, or fourth vacation home, new expensive luxury cars, a new boat, or new fancy electronic gadgets, important to you?
To some people, it’s extremely important to have these things. It’s their life goals to obtain these things. They convinced themselves that they need these material items to be happy, to feel satisfied, to feel that they are important, to show off to their family, friends, neighbours, and strangers.
It all comes down to what you prioritize in your life.
For me, I simply don’t need these things or to impress other people through my fancy things.
I have long learned not to care about what other people think about me. When I learned this valuable and important life lesson, I was liberated. I no longer have the need to impress other people just so I can receive compliments from other people. I learned that happiness comes from within, not externally.
Maybe all this makes me an outsider in today’s society?
Maybe that’s what makes me “special?”
Optional questions from the readers
If you live in the United States, what’s your plan for healthcare?
I am very glad that we live in Canada where universal health care is available to all Canadians. I remember at FinCon 2019 one of the keynote speakers, Sharon Epperson, talked about the shock she and her family had when they received the hospital bill after her brain surgery.
The medical bill was much higher than expected because one of the doctors was “out of the network.” I was sitting at a table with a bunch of Canadians and we all looked at each other wondering what that meant.
I really hope the US will eventually come out with a similar universal health system so it is easier to budget post retirement health care.
While health care is free for people living in British Columbia (yes it’s true, we don’t pay anything extra other than income tax), one thing we need to figure out once we are retired is how to take care of extended health care like dental care, physiotherapy, vision care, massage therapy, etc.
Right now, I have extended health benefit coverage through my work. I think there are self-insured options but I need to do more research.
Why did you pursue early retirement? What made the FIRE folks evaluate life and said this path is the right one for me?
I decided to pursue FIRE because I have seen how powerful it is firsthand. Growing up, my dad was always there because he was retired. He and my mom were able to attend all of my school related and extracurricular events.
Each summer, we would take extended trips that last one or two months. One year we drove from Vancouver all the way down to New Orleans and back. Another year after my Scouts Jamboree, we drove all over Eastern and Maritimes Canada and the US. When I got my driver’s license at 16, we spent a month driving from Vancouver to Alaska and back.
Those trips were very memorable and I gained a lot of valuable experience and knowledge that I would have not learned from school. Knowing all that, I want to be able to provide similar experiences to my kids.
Would you change anything about the way you retired from your job?
Well, I have not “retired” from my job yet but reading from other early retirees, sounds like the “one more year” syndrome is very typical. I definitely want to avoid sticking around work just to build more safety cushion.
If it’s possible, working out a deal and getting a severance package instead of walking away with nothing would be the ideal situation.
Did you make any big mistakes? How can we avoid them?
Well, the one mistake was investing in mutual funds and guaranteed investment certificates (GIC’s, similar to CD’s in the US) early on, rather than investing in stocks or ETFs.
Knowing how crazy the real estate market is in Vancouver, another “big” mistake was not investing in real estate when I started working.
But hindsight is always 20/20 and these mistakes have made me who I am as an investor. I have no regrets making these mistakes.
How can someone avoid making the same mistakes as me? Well, it’s all about learning and being educated about finances. Reading Joe’s blog is definitely a good start.
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?
We have been keeping a spending spreadsheet since late 2010. We track all of our expenses there. Every quarter, my wife and I would take a five minute review of our expenses to see how we’re doing. Then at the beginning of each year, we’d review our annual expenses and examine our expenses in the different categories. For example, last year we spent $48,908.74 CAD or $38,420.06 USD with a core spending of $35,511.60 CAD or 28,054.16 USD for a family of four.
Being an Excel nerd, I created a bunch of charts to allow us to analyze our spending trends. I think understanding trends is very important as it allows us to make changes whenever necessary.
We also have a separate spreadsheet for tracking our net worth. We update our net worth every quarter to see how we’re doing. For the most part we know our net worth is growing steadily so we don’t pay too much attention to the percentage increase or trying to compare our net worth increase to other people’s.
What’s your next big dream?
As mentioned, my wife and I would love to travel around the world with our kids for a year or more at some point. We’d also love to live in Taiwan and Denmark for a period of time. We think this would provide a lot of good learning opportunities for the entire family.
We also have a big dream of visiting all seven continents. A reader of mine recently told me that he and his partner have been to six continents multiple times. They also spent 8 days kayaking in Antarctica. This sounded amazing and we’d love to do that.
Another big dream of mine is making a positive impact on other people’s lives.
One person that had made a lasting impact on my life is one of the Scouts leaders at my Scouts group when I was a teenager. When we first immigrated to Canada, I was very different from who I am today. I was shy and not talkative. I could go days without speaking to anyone. My parents enrolled me in Scouts as a way to encourage me to break out of my shyness.
This Scouts leader helped me to become who I am today by gently encouraging me to participate in discussions, putting me in uncomfortable situations, showing me what it meant to be a good citizen of the community. Through Scouting, I met a lot of people, gained a lot of important life skills, and learned a lot about myself.
A few years ago my wife and I went to my high school band teacher’s retirement party. My teacher started his teaching career in 1994. Through his career, he created an extremely successful and well-respected music program in Canada. Despite a successful music program and well respected by his peers, what made my teacher truly amazing is how down to earth he is and the countless kids he has inspired.
As a teacher, he didn’t just teach me about music and how to play instruments – he taught me more than that. He taught me how to treat people, how important practice is, how to be committed to something, how to respect people, how to deal with adversity, how to excel as a visible minority, and how to be level-headed.
At the retirement party, another teacher gave a fabulous speech:
“At the end of the day, it’s not about how much money you make, it’s not about how big your house is, it’s not about what kind of car you drive, it’s about the relationships that you build and the impacts you’ve made on other people’s lives.”
This quote really stuck and resonated with me. So I want to make a positive impact on other people’s lives. One of the ways to do that is through my blog – I want to teach people about financial literacy but also the intangible side of life.
Thank you, Bob!
That was a great interview. I hope you enjoyed it as much as I did. It’s interesting that Bob’s dad retired so early. Bob is very lucky to have a role model. I hope to inspire my son to achieve financial independence at an early age too.
Ok, I need your help. I love this interview series, but I need more people to interview. The problem is this is a long post. It’s a lot of work! Please volunteer to be interviewed. I’m desperate to continue this series.
Let me know what you think of this interview series. If you have any questions you’d like to ask, leave them in the comment as well. I’ll add them to the interview. Thanks!
- Adam and Jane, our long-time readers retired in 2019.
- Financial Freedom Countdown
- Mr. Tako Escapes
- Jim from Route to Retire
- Joe, Retire by 40
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.
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