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I SAID GOODBYE TO my career in the retail industry nearly five years ago, at age 39. I’d had my eye on early retirement as soon as I entered the workforce.
My first job out of college was with an upstart retailer, where I worked 80-hour weeks for many years as I sought to improve my skills, knowledge and reputation. I did well, earned multiple promotions, and had high hopes for a life-changing payout from the company’s planned initial stock offering.
But instead, the business failed.
I started over, spending a decade climbing the corporate ladder at other retailers. I earned as much as I could, lived modestly and invested the surplus. Finally, deciding I had enough saved, I took the financial and emotional leap into the unknown.
I thought I had a vision for what early retirement would be. But five years after I left office work—what I now call “my first career”—my life, including my financial life, is quite different from what I’d imagined. Whether you’re planning an early retirement or a more traditional one, these surprises and the lessons they taught me may apply to you, too.
I’m busier than I thought I’d be. I never imagined sitting on the beach all day, every day—does anyone?—but I still thought the pace of retirement would be relatively leisurely. Instead, I’ve gotten so busy that I’ve already had to quit two different side hustles to regain control of my time.
In truth, I never stopped working. Here, in chronological order, are the jobs I’ve done since I “retired”:
Remarkably, none of this was envisioned at the time I retired. I still had the energy and desire to learn new skills and be a part of businesses, so when these opportunities knocked, I answered. For the moment, I like the balance I’ve achieved, but I wouldn’t be surprised if future circumstances force me to “rebalance my time portfolio” once again.
On top of all this, I’ve pursued personal projects and priorities since leaving the corporate world, including honing my classical piano repertoire, traveling, spending time with friends and family, and getting involved with the alumni organization for my college a cappella group.
My parents are traditional retirees who left their teaching careers decades ago. They’re fond of statements like, “We’re so busy now, I can’t imagine how we ever had time to work.” Before I left my job, I’d scoff at this. What could they possibly be so busy with?
Now, I get it.
The lesson: Sometimes, retirement isn’t “retirement.” We have more time, but not unlimited time. We may still have to protect our schedule, and prioritize the projects that are most meaningful. Some of those projects might even earn some money—which brings me to my next surprise.
I’m still making money. I didn’t quit my retail career until I had a high degree of confidence that our savings and investments, along with my spouse’s business income, would be sufficient to support us even if I never earned another dollar. Instead, to my great surprise, I’ve earned quite a few dollars. Looking at the jobs I listed above, each is or was a paying gig. From those that remain, I’m currently making almost half of what I was making when I left retail.
This, I’ve found, is common among early retirees, most of whom look back and wonder why they waited so long to leave their job. As a group, early retirees tend to be careful planners who are reluctant to take big risks. Still, it may be overly conservative for early retirees to assume zero future income. It certainly was in my case. Had I known I’d be earning my current income, I would have left the corporate world many years earlier.
The upshot: It’s possible, especially for early retirees, that you’ll keep earning a healthy sum after you retire. This might be cautiously incorporated into your retirement’s financial plan and into the decision of when to leave your job. Almost every early retiree will tell you they waited too long.
I’m spending money like crazy—or, at least, it feels that way. For decades, I was hyper-focused on accumulating savings. I made budgets, tracked income and spending to the penny, compiled reports, made projections, and looked forward to the day when all that effort would allow me to escape the office grind forever.
But after achieving my goal, I found it difficult to switch gears. Mathematically, my approach to money should have shifted significantly once I had enough for early retirement, particularly since I was continuing to earn more than I’d expected. Emotionally, though, I was stuck in the accumulation phase—buried in the numbers, reluctant to spend, and petrified of red numbers on the spreadsheet.
Five years in, I’m getting better at loosening the reins. We have plenty of money, so it makes sense to buy what we want and not sweat the small stuff. I’ve even flirted with shelving my detailed monthly expense tracking and reporting, but the idea makes me queasy. I’ll keep doing it for now, even if it’s little more than an exercise in self-soothing, and hope I’ll eventually muster the bravery to give it up.
What lesson can be learned here? Retirees who have been diligent savers may struggle to enjoy the fruits of their labor. The rationale for further wealth accumulation deteriorates as you get wealthier; the same is true as you get older. At some point, it’s fine to unlearn those strict saving behaviors.
