Wednesday, August 7, 2013
What Does Early Retirement Look Like?
I've gotten a couple emails lately asking me what exactly I plan to do once I retire at 40 years old. As I discussed recently, financial independence is both a journey and a destination. And while I'm quite enjoying the journey, I am very much looking forward to the destination; reaching financial freedom. And the destination isn't the end. It's the start of another journey: life without full-time work. Quite exciting!
What does early retirement look like? Well, that all depends on you.
Once you are free to live your life without the constraints of having to go out and earn a paycheck so that you can put a roof over your head, food on the table and also enjoy some modern luxuries here and there you can really do anything you want. Early retirement is only bound by your imagination and your budget. While the former is free, the latter can impose some limits on what exactly you can do. But this is no different from a more conventional retirement, whereby one stops working in their 60's. Quite the contrary, early retirement can be significantly more rewarding because you're much younger and able-bodied. You're able to do things that an older version of you might not not be able to. It's not just about retiring. It's about living life on your terms.
I'll tell you what I'm looking forward to: time. And the freedom that comes with it. Time is the most expensive commodity of all because we're all born with very limited amounts of it, and it's non-replaceable. Once it's gone, it's gone. And yet, so many of us trade it away so easily without asking ourselves if the objects or experiences we're getting in return are really worth it.
Financial independence means I'm completely independent of anyone's else's demands on my time. I own my time and all the benefits that come with it. And what will I do with that time?
I hope to continue to blog here at Dividend Mantra once I'm financially independent so that I can actually show readers what retirement at 40 looks like. It's one thing to blog about the journey, but quite another to talk about what it looks like once the destination is finally reached. I've even contemplated maybe writing a book one day if I'm actually able to retire at a young age. I want to continue writing because I find a lot of reward by inspiring others and seeing people succeed. Watching dreams come true is really amazing. Right now, a great deal of my writing is on how to live frugally and invest that excess capital into high quality companies that pay out dividends. But what I'd like to write about when I'm financially independent is how to budget for such an extremely early retirement, continue to save and how to also manage investments once the asset accumulation phase is over. I'd also like to write about my adventures and show people how exciting early retirement can really be! There are so many opportunities here that I'm really excited just thinking about it.
Spending more time with loved ones.
I don't see the people I care most about as often as I'd like. I work a lot, over 50 hours per week. I get tired. My very limited free time is split between relaxing, blogging, working out, reading, managing investments and occasionally hitting the town on the weekends. My days are quite full and I don't ever have enough time to do everything I'd like to, which is why I'm so amazed when I hear that some people wouldn't know what to do with themselves if they didn't have a full-time job! Once I'm financially independent I can structure my days so that I'm busy doing all the things I need to do during the day and then I have unstructured free time at night when the people I care about are no longer working. One great thing about retiring early is that right around the time I'm turning 40 and I decide to stop working for a living, my parents will likely be doing the same. So, we'll all have a lot more time available to us.
Boring, I know. What can I say? I enjoy reading an annual report like others might like reading a great mystery novel. I enjoy seeing companies innovate and dominate. I love reading about the latest operational results from multibillion dollar companies as they manage thousand of employees across the globe. It's fascinating to me. Early retirement may not include this for you, but it's something I greatly look forward to. Reading annual reports, checking quarterly results and listening in on conference calls can take up a lot of time, and once I have 100% of my time to myself I can do these things guilt free.
I'm not sure when, but I'd love to travel at some point once I'm financially independent. And by travel, I definitely do not mean going to 5-star resorts and eating filet mignon while someone rubs my feet. I mean slow travel. I want to go to an affordable country like Thailand or Ecuador and actually live there for a while. Maybe a year, maybe more. Maybe forever. Who knows once I get there. But the point is that by traveling slowly you're spreading out the costs of airfare, which mitigates the most expensive part of traveling. And I'm looking forward to living like locals do. Not in hotels where other Americans are staying, but in long-term rentals like everyone else. I think it would be amazing to spend a couple years in a foreign country, eat the local food, learn the local language and immerse myself in their culture. The world is a big place, and I'd like to see a little of it before I die.
I haven't talked a lot about this on Dividend Mantra, but I'm interested in engaging in philanthropy when the time is right. I won't be able to give away billions of dollars like ol' Warren Buffett, but I will be able to give away a little bit of a more valuable commodity that I'm working so hard for: time. I'm interested, once I'm completely free of other obligations and enjoyed a bit more of the above activities, in doing local charity work and helping others that didn't have some of the same opportunities I was given. I've been extremely lucky in life. Just being born here in America in 2013 puts you far ahead of the billions of people that have ever lived in the history of mankind, as well as billions of other people alive currently that are suffering in poor countries where food, clean water and housing are all short in supply. I'd like to start local, and then scale up if possible and if I'm able to. I can think of few things more noble than helping out your fellow man. Although some situations are self-inflicted, there are people out there in genuine need of help. I'd like to offer a hand when the time is right.
Staying physically active.
I started lifting weights at 11 years old after I moved away from Detroit and into a small town. I was picked on a lot because I was an outsider. I didn't know anyone, and kids can be cruel. So I started working out, and as you can probably tell I take things pretty serious when I get interested. One thing led to another and by the time I was 13 I was training for my first bodybuilding competition. I got really big in my teens and kept at it throughout my 20's, but I've slowed down a tick since then. It's simply tough to get a great workout in when I've already ran around at my day job for 10 hours or more. I hope that once I'm financially independent I can devote a bit more of my schedule to staying fit because I think the cheapest health insurance is a good workout regimen and an appropriate diet.
It sounds like I've signed myself up for a full plate, but relaxation is still going to be in the mix. How so? Well, because I won't have a full-time job to attend to anymore. When most people are getting home at 6 p.m., I'll already have had the full day to accomplish everything I'd like to. Relaxing and slowing my life down a bit is something I really look forward to. I love sleeping in. I'm not the kind of guy who likes getting up before the roosters to watch the sun come up with a cup of coffee. That's just not me. I like staying up late and sleeping in until a reasonable time (10:00 a.m. or so). I like laying on the beach and letting the sun hit my skin. I love going for a walk downtown, enjoying the architecture and the smell of food while I window shop and people watch. I'm easily entertained. Watching a good movie with a small bowl of kettle corn is a fun Friday night to me. I love sitting down to a great meal with my family, telling jokes and making fun of each other. I don't require a lot of money to have fun, and that's why I'm quite confident that I'll really enjoy myself once I'm no longer working full-time.
That's what early retirement looks like for me. But what your early retirement looks like is completely up to you. What do you enjoy? What gives you pleasure? What do you find rewarding? How do you minimize stress and unhappiness and maximize your time spent on doing the things you love to do?
And once you're financially independent you don't have to call your boss and quit the very next day. You can keep working if you want to. Maybe you enjoy your job and wouldn't mind working for another 5-10 years. Maybe you want to pad the brokerage account and give yourself a bigger margin of safety. You can also downshift and work part-time. That way you get a little bit of both worlds.
The point is this: early retirement is whatever you want it to be. I've said it before and I'll say it again: fear holds us back. Conquer your fear and realize that your time is your own. What do you want out of life? Are you on the right track to get it? I know what I want and I know that I'm on track for it. Life can throw some curveballs to be sure, but who better to be prepared for them than someone who has hundreds of thousands of dollars put away because they're chasing the dream of early retirement? Be true to yourself and don't be afraid to chase your dreams.
How about you? What do you want out of early retirement? What will you do with all of your free time?
Thanks for reading.
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