8 Things To Do With Financial Independence Besides Retire Early

Financial Independence is a wonderful thing, and it’s a worthy goal whether or not you have any interest in retiring early someday.

Many a FIRE blogger has realized this, coming up with different acronyms (or different words for the same acronym) when describing their ideal life. For example,

When Dr. Jim Dahle, The White Coat Investor, wrote this post, he was approaching financial independence, and has now surpassed it. However he continues to work two lucrative jobs.

Personally, I worked for nearly five years as an anesthesiologist after discovering we had achieved financial independence. And despite retiring from medicine having long surpassed our financial goals, I continue to publish blog posts for you four times a week. #retirednotretired

Prior to leaving my hospital position, I actually employed four or five of the following eight suggestions. There are some excellent ideas here, and I encourage you to implement all that make sense for you as you approach financial independence.

 

8 Things To Do With Financial Independence Besides Retire Early

 

There are many financial bloggers and blog readers out there in the FIRE (Financial Independence Retire Early) community including our own Physician On Fire, who writes a blog about FIRE directed straight at doctors. A recent forum post got me thinking about this subject. The forum poster asked, “Why don’t more MDs retire in their early 40s?” I answered that there were three main reasons:

  1. Most doctors aren’t financially savvy enough (both knowledge and discipline) to have enough money relative to their expenses to retire that early.
  2. Most doctors like their job, their career, and their profession and didn’t spend more than a decade learning how to do it just to quit as soon as they could. They truly weren’t in it just for the money.
  3. Many people who are savvy enough to retire early simply consciously choose they’d rather not make the financial sacrifices required to be financially independent that early in life.

 

Why I’m Not Retired

 

Now, obviously, the main benefit of financial independence is to be able to retire early. However, there are a number of other benefits to early financial independence and that’s what I’d like to discuss in this post. Before doing that, however, I’d like to take a minute to discuss why I’m still working.

Financial independence got really squishy for our family the last couple of years. It used to be a very hard and fast number. We even wrote it into our financial plan and indexed it to inflation. It was $2 Million back in 2006, which is now $2.7 Million [Update 2019: It’s now 2 years after this post originally published and we now consider ourselves FI].

Using the handy-dandy 4% rule (or suggestion, depending on how you feel about it) with a nest egg of $2.7 Million, we could spend about $108K a year, or about $9K a month. Our net worth now significantly exceeds that number. I suppose that according to our original written financial plan we’re now the big winners, and 11 years earlier than planned. Yay us! So why is it so squishy?

Well, it’s squishy for two reasons.

First, a large part of my net worth is now tied up in the value of this website and its associated empire. Illiquid is an understatement. However, given that websites tend to be valued between 2 and 3 times annual profit, the return on this “investment,” even subtracting out a reasonable figure for our time, is better than the expected return of any other investment we have.

Why sell something with a 40% yield and significant potential capital gains in order to invest in something with an expected return of 7-8%?

Second, it’s squishy because we started spending more money. We spend more than $9K a month. In fact, if you include our mortgage, $2500 a month for trips, and $2500 a month for major purchases like home upgrades and automobiles, we spend about $15,000 a month, or $180,000 a year, and that doesn’t include taxes and charitable contributions. [We paid off the mortgage in 2017.]

 

 

Is this some sort of weird financial disaster? No. It was a conscious decision to loosen the purse strings.  Could we spend less than $180K a year [now $150K a year in our post-mortgage life]? Sure. We’ve done it for many, many years.

But when considered from a budgetary perspective does spending such a small fraction of a rising income seem so crazy? Not really. Barring an impending retirement, that seems pretty darn sustainable. And if it’s not, at least we can console ourselves that we made hay while the sun was shining by saving something like 2/3 of our net income.

 

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Work Matters

 

So maybe we’re not quite financially independent, but we’re close enough that we make all of our decisions as though we were. Certainly, we will consider ourselves to be financially independent within a couple of years at our current rate of earnings and net worth growth. [PoF: that prediction turned out to be spot on.]

So why am I still working? Because I’m a workaholic. There I said it. Are you happy? Just kidding. But I do see work as an important part of my life.

In between my 1st and 2nd year of medical school, I had a one month mandatory class with the Air Force. But on either side of that month, I had a month completely off. My wife was working and going to school and we had no kids.

We didn’t have a lot of money, but I had all the free time I could desire. I got a season pass to the university golf course (it was $32 for the whole summer as I recall) and played most days. Then I’d go home and play some video games. Some days I’d go climbing or mountain biking.

