Posted by Tim Stobbs on November 9, 2016
Ten years ago today I decided to create a blog and wrote my first post. The idea was simple I wanted to retire early and I picked a number out of thin air of retiring at 45. It sounded good. Really that was it. The blog wasn’t anything particularly special and I really didn’t have a bloody clue on what I was doing, but I did enjoy writing and I learned a lot from people the commented.
Now ten years later just about everything has changed. I have had seven different jobs during that time, had two kids, got a dog, moved houses but still have the same wife (or does she still have me…I can never tell the difference). The blog has grown to 1878 posts and 11,695 comments so basically together we have written several books worth of text between us…good job!
As for my retirement goal, well I am far exceeding just about every expectation I had for my goal. I will likely be in a position to semi-retire before my 40th birthday. How the hell did I managed to take a vague goal with no plan into exceeding the original goal? Well I have looked back on some of my previous posts and data to come to the following key drivers:
- I believed it was possible. Pardon? Honestly, without the thought that I could I would have never gotten to this point. It would have been easier to give up many times, but I kept at it.
- Aim slightly lower on savings. I always left a buffer to my planned savings in a given year so I would often exceed the initial target. If I thought I could save $12,000, I would aim for $10,000 instead.
- Be realistic on investment returns. I always aimed for a 5% real return on investments (given inflation has been 1.6% per year over the last decade that would work out to 6.6%). Then proceeded to exceed that most of the time (notable exception was 2008, but 2009 made up for that).
- A bit of luck. We managed to buy a house in Regina prior to the local housing boom which saved me about $200,000 off my house’s current value. So yes there was some luck involved.
- Assume no raises in salary beyond inflation. As noted above annual inflation for the last decade has only been 1.6%, but my increases in salary have exceeded that. Mainly because I changed jobs and asked for more money rather than annual increases. In total, I have exceed inflation by an additional ~2% a year, which isn’t much but it does add up over decade.
Yet only enough despite all of the above the biggest thing I have learned in ten years is this: what’s in your head matters more than your wallet or bank balance.
I know you were expecting something a bit more profound, but developing an awareness of your thoughts and adjusting your life to your particular interests is the most critical thing you can learn to do to help you retire earlier. After all, the math of early retirement is very basic the more you can save of your take home pay the sooner you can retire. So 20% is good, but 60% saving of your take home pay is better.
Yet what really changes during the journey is understanding yourself and what you need to know is when you have enough to try your hand at early retirement. Understanding your own personal tolerance for risk and your own fears is key to that and you won’t learn that from a book or reading a blog, but rather looking at the thoughts in your own head.
For me personally I realized that I don’t actually care about doing some work, that I’m more than willing to trade a bit of work over the decades in exchange for entering my semi-retirement period earlier. I think the average person grossly under estimates one of the key assumptions to the entire 4% rule which is: you never earn any external sources of income (only investment income). No government pension, no income form odd jobs or hobbies, no gifts and no inheritance. In my particular case I am sure I will break every one of those, so I’m willing to roll the dice with more risk in my plan than some other people. I understand myself and my situation and I don’t expect it to apply to others.
So for this blog’s birthday wish, I wish you all the gift of self knowledge. Find your own path the early retirement, it will take a lot of work and a lot of soul searching but you can get there. Remember it starts with believing you can and then be willing to learn. Good luck on your journey.