You’re Closer to Retirement Than You Think

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Ever since our story went viral, we’ve been getting slammed with e-mails and comments saying “Yeah but you’re making a salary of $260K year! Nobody makes that.”

Okay, first of all, at our highest point (2014) before we quit, our salaries were $164K, which is $213K before tax (we live in Canada, not Denmark). And that’s after 11 whole years (including co-op) of busting our asses for our Corporate overlords, getting multiple promotions, and drowning in overtime. You don’t get that kind of salary fresh out of school or with an easy, fun degree. You have to pay your dues by crawling through the mud-filled, body-riddled trenches of engineering school, and climbing your way up the corporate ladder, 60-80 hour weeks at a time. It’s not easy nor is it fun, but boy is it worth it when you come out the other end, smelling like roses.

Fear will hold you prisoner, a portfolio of index funds will set you free.

Anyways, enough about me, let’s talk about you.

What if you’re not in engineering, and you don’t make that kind of salary, can you still retire early?

The answer…is an astounding: HELL YES!

And here’s how:

Update: Math has been updated based on reader feedback. Thanks for the assist guys!

Let’s say you make $50K/year and there are two of you. (The key here is to have both people working. If one person is dragging the other one, you’re going to have a hell of a time rowing with half the capacity.)

Help you row? I'm really more of an ideas person... Photo by Don DeBold @ Flickr
Help you row? I’m really more of an ideas person…
Photo by Don DeBold @ Flickr

That gives you a combined salary of $100,000. So after minimizing taxes with RRSPs/401Ks, TFSAs/Roth IRAs, we get $82,261.

Using the power of bad-assity to make our spending as efficient as possible, you can easily live off $40,000/year (we lived off less than this in expensive Toronto, and my buddy and fellow blogger Justin from lives off this with 3 kids). That means you can put away $42,261/year into the ol’ savings account.

But if instead of leaving it in a do-nothing savings account, you invest this amount in a portfolio of low-cost Index ETFs, with a conservative return of 6% you’ll have a cool $1.11 Million in 15 years. (And this is assuming your salary is only going up by 2% a year with ZERO promotions or raises in 15 years. Most people will get several promotions during this time) If you just graduated, that’s less than 1/3 of the number of years most people work before they retire.

YearStarting BalanceAnnual ContributionReturnTotal

Don’t want to wait 15 years? Well you don’t have to! Retirement for us young, passionate and (presumably) sexy Millennial Revolutionaries doesn’t mean sitting around and sipping cocktails by the pool. Hell no! We’d pursue our dreams! Maybe this means writing a novel, become a DJ, becoming the next Louis CK, whatever. We’re too creative to just sit around doing nothing. And that means you’d still be able to make money in “retirement.”

So instead of waiting 15 years, you can stop working in 9 years (same as us!) after you hit half a million. This gives you a sweet passive income of $20,000/year. By working on something you’re passionate about, and making only $10,000/year each (not insurmountable in any of those creative pursuits I just mentioned), you’ll be able to quit your 9 to 5 and do what you love in just 9 years.

YearStarting BalanceAnnual ContributionReturnTotal

Most of us don’t want to sit around doing nothing after leaving the 9 to 5 anyway, so having a goal of making just $10,000/year each is very doable.

Hell, with all the time in the world to build things, you might even find that you’ll make MORE money in retirement than when you were working! Don’t believe me? Check out these hustlers, who managed to do just that:



Financial Samurai

Pat Flynn

I know people in my field making even more than we did ($150K/year each) but can’t manage to save even 10%. So by making only 33% of what they make, you can still kick their ass and coast to retirement 36 years earlier just by optimizing your spending, Hey, if I can travel the world on $40,000/year, and other people can raise 3 kids on it, you can live off $40,000/year.

And keep in mind that your cost of living drops drastically once you stop working. You no longer have to pay for daily transportation, gym, dry cleaning, professional wardrobe, eating out, day care, etc, etc. So if you were living on 40K when you were working, you won’t even need that much once you quit. People have no idea how much they are actually PAYING to work (but that’s an article for another day).

But what if your salary is even lower? What if your family income is $65,000/year and living off $28,000/year (like one of our readers).

After taxes, that’s around $55.2K/year. But with a spending of only $28,000, this gives us a savings rate of 49%! Nice! By putting away $27,200/year, this couple can retire in 15 years.