More broadly, I think I was focused on the wrong thing. My vision of early retirement was limited to what I wouldn’t be doing, such as setting an alarm, reporting to a temperamental boss and dealing with corporate nonsense. I was right about all of that, thankfully.
What I lacked was a positive vision for what I’d do with the extra time that retirement created for me. This is a difficult question to contemplate as a hypothetical, though, and only becomes real after you leave work. If my experience is any guide, the best plan may simply be to stay open, curious and flexible when it comes to your life in retirement—and go where your mind and heart lead you.
Eric Hughes used his cash-generating rental properties to leave behind his corporate career at age 39. He now runs the website Rental Income Advisors, where he writes about rental property investing, publishes a monthly newsletter and serves as a private coach for new real estate investors.
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As others have noted, the definition of retirement is clearly changing. However, the extent of your rental property investments may not be the type of retirment that many people envision.
Looking at your website, it appears that you had at least two evictions in the past three years including “an extended and painful eviction/bankruptcy that started in late 2019, and didn’t wrap up until last April when I was finally able to get the property re-rented.” You also described a tenant who vacated without noticed and left damages that cost $3,800 to repair.
Given that we have experienced a booming job market and low unemployment during this time period, I can’t help but wonder how you would fair in terms of occupancy and evictions during a recession. I also noticed that you have over $1 million in mortgages and that you have recently added several new properties to your rental portfolio. I’m glad that things have worked out well for you so far, but I don’t think your approach to retirement is for the faint of heart.
Thanks for visiting my site! All you say is true, and clearly I don’t try to hide or sugarcoat any of those issues on my blog. In fact, I try to be as transparent as possible, since my goal is to build trust and credibility over the long term with my readers and clients.
Allow me to make a few points in response. First, all day-to-day work in my portfolio (including evictions) are handled by my property managers, so the actual work I do on the portfolio amounts to no more than a few hours per month, mostly communications with my managers.
Second, despite the ups and downs of the business, my cash flow is quite reliable on an annual basis. I publish a detailed annual report showing the full financial performance of my properties to illustrate that. (Scale in a portfolio helps to even out the inevitable bumps at any one property; I have 25 properties, so there’s nearly always at least one “problem” somewhere in my portfolio, but the overall picture is fine.)
Third, leverage in rental real estate is very low risk if you stick to 30-year fixed rate mortgages. People get into trouble when they venture out of that lane into riskier loan products. In fact, the ability to get 30-year fixed rate loans is one of the things that makes rental investing so lucrative.
Fourth, historical data attests to the fact that rental demand is quite recession-resistant, and rents are remarkably stable and almost never go down materially.
You say rental investing isn’t for the faint of heart. I suppose that’s true, but no more true than it is for stock investing, which I assume is much more familiar to most Humble Dollar readers. Smart stock investors know to expect wild swings in the market, but the best strategy is to hold on for the long term, even when the dips are gut-wrenching. The same thing is true with rental properties: there are plenty of ups and downs, but if you hold on for the long term, you’re very likely to do well.
👍
My definition of retirement was when I no longer received a W2. After that my wife and I bought and restored several vintage houses. The houses were bought with cash and the work was done at a relatively easy pace, so I never considered myself a “flipper”. At 78 years old, that phase is over now but I continue to do projects for friends and neighbors. I keep track of the hours spent and “charge” by asking “clients” to donate to my favorite non-profit at the rate of $50/hr for my time. It’s a win-win for everyone and I get to keep my tools sharp.
Thanks for the article.
The life you’re describing is what I would call “lifetime semi-retirement.” There are quite a number of authors who’ve pointed out that establishing an income floor from investments that allows one to choose what one works at based on deep interest and passion rather than simply what the job pays is far more sensible and natural for most (not just some) people than working far too hard (often endangering or ruining one’s health in the process) until age 65 or later, getting the proverbial gold watch – and keeling over from a heart attack on the golf course.
When I first explored this lifestyle nearly 25 years ago the only person talking about it cogently was Bob Clyatt, whose book “Live More, Work Less” remains useful decades later. He still maintains a website for it here:
http://www.workless-livemore.com/
Though he has long since developed his “retirement” gig into a second career as a world-class sculptor:
http://www.clyattsculpture.com/
James Thurber famously said “All men should strive to learn before they die, what they are running from, and to, and why.” I think your excellent post speaks eloquently to the virtues of using early (or rather lifetime semi-) retirement to do just that.
