In June 2012, at the age of 34 and after working in investment banking for 13 years, I wanted out. So I decided to negotiate severance pay, retire early, and live on passive income through my rental properties, stock dividends, and e-book sales.
But a year later I realized that the life of travel and leisure that I thought I wanted was not for me. I was bored and felt a loss of identity. I needed an outlet and wanted to do work in which I was personally invested.
Although it’s been over 10 years since I stopped working full-time, I wouldn’t say I’m retired. Instead, I call myself a “fake retiree” because I ended up taking on some side hustles to fill my time.
Here are six surprising lessons I learned after 10 years of being “fake retired”:
1. There’s no shame in being ‘fake retired’.
I’ve talked a lot about my journey to early retirement, and one of the biggest setbacks I get from readers is something like, “You’re still doing some kind of work and getting paid in return, so you’re not actually retired.”
That is a valid point, which is why I think more people should embrace the term ‘fake pension’. Many of us retirees write blog posts, record videos, create e-courses, write books or sell art. I still run my blog Financial Samurai, and I just spent two years working on my personal finance book, Buy This, Not That.
Many early retirees are working harder than ever to build their online business, even if it’s just a short-lived passion project. The extra money they earn may not be a necessity, but it’s a nice bonus.
By calling myself a ‘fake retiree’, I own the criticism. Yes, I could sit on the beach all day and drink piña coladas if I wanted to. But not me. I want to work during the week and be productive, which for me is about two to three hours a day.
2. Your financial needs will evolve – and probably grow – over time.
When I retired, I was happy with my $80,000 a year in passive income. But in 2015, my wife took early retirement. We have calculated that we need to generate $160,000 annually in passive income to cover the loss of her income.
We also planned to start a family. Our son was born in 2017 and our daughter in 2019, so our financial needs kept rising. Paying $2,200 a month in unsubsidized health insurance premiums — plus $5,000 a month for preschool — adds up.
Now that inflation is at its highest point in 40 years, we need to generate more revenue again. That’s three major revisions to our budget in just 10 years. To keep pace, we’ve bought more rental properties and invested in assets that continue to appreciate in times of inflation, such as health care stocks.
3. You may still feel the pull of traditional work.
Since 2012, I have fought the urge to go back to work full-time several times. The first time was less than six months after I left my job. I found myself missing the camaraderie of working as a team on a shared mission.
The second time was after our son was born. I was afraid we wouldn’t have enough money to provide for our family. I also struggled with how hard it was to be a stay-at-home parent. I thought having an office to go to could be a “break” from the stress of a new dad.
The third time happened a year after the pandemic. So many friends who worked from home seemed to have a work-life balance that made them happy.
But eventually I realized that even if I got a remote job that allowed me to go to the beach in the middle of the day, I would still have to answer to someone.
Think of all the times you had to shut up at work because you didn’t want to jeopardize your salary, promotion, or reputation with your employer.
One of the greatest benefits of being financially independent and not having to follow company rules is that you can fully express yourself.
Plus, you can confidently stand up for people who could use your support. For example, when I was approached by a producer to record an audiobook version of my book, he was adamant about choosing from three white men to narrate.
But as an Asian-American, I wanted someone who looked and sounded like me. Finally we ended up with a Chinese-American narrator. If I hadn’t felt confident enough to say something, that narrator wouldn’t have had the chance.
Early retirement gives me more time to be alone with my thoughts. When I was no longer limited to a 40-hour work week, I was able to think about what was really important to me – and what legacy I would like to leave behind.
For some people, that might be donating a scholarship to their alma mater or making an impact for a good cause. For me, it’s sharing financial advice that can help other people achieve their life goals.
The only thing that kept me going when the pandemic lockdowns kicked in was the knowledge that my kids could one day bring my book to show and tell.
I’ve found that if you support the causes that matter most to you, share blessings, and mentor others, your legacy will flourish.
Do what you can now to give the “future you” as many opportunities as possible. Save and invest as much money as you can so that you have plenty of options when you’re ready to quit your job.
And maybe you won’t retire completely. Maybe you go to a lower paying job that makes more sense or take a few years off to take care of your parents. Or you can decide to fake retirement like I did.
Simply put, try to think about the future in terms of probabilities, not absolutes. I have a 70/30 decision-making philosophy that has rarely steered me wrong: If I believe there’s a 70% chance I’ll make the right decision, I’ll go for it.
At the same time, I have the humility to know that there is a 30% chance that I will make the wrong move. And I agree; mistakes are not failures if you can learn from them and make better decisions in the future.
Sam Dogen worked in investment banking for 13 years before starting Financial Samurai, his personal finance website. His new book “Buy This, Not That: How To Spend Your Way To Wealth And Financial Freedom” is out now. Follow him on Twitter @financialsamura.
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