But wait! What if they were to work part time, and make $10K/year each after retiring from the 9 to 5? This reader said he wants to pursue music and his wife wants to be a writer, and while it may take a while to get their income up to this level it’s, again, not THAT crazy. This brings down their time to retirement to only 6 years! (WAY faster than us!).

And I can already hear the Internet Retirement Police firing up their keyboards, saying that this doesn’t count as retirement. So let’s be crystal clear: Retirement means “retiring from the 9 to 5”. It means no longer having to do a job you hate just for money. You can step it down to part-time, or choose to do something you are passionate about, but never paid enough to fully support you. The portfolio gives you supplemental income so you can make these kinds of choices.

Retirement doesn’t mean doing nothing. Retirement means FREEDOM.

So even if you don’t have a 6-figure salary, as long as you understand how money works and how saving and investing can allow you live your dreams, you can STILL kick ass and retire from the 9 to 5, 30-40 years earlier than everyone else!

The real secret to early retirement is that savings rate matters more than salary. A higher savings rate means you need less to live on, which also means you need a smaller portfolio to quit. Win-freaking-win!

And just because you make more money doesn’t mean you’ll be able to retire earlier. If you look at my 6-figure friend, who saves only 10%, his time to retirement is 50 years! A higher salary makes it easier to save more but that doesn’t always happen. In fact, if you don’t understand the retirement math, higher salaries just lead to higher spending. (*cough* houses *cough* purses)

Purses full of BULLSHIT.
Purses full of BULLSHIT.

So, don’t get discouraged just because you don’t have a 6-figure salary. With a few adjustments to your spending, and a plan to make just a measly $10k/year each after quitting your 9 to 5 (which you will probably do anyway, because sitting on a beach every day is boring), you can retire from the nine-to-five in just 5-10 years.

Don’t let anyone tell you you can’t become financially independent just because you have a small salary. Growing up poor, if I had believed every bully who told me I was never going to be rich I wouldn’t be where I am today. And even though they grew up with more money than me, I am now richer than them. I came out ahead because I refused to let them tell me what I couldn’t do.

And you shouldn’t either. If you make less but keep more, you are WAY ahead of people who make 6 figures and piss it all away. And while they’re stuck in their job for the next 50 years, you’ll be free in just 5-10 years, doing what you love. Who’s going to be laughing then?

I’m going to leave you with one of my favorite quotes:

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75 thoughts on “You’re Closer to Retirement Than You Think”

  1. Great post. I love how you point out that you can retire and still earn a little bit on the side to cover part of your expenses. I sometimes do bike messenger deliveries on the side in order to get some exercise and because I think its fun, and it’d be so easy to earn 10k a year biking around the city making deliveries while getting exercise. Then use the rest of the portfolio to live.

    I’m definitely looking to reach your point. Unfortunately, the fiance is currently in residency earning 0 dollars, so right now, we only have one of us working. But once she’s done with her residency in two years, if we play our cards right, we should hopefully be able to get to where we want to be in 10 years, especially since we’re already used to living how we live now.

    1. The bike messenger deliveries sound like fun and a good workout. And yes I can imagine earning more than 10K/year just from that.

      Your fiance is in residency, meaning she’s going to become a doctor right? Her earning power is going to be INSANE when she’s done, so you’ll be able to get to FI in no time. Especially since doctors can shelter a lot of their income in a corporation once they open their own practice.

      1. We’re definitely aiming to save six figures a year once she starts working, if possible. It’s a vague idea anyway. Hard to have specifics in mind since we can only guess at what she will make and have no idea what life will throw our way in the next few years. Ms. FP is a dentist and is specializing in a dental surgery specialty, so her earning potential will be high for sure.

        A few hiccups in our plan. Ms. FP has six figures in student loans, so we have to take a year or two to pay that back and get ourselves back to even. (I luckily paid off my law school loans right away.). Then if she’s opening up her own practice, we have to deal with the cost of buying a practice and time it takes to ramp up and get profitable. So I guess in short, there are so many variables coming our way that its hard to know where we are headed quite yet. I think we’ll have a better idea in two years.

        1. Wow, a dentist and a lawyer! Nice. And your student loans are already paid back, so you’ll only have hers to worry about.

  2. Good stuff, as always. I think if your family is pulling down $100k, you can definitely still make this sort of thing happen. There’s obviously a point on the income ladder where financial independence at a very young age is no longer possible, and at that point you need to focus a lot more on income.

    Like you said, even someone making the average income for a household can technically make this happen. It’ll just take more time, and more hustling.

