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Early Retirement interview- Vancouverite reader J

Recently a reader name J reached out to me to share his early retirement story. What’s neat is the fact that he’s also located in Vancouver. Because his story is so cool, I asked him if he was willing to share his story with my readers via an interview format. Fortunately he said yes. Take it away J!

 

Thanks Tawcan. Here is a bit of background for my story. I am a 37 year old husband and father of a 1 year old daughter. Recently, I retired from my career in the financial sector in Vancouver.

 

Q 1. It’s amazing to hear that you retired last year at the age of 36. Could you describe what you did prior to retirement and speak about your path of how you got to this point? What did you do prior to retirement?

A 1. I retired on my own terms. My path to getting to this point is quite common in a sense, in that I moved away and went to university after high school, then I got a job working in an office. I worked in the financial sector, first at a consulting firm for around 10 years and then doing similar work for a large financial firm for about 5 years after that.

 

Q 2. How did you realize early on that you want to be unconventional and retire before the age of 65? Was there a single event that got you started on the “early retirement” path?

A 2. A couple of stories come to mind. First, I spent a summer backpacking around Europe when I was 21 and close to my university graduation. At that stage of life, I had barely any money and so I had to learn to take a pretty hard look at each and every decision in my life. I could choose to do whatever I wanted to do so long as I could make it work with the very limited resources I had at the time. It was an incredibly freeing experience and was a bit of an epiphany to me. Literally everything in life represents a decision that is yours to make and that the impact of many small decisions add up significantly over a lifetime.

The main point is that I realized while traveling that summer is that I could do whatever I wanted all day, every day. And it didn’t have to cost a lot of money to do so.

Tawcan: That’s funny because I came to similar realization when I lived and traveled Europe on an 800 € per month budget.

Secondly, I realized quite early on in my career, certainly within the first year or so of working, that my passions in life were not going to be fulfilled by my chosen career. While I needed and enjoyed the paycheque at the time, sitting in a cubicle all day working as a very small part in a very large machine was incredibly stifling to me. I also quickly realized that most people I worked with were not particularly happy, and for the most part had accepted that working everyday was their lot in life. This was especially striking because many of these people made very decent salaries. It was my impression that many of them did not think that life could be greater than grinding out one day to the next. I often found myself daydreaming about how I wanted my life to be, and I was pretty determined to make my life extraordinary from then on. My path to financial independence was born around that time I would say.

Tawcan: Love it. This is exactly why I practice being FI despite not FI yet.

 

Q 3. What was your strategy that allowed you to retire so early? Do you have any secrets that you could share? Please describe your investment strategy.

A 3. My investments are composed of a diversified portfolio of primarily passive equity investments, with a focus on minimizing expenses.  Working in the financial industry made me realize that most people are better off with passive investments than paying excessive fees for “financial advice” which is pervasive in Canada.  We also own 2 rental condos from when my wife and I were single and we each used to live in.  We are currently uncertain whether we will continue to rent them in the long run but for now that is the case.

This being said, it is important to have more than just the investment side of the equation figured out if you want to retire early. While I was working I earned the salary of a professional and could have spent all of it without being careful. Managing my expenses was a far bigger factor in my ability to retire at this stage than whether I earned 5%, 10% or 20% per year on my investments!  This is such an important factor that is not stressed enough, but I do believe that you should also be maximizing your happiness while you are working as well and still enjoy life while working. Balance is very important in life.

Tawcan: Totally! Finding the right personal balance is the key. If you think you’ll finally be happy once you reach FI, you probably will never be happy. Keeping your expenses low is really truly the best way to control the timeline of your FI journey.

 

Q 4. Are you taking advantage of tax-sheltered accounts like RRSP and TFSA? Do you have any RRSP withdrawal strategies or are you leaving RRSP until you are 71 years old?

