Financial independence and retirement are used interchangeably, but there are some subtle differences. Financial independence is usually applicable to people across their entire lifespan. Those who cashed out $5 million dollars worth of Facebook stock at the age of 30 are financially independent just like those who saved $5 million in their retirement funds by the age of 65.
Retirement, on the other hand, is a term often used to describe someone in the last quarter of their lives e.g. ages 65 and up. This is why some folks get so hot and bothered if you aren’t in the upper ages but say you are retired. They don’t think you deserve retirement because you’re not old enough! If you don’t want unwanted attention as an early retiree, just say you are unemployed, on sabbatical, or an entrepreneur.
The reality is all of us would rather be financially independent earlier, so we have more time to enjoy our wealth. When the director of admissions at Berkeley asked why I was applying so early (25), I told her it was because I knew what I wanted to do and felt it best to leverage an MBA degree sooner, for a longer period of time. Little did I know I’d be done 10 years later.
The older we get the more we are willing to trade money for time since we have less of it. Given I’ve already described what financial independence feels like, I’d like to now describe what life is like once you no longer have to report for duty. I’ll be as candid as possible so you can get a realistic understanding.
THE CHANGED LIFE OF A RETIRED MAN – THE POSITIVES
* No longer have to wait for the damn bus. It’s funny that not riding the bus was the first positive that came to mind as opposed to workplace politics, stress, or more common answers. I used to leave the house around 7:20am every morning to catch the 7:23am bus around the corner. Despite my punctuality, the bus would either not arrive on time or be so full of people I’d have to walk another 5 blocks just to get on. Now when I see folks crammed in buses I can’t help but smile.
* Running errands is easy. I do all my errands around 10:45am or 2:30pm, because that is when most people are still at work. There’s no traffic or lines at the store during these hours and I’m much more efficient in getting things done. I continue to wonder why everybody wants to come to work at 8am and leave at 5pm. It took me 1.5 hours to drive 20 miles to pick up my parents at Oakland Airport due to traffic the other month. It only takes 35 minutes during off peak hours. Come into work earlier and leave a little earlier. Your stress level will go way down.
* Lots of free entertainment. There is an incredible amount of free entertainment during the week. Part of it is because organizations want to show their community support and free access on weekdays provides the lowest amount of damage to their bottom lines. For example, I visit at least two $15 cover museums a month for free. There are also free cooking classes by Williams Sonoma, free interior design parties by AirBnb, free rock climbing lessons by REI, and so on. I’ve subscribed to a site called sf.funcheap.com which highlights the various free concerts around the city. Big names such as Alanis, Ed Sheeran, and Matt Nathanson all came to the Golden Gate Park last year. Early bird specials for half off rocks as well!
* House is much cleaner. I’ve never had cleaners and now I know I never will. I enjoy spending 10 minutes a day, or 50 minutes once a week cleaning the kitchen, bathroom, and common areas of the house. There’s something soothing about this process that also feels very rewarding. If you have a working partner, s/he’ll love you for it too. Stay at home men of the world, unite!
* You learn to do things yourself. When I was busy working, I didn’t have time to figure out how to fix the leaky toilet. I would call the plumber and pay him $150-$250 at a time. Nowadays, I simply search on YouTube for a home maintenance tutorial and voila! Call me handyman Sam. If I can’t fix something I’ll chat up the local hardware store attendee and see if he can tell me what’s wrong. Having a smartphone to videotape the issues helps tremendously.
* Better nightlife. Because I used to start work by 7:30-7:45am every morning, I was tired by 10pm. I just wanted to stay in and watch some Tivo or a new DVD after work. Now I’m always down to go out for dinner or drinks with friends during the weekdays. I’ve attended multiple events that last until 11pm and am ecstatic to not have to go to work the next day.
* Better friendships. I spend more time cultivating my offline relationships now that I don’t work. Those thin relationships one has on Facebook become stronger as you actually send them personal messages to see what’s up and hang out. The more you go out, the more friends you’ll meet. This is especially helpful for single folks. Friendships are vital to my happiness and I’m sure to many of yours as well.