    People tend to focus on the end result, ignoring the hard work that goes into the process.

    This is one reason I don’t particularly like it when some bloggers make it seem like the process of frugality and hard work are no big deal. No need to do a bait and switch: you have to work really hard to make decent money, and it takes discipline (and practice) to not succumb to the army of marketers trying to separate you from that money.

    It gets easier over time…but it’s never truly easy.

    1. Yeah, I think frugality for the sake of frugality is stupid. It’s about prioritizing your spending (it’s fine to treat yourself on things that matter. Just not on EVERYTHING. And you definitely gotta make sure you’re not losing money to fees or stupid things that don’t make you happy) and working towards a financial goal. It gets easier when there’s a reason for it (like freedom). A goal of “let’s just suffer for the sake of suffering” is not a worthwhile goal.

  3. Well said, well said! I vomit in my mouth a little when I hear people say “I only make $40k/$60k/$100k – how can I ever retire early because I can’t afford to save anything?”. WTF. Live like you’re earning $30k (that’s almost 3x the poverty level in the US!!) and save the other $10k. Or $30k. Or $70k. Yes, if you make minimum wage it will be difficult to retire early, but not impossible. You won’t earn min. wage forever and you aren’t limited to working 40 hours per week either.

    1. “You won’t earn min. wage forever and you aren’t limited to working 40 hours per week either”

      Exactly. It’s so easy for people to just give up rather than be creative and think of ways to improve their situation. I know it’s hard and it takes time, but you can DO IT! The “can’t win won’t trying” attitude never helps anyone.

  4. Basically, two main points: retirement doesn’t mean doing nothing, but rather not doing what you hate full time, and saving aggressively. 🙂 My husband and I were both post-divorce broke house-training poor, but we were determined to rebuild with vengeance. 7 years, and we are doing great (without specifics), having quite an average salary. Life is about choices.

    1. “Life is about choices”

      Exactly. Good work on rebuilding with a vengeance! People don’t see how easy it is to save and invest until they actually try it. Once you start building wealth, it snowballs.

  5. Im 22 years old, graduated last year, have issues with spending too much money on booze, and just started reading your posts two weeks. I student loans up the ass both in OSAP and credit cards because I was fucked over by OSAP with one semester left. I have redone my entire budget, work as an admin by day and just received a second job at the Wine Rack, and have been applying to higher paying admin jobs. I make about 30K with my admin job and hoping that working 15-20 hours a week at Wine Rack I am able to fully pay off credit card debt by Decemeber 2016 while saving at least 10% of my paycheck per month.

    I am wondering if you could write an article on how to retire early based on one income of $50k.


    1. First of all, let me just say, good for you for hustling and working to pay off your debt by 2016. Since you are so young, you still have lots of time to increase your salary and build up your wealth.

      And to answer your question:

      As a single person, your earning power is halved…BUT your costs are also halved. So in this case, your situation is similar to the couple making $50K each. So instead of living on $40K/year, you would aim for $20K/year. With a 50% savings rate, and planning to work for 10K/year after quitting the 9 to 5, you can leave in 8 years on $250K (since you only need to generate $10K/year passive income in retirement).

  6. Saving is the key. Not spending available money takes a discipline that has faded over the years. That is one potential value of owning a home (which I know your thoughts on) that can serve those who prepared to make a long term commitment. Stay in a home (or keep it and rent it out) 15-20+ years and you will build equity that will support early retirement plans. Don’t refinance and cash out early, just settle in and build wealth slowly. Combined with your ideas for saving and investing, there is no reason financial independence can’t happen at a fairly young age.

    1. I have heard of homes as a “forced savings plan”. But that’s only one advantage. Owning a property causes you to take on a lot of risk and additional costs, that many people aren’t aware of until they become owners. And in Toronto and Vancouver, homes are getting less and less affordable for my generation, so that “dream” is turning into more and more of a nightmare.

      I personally don’t think you should “force” yourself to do anything. Taking away your free will and forcing yourself to be locked down is not my idea of a good way to live your life.

  7. There is so much I love about reading your blog. By the way, greetings from a fellow Waterloo alumnus. I graduated in 2013 and wish to follow down your footsteps. Who knows? You may just inspire enough Waterloo grads to start an early retirement Waterloo alumni group. Now that’s a lecture all Waterloo kids would want to attend in Tatham Centre (in case you forgot, that was out Career centre building). Keep writing and inspiring :).