A 4. Yes, I use of both of those vehicles. My wife, on the other hand, is an artist and also an American citizen, so she hasn’t started contributing to either vehicle. Her income is low and so contributing to the RRSP doesn’t make sense for her, and the TFSA also isn’t great for her because the USA requires additional tax reporting and investment restrictions on her because they don’t recognize it like the do for RRSPs and so far it isn’t worth the hassle.

For people retiring at an early age it is very likely you will have sizeable non-registered investments so there is some optimization that is needed to minimize your tax burden over your life. I plan quite far ahead but right now and for the foreseeable future it is pretty simple, tax shelter the maximum amount possible.

Tawcan: And that is exactly why we made some financial independence assumptions to determine our tax consequences in FI.

 

Q 5. What’s your daily life now that you have retired? Are you “working” on different personal projects?

A 5. I have a 1 year old daughter and most of the day is spent taking care of her. She is the ultimate personal project if you want to look at it that way. We feel that it is extremely important to spend time with her and allow her to learn from us because our parents were such positive influences in our lives. My wife also is still involved in various artistic pursuits and having my freedom greatly increases her flexibility to continue her passions. We have been able to travel so that she can take on projects and spent a considerable amount of time in Europe last year. I have many personal projects that I like to spend time on besides my daughter, and those fit in around the edges for now. My main passions are chess, photography and I love to travel also.

Tawcan: Hey sounds like we should be friends. I love photography and travel too!

 

Q 6. Do you feel that you have a better quality of life after retirement? Are you feeling more at peace and do you feel healthier?
A 6. Absolutely, my quality of life is immensely better after retirement. I now leisurely wake up with my happy family, instead of rushing to get to the office. I certainly feel healthier and I believe things will only get better.

 

Q 7. Did you have a budget prior to retirement? If so, do you still budget now that you are retired? Is there any difference between the two budgets?

A 7. I have had budgets in the past before retirement, but after a while it just became routine and so I haven’t written one down in quite a while. I have a philosophy of looking at each and every item I spend money on and considering if that is really the best way to make my life better. So in a sense I would be looking at my budget continuously, rather than saying, “it is the beginning of the month and I have $100 for whatever category of expense, how am I going to spend it”. I have always been extremely careful of managing needs versus wants, and I abhor waste of almost any kind.

That being said we do have a rough budget now with my wife on board. The biggest difference in dollar terms is that I no longer have such a large income tax bill.  Trading your time for money, or working for a salary, is the least tax efficient way of making money and so I am somewhat surprised more people don’t jump on board the early retirement train. Besides that, things haven’t changed much because we have been living at a level of spending where we are comfortable for a long time and just because I have stopped working doesn’t mean we have to slash things all of a sudden.  Our core spending levels have been about the same for many years now. While I was working I just saved a large percentage of my earnings because we already enjoyed our lifestyle at that level.

 

Q 8. Was there something that convinced you to finally quit your work? Was it a difficult decision? How did you know that you would be OK financially without working fulltime?

A 8. My career was quite mathematical and so I had been doing calculations for years to see the financial impact and level of risk around my decision. There wasn’t one thing that was the deciding factor but the birth of our daughter made the decision easier. It wasn’t really a difficult decision, in fact it probably made my transition out of the workforce easier because I could use parental leave as a sort of reasonable excuse rather than having to potentially have an awkward conversation around the reasons for leaving and having to answer questions about leaving without planning for another full-time job. Most people still don’t really understand when I try to tell them about what I am doing because it is just so uncommon.

 

Q 9. Do you have any regrets retiring from your full time job? Have you considered going back to work?

A 9. I do miss some aspects of working full time. I made some good friends over the course of my career and I am not as close to them as before. But the vast majority of it, I don’t miss at all. Slaving away until midnight for a client that doesn’t even realize I exist? Nope, not in the slightest.

I don’t think that I will never “work” again either.  In fact, I work arguably harder now looking after my daughter that I did in my previous jobs.  I also have many passions and I can now spend time trying to perhaps grow those into something more than just hobbies.  For instance I would love to be a travel photographer, however that is not an easy or realistic way to make a living for all but a handful of people in the world.  But I may at some point make a little money leading photographic tours or something similar.  I don’t think I will return to working exclusively for the money again anytime soon though.

