In a previous article, I highlighted the negatives of early retirement nobody likes talking about. It might have seemed like the negatives of early retirement outweighed the positives, but I assure you that’s not the case at all.
Retiring early has by far been my “best career move.” Originally, I thought I would just live a frugal lifestyle off of roughly $80,000 a year in investment income in 2012.
My wife joined me three years later when she also turned 34 so we could both live free and frugal together. We thought we’d rent or buy a small two-bedroom, one-bathroom apartment near or on the beach in Hawaii and live out our remaining days.
Instead, our lives turned out a little differently. Let me share with you all of the surprising benefits of early retirement I never anticipated.
The Surprising Benefits Of Early Retirement
1) You might slow your aging.
When I was 33, I started sprouting my first grey hair. Ah hah, the dam has finally broke! I remember thinking to myself. My hairline started to recede as well. All of this was kind of depressing as I had to come to terms that I was finally losing my youth after years of getting beaten down by the finance industry.
Then one morning a year after I retired, I was looking at myself in the mirror. I noticed I could no longer find any grey hairs. I thought it was the bad lighting so I called over my wife to inspect me like how animals do in the wild. Nope. Still nothing.
I’m 42 now and I still have no grey hair. My hairline has also stopped receding. If you believe your outward appearance is a reflection of your true age, then retiring early might be one of the best ways to extend your life and allow you to look happier and younger.
But of course, I won’t really know whether having a less stressful life has helped increase my lifespan until after I’m dead. After all, Steve Jobs was a billionaire vegan with access to the best health care and he still died at 56. But, I will say that I feel healthier than I did while I was still working.
2) Your chronic physical pain might go away.
While I was working, I experienced several chronic physical ailments: TMJ pain, sciatica, and lower back pain.
I constantly ground my teeth in my sleep and would wake up with a very sore jaw. Sometimes I would grind so loudly that I’d wake my wife up. Every time I would talk for longer than five minutes, my TMJ would flare-up. The pain got so bad that I went to a dental specialist and paid him $760 out-of-pocket to drill some divots in my back molars so I could close my jaw more comfortably.
Sciatica and lower back pain came hand in hand. While at work, because it was too uncomfortable to sit, I found myself standing for many hours. For many years, my lower back pain periodically forced me to stop playing sports such as tennis, softball, and golf because I simply couldn’t bear the pain caused by twisting my back.
I eventually got some relief after reading Dr. Sarno’s book, Healing Back Pain. The book talks about how our minds can manifest chronic pain to deal with stress and anger. I believed him and got better.
Then amazingly, about 10 months into retirement, I noticed my pain had completely gone away. After 13 years of living and working through chronic pain because I thought I had no choice, I was miraculously pain-free.
Looking back, it is shocking how long I put up with chronic pain in the pursuit of career progression and money.
3) Your infertility issues may clear up.
Both my wife and I worked in finance, a highly stressful industry that required 60+ hour work weeks. Although the money was good, we were constantly tired. The idea of children was not top of mind because we didn’t feel like we had any energy left to spare. Further, we were very focused on trying to make as much money as possible in order to leave work for good.
It wasn’t until after my wife turned 32 in 2012 that we began to contemplate seriously having children. We had always been told that it’s best to have children before age 35 to minimize health risks and maximize the chances of success.
We tried sporadically for one year while she was still working with no luck. Then we tried more purposefully the next year still with no luck. She had been pretty stressed at work because she had just gotten passed over for a promotion she thoroughly deserved.
I had never seen her so mad about her job before. This was when I finally convinced her to finally plan her exit strategy. But only after she got her promotion, which she ultimately did six months later.
My wife’s severance was one of the best arrangements she could have imagined. She left her job feeling like she had won. A year and a half into her early retirement we successfully conceived and gave birth to a baby boy.
It was as if he was waiting for all our affairs to get sorted before coming into this world.
4) You might become wealthier. Depending on what part of the cycle you retire in, there’s a decent chance you could become wealthier in retirement. It sounds counterintuitive that we got wealthier after we severed both our salaries, but it’s true largely thanks to a raging bull market. Growing our wealth in retirement wasn’t skill, it was mostly luck. We just mostly kept our existing investment positions and added new investments over time.
After I retired, I decided to cross off a bucket list and write a book about how to negotiate a severance package. The book is now in its third edition for 2020 and has helped thousands of people quit work early with money in their pocket. The book currently generates about $50,000 a year in passive income, none of which would have been possible if I didn’t go through my own severance negotiation.
With 12-14 hours more of my day free, I spend 2-3 hours a day writing on Financial Samurai. As a result, Financial Samurai now generates enough online income where I can treat my family guilt-free to Filet O’ Fishes at McDonald’s. In the past, I couldn’t get past the dollar menu because spending 4.5X more on a sandwich felt ridiculous.
We fully expected our net worth to stay flat or even decline after we both left our jobs. But instead, our net worth has grown along with the markets thanks to a good economy and being able to do what we enjoy.
5) You may appreciate full-time work again. During the last weekend of my employment, I ran into a huge roadblock. I had accidentally e-mailed to my personal e-mail address an old client list. HR talked to me on Friday and said they’d get back to me the following week with any potential disciplinary actions. I thought my severance package was doomed.
Over the weekend, I went to a Hastings School of Law community fair where their law students and law professors helped address any legal questions residents had for free. After waiting in line for two hours, a professor basically told me I should be OK.
That weekend, I swore to myself that if I ended up receiving 100% of my severance package, I would never return to Corporate America. Yet, almost eight years later, I’m itching to go back.
You would think that once you’ve tasted the sweet nectar of financial freedom, you’d never want to return to work again. But things change because financial targets are always moving. I’ve got a family to take care of now.
Do Early Retirement Right
Retiring early is great if you do it properly. I’ve seen too many people retire early only to feel extremely stressed because they underestimated how much they needed in retirement or overestimated how much joy they’d experience with all their free time.
It’s important to have enough assets to generate enough investment income to cover your desired life’s living expenses plus an extra buffer. If you don’t, I promise you will feel stressed. You’ll end up just spending a tremendous amount of energy trying to make money in a different way.
If living off $100,000 a year in gross income makes you happy, then it’s best to generate $120,000 a year in investment income. It’s good to have a 20% buffer to cover any incidentals. To generate $120,000 a year in gross investment income requires $3,000,000 of investments generating a 4% rate of return.
With the 10-year bond yielding below 2%, a 4% rate of return at this point in the cycle may be aggressive. If you want to be more conservative, you may have to accumulate enough capital based on a 2% – 3% rate of return, instead of a 4% rate of return.
The last thing you want to do is sacrifice your working life to retire early and then sacrifice your retirement life by living in or near abject poverty. Instead, a better route may be to find a more enjoyable job and delay retirement.
For 2020 and beyond, I’m excited to see what type of finance, tech, or media job opportunities are still out there for this middle-aged stay at home dad. Perhaps there will be none, in which case I’ll just keep focusing on Financial Samurai. I just won’t know until I try.
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Readers, for those of you who have retired, what are some other surprising benefits of retirement you’ve discovered?