    1. Hi fellow Waterloo alumnus! 🙂 Oh man, a Retirement Waterloo Alumni group sounds AWESOME! I’m seriously thinking of doing some talks at my old stomping grounds…

      Maybe in a few years.

  8. My wife and I earn approximately $100k so this is quite relatable to me, however, we don’t earn anywhere near $89k after tax. We pay approximately 23% in various forms of tax/EI/CPP so are left with $77k after tax. Even if we completely maxed our RRSP we wouldn’t be even close to $89k. How did you get to that number? TFSA’s don’t affect after tax income so it can’t be that.

    As for spending only $40k a year, that is perhaps doable if you a) Do not own a vehicle, b) Do not go on vacation c) Do not have children, d) Do not buy many clothes/furniture etc. e) Do not have a very fulfilling social life. I’m not saying it’s not doable, but it’s very hard for most people. Rent in VanCity alone for a 1 bed apartment is at least $20k a year so that’s half your money gone already.

    1. This comment sort of implies that you have to spend all the money in order to have a fulfilling social life. I don’t think that is necessarily a fair statement.

      But I’m a saver weirdo who is in disbelief when he sees his peers drop $100 at the bar on a weeknight…

    2. I think 40K CAD is doable, but you’ll need to be flexible with your budget. I was grocery shopping in Vancouver recently, and I think the cost of food is actually not that expensive. $10/lb for lobster!!

      Children will add to your cost, because you’ll need daycare, kid stuff, kid clothes, kid classes and so on.

      Furniture, clothes, do you really need new furniture every year? How many pairs of shoes do you need?

      Is hosting dinner at your place with your friends considered socially unfulfilling? I’ve replaced eating out with my friends with inviting them over for dinner. I guarantee my ingredients are far superior than eating out. Drinking out is probably one of the biggest rip offs out there. Alcoholic or not.

      I’ve been trying to push my budget below 40K actually, I’m not there yet, but with practice, I think this will happen

    3. I can’t help with the tax math…never came close to making those numbers. But spending 40,000 a year of course means that a high percentage of people would yes, have to change the way you live. Not having a car is a great idea. Reducing unnecessary purchases such as this n clothes and furniture is another great way to do this. It may require moving. It may require camping vacations as opposed to resorts. Or staycations. A social life that requires little money can be much more rewarding and fulfilling than one that requires throwing down money on restaurants bars and movies. Look outside! You are in one of the best cities in Canada to enjoy the out doors. I think the point that is being made is that it’s about being willing to look at the possibilities we all have regardless of our income bracket. Seeing what we can do as opposed to always feeling “not possible for me”.

      1. As I said it is doable. If I look at my expenses I know there are some (big) areas I could save. Our car alone ($6k) is one of them, we have a dog ($3k or so), eating out/entertainment ($2k), student loan ($1.5k), vacations ($2.5k) but all in all if we cut ALL of that out it’s an additional $15k on the $20k we are saving right now. Losing all of that would be a major life change (not that we couldn’t do it) and I’m not sure I would be enjoying life very much with essentially zero discretionary spending. Throw in a kid eventually and it’s game over.

        Cutting all that would get us to $35k a year savings. The remaining $14k we are missing from the $49k in this article is largely down to my original point, I don’t know where they are getting $89k after tax income from $100k gross. How do you get taxed at only 11%?

    4. You’re right, it should be $82K after tax, not $89K. But $82K is not “nowhere near $89K”. So if you max out your RRSP, you should be left with $82k, a whole $5K higher than what you’re currently getting.

      If you live in Vancouver, it will be more difficult to live on 40K, but it’s not impossible. Not wanting to and not being “able” to are very different things. Besides, once you build up the portfolio and live off the passive income, you no longer have to live in Vancouver. So your costs would go down a lot. If you “choose” not make any changes, then of course you’ll be stuck in the same situation. That’s a no brainer.

      And if you rent in VanCity, why would you need a car? Why wouldn’t you use public transportation, biking, and car sharing? Not having a car saves you a TON of money.

      1. Okay, good I’m not crazy. I thought I was doing something wrong with our taxes haha.

        I’m not a big fan of RRSP’s versus TFSA’s as with an RRSP you eventually get taxed on all the capital gains/interest you earn over the many years it’s invested. Your initial tax break eventually becomes a larger taxation later down the line. I prefer a TFSA knowing that I can withdraw it all without a dime of tax later in life.