* Better family relationships. I spend much more time speaking to and visiting my family now that I have more time. Spending more time with family is probably the most rewarding part about retirement. The younger you are, the more you appreciate it because you likely have more family still around. It was so fun to go car window shopping with my dad when he came to visit over the winter holidays. I also enjoyed taking my parents for a nature walk along the San Francisco cliffs at Land’s End. It’s a blessing to be able to share some physical activities with them.
* More comprehensive posts. My post length average has doubled to roughly 1,500 words from 750 words when I was working. Longer is not necessarily better, but it is more thorough for those readers who come here via search engines such as Google and Bing. A lot of people want informational posts about the ideal mortgage amount, negotiating a severance package, investing in real estate, rebalancing portfolios, evaluating a financial adviser and so forth. Most of my traffic comes from Google, and Google loves meaty content so I oblige. This post is 3,457 words as a reference.
* More purpose in life. Most people I know don’t believe their purpose in life is whatever they do at their jobs. In fact, plenty of folks start getting depressed when they talk about spending all their time at a job that doesn’t really make a positive impact. They see a job as a stepping stone for something greater and can’t wait to get out. Once you no longer have to work for a living, you sidestep such a means and get to go directly to the source. I’d like to think my purpose in life is to be a good son and leave some nuggets of financial wisdom to others that will last long after I’m gone. I’m looking at new avenues in public service such as working in the foreign service to continue my family heritage of serving our country.
* In better shape. Without having to sit in a chair for hours at a time, I’m burning more calories now. I used to struggle maintaining a weight of between 162-165, now it requires less effort. My static work weight was 167-170, which is a noticeable difference for someone with my frame. I now play tennis, bike, walk, or hike at least four times a week compared to just once or twice a week while working. Being in better shape is a great feeling. It might even extend my life, who knows! It mostly depends on genetics.
* You can always be busy. One of the biggest fears working people have before retirement is figuring out what they are going to do with all their free time. I worried how I was going to go from working 70 hours a week to just “working” 20 hours a week and playing sports in the afternoon. I put working in parentheses because I don’t consider writing online and interacting with folks over e-mail and social media work at all. After almost a year of not having to work, I can certainly say that I’ve had no problems staying busy. In fact, it’s hard for me to only restrict myself to around 4 hours of work a day because I’m so used to working 3X more! My mind is always racing to write a new article or try something new. If you have a hobby you are passionate about, you don’t have to worry about not being able to fill the void in retirement.
* No fear of getting fired. Nobody is safe in this economy. You could be a star performer but if your bosses hates you for whatever reason, you’re done. The internet and social media has also elevated your risk of getting fired because nothing you Tweet or write is ever fully private. There’s a recent case where two developers joked about dongles, forking, and repos (real tech terms) and a woman sitting near them overheard, got offended, posted their pictures, tweeted it to her 10,000 followers and one of the guys got fired! The woman who tweeted the picture also got fired so that equals a lose-lose situation. It is a wonderful feeling not having to always watch what you say or do in this free country. If you depend on your job to survive, do not mess around with social media. You will get forked.
* Always smiling. Every time I walk down the sidewalk, guys and girls are constantly smiling back at me. It was strange to have random folks constantly smile at me until I looked at my reflection in a store window and saw my own big stupid grin smiling back at me! I had no idea I was smiling at every stranger I walked by. I’ve got a big teethy smile that I guess makes people want to smile back. Maybe smiling when you don’t even know it is the true meaning of happiness?
THE CHANGED LIFE OF A RETIRED MAN – THE NEGATIVES
* Become more impatient with waste. Traffic and long lunch lines used to annoy me, but now they really annoy me because I hardly ever experience them anymore. I get annoyed with myself for going anywhere during peak rush hour. In fact, I really try not to meet anybody if I have to commute during the hours of 7am-10am and 4pm-7pm. I have to remind myself when it’s bumper to bumper thank goodness I no longer have to deal with such jams on a regular basis.