Hi Eric, I came across your website (RentalIncomeAdvisors.com) and it resonated deeply with me. I’m 39 and literally doing what you did 5 years ago. It’s so great to read about your journey as well as understand how you’ve been managing your time and expectations.
Thanks for writing this article. All of your articles are well written. Keep it up!
I enjoyed your article. Thank you.
I will follow John Yeigh’s recommendation and have read a couple of the commentaries on your website and plan to read more as my schedule permits.
I did have one initial thought after reading your article and I wonder what your thinking is in regard to your future social security benefit planning as the vast part of your income appears to be rental income and you may have 25 years of no or low earned income and your future social security benefit may be a very modest amount.
Fortunately, I still have a decent amount of earned income through my coaching business and my bookkeeping side-gigs, so I’m not giving up anything in social security benefits at this point. Even if I were, it wouldn’t be my main focus, since I intend for my investments to provide all the financial security I need in old age.
Eric: Really enjoyed your article and I admire you for having the gumption to retire early. I totally agree with you that retirement is a way to get yourself involved in what you really want to do. After retiring with nearly 40 years with my employer, I got my dream job of becoming a full time investor. I have a financial advisor, but I run my own portfolio which is a full time job. I spend most of my days reading (like Messrs. Buffet and Munger) and I wish this could have been my line of work much earlier in my career.
Good article. Some people including myself spent a lot of our 20s working too many hours with a plan to retire early so that we could stop working. Maybe having a more balanced life would have been wiser. I now see the 80 hour weeks as a mistake rather than a badge of being a high achiever.
Eric – great article. As a fellow “retired” rental property owner, I would further highly recommend Eric’s website to Humble Dollar readers. It is one of the most clearly written I have encountered about the real ins and outs of rental property ownership.
Thanks John! For me, “clearly written” is high praise indeed. 😉
Call me confused but it seems we have a new definition of retired. Exchanging one form of work for multiple forms of income generation is surely retirement redefined.
Having more than enough money for the next 40 years or so is admirable. I guess we could buy what we want, but I can’t get myself to do it and we sure don’t have 40 years in the future.
When I was your age I had just started paying for16 years of our children’s college and going deeper in debt each month.
I think of retirement as a dimmer switch, not an on/off switch. Retirement doesn’t mean you don’t work any more, it means you don’t have to do anything you don’t want to do — and no boss… Nice website Eric!
Yes, retirement is being redefined. There seems to be a school of thought that says, “if you’re earning a single penny, you aren’t retired.” That — quite frankly — is absurd. It seems to stem from the same school of thought that says, “Retirement is all about relaxing.” I believe people should use their retirement for fulfilling, challenging activities and, if they happen to make a few bucks along the way, they deserve our applause, not our approbation for desecrating some outmoded definition of retirement.
I don’t think there is a need to redefine retirement. Someone who still works (less than full time) is semi-retired. A person who doesn’t have an earned income is truly retired. Those who work full time at an encore career are not retired at all, they’re employed. The terminology is older than any of us (even Mr. Quinn)
I think it might depend on whether the “jobs” add up to full-time, and even more on whether you are in a financial position to quit when you choose. In other words, if the work is optional, you’re retired. I did part-time contract work for a few years after I left the mega-corp, but I still figured I was retired.
Good point. One can be retired and still enjoy a little bit of income and the engagement with some part time work, but I have a hard time defining retirement when a person is working part-time and running a business. There are several so-called FIRE folks who run blogs and sell their self-acquired expertise, write books, etc. That to me is not retired.
I think it’s easy to get hung up on the word “retired”. It’s a word that comes with a lot of baggage and associations (which is why I frequently put it in quotes when I write about it). How about we just say I quit my first career and started a new phase in my personal a professional life, in which I have more choice, freedom, and flexibility? There, fixed it. 😉
Great. Now do that with one word 😉
Congratulations on achieving it, whatever you choose to call it.
I would say you traded an intense work schedule controlled by others to a new career managed by you, but I suspect with all your , managing properties, consulting, etc. you are working what most of us would call a normal work week.
Yes, that’s true (though it’s nearly all in sweatpants, which most would not consider a normal work week. 😉
But my busyness is actually the point of the article: it comes as quite a surprise to me, and does not align with what I expected at the outset of this experiment. Which is perhaps instructive for others considering retirement (at any age).