        As such I put as little as possible into our RRSP’s and instead work on maxing out our TFSA’s (which have a lot of room as we both didn’t invest a dime in them until the past year or so). This obviously means we won’t receive as high of a tax break now, but when it comes to retiring we won’t be paying taxes on the capital gains in the TFSA. Soon enough they will both be maxed and we will resort to the RRSP room we have been accumulating over the years too.

        As for renting in VanCity with a car, that’s an argument I have with my wife a lot. Neither of us commute to work via car and we only use it on weekends and on road trips (we go camping a lot) etc. I haven’t done the math but I suspect we would save a good chunk by moving to a car share, however, the convenience of a car is hard to give up. I think I could manage but my wife would tear her hair out.

        1. “with an RRSP you eventually get taxed on all the capital gains/interest you earn over the many years it’s invested. Your initial tax break eventually becomes a larger taxation later down the line.”

          Actually that’s the beauty of becoming FI! Because our salaries have essentially gone down to almost 0 in retirement, we can withdraw from our RRSP tax free! We’ll be talking how to melt down your RRSP to pay essentially no tax in a future article.

          “Soon enough they will both be maxed and we will resort to the RRSP room we have been accumulating over the years too.”
          This is great! Soon, you’ll be getting more money in your pocket and that should help a lot with the expenses.

          Too bad about the car. If your wife were onboard, just by maxing out your RRSPs and getting rid of the car, you’d be saving an extra $11k to $15k/year!

  9. Good analysis, but you’ve somewhat overstated your after-tax income. I’m using 2015 rates for Ontario (I believe this is the province where you live).

    I’m assuming both individuals earn exactly $50,000, and both contribute exactly $9,000 (the maximum – 18% of their earned income) to their RRSP. They have no other deductions or sources of income.

    Each person’s credits would be the basic personal amount, CPP, EI, and the employment amount (totalling just over $15,700 at 15%).

    Each person would owe $5,650 in income taxes, plus they’d need to pay another $3,200 in CPP and CEI.

    Therefore, in Ontario in 2015, someone earning $50K and contributing $9K to their RRSP would pay around $8,850 in income and payroll taxes. If both people earned the same amount, their after-tax income (taking into account both income and payroll taxes – I suspect you forgot to include the latter) would be a bit over $82K per couple (of which $18K went directly into their RRSP).

  10. This is definitely not the norm. House is always an asset that goes up or down like the stock market. Instead of renting for 30 years in that time that money can pay off that mortgage. There are recession in the stock market that no one can predict. You happen to invest at the right time when the stock market hit new lows in 2009 and has been on a tear ever since. Again no one can predict that you will continue to get passive income unless you invest in a CD which is the only thing that is guarantee passive income. My question is this what if the next stock market of student debt crisis and your 100 percent investment loses that passive income?

    1. “Instead of renting for 30 years in that time that money can pay off that mortgage.”
      Some people don’t want to pay a mortgage for 30 years. A lot of things can happen in that time. You could get sick, you could get laid off, your family members could get sick. If you wait until you’re 65 to retire, you will have robbed yourself of the opportunity to travel, spend extra time with your kids/family, follow your passion. Life is short and time is precious. I’ve seen many people wait until 65, then get cancer, or Parkinson’s, etc and never have the opportunity to do what they love. And then it’s too late. They are bedridden and can’t go anywhere. When I turn 65, I’ll have travelled the world, spent time with my family, and accomplished my writing dreams. If I get sick, I’ll have ZERO regrets.

      “My question is this what if the next stock market of student debt crisis and your 100 percent investment loses that passive income?”
      This shows a complete lack of knowledge of the stock market. 100% investments? There is such a thing as asset allocation, which means part of the investment is in bonds, which is anti-correlated to the stock market. We also own REITs, which benefits if real-estate goes up. Also we use the indexing strategy, and do NOT picking individual stocks. In this case whenever a company drops out, it gets replaced with a new one, so your stocks will never go to zero.

      Most of our passive income is from dividends, so even if the capital value goes down, we still get paid.

      1. I completely understand your caution with real estate. The oversold idea of owning your ‘Dream Home’ has developed an overconfidence in housing related decisions and has lead property values to the very edge of affordability. But don’t throw the baby out with the bath water. Real estate is not without benefits and opportunities for financial gain. You will be paying for some form of shelter those 30 years and building equity that entire time is money you will get back…and then some. And while rents rise with inflation, the mortgage does not making your housing costs seemingly shrink each year. If you want freedom, then rent the house and go travel, letting someone else pay the mortgage for you. In time, that income will fund your travel and freedom.

