Post FI Notes 013: ESI Money Reflects on 5 Years of Early Retirement

You may be more familiar with John from ESI Money as an interview host. I was a guest nearly 5 years ago in Millionaire Interview 5 at the start of an outstanding series that now has nearly 300 interviews and counting.

Our generous friend is returning the favor, participating as a guest to share how he earned, saved, and invested his way to retirement in his early 50s as a multimillionaire.

While his presence and productivity on his popular website might have you believe he’s replaced one full-time job with another, he actually spends all kinds of time being active in other ways. He’s also 6 months ahead on content, whereas I’m never more than about 6 days out! He’s got this FIRE thing down, as far as I’m concerned.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes. To see other posts in the series, visit our Q&A archive.

Getting to Know You

Hello, everyone! I am ESI/John from ESI Money, a financial site that focuses on earning, saving, and investing (ESI) as the three steps to wealth.

Here’s a quick overview on who I am:

• I’m a 57-year-old guy who’s been married for over 30 years and has two kids (son, daughter) in their twenties.

• We live in Colorado (and LOVE it!).

• I grew up rather poor in a small Midwestern town and knew I didn’t want to live that way as an adult. From a young age, I knew I wanted to be wealthy and I geared my career choices towards high-paying professions.

• I worked my way through college and grad school (got an MBA). Then I spent the next 28 years working in marketing for large and small companies.

• Soon after we were married, my wife and I started helping others at our church with their finances. The training we took prior to assisting them not only equipped us to help others but also educated us about managing our own money.

• Counseling others taught us a great deal about real-world money issues. We could see first-hand what was working and what wasn’t. Much of our learning was from seeing others’ mistakes.

• A few years later I read The Millionaire Next Door and started applying the concepts I learned. It is easily the most influential money book of my life.

• We paid off all our debts early in our marriage, including our mortgage, and saved 36% of my income for over 20 years. We invested this money initially for growth and later for income.

• Along the way, we donated approximately 20% of our income. Helping those who are less fortunate is a key part of our family’s values.

• In 2005, I started a personal finance blog. As I wrote, I learned more about what it really took to become wealthy. It helped crystalize my thoughts and forced me to take action.

• I determined an arbitrary amount in both assets ($4 million) and income ($100,000) for what I thought it would take to retire early. Then, through a series of events, I became tired of work. I wanted to leave for good. I wanted my freedom. I began to rethink my retirement plans. I calculated a very specific retirement budget and found that I had enough to retire at any time. (I had become financially independent a decade earlier. D’oh!)

• In the fall of 2016 I retired at 52 with a nest egg whose income is large enough to provide for my family’s needs. In other words, we don’t have to withdraw anything from assets to cover living expenses. I have been retired for over five years now and am LOVING it!

• I started ESI Money shortly before I retired.

Hopefully this overview will provide some needed background. I’ll add details to some of these as I answer the questions below.

You’re financially independent. About how much does your household spend in a typical year? How much could you spend while still abiding by the 4% rule?

Each year I do a financial update detailing our net worth, income, and spending.

If you’re interested in past updates, you can find them here:

• 2016
• 2017
• 2018
• 2019
• 2020

These will tell you more than you want to know about our finances.

That said, we spend around $100,000 per year. Or at least we used to.

Traveling was a big part of that $100,000 and since Covid we haven’t been as exotic or broad in travel as we once were (we got off one of the last cruise ships in February 2020 before they began stranding them at sea).

2020 was a complete bust for traveling (other than the aforementioned cruise), and 2021 was worse.

So we’re more like $60,000 this year. That’s still a healthy amount of spending given that we don’t have a mortgage.

However, things are starting to loosen up a bit. We will be traveling again in early 2022. We’re planning on spending 2.5 months in The Villages, Florida, renting a home from a friend. My dad will stay with us and our kids will visit for a few weeks. We’ll go to Disney World, scout out various cities in Florida, and play all the pickleball our hearts desire (which is a lot).

My wife is tired of the long Colorado winters so this is our first attempt at being snowbirds. We’ll see how it goes.