Guess what?

By the time I’d done that for 3 or 4 weeks, it felt like work. It sucked all the joy out of my recreational activities. Weird, huh? But I felt very purposeless and like I wasn’t making a significant contribution to society.

I didn’t like that feeling at all. I did, however, manage to shoot one scratch round at our little 9 hole course. 5 birdies, 3 bogies, and a double-bogie. That never happened again.

 

Hunting is fun too, but only for about 20 hours. Yes, we eat caribou in Alaska. No, it doesn’t taste like chicken.

I spent a grand total of 11 years in school and training to become an emergency doctor. Like many doctors in similar specialties, I’ve always been one to look at medicine as a bit more of a job than a calling, although this concept is a spectrum. Some doctors might be 90% calling and 10% job, while others are 90% job and 10% calling.

I knew in medical school that I had many other interests outside of medicine and wasn’t going to be happy being a resident for 7 years nor working 80 60 40 hours a week for the rest of my life.

But that didn’t mean I didn’t LOVE doing it for 20 or even 30 hours a week. It turns out there is nothing in my life I actually enjoy doing for more than 20 hours a week, but I’ve got a dozen things I could spend 10 hours a week doing and love every minute of it.

At any rate, it seems a waste to spend a large chunk of my life training to perform a valuable, much-needed service that I enjoy performing and then stop doing it completely as soon as I get good at it just because I had enough money to do so. (Studies tend to show doctors about a decade out of residency are the most competent, and patient preference surveys agree.)

My “other job” running the WCI Empire is also enjoyable to me, again when I limit it to about 20 hours a week (which can be a tough challenge at times), and lends purpose to my life where I feel like I’m making a big difference in the lives of others. Why would I want to stop that?

 

Kids Matter, Too

 

Finally, I’ve got a 2-year-old and three school-age children. I would like to go on more adventure trips than I currently go on (I know it seems I already go on an insane number to some of you.)

However, it isn’t money, nor time that is keeping me from going on more trips. It is that my wife doesn’t want me leaving her home with the kids for 3-10 days at a time any more than I do now. [Don’t give me crap, she’s going on three this year without me including one to Finland, Sweden, Estonia, and Russia.]

In addition, perhaps the most important thing I’m doing in my life right now is raising kids, which I also enjoy (for about 20 hours a week). That 2-year-old isn’t going to be out of the house for 16 more years. I’ll be 58 then.

Given that I currently have two jobs I enjoy already, both of which pay me well, and given that I can’t go on any more trips than I’m already going on and still take care of things that are more important to me than the trips, what would be the point in dropping work completely?

Might as well keep working. It will allow me to have more money than planned to leave to my kids, give to charity, help others, pay toward the education of my children, spend in retirement, and spend now.

Plus, I get to save a few lives, reassure a lot of anxious people, and help a whole bunch of docs stop doing dumb stuff with their money. Maybe I’ll change my mind in a couple of years, but it seems unlikely to me.

Well, that brief personal note got pretty long. Let’s get on to your options.

 

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8 Things You Can Do with FI besides RE

 

# 1 Lower Future Expenses

 

If you’re financially independent, you can cancel your term life and disability insurance. That’s $500 a month for me, and I’m sure many of you are spending even more than that. You also might be able to retire mortgage or student loan debt (if you haven’t already) and possible future educational costs (by saving more now for them rather than cash-flowing them.) [Dumped my disability insurance back in 2018]

 

# 2 Lower Risk

 

William Bernstein, MD, author of The Investor’s Manifesto, likes to say “When you’ve won the game, stop playing.” What he means by that is that when you acquire enough money to sustain you for the rest of your life, stop risking it.

If you are financially independent but still working, you can dramatically lower the financial risks in your life by continuing to save and letting your investments compound, even if you use a less risky portfolio. You may go from a 4% withdrawal rate to a 2% withdrawal rate. Perhaps you can go from a 60% stock portfolio to a 40% stock portfolio. You don’t have to invest on margin either. FI without RE can allow you to lower risk.

 

[PoF: This approach seems counterintuitive to me. The lower the withdrawal rate, the more risk you can afford to take, and the more wealth you are likely to accumulate despite spending a portion of your returns. Even Dr. Bernstein himself stated this at the inaugural WCICon.]

 

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# 3 Take Some Time Off

 

Who says retirement has to be a one-time activity? Why not do a bunch of mini-retirements throughout your career? If you’re an academic, perhaps you can take an unpaid sabbatical.

If you’re a “gun-slinger” selling your services to the highest bidder, you can just stop accepting locums jobs for a few months or even a year, repeating as often as you like. If you’re an employee, you can give your two weeks notice. Chances are good you’ll be able to get another job in a few months.

This one might be a little tricky if you have a private practice, but you could bring in a locums doc and have a nice, long, well-deserved vacation. You may find you miss work more than you think. Or you may find you don’t miss it at all and decide that maybe early retirement really is for you!

 

# 4 Go Part-Time

I guess I kind of did this one. Due to the rotating shifts, odd hours, lack of holidays, and high-paced work, most emergency physicians consider full-time to be twelve 12 hour shifts or fifteen 8-9 hour shifts a month.

In 2016, I went from 15 eights to 12 eights. What a marked improvement in lifestyle even that small change was! Imagine going half-time. I wonder how many burned-out doctors would fall in love with medicine again if they only worked half as much. [WCI made that switch to 1/2 time in 2018.]

 

# 5 Drop Unpleasant Parts of Your Job

 

I did this one, too. I didn’t just drop 3 random shifts in 2016. I dropped my 3 overnight shifts, you know, the ones that start at 10 pm. Missing out on your entire anchor sleep is painful and the patients who come to an ED at night are not the same as the ones who come to an ED during the day (more drug-related issues, more psych issues, more Medicaid patients, lower acuity, etc.)

There was a significant loss of income from this decision since our group pays those overnight shifts the best (by far) but what an improvement in my practice and my lifestyle!

Now I’m up at 7 or 8 most days energized to get things done. I’ve lost 10 pounds and am in much better cardiovascular and muscular shape. No more DOMAs (Day Off My Arse- you know that day you worked until 6 or 8 am but are starting a transition back to day shifts). I get to go to bed the same time as my wife 27 out of 30 days a month (instead of more like 20 due to all the weird schedule flipping.)

In your case, perhaps it is also dropping night shifts. Or perhaps you’d like to see patients at a slower pace. Or drop weekends. Or quit taking call. Or do less clinic or less obstetrics or less trauma. Whatever it is, financial independence may very well allow you to mold your practice into your ideal practice.

 

 

# 6 Get a New Job

 

Sometimes your job just sucks. But you need it because it pays more than a job that doesn’t suck. Guess what? When you don’t need the money, you can walk away and take the good job that pays less.

Hanging around on FIRE blogs and forums sometimes makes me wonder if many of those people just have sucky jobs. There’s nothing quite like hating what you spend 40-60 hours a week doing that will motivate you to save 60% of your income.

 

# 7 Change Careers

 

Maybe you realized medicine isn’t your dream career, after all. Unfortunately, it is the only way to pay off your student loans. And that big mortgage you took out. And save enough to become financially independent any time soon. But once you reach financial independence, you can move into not only a better job, but an entirely different career.

It may pay dramatically less; these are often called “encore careers.” Perhaps you would like to be a river guide or a host for travel company. Or a ski instructor. Or a painter. Who knows? But if you don’t have to work for money, you can do any job you like. Retirement is squishy anyway. Lots of people earn money while “in retirement.” Only the Internet Retirement Police care.

 

# 8 Spend More

 

Imagine this scenario. You get to your financial independence number and realize you still like doing your job. And your job pays you very well. Now what? Well, now you start looking around to see if there are any ways you could spend money that might make you happier.

Perhaps you can give more to charity. Perhaps you toss some more into your kids’ 529s. Maybe you’d like to try heli-skiing. Or take your family on some expensive foreign trips. Or drive a Tesla instead of a Camry.

As long as these expenses are one-time, lump-sum expenses without an ongoing spending commitment, they won’t affect your financial independence one bit. You probably ought to be a little careful about that hedonic treadmill, but it seems unlikely to me that someone with the financial knowledge and discipline to become financially independent in her 40s is going to get herself into financial trouble by loosening up a bit.

 


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What do you think? What else can financial independence do for you besides allow you to retire early? Are you financially independent? If so, have you retired? Why or why not? If you are not financially independent, when do you expect to become so? Will you retire then? Comment below!

13 comments

  • Ryan

    “There’s nothing quite like hating what you spend 40-60 hours a week doing that will motivate you to save 60% of your income.”

    So true! I was experiencing a dismal level of burn out. I thought to myself “how will I be able to survive the next 20-30 years?”

    Now that I’ve discovered POF and WCI, I’m saving 50% of what I make. I’m on a short path to financial independence.

    This financial peace in my life has eliminated burnout. I enjoy my job now since I’ve created a large gap in my spending vs my income. I’m more generous in donating my time for free. I make better decisions because I’m not worried about hitting production goals. I take more vacations.

    I never thought saving a bunch of money would actually make me like my job more. I was hoping that by shortening my career by 15 or 20 years that I would be able to, at best, survive. But what I experienced was a radical change in how I approach my career and life itself.

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  • Michael M

    By living on 50% of my income I was able to go from working 5 days a week down to 3 days. This is the sweet spot for me. I went from hating my job and desperately wanting to change careers to actually enjoying it and looking forward to going in on those free days. I am astonished at my own change in mindset. I could do this for another 10-20 years, FI or not.

    • Cheers to part-time work!

      I didn’t have the same experience, but I can say that I enjoyed part-time over full-time. If I didn’t have anything else keeping me busy, like kids or this blog, I may have been more inclined to continue on a part-time basis.

      Cheers!
      -PoF

  • Millionaire73

    Really enjoyed this article and many similarities with our current situation on both the increase in spending and a lot more vacations but still saving a large portion (70% after tax) and I still enjoy my job and lucky to work 95% from home so very good work/life balance (have a 12 and 13 year old).

    Recently crossed 10M Net-Worth and make ~750K a year and of the best things I like is knowing I can retire any time I want (even though have no real plans to do so) or stop working with any customer I don’t enjoy. That freedom actually makes me better in my job and gives me more opportunities if I want them so a pretty cool circle. Very lucky!

    Here is a bit of our story if anyone is interested (done 18 month ago)

    https://esimoney.com/millionaire-interview-73/

  • Enjoyed this post. Perfect for the FI-acheiving-mid-life-crisis crowd (to which I belong).

    We have actually arrived at much the same conclusion as WCI. I have the same 20h/wk optimal attention span-type issue. Early on, I addressed that through working in multiple medical specialties (GIM/Respirology/ICU) and some non-clinical medical jobs. I am now moving more towards non-medical pursuits to keep diversification, but would not want to give up medicine entirely at this point. Raising kids is definitely a big game-changer.

    We also thought it important for our kids to see that attending to your finances is great for giving you options, but that it is also important to keep active. That could be at some kind of job and/or community contribution. However, it needs to be a real contribution. Simply living a life of leisure at all times just because you can is not as rewarding as it seems – at least not for us. Also, we enjoy some travel, but are more about putting down roots than sprouting wings. Sense of purpose is a key component to happiness and longevity. FI gives more ability to actualize that (medicine is a good career for that), but also the ability to balance that with facets of living a healthy happy life.
    -LD

  • I think #4 would be the best option for me.

    I work on the finance side of healthcare but certainly can resonate with the ’20-hour’ mark. Although I really enjoy the work, it is an easy field to get burnt out on. I would love to go into work from 8-12 M-F and unleash the rest of my day onto other projects. FI will get me there soon!

    Happy college football weekend!

    Max

  • It seems to me you learned how to live financially well.

    • Shane

      To even suggest that many, much less MOST, doctors in this country become one not for the money is absurd. The medical industry is filled with unethical money grabbing blokes with a propensity for illegal dealings.

      Go to other countries where doctors don’t rank at the top of wage earners and where it doesn’t cost $9,000 just to step into an emergency room and this might be closer to being true.

      Mother Teresas are very rare. The youth don’t bust their bodies for years because they want to help people. Hell they don’t even ease the gas pedal to save lives so why would anyone think they’d go through all that just to maybe make a difference?

      Let’s just be honest. Doctors do it for the money, and that’s fine. Most people work for the same reason. Doctors are no different.

  • I’ve really enjoyed having options now that I reached FI. I traveled so much this year that being home seems like a vacation now. There really are a lot of things you can do. I’ll give you a #9: Take up an expensive hobby you wanted to do but were unwilling before due to the cost. Options are good. I’m going to add this to Fawcett’s Favorites next Monday.

    Dr. Cory S. Fawcett
    Prescription for Financial Success

  • Pingback: Fawcett’s Favorites 9-9-19 – Dr. Cory S. Fawcett

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