        I would love to see your financial sensibilities applied to home purchases. Make smart housing decisions rather than emotional. Buy a multifamily and be a landlord for a few years, don’t ever sell it and avoid pulling money out. Not as fun sounding as the pretty house with the white picket fence, but smart housing choices will catapult your wealth building efforts.

        1. “And while rents rise with inflation, the mortgage does not making your housing costs seemingly shrink each year.”
          Equities also are a hedge for inflation. In fact, over the long run, the market beats housing. Your mortgage may go down, but not all housing costs shrink each year. You still have to pay property taxes (which rises as your home value rises), insurance (which rises with inflation), and maintenance (which also rise with inflation). And you can’t tap any of that appreciation without selling, which tacks on another 5% of closing costs.

          “Buy a multifamily and be a landlord for a few years, don’t ever sell it and avoid pulling money out. Not as fun sounding as the pretty house with the white picket fence, but smart.”
          This is actually not a bad idea, but not everyone wants to be a landlord. Why would you want to deal with tenants when you could be using that time to do things that you love? I personally have zero interest in chasing people for rent and making sure they don’t destroy my house.

          “If you want freedom, then rent the house and go travel, letting someone else pay the mortgage for you. In time, that income will fund your travel and freedom.”
          Who would be around to collect the rent, take care of the house, make sure the tenants don’t destroy your property? You’d have to hire a property manager, which is another added cost. And why would I need the income to fund my travels if the dividend income from my portfolio is already funding it? And the cost to maintain my portfolio is WAY lower than maintaining a house.

          You have some very good points about housing, don’t get me wrong. But it depends on what the end goal is. My end goal is freedom, not owning a house. Which is the point of this blog. And I did it without owning a home. Other people have achieved financial independence by real-estate investing, but that is not my expertise or interest, so I can’t comment on that.

  11. Great website. You have tremendous diction & enunciation; you should consider doing narration & voice over work for some extra money.

    I’ve always chosen jobs based on my expected enjoyment. I’ve accepted jobs when I had higher paying counteroffers. I once accepted a job and forgot to ask what the salary was. With one exception they were fun. I like to play with numbers and large datasets so I’m lucky that what I consider fun is frequently well paying. Now it has finally happened. I have a job I don’t like and difficulty finding a new one. It’s a new experience for me to have a job that I don’t look forward to every morning.

    My question to you is that it seems like when you were younger, you subsumed your dreams and desires and it was only when your work became so horrible that you couldn’t take it that you resigned. Quitting your job combined with an FI lifestyle/portfolio allowed you to pursue your dreams now. I’m the opposite. My dream is to find work that I enjoy. For 20 years I have “lived the dream.” Now the dream seems broken and I don’t have another dream to replace it. What would have happened if you enjoyed that job that you came to despise? Would you have still quit when you hit $1M even if you enjoyed it? Some people interpret your story as making lemonade from lemons. To me your story is one of redemption. You were talked out of following your path when you were younger but then through hard work, hard knocks & what seemed like hard luck at the time, you found your way back. However, without the income you made at that job you hated, you couldn’t be in the position you are now. There is an irony to that.

    I could retire now (in my 40s) but when you have had a lifetime of enjoyable & well paying jobs, you don’t look at retirement as the gateway to freedom. You look at it as the end of your dream. They say “Never fall in love with the job because it won’t love you back.” They also say “Follow your passions.” When you have jobs that allow you to follow your passions, it is difficult to reconcile those two statements.

    1. It’s not about having jobs you like or don’t like. It’s about figuring out your finances to give yourself choices. A good job can turn bad or you can end up finding a job you dislike (as you said). So being financially independent doesn’t hurt, it gives you more choices so that you don’t HAVE to do a job you don’t like just for the money.

      “without the income you made at that job you hated, you couldn’t be in the position you are now”
      You missed the whole point of the article. If you look at the math, you can see that you can be financially independent without having the salary I had.

      1. So much of the FIRE movement seems predicated on people not enjoying their jobs and dreaming of leaving their jobs. It seem like most of the FIRE bloggers have a dream of not working and doing something else. I would have to write a few paragraphs to really flesh out my thoughts but FIRE seems to go hand in hand with quitting the corporate gig, eschewing consumerism and following their dreams when in fact FIRE can stand independent of that mentality. How many of these FIRE bloggers wrote “when my passive income generated $X/month, I quit my job” or some variation thereof? That’s essentially what you did and more power to you but it doesn’t resonate with me.