 

Q 10. What would you tell someone like me who is trying to achieve financial independence? Do you have any advice for retiring early?

A 10. Do what makes you happiest. Keep working towards your goals. It is achievable with the right mindset and persistence. Part of the reason I did this interview is because I wanted to make a point that despite many people not understanding the concept or early retirement or not believing it is possible, you can do it, and I am an example of that. I firmly believe that most people I worked alongside could achieve exactly the same outcome that I have had.

The funny thing is that most people consider what I am doing as some sort of impossibility that cannot be believed, however most of those people could make the same choices and be able to leave their jobs decades earlier than they think. It is this inability to consider things outside of what is considered normal that holds people back, and the first thing they need to do is adopt the mindset of the dreamer.

 

Q 11. Do you have anything else you would like to share with me and my readers?

A 11. Thanks for your interest in my story if you made it this far.  Dare to push your limits a little further.  You will be pleasantly surprised what is slightly beyond your horizon and how many misconceptions we have about the unknown.

 

Wow that was a lot of great stuff coming from someone who has retired early and now able to decide his own schedule each day. Thank you J for sharing your story and all the advice.

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34 Comments

  • Reply
    eljaydub
    March 29, 2017 at 9:19 am

    Thanks for posting this Bob, and thanks to J for sharing! It’s really nice to start the day with a story about an FI success like this.

    • Reply
      Tawcan
      March 29, 2017 at 1:17 pm

      Hey Lee,

      It was a great story and J provided some great insights.

  • Reply
    Mike S
    March 29, 2017 at 10:00 am

    J’s story reminded me of Joe Dominguez, one of the originators of the FI concept. Joe was a financial analyst and left paid employment in his early 30’s.

    T, have you read Your Money or Your Life? It would be interesting to hear your review on the book, particularly from a current perspective as to which parts you’ve found most helpful.

    • Reply
      Tawcan
      March 29, 2017 at 1:18 pm

      Funny you ask, Your Money or Your Life is one book I haven’t read (I read a lot). For some reason I never managed to find a free copy of the book despite wanting to read it for ages. Maybe I’ll try and see if I can reserve one at the library.

    • Reply
      J
      March 30, 2017 at 11:19 am

      Mr. J. here.

      First off thanks for posting this interview, and it is nice to here that a reader would mention this in the same breath as Your Money or Your Life.

      Secondly, I highly recommend reading that book. I read it while procrastinating in the library while I should have been studying for an exam and it helped shape my worldview. So, yes you can definitely get a copy there.

  • Reply
    Liquid
    March 29, 2017 at 12:26 pm

    Great interview with J. He sounds like an INTJ like yourself, a long term planner. 🙂

    • Reply
      Tawcan
      March 29, 2017 at 1:19 pm

      Yup he sounds like an INTJ too. I think most ppl in the FI community are like that.

      • Reply
        J
        March 30, 2017 at 11:19 am

        Actually, I am an ENTP according to that test, though I always felt that I was an I.

  • Reply
    Frankfurter RobLost in Space
    March 29, 2017 at 12:44 pm

    Good post but some more information would be helpful. What was his income while working, 1%er or minmum wage. Secondly and more importantly what was his savings rate? Finally what about housing, I’m assuming he got in early and paid off his mortgage. Finally what’s his rough monthly cost of living? That will give us an idea of how big he had to grow his stache.

    Mustache has mentioned that he and the wife live on around 2000 a month US.

    • Reply
      Tawcan
      March 29, 2017 at 1:22 pm

      These are good questions, perhaps I should do a follow up interview with J to answer these questions. 🙂

    • Reply
      J
      March 30, 2017 at 11:19 am

      It was deliberate on my part to not get into the numbers in this interview, however I can say that I earned a reasonable salary as a professional for the time I was working. I understand your question and it is relevant but my point was that for many white collar professionals this goal is achievable. The amount of time may be different if you earn or save differently but you can get to the same result.

      • Reply
        FrankfurterRob Lost in Space
        March 31, 2017 at 12:52 am

        Sorry if my question seemed a bit personal but I’ve been interested in what is it that people like yourself do different from others. Mark from My Own Advisor wrote an honest column on this subject. “If you’re so smart why aren’t you retired? And the short version is that he got into an expensive house marriage kids lifestyle.

        IMHO there are 5 things you need do in order to FI in your 30s

        1. An early obsession with FI and frugality
        2. Get lucky on your house.
        3. An obsession with ditching the mortgage –
        4. Earn good money and be willing to hustle to earn more – thinking No More Harvard Debt style
        5. But the most important aspect is a supportive spouse.

        On that last point the MMM forums have hundreds of posts on trying to get a spouse on board

        According to Stats Canada the average household spends $5000 a month with house (mortgage taxes upkeep) taking approx 25%. How does that compare with your post retirement numbers?

        • Reply
          J.
          April 1, 2017 at 10:05 am

          Not too personal, don’t worry about that. Agreed, it is really easy to get into that expensive house, marriage and kids lifestyle. At my prior job I was shocked at some of the responses my co-workers would give me about what they would do if our office pool won the lottery. More than one would say “no change in lifestyle whatsoever, just my mortgage would be smaller.” This is one reason I wanted to do this interview.

          Yes, your five points are sensible however I do think that there are many paths to retire early. For instance, we still have mortgages on our rentals and have had really no obsession with paying them off (I may actually releverage them to some extent down the road). Geographic arbitrage is one that I believe many people don’t think much about either. Getting lucky on investments in general is helpful I believe it isn’t required to retire early. My firm belief is that most white collar professionals could achieve FI at an early age without extraordinary luck.

          A supportive spouse is really important and I’m truly blessed in this regard.

          I would be open to doing a more numerical interview in the future, let’s see what Bob and I can do.

          • Tawcan
            April 3, 2017 at 11:29 am

            I’m in agreement with J. Most white collar professionals should be able to achieve FI at an early age. Will talk to J about having a post with more numbers. IMO I think people often get too focused on all the numbers instead of looking at the big picture.

          • Lost in Space
            April 6, 2017 at 1:16 am

            Thanks and it would be interesting to have a more in depth interview at some point. There’s almost nothing written for Canadians on early retirement. Derek Foster wrote a book but his math doesn’t add up. Part of it is that I’ve noticed that people tend to be either very frugal or earn good money, but usually the two don’t go together.
            Secondly I’d like to know a bit more about your cost of living. Mr Money Mustache lives very nicely on about 2000 US a month, Mark over at My Own Advisor said he’d need about double that in Canadian dollars. Rob

          • Tawcan
            April 6, 2017 at 7:58 am

            I have read about MMM’s $2000 US a month budget but it’s unclear whether they’re still doing that today. He has made several claims on recent posts that they no longer live on the “MMM budget.”

  • Reply
    renewed investor
    March 29, 2017 at 2:35 pm

    Thanks for the interview. It was very insightful. It reaffirms what many of us in the FI journey practice. Growing our passive income while reducing our expenses and living within our means. There are so many things we can do without burning a hole in our pocket.

    I was amazed how wise J was to realize the importance of FI in his early 20s. I did not gain this important insight till I was 30.

    RN

    • Reply
      Tawcan
      March 30, 2017 at 11:24 am

      It’s pretty amazing that he realized the importance of FI in his early 20s. I realized the importance of saving in my 20s but I wish I knew a bit more about investment options back then.

  • Reply
    CanadianPassiveIncome
    March 29, 2017 at 6:41 pm

    Great post thanks guys. Personally I love reading stories of people becoming millonaires or just living life however they would like it to go. It’s really motivational.