How much could we spend and abide by the 4% rule? About $430,000 (this includes income and asset withdrawals.) I know. It’s a bit overkill.

Let me explain…

First of all, while $100,000 is a very healthy spending amount, it’s less than half of what our income is annually. Even in retirement, we make way more than we spend so we’re consistently adding to our investments every year.

Second, since we’ve been living off of income and not withdrawals the past five years, our assets have simply sat there — and grown tremendously. We are up almost $3 million since I retired! It’s been crazy.

So we have a ton we could withdraw if we needed it. But we won’t need to for the foreseeable future, so we’ll just let it grow for now. And we’ll be giving a good amount away in the years to come.

Now while that may sound amazing to some, to me it says I could have retired much sooner than I did. My biggest mistake was not retiring a decade earlier as I mentioned above. More on that below.

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

We live in Colorado Springs, Colorado. Me (57), my wife (a bit older), and a cat (not yet three) in a 3,500 square foot house. Yes, it is ridiculous.

That said, the combination of a housing market on fire and an awesome location of our current home (very high in walkability — we walk to the gym, the grocery store, the doctor, the dermatologist, the eye doctor, the pickleball court, and any number of retail stores like Lowe’s and Target) has us staying put for now. We have talked about downsizing but doing so with a new place would mean a worse location for probably the same cost as our current house (as we’d have to buy newer construction in a higher-end neighborhood.)

We have two kids. They are 25 and 23 and are both out of the house. They live in Colorado Springs as well, and we see them often. They are both self-supportive.

Are you still working? In what career? Did your work schedule or attitude towards work change once you knew you were FI?

Am I working…that is a very good question…and it has some nuance to it.

I retired from my 28-year career as a business executive when I was 52. This was shortly after I took my last job, had a boss who was a micro-manager extraordinaire, and decided “I don’t need to take this any longer.” That, combined with the fact that we had just moved to the beautiful state of Colorado, an awesome place to retire, made me take the leap and I have not looked back.

Funny story: I don’t have many nightmares these days as I tend to sleep very well since I retired. But the one that keeps recurring now and then is a dream where I find myself back at work. I always wake up thinking, “Why am I working? I have enough and was retired! Why don’t I go back to being retired — it was great!” Hahahahaha.

I really hadn’t thought about being FI and retiring prior to the crazy boss/moving to Colorado happening, so there wasn’t a long time when I was consciously FI and still working. That said, I went back, ran the numbers, and I was actually FI around 42 years old — I just didn’t know it. At that point, FIRE was not nearly as big as it is now and it just never occurred to me. After all, who was financially independent at 42? No one!!!!

I blame Mr. Money Mustache. If he had come around 20 years earlier I would have had an extra decade of retirement. So it’s his fault. 😉

Anyway, I consider myself “retired from my career.” But you may disagree.

I am “working” in the sense that I have projects going that earn income. And the internet retirement police will point out that if I do something and it earns money, then there’s no way I can be “retired.” I disagree, but that’s too long of a discussion for this question.

I had written about money for many years, first as a freelance writer (a side hustle that helped us pay off our mortgage) then as a blogger starting in 2005.

As I approached retirement in 2016, I started ESI Money as a new site where I could implement the learnings I had from my first site. I enjoyed it as a passion project, but it turned out that people liked it (especially my millionaire interviews which PoF is so kind to share on this site frequently.) I keep writing because I enjoy it, love discussing money, and it keeps me intellectually challenged.

And despite the fact that I have done very little to monetize it (I run ads and that’s pretty much it), I somehow net around $50,000 a year on the site. Not bad for something that is a fun hobby.

In addition, I have had a couple of entrepreneurial escapades in the past half-decade.

The first was I bought Rockstar Finance, grew/expanded it, then sold it for significantly more than I bought it for a couple years later.

Later I started the Millionaire Money Mentors, a forums-based membership service where millionaires share their wisdom with those who are looking to grow their net worths. That effort has been a tremendous success as well.

