Growing up, financial independence retire early (FIRE) had never been an unfamiliar concept to me. Seeing my dad retiring in his early 40s while I was a teenager and then having one of my cousins retire in his early 40s, I knew early retirement was possible. On the other hand, having another cousin reaching financial independence but still continuing to work meant I knew there were different FIRE paths.
When we started our FI journey in 2011, Mrs. T and I knew it wasn’t a question of if but a matter of when. Deep down, we always knew that if we lived below our means, grew our savings gap, and invested regularly, we would reach FI one day, whether it was in our 40s or 50s. It was a matter of letting our money work hard and compound over time.
At some point on the FI journey, we arbitrarily set our sights on becoming financially independent by 2025. Since 2022, our dividend income has been able to cover our core expenses. By definition could call ourselves financially independent.
So why do I continue to turn on my work laptop every Monday morning? Isn’t it strange to continue showing up every Monday morning when I don’t have to work anymore?
Why am I still working full-time? More importantly, why does this feel…so complicated?
The math checks out, the mind says wait
It’s easy to do projections and calculations in spreadsheets. Because numbers in these projections and calculations are very black or white. You either cross the financial independence threshold or you don’t.
That’s how I thought life would be, too – we cross a definite FI threshold and we’re golden. Everything else is secondary. I can hand in my two-week notice, life is peachy, and we live happily ever after.
In reality, life isn’t as black or white. Life is full of different shades of grey. Let’s face it, life is complicated and that’s part of the fun of living – the unpredictability of day-to-day life.
For example, based on my dividend income projection for this year, we are on track to receive $72,000 in dividend income with a good chance to exceed that number. Our annual core spending in the past five years was $46,000 per year. Considering growing kids and inflation, if we were to include some buffers to make the core spending to $55,000 per year, we would have a surplus of $12,000.
So we should be good to go, right?
But things are a little bit messier than that. The $55,000 annual spending number is our core expenses. It doesn’t include things like dining out, entertainment, vacation, big house maintenance expenses, charitable donations, gifts, etc. Furthermore, some core expenses like property taxes, insurance, groceries, and utilities, not to mention kids’ expenses, will only increase over time. We usually visit Denmark every other year. On top of that, we have travelled for vacation to places like Taiwan, Japan, Iceland and the US. We don’t plan to stop travelling and exploring the world. Airfare and accommodation costs certainly won’t go down anytime soon.
We also can’t forget that pesky thing called inflation!
So even with organic dividend growth from our dividend portfolio, there are some concerns.
We can certainly withdraw around 1% from our portfolio to supplement our dividend income to cover the difference between dividend income and total expenses but somehow the idea of selling investments early on in early retirement seems to reduce our overall margin of safety.
Yes, it’s easy to look at the projections and calculations and decide that things could work today – that’s what the rational part of my brain is telling me. However, the cautious part of me keeps saying, “let’s build more buffers and increase the margin of safety.” Or, as a phrase famously known within the FIRE community,” the one more year syndrome.”
Don’t get me wrong, I don’t think we’re completely in the “one more year” syndrome camp, but we are definitely getting closer or hovering over it due to my cautious nature.
The mental shift nobody tells you about
Knowing that we could be financially independent and perhaps retire early if we really wanted to has created a huge mental shift on how I view work. This is one thing perhaps not many people talk or write about.
When you no longer need your job for financial security, your relationship with your job changes fundamentally.
What do I mean by that?
Working in a high tech sector as a product manager means I face a lot of high pressure situations. I handle products that generate multi-million dollar revenues every year. I need to ensure my product portfolio hits the numbers in our annual business plan. If there’s a decrease in revenue and/or gross margin, I could get a lot of questions from the higher-ups. I am also responsible for working with Sales to win future businesses and working with internal teams to create new products and maintain existing products. Since I deal with co-workers and customers all over the globe, I get emails around the clock. It’s not unusual to have meetings as early as 6 AM or as late as 10 PM. If you work in high tech, you know this is the normal work life, but when you aren’t familiar with it, it can be quite overwhelming.
I still enjoy my work on most days. I also enjoy working with my colleagues and I have a solid relationship with my manager. But knowing I could walk away tomorrow if I really wanted to has created this weird psychological shift. That urgent escalation that would have stressed me out and kept me up at night five years ago? Now I don’t feel stressed. If I feel certain meetings are a waste of my time, I simply decline (it helps when you have a supportive manager to back you up).
I am also not worried at all if I get fired due to a company-wide cost-saving reduction. If it’s my time, great, I’ll happily take my severance package. I no longer have anxiety or feel stressed out about job security like I did during the financial crisis.
Another benefit of this weird psychological shift is that I no longer put up with silly stuff and BS that we all see so often at workplaces. I’m more willing to speak my mind, advocate for what I think is right, and push back on things that don’t make any sense. I’m not afraid to speak up in important meetings. Ironically, this state of liberation makes me a better employee because I am no longer operating from a place of fear. This has also improved my overall performance and visibility within the company.
The moving goalposts problem
When we started our FI journey, we had a very simplistic view: keep our expenses low and
generate enough dividend income to cover our expenses. It’s mission accomplished when we can do that.
Over time, the goalposts have moved. This is clearly indicated in the blog intro section: “We originally dreamed of becoming financially independent and living off dividends by 2025. Although we could live off dividends by supplementing it with a part time income in 2025, we aren’t in a rush to cross the so-called “finish line.” Therefore, we are taking it easy and we plan to realize the dream of living off dividends before 2030.”
The blunt truth is that we moved the goalposts from 2025 to 2030.
To be perfectly honest here, the “we aren’t in a rush to cross the finish line.” “We are taking it easy and living life,” or “we are in no rush to live off dividends” are really just excuses I made up. The truth is that we are not 100% sure when to take the leap.
“What if we wait until we have an extra $30,000 cushion?”
“Shouldn’t we wait until the kids are older?”
“I’m getting compensated well for what I do, why not just see how things unfold?”
“The company stock is doing well, let’s just wait for more RSUs to vest.”
“What if there’s a recession and dividends get cut?”
Unfortunately, the questions never stop and you can get into a downward spiral pretty quickly. And the reality is that it’s easy to make up excuses, safety mechanisms, and to increase your margin of safety just to avoid change.
Because changes are discomforting. Changes are weird. Changes mean different things.
Having said that, some of these concerns are valid. But it begs the question – how much is enough? Can you really plan for everything to cover all the potential planned and unplanned life situations and events?
In some ways, shifting our target to 2030 gives us a little bit more breathing room and allows us to be a bit more flexible. But I’ll admit that I do wonder if we will simply kick the ball down and move the goalposts when 2030 gets closer…
The different flavours of FIRE – The Lean FIRE vs. Regular FIRE vs. Fat FIRE dilemma
At this point, we have gone far beyond barista FIRE. If we optimize our expenses now, we can easily achieve Lean FIRE. We are certainly within reach of regular FIRE. Fat FIRE? We have never really considered it. It may be achievable if we stay focused and build up our portfolio, but we certainly would fall into the constant “one more year” syndrome…
Yes, our dividend income can comfortably cover our core expenses. If we needed to, we could optimize and tighten our belts and live below that amount and reduce other core expenses.
However, over the last few years, I have learned it’s important to live life and not deprive ourselves for the sake of achieving FIRE a few years earlier. It’s important to create memories.
As Bill Perkins writes in his great book “Die with Zero,” travelling in your 30s and exploring a new city will be a completely different experience than travelling in your 70s. Spend the money now and create everlasting memories instead of waiting until you’re older or regret that you didn’t get to do something when you’re younger.
After all, on our deathbed, we don’t ever wonder if we should have saved that $10. Rather, we wonder if we lived a good life and experienced what we wanted.
I also learned that we really don’t need more in our lives. Flying business class, dining at Michelin-starred restaurants, driving expensive cars, and wearing expensive watches are not something we need or desire. Sure, it would be nice to fly business class and dine at Michelin-starred restaurants once or twice in the future just so we can say that we’ve done it. But we don’t need these luxuries in life constantly to be happy.
Our current lifestyle is relatively simple and involves stuff like:
- Overseas travel to visit family or explore new places once a year… but we can certainly cut back if needed
- Hobbies and personal interests like pottery and curling
- Occasional splurges to make life fun
- Occasional dining out at restaurants or cafes
- Kids sports and activities
It is nice not to overanalyze and overthink the smaller expenses anymore. At the end of the day, that $50 visit to a local cafe to enjoy hot chocolate and nice pastry treats won’t make a dent in our investment portfolio and net worth.
So what does “retirement” even mean anymore?
When people think about retirement, many have the image of sitting on the beach, relaxing and drinking pina coladas. Yes, this is probably the typical image of what traditional retirement looks like – retire at 65 and spend days golfing, travelling, and enjoying the fruit of your labour.
Curling for the past year and a half, I’ve met many of the curlers who are retired. I’ve discovered from them that retirement doesn’t always mean full relaxation. Many of them still work despite being “retired.” For example, some volunteer and many maintain their pre-retirement lifestyle. Some travel two or three times a year, usually somewhere sunny like Mexico. In fact, most of these retired curlers are still very active and make sure they keep themselves that way, fully engaged every day, whether they are in their 50s or 80s.
When it comes to early retirement, that’s exactly what I envisioned. Doing things that we enjoy doing without having to worry about whether we get paid or not. It’s all about having more time to dedicate to different projects we have and having more time to travel and explore the world with my family. For example, this blog has become a creative outlet for me, and the DIY Wealth Canada Podcast has been a creative way to record the interesting chats with my co-host Nelson.
Having said that, these projects do not have to wait until early retirement. I can still travel more and work on interesting projects regardless of whether I’m working full-time or not. It’s not a binary decision at all like work orretirement; it’s about finding a better balance.
Admitting to being privileged
I realized that we are extremely fortunate to be where we are financially.
We are privileged.
Early retirement may never be a choice for some people; many even struggle to retire at age 65. Many countries are raising the mandatory retirement age, well past 65. We have been extremely fortunate with our income, our ability to spend less than we earn, and our investments growing and compounding over time.
But sometimes all these things make me feel things are actually harder. Sometimes I feel like I have imposter syndrome. Sometimes I feel like I should have all the answers. Sometimes I feel like I should take every opportunity and go with it.
Sometimes, having all that internal pressure can be extremely hard and challenging.
Financial independence isn’t a destination. It’s not a finish line. You don’t reach financial independence and magically become happy (or happier). Financial independence is a journey. Along the way, you may find more doors opening for you and more decisions to make.
Sometimes you may enter one of the doors.
Sometimes you won’t know if it makes sense to enter the door or not.
And that’s totally OK.
So what’s next for us?
I believe it’s not worth putting that additional pressure on ourselves. What we are doing is being more conscious to live the life we want now, rather than waiting to live until some perfect moment sometime in the future.
This means not stressing out about every dollar we spend. It’s about having the flexibility to spend and splurge on things if we choose to. It’s about having the ability to spend a little extra to create everlasting memories.
Am I looking to stop working full-time? Not currently, but knowing I have options has lifted a great weight off my shoulders. Will I decide to stop working soon? I don’t know. Maybe? Maybe not? Whatever the decision I end up making, I know I can take my time figuring it out.
At this point, I am OK with not having everything figured out.
The uncomfortable middle, I think, isn’t exactly “uncomfortable.” In fact, I think it’s a good place to be. We have enough money but maybe not enough to have sufficient clarity about what comes next and that’s totally OK.
The FI journey isn’t all about being comfortable and having clarity the entire way. Having discomfort and having uncertainties are part of the fun. It’s OK figuring it out as we go. We don’t need to have all the answers.