    • Reply
      Tawcan
      March 30, 2017 at 11:25 am

      It’s definitely very motivating, I love hearing these stories too. Totally need to catch up with J one of these days and pick on his brain. 😀

  • Reply
    wealthfromthirty
    March 29, 2017 at 7:18 pm

    Great interview Bob. And thanks to J for contributing. It’s remarkable that FI seems to be largely about reducing expenses to the rough minimum for a comfortable life seems to be how most people who succeed at FIRE do so. I wonder what the return on effort is for squeezing out an extra 1-2% from your investment portfolio vs reducing expenses would be.

    • Reply
      Tawcan
      March 30, 2017 at 11:27 am

      FIRE is pretty easy to achieve but it’s not a simple progress to get there. It’s easier to reduce expenses by 1-2% IMO. It’s harder to squeeze out an extra 1-2% from your investment portfolio because you have no control on how well the investments will perform. If you aim for higher return, you will end up with more risk.

    • Reply
      J
      March 30, 2017 at 11:57 am

      You are welcome. I wish I had met someone earlier who had told me about some of these concepts and that I why I wanted to do this for others.

      I think you are getting what I am saying but I might say it a different way – while cutting out unnecessary spending is important, my idea isn’t about reducing your expenses to a minimum. Instead, spend money on what makes you happiest.

  • Reply
    Dividend Growth Investor
    March 30, 2017 at 7:24 am

    “Trading your time for money, or working for a salary, is the least tax efficient way of making money”

    I love this quote. I was recently thinking about how a married couple in the US can make $90,000 in qualified dividend income, and pay no taxes.

    You need a salary of $120,000 to make the same amount of after-tax income (and it doesn’t take into account work related expenses such as gas, car depreciation, time to get ready, work clothes, buying lunches etc)

    • Reply
      Micro Dividends
      March 30, 2017 at 11:08 am

      This is exactly what I’m working on. Trading time for money, is something I think about everyday. However, at the moment I’m rather enjoying my job. But knowing this fact, shoring up assets to produce true passive income not on the basis of my time; gives me the assurance that I can walk away anytime if I’m no longer happy.

    • Reply
      Tawcan
      March 30, 2017 at 11:28 am

      A dollar earned by working actively and a dollar earned by dividend income get taxed differently. That’s the power of dividend income. 🙂

  • Reply
    Mr. Tako
    March 30, 2017 at 11:13 am

    Great story Tawcan! Thanks for sharing this interview. I really like how he stressed saving. It’s so true. In the beginning, the return on investment from a small portfolio is nothing compared to the returns from saving more. The focus really should be on saving in the early days.

    • Reply
      Tawcan
      March 30, 2017 at 11:29 am

      Very true, at the beginning a dollar saved when you’re in debt or early in your FI journey will have a much bigger impact than a dollar saved once you’re either FI or almost FI. 🙂

  • Reply
    Dividend Diplomats
    March 30, 2017 at 6:44 pm

    Tawcan –

    Great Q&A/Interview. Always awesome to see someone who has done it at a young age – 36 is nothing to scoff at, AT ALL! Just further motivation for us all, thank you!

    -Lanny

    • Reply
      Tawcan
      March 31, 2017 at 5:13 pm

      Retiring at 36 is nothing to scoff at. J’s story is very inspiring and what’s more amazing is hearing from a fellow Vancouverite.

  • Reply
    Dividend Diplomats
    April 2, 2017 at 8:14 am

    “Do what makes you happiest. Keep working towards your goals. It is achievable with the right mindset and persistence”

    Love it Tawcan. Very inspiring stuff to read this morning. Thanks for putting a little extra fire in my belly here!

    Bert

    • Reply
      Tawcan
      April 3, 2017 at 11:30 am

      Thanks Bert. So glad J contacted me regarding his story. Very happy to have him sharing his story with everyone.

  • Reply
    Divi Cents
    April 4, 2017 at 11:57 am

    Nice to see another Vancouverite living out the FIRE bro dream.

    • Reply
      Tawcan
      April 4, 2017 at 6:06 pm

      For sure! It’s awesome that J reached out to me to share his story.

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