All told, I might average an hour or two per day total of “work” but it’s completely flexible. Some days I get in the zone and spend four hours writing. Then other days I don’t do anything on the sites at all. I did spend a good part of the fall writing up a storm and now have all my posts completed from now through mid-May. I’m planning on taking an extended break from writing while we are in Florida.

I’ll let you decide for yourself if I’m retired, working, semi-retired, or something else.

If it makes any difference, the money I earn from these activities is completely extra and not needed to fund my “retirement.”

Was financial independence a long-term goal of yours? Did you think you might retire early or be able to do so when you first got started in your career?

Let’s start with some perspective.

The people of my generation didn’t have FIRE, know what FIRE was, or anything else associated with the concept. The 4% rule and all the trappings that are now taken for granted were not commonplace when I was starting out.

With that said, I did always want to “retire early” which I translated to as “around 60.”

While this may or may not seem early to you, back in the day, anyone who retired that early was very early retired.

In addition, I set an arbitrary number for retirement: $4 million net worth. As stated, I had no 4% rule or any other guideline and though it seems silly given the ease at which we do retirement calculations these days, no real way to measure if I had enough. $4 million just seemed right.

So when I found myself in a job I hated with $3.3 million in net worth and all the FIRE tools we now know and love, it took me about three minutes to run the numbers, see I had more than enough, and retire.

Better late than never. And I still retired at 52, so it wasn’t that bad (and was well ahead of my original goal.)

Investing

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

My current asset allocation is as follows:

• 68.6% Stocks (index funds and dividend stocks)
• 22.3% Real Estate
• 9.1% cash

I do not have any:

• Bonds — Never liked them but especially don’t like them with interest rates so low.
• Cryptocurrency — Not for me. I’m doing well enough without it.
• NFTs — No way.

My journey has been roughly as follows:

• Got an MBA and started my career.
• Worked hard to grow my income so I had even more.
• Kept spending under control to expand the gap between what I made and spent.
• Invested that surplus. First I dabbled in individual stocks, saw I was no Warren Buffett, then plowed everything into stock index funds for 20+ years.
• After the financial crisis in 2008-2009, bought real estate in Michigan (where we lived) in 2012 when prices were still depressed.
• Made 10% income off those investments and watched them appreciate over the years. Plowed the profits into more index funds.
• Just sold all the properties this year. Invested a good part of the proceeds into real estate syndications. Kept the rest in cash for a rainy day (or a stock market drop.)

It was not rocket science.

In fact, it was really a series of pretty small steps that were done consistently over a long period of time and added up to something very big.

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

Mostly in tax-deferred.

I maxed out my 401(k) contributions for at least a couple of decades. And I’ve always been high income so converting them to Roths never made sense from a tax perspective.

That said, I don’t need them and won’t pull out a penny until RMD’s force me to. As stated above, our income more than covers our needs.

And we’re looking at something like $65,000+ in Social Security income at full retirement age so there’s that to deal with, as well.

Do you have investments in an HSA? How about 529 Plans?

I have an HSA from when I had high deductible health insurance at a job several years ago.

I had kept it in cash all these years, but when the market tanked in March 2020 I invested it in index funds and it’s almost doubled since then. Hat tip to the Millionaire Money Mentors for suggesting I do that. 😉

My kids are past college, but we saved too much in 529s. We currently have $150,000 in those. Hoping to pass this money to grandkids one day.

What has been your best investment?

In the broad sense of “investment”, it’s been my marriage. It takes two to become wealthy and I’ve always said my wife and I make a great Super Bowl team — I play good offense and she plays good defense (and can squeeze a quarter out of a dime.)

In a less-broad but still not traditional sense of investment was my MBA. It immediately doubled what I could earn and set me on a path of strong income growth throughout my career.

In terms of a pure investment and sheer amount gained, it was index funds. I put a ton in and they earned a ton.

In terms of an investment and the highest percentage return, the real estate by far. Buying after a market collapse and selling after years of run-ups tends to generate a pretty solid return.

Your worst investment?

Well, there have been a few:

• As a college student, I put money into an uninsured bank. I ended up losing $500 or so when $500 seemed like a ton of money.
• I spent a couple of years picking stocks and might have broken even (at best).
• I invested with some friends in a piece of property that was going to skyrocket since Walmart was moving nearby. Except Walmart didn’t move nearby. Four years of cash calls later, we sold at a loss.

Thankfully none of these were deathblows or huge amounts of money.

I tell others that to become wealthy you don’t have to avoid all mistakes, just the gigantic ones.

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Post-FI Life

What do you like to do with your free time? How much free time do you have these days?

All my time is free time these days! It’s awesome!

My main activities are:

• Exercising — Weights 3x per week, cardio 3x per week.
• Walking — Average 20k steps a day. Take at least one long walk with my wife every day.
• Pickleball — Play 4-6 times a week for two hours at a pop.
• Business — Write for ESI Money and participate at the Millionaire Money Mentors forums.
• Reading — Between physical books and audiobooks, I read about two books per month.
• Family activities — Have a cookout or something similar with our kids once a week.
• Travel — Now that we’re back at it, we hope to spend at least 2.5 months each winter in a warm place, take another 7-10 day trip every October, and maybe work in 2-3 shorter trips in between.
• Entertainment — My wife and I are Hallmark movie junkies (yes, predictable and sugary sweet, but you know what you’re getting.)
• Video Games — I have several types of games I like (Assassin’s Creed, Batman, or anything related like Ghost of Tsushima and Horizon Zero Dawn) and play them for hours (maybe 100 hours per game) when they release (which is sporadic.)

I also have several ideas from this list that I would like to try.

Do you enjoy travel? Tell us about a favorite trip you’ve taken.

If I had to pick one trip, it would probably be our first one to Grand Cayman (it was so good that we went a second time.) I’m hoping we can get back there in a few years. My son-in-law has never been and I’d like to show it to him.

We had been on cruises up to that point and while those were great, they only gave us a taste of an island (though we got to see several islands.)

So we decided we wanted to go to just one island and be there for an extended period of time. We did our research, picked Grand Cayman, and absolutely loved it.

Other good trips include a 13-day stay and cruise around the Hawaiian islands, a trip to Aruba before we had kids, and four Caribbean cruises (the best of those was a 12-day round trip from New York City.)

The best part was we took our kids and my parents on all of those trips (except the Aruba one for the kids and the first cruise for my parents.) Having your family along can make a great trip so amazing.

And as my mom passed away this year, I’m so thankful we got to take her with us so many times.

Do you incorporate giving (money or time) into your post-FI life?

Hahahaha. Is this a trick question?

I wrote The Case for Giving on the Road to Financial Independence. I think it’s all been said there.

We gave while saving for FI and still do these days.

In the past, we mostly gave cash, but now we donate appreciated index funds to our donor advised fund and give that way.

I’m working on a longer-term plan to ramp up our giving and give more sooner. I hope to have that new plan in place sometime next year.

While saving for FI, I was the president of a small non-profit for seven years and donated time on committees for another charity. I’d like to find a board to serve on these days, but it’s been hard to find the right opportunity.

I do view part of my blog writing as giving. People can get a lot of solid, free financial advice that I know works. If they apply, it the suggestions can change their lives dramatically for the better.

If retired, do you miss work? Do you get bored?

I do not miss my career or “working for the man” AT ALL.

And I do not get bored. My life is full of great activities.

My only regret is that I didn’t retire sooner.

What advice do you have for others hoping to achieve the financial success you’ve found?

My site summarizes my philosophy for how to become wealthy:

• Earn as much as you can through your career and/or a side hustle.
• Save as much of that as you can by keeping expenses low.
• Invest what you save to grow your wealth as well as generate income.

Do those for a couple of decades and odds are you will do quite well financially.

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I thank today’s interviewee for sharing their story, and I’ve shared my feedback privately with them. I wouldn’t want my opinions to influence yours. Please give your take and answer any questions they have had in the space below!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.