* Gets lonely sometimes. While your friends and acquaintances are busy working, you’re sometimes busy doing nothing. If you don’t have a partner or family, then you might end up having breakfast, lunch, and dinner alone. I really enjoy meeting people once a day. As a result, I’ve built a small network of work-from-home, unemployed, and early retiree types to spend time with throughout the day. I also try and play tennis or go for a bike ride after an early afternoon nap. It’s easy to feel disconnected if you’re always working from home.
* Easy to get lazy. I can’t remember feeling lazy since college. I knew I had a window of opportunity to make the most of my career and my finances so I did everything possible to achieve financial freedom. The work hours were extra long, and things got brutal when I spent 3 years getting my MBA part-time. But now I’ve got so much time that sometimes I’ll just take a nice hour nap in the middle of the day when nobody is watching. Sometimes I end up spending two hours in the hot tub without evening realizing the time. As a result of wandering time, I’ve adhered to a morning productivity schedule of writing from at least 7:30am to 11am. Once I’ve put in my 3-3.5 hours, I’m free to do whatever I want.
* Less money. This one is obvious, but maybe not. You only voluntarily retire and stay retired if you have enough money to support your desired lifestyle. It’s a different situation if you are forced into retirement. But, even those who are forced into retirement are enjoying life more. It does sting a little bit to no longer have a healthy W2 income. However, just like how we adapt quickly to a nice bonus or raise, we also adapt quickly to a loss of income. Adaption is one of our greatest attributes. I’ve discovered that we overestimate how much money we need to be happy.
* Vacations aren’t as exciting anymore. I used to love taking five to six weeks of vacation every year. If my old job could grant 10 weeks of vacation a year, I would have stayed on for at least another five years. Now that I’m literally on vacation everyday, planning a vacation sometimes feels like a chore. I went to Hawaii three times in 2012 along with a two week trip to various parts of Europe and Russia. I had a great time, but I’m also beginning to lose my enthusiasm for travel. Spending lots of money to go on vacation also doesn’t feel as rewarding. Pain makes pleasure more pleasurable. When you’ve got all you can eat oysters on the half shell, sometimes you just want a glass of champagne with ice cream instead.
OTHER OBSERVATIONS POST EARLY RETIREMENT
* Spend less time on social media. For some reason, I spend probably 50% less time on Twitter than when I was working. Perhaps it’s because Twitter was a great way to pass the time during commutes. I also continue to spend very little time on Facebook except for my tennis team group page. It’s good to check in once a week to see what’s going on, but that’s about it. The automatic notifications for all my social media apps have been turned off so I can check when convenient not when pushed. I spend more time with offline friends at sporting events, dinners, or parties now.
* Know a lot of unemployed people. No matter what time during the day I go out between Monday and Friday, there are tons of people out on the street or hanging out at the tennis courts. When you’re working, you think everybody is holed up in an office building and only comes out during lunch or when the clock strikes 5pm. In reality, plenty of people are unemployed, but at least they look happy. These are the people the media talks about when they refer to the “real unemployment rate,” or the underemployed. If you can’t find full-time work, then you might as well enjoy the time off to relax in a park or sip coffee outside a cafe on a warm, sunny day.
* Discover so many different ways to live. When I was working I just figured most people live their lives the same way. Of course as I started to grow this blog, I realized many people also earn viable online incomes. Now that I’m meeting people during the middle of the day I realize there is a plethora of ways to make money and live a good life! I’ve met dog walkers, nannies, professional athletes, teachers during their summer vacations, government works with great pensions, bartenders, strippers, bouncers, tennis teachers, coffee shop owners, and a host of small business owners who enjoy a lot of freedom during the day.
* No desire to play golf. I used to love golf but at $58 and five hours a round, I’ve kind of lost interest. If I had a close golfing buddy who could play from 11am to 4pm on the weekdays, I’d probably enjoy it more. The other thing is that I’m no longer rapidly improving given I’ve got a 9.8 handicap. In order for me to regularly break 80, I’ve got to spend massive more time practicing with not much incremental progress. I’d rather play tennis or write instead. For those of you who are golfing fanatics, the handicap sweet spot is 15. Don’t try and get better!