        FI was the means to your end goal. FI was not really my goal because a) my upbringing made the FI lifestyle my default lifestyle, b) my father was in the finance industry and taught me at a young age the lessons you learned later in life and c) I understood that it’s always better to have more money than less money. One day I read an article and discovered I was FI without it ever previously hearing that term nor having made it my explicit goal. Now that I am FI & the job is the worst in my life, what do I do? I’m FI but can’t quite imagine the RE part of it.

        Most of these blogs are about the mechanics of FIRE. How to get out of debt, how to save money, how to invest, how to make money off your blog, etc. I like this blog because you wrote a lot of about the journey and how the FIRE got in your belly. I need a blog or forum for people who are FI, vaguely dissatisfied with their current situation and confused about what to do next. I am closer to retirement than I wish to acknowledge and it scares me because I don’t know what to do next. It’s a quandary I don’t like where I’m at now but I don’t know where to go next.

        “without the income you made at that job you hated, you couldn’t be in the position you are now”

        I only commented in this article because it is the most recent but I stand by my statement. If you didn’t make the money you made in that job, you couldn’t have saved as much in the same period of time and as a result you would have achieved $1M later. If you made half the salary, you probably would not be at $1M at this point in time. You interpreted the sentence to mean “without the income you made at that job you hated, you could never achieve the position you are now in” but that’s not what I meant. My point was that you couldn’t have found whatever level of contentment you have now without having worked at that job you hated. There is an irony there that you are largely silent about. Exploring that would make for good reading.

        1. “I am closer to retirement than I wish to acknowledge and it scares me because I don’t know what to do next.”

          This is actually something people have asked me before. What would I do in retirement?

          I think this happens because our identities are so tied up with our work, we feel like quitting would be losing that identity. And I don’t have an one answer that fits all (because everyone is different), but one of the advantages of not having to work anymore means that you can now try new things. And you no longer have to be limited to choosing only the work that paid you enough to live on. Like writing, for instance. The avg yearly income for a novelist is $5000/year. Now that would NOT be something most people would even think of pursuing, unless they are FI, have a spouse/parents supporting them, or were born into money. Once you retire you have those options. And it doesn’t have to be paid work either, there are lots of volunteer opportunities out there too. You just have to go out and try things. Not changing your situation and just waiting around for a magically solution to appear isn’t going to work.

        2. I don’t think there is irony here. The general dissatisfaction of the current millennial generation is genuine, and it’s not because people are just lazy. Human beings has been in this planet for 150k years in this planet and capitalism is a recent fact. The problem is that most of the systems we are part of, do not provide the right conditions to happiness. I’m not talking about utopia, but more aligned with human neurological and psychological processes. I don’t want to go too much into details here, but let me give some examples: human beings are hardwired for helping others, it’s a natural mechanism for species preservation, what do we do in corporations? from the outside perspective we are just accelerating the destruction of our own species and planet, from the inside perspective we are just competing with people that we spend most of our time with, who were supposed to be our friends. Another thing that brings happiness is for human beings is mastery and self development, this is not compatible with a money-driven business. It seems that this movement is a small attempt to get control back from the Matrix, we have the need to be actors of our own life, or at least try.

    2. Don’t follow your passion, let your passion follow you.

      No job will last, remain the same, or remain a happy job. And no job will remain a miserable job either. But get up each morning knowing you will do your best.

      If your current job is one you don’t love, find aspects about it that you do enjoy, and live for those enjoyable aspects. But also find a hobby for your off hours so you have something to look forward to each day.

      And budget and save your money into a F-U fund. A F-U fund is a lovely thing to have when a boss thinks they’re going to double-down on the misery and get away with it.

      I hope things improve for you.

  12. I am glad I found your website and binged read your journey. I agree with your sentiments and hope folks of all generations can at least be open to this new way of thinking. I was not this progressive. But 2 events changed my whole life view. First, my father dying of cancer at 64 when he was just ready to retire (we are Asian immigrants and they labored hard for many years). So I saw first hand that tomorrow is not a promise. Second, losing my job from lay off at 32 years old. Angels spoke to me and I took my severance and savings and went to Spain for 2 months to learn Spanish and just recalