If you are like me and you are interested in personal finance, then you probably have at some point encountered the Financial Independence/Early Retirement community. Maybe you stumbled across Early Retirement Extreme, maybe Mr Money Mustache, maybe even Our Next Life. Maybe, just maybe…you have dreamed about doing this. Although it seems difficult, you imagine that you can save some pennies here and there, start riding a bike, buy a house-hack or a trailer, and vault yourself financially into the stratosphere.
But, let me tell you a story that is repeated more than meets the eye.
It is repeated everyday by bloggers, podcasters, you-tubers, and everyone in between.
The Insider Story
A person (or thousands of people) saves up money.
During the saving period they have an idea of what they would like to do, if they were ever able to retire early- this could literally be any goal or perceived job that would bring them satisfaction in doing it and not necessarily because of the money it brings. Think Traveling in an RV for fun with 11 kids or flying a drone non-stop.
They begin to do something on the side usually- like photography, blogging, podcasting, writing a book, starting a business, etc. Said person works hard at their 9-5 job and is busy saving with an eye towards early retirement by the time they are 30, 40, 50, etc.
They begin slowly, but then compound interest starts to kick in and it really fuels the FIRE and their goal of early retirement.
Then, one day, something happens- Out of nowhere they realize that the side hustle they have been working on could become a full-time gig. A way to make money that is actually fun as opposed to the rat race.
In parallel with this realization, their accounts are looking fantastic…because they have been saving! The fact that they have multiple six-figure wealth is a mind-altering thing that gives one a sense of FU money.
What happens next is the Transition!
They instantly quit the 9-5 and start doing what they have “always wanted to do”. A certain post I read reminded me of this quite a while ago, and so I have devised a middle way for those of us who are “in the know” of what is really going on in all these peoples lives.
For those of us who see the forest and not the trees.
The Middle Way
Most financial advice is for when you are old and retired.
Most of it, therefore, is not good life advice. It is simply financial advice. The problem inherent is that we need good life advice, and we need it NOW.
So, let’s cut the crap and call it what it is. Terrible life advice.
It’s as if we look for advice about how to put gas in a car, when we haven’t even built the car. It’s as if we pretend to understand and enjoy beer, before ever having one. It’s as if we want to plan a retirement, but not plan a life. The people who have made the transition understand this, they understand that retirement is a new journey, not really a destination. A goal that they hadn’t reached, but once reached became a new path to a new goal. They are planning a life now and not a retirement.
So, let’s hack this and shortcut it.
The Middle Way is a way of re-imagining how you could live here and now. Here is the basic premise.
- Start Saving Today
- Start Working on Something as a Side Hustle
- Get to 6 figures of expendable savings (this is the 2-year part)
- Quit 9-5 job
- Do what you love the rest of your life
- Be Happy and “Officially Retired”
Seemingly, this is the exact path that so many in the FIRE community are doing. They Wash, Rinse, and Repeat these steps all the time, while the consumers of all their information simply sit by and continue grinding well after that first 100k. The spoiler is that FU money gives the leverage to truly pursue what you want.
Have you ever heard anyone that is financially independent the didn’t make a further dollar…of course not.
THEY ALL END UP “WORKING”.
The 2 year path to retirement peeps understand all of this (which is now you). I think that with an ideal career (say making 70k+) that within 2 years you could be into 6 figure savings. Just save $40k the first year and $40k the next year and as long as returns are around 8% you will be within striking distance of 6 figures. Maybe its a 2.5-3 year plan if you literally have nothing saved. Maybe 4 or 5 if you make less or are in debt.
IT DOESN’T MATTER! You can do this in much less time than you think.
So, the take away for me is that we need to save up enough cushion, then quit to pursue our dreams of being retired. Because at the end of the day we are going to still have a job (way of earning money) in retirement. That’s the spoiler to this whole thing, is that no one stops and just does nothing. Even the ones that claim to have stopped still blog at the very least- and they make $$$$!
Again, this is not a post to be the metaphorical retirement police. Rather, it is to be radically honest about what I observe about this movement in my reading of so many success stories.
The real truth is that it’s not retirement that we all seek. It’s freedom. Plain and simple time to do what we want, love who we want, and experience what we want.
So, join me on the 2 year option- instead of the 10-20 year option:) You can thank me later or read this blog and pay it forward.
So, how long until you retire? Any thoughts?
Am I being unreasonable?
This is a great way of thinking. I obviously waited too long because I didn’t think of this early enough like you have. But now that I’ve quit and have been FI for seven years, I end up “working” all the time, just as you say. But for me, I try really hard not to get paid because then it IS work. And I keep firing myself and trying something new all the time. But I admit, I just posted about buying myself a job after FI. You are so right!
By the way, we happen to live somewhat close I believe. We live in Stockton.
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Yes! I teach part-time at Delta College! Also, this is the plan! Great to connect:)
I love the idea of it being only 2 years, but doesn’t this also hinge on not having debt. I mean your 2 years of savings would not really be enough to cover expenses, at least passive income. Or am I missing something?
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No, it wouldn’t be enough to cover expenses for the rest of your life or something of that nature. The point is that you will make money after so why not make a lifestyle choice now! And yes, I didn’t account for debt of any kind. I am assuming you are at zero net wroth now, or even have 10k in savings.
This has been my path (took 3 years d/t student loan debt) – establish enough savings to cover uncertainties and likely my 65+ retirement after compounding, then go do what looks interesting, even if it entails a paycut. FU money or coast FI or whatever you want to call it is really a point where you can take risks, try new things, and know you’ll be ok even if some of them fail.
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Thanks for the comment! That is what is interesting! If you do the math on even 100k saved in your 20’s then you can see that even if you just break even for the next 30 years doing what you love, there will be enough there at retirement. Coast FI? Never read about it. Is there an Article?
Hmm, I’ve heard the term tossed around but don’t have a go to article to link. It’s the subject of my next post, which is upcoming, but I definitely didn’t come up with the term. It’s just as you described – the point where your savings will compound to cover traditional retirement age expenses. You can’t quit working forever, but it’s an opportunity to downshift or focus on more fulfilling work that maybe brings in less so long as you can cover your living expenses
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