Readers, what about you? Are you in a similar position as us? If so, how are you navigating this “uncomfortable” middle phase? What’s holding you back from early retirement? And if you have taken the leap, what gave you the confidence to make a change?
And for those readers who are earlier in your FIRE journey, I hope this gives you a different perspective on what reaching FI means.
Please leave a comment, I’d love to hear from you.
Thanks so much for this episode. I thought I was the only one constantly wondering why I had reached my goal, moved the goal posts, and reached it again and again and didn’t suddenly feel elated and stress free. This post is about really important lifestyle choices pre and post retirement that can help us all on whatever part of the journey we are on have a better time on the way.
Thank you.
You can never have enough money as long as you enjoy yourself. Situations change, who knows your kids might want to do an expensive degree course or medical school, health problems needing long term care for family.
As an MD I feel I’m fortunate, the older I get the more experience I achieve and confidence patients have in me, I can locum or have full time work for years to come.
But like everyone always live below your means and cherish your children and future
In the same boat as well: changed from FIRE (I’m actually working as a FF lol) to FIWOOT: financially independent work on own terms.
Work is a lot more fun when you don’t care about the little things- which being financially confident can help empower.
Cheers to you on your journey.
Hi Bob,
I enjoy reading your blog and podcast and your approach to investing (and life). I can relate to your comments on the psychological impact of realizing you achieved FI and, even though, I am still working, it does change your perspective. I’m in my later 50s and, as a life long saver, I have been forcing myself to open myself to more experiences. As an example, we (two adults, two kids) are going to Italy to take advantage of family time and the experience. In the past, I would have stressed about it in the past, but now I just paid for it out of the account I set aside for fun things. I intend to do another big trip in 2027 as well.
Regarding your comment on “privilege”. Yes it comes into play, as does luck. However, you both are also reaping the benefits of many years of dedication to your goal. You both should feel proud of that and I hope those lessons are conveyed to your kids.
Great post, thanks Bob! My wife and I recently had a second child and we’ve reached the core expenses FI stage – much like you guys. And very much like you guys, we are in the happy medium for the time being so we decided to both take 1 year and half off our jobs and re-assess the future. Perhaps after the time away, one of us may quit their job or perhaps we may work PT. But the important thing is, like you mentioned, is the optionality, the peace of mind to not have to worry. The future will arrive and we will continue to diligently watch our expenses but we will not go crazy like we did in the past and try to save over 50% of our income. We are privileged but we’ve also worked hard to get to this point. And your blog has helped us so much to get to this point. We hope to be able to be fully FI in the next 5 years. Cheers!
There’s a lot to unpack your post this week…!
I’m close to my retirement age (mid- to late-60’s), and I’m having lots of the same thoughts you are. How much is enough? How do I balance the pro’s and cons, and think about this from both sides of the coin? Our kids are grown and adulting, no grand kids yet, and we are traveling and enjoying things we didn’t do when they were young. I know some life choices will likely be made after grands come along, but for now we both continue to work, live somewhat under our means, and travel while we are fit enough (and not too tied down!) to enjoy it.
I’m also thinking about the other benefits of work. I’m in cybersecurity in healthcare, so work has purpose. I believe in the company’s mission and my team’s mission, and getting to work with and mentor younger team members is meaningful. However, I know when the time comes I’ll be able to walk away. What I would miss most, though, is the social interaction. I’m still figuring out what that will look like once I don’t work anymore. I worry that a lack of social interaction could affect me negatively, so I’m starting now to think ahead: how will I meet that need once I stop my day job?
Should you keep working? Maybe, maybe not. Ask a different question: what matters most in your life? What brings you meaning? How does your job and your finances feed or enable that? Also, if the thing that matters most is your children, have you though about what it will be like when they leave for college and careers? Retirements can fail, too: some people go back to work because they can’t adjust to the changes.
I’m enjoying your blog: keep it up!
JM