* Feel inspired by older workers. Every time I go grocery shopping, I bump into cashiers and baggers who are over 60 years old. They probably only make around $10 an hour. Their hard work inspires me to not take things for granted and work harder. Everybody starts off with different opportunities in life. We’ve got to make the most of what we’ve got.
* Just want to feel useful. When you don’t work, you may feel you have too much time on your hands somedays. I’m often done with all online related activity by 9am given I wake up at 6am. Running errands or fixing things in the house makes me feel good because it makes me feel useful. If I don’t feel useful, then I feel listless. I can see how feeling useless can lead to depression. Hence, I try and stay busy after writing online by doing more household chores and volunteering. There will be times where I’ll think, Is this it?
* Constantly wonder what else is there in life. When I was busy working, I didn’t have much time left to think about philosophy. Now I’m constantly wondering what else can provide more meaning to life. I feel a little bit like Neo in The Matrix who discovers the world is a meaningless reality made up of billions of entities doing what they are told and not what they want. Then I think how it’s a good thing they don’t know what freedom is like, otherwise there would be a worldwide revolt. We need people to work for as long as possible to pay taxes and support society. I’ve begun reading passages from the I-Ching, The Dhamapada, The Bible, The Koran and other religious works for inspiration.
* It gets harder to stay retired over time. The first six months of retirement were full of excitement, fear, and joy. As time went on, I adapted to my newfound freedom by creating a routine that best suited my desires. Once I mastered my routine life got incredibly easy. When life gets easy, life also starts getting a little boring. I hunger for challenges to keep me motivated. Now that the bull market has returned I’m finding it increasingly difficult to sit on the sidelines as old colleagues maximize their incomes. A growing part of me wants to get back to work so I can leverage the upswing for the next several years.
EARLY RETIREMENT IS A WONDERLAND
There are studies that show death comes quicker after retirement due to a lack of purpose. With the internet and so much good we can do once we have our free time back, I can’t see how anybody would ever feel permanently lost in retirement. Try volunteering at a charity or mentoring a child if you start feeling aimless. Everybody could use a helping hand. The way I like to contribute is through this site.
Retiring early is a blessing because our bodies still allow us to climb the steepest Mayan steps and start the most daunting businesses when we are younger. Hopefully this post gives you some inspiration to get up a little earlier, save more after-tax income, and take calculated risks to retire early as well. The feeling of being able to do whatever you want is priceless. Just know that once you’re retired you may very well want to go back to work!
Recommendation To Build Wealth
As an early retiree, I stay on top of my finances with Personal Capital. They are a free online wealth management tool that keeps me within budget, tracks my net worth, and allows me to manage my risk by providing an easy way to visualize my asset allocation. I also run my 401k and investment portfolios through Personal Capital’s 401k Fee Analyzer every time I make a major rebalance to make sure I’m not paying unnecessary expenses. I saved over $1,700 a year in portfolio fees I had no idea I was paying. When you no longer have W2 income rolling in, it’s more important than ever to know where your money is going. The most important person you can trust to do what’s best for your money is you.
They’ve also come out with their incredible Retirement Planning Calculator that uses your linked accounts to run a Monte Carlo simulation to figure out your financial future. You can input various income and expense variables to see the outcomes. Definitely check to see how your finances are shaping up as it’s free.
Retirement update 9/27/2016: It’s been four and a half years years since I retired from Corporate America to focus my time traveling, spending time with family, and working on Financial Samurai. It’s been a blast and I’ve finally been able to replicate my day job income through my online endeavors. I recommend everybody start their own website to at least have something to do in retirement. You can connect with all types of people, share stories, learn from others, and even make a healthy side income stream. You never know where the journey will take you. Here’s my step-by-step guide on how to start a blog.
Photo: It was 77 degrees in Santorini when I visited in October, 2011. After spending three hours exploring every little church and side street, I stopped at a bar to enjoy a Mythos beer. The bar had wi-fi and in streamed my e-mails regarding various opportunities. That’s when I realized maybe, just maybe it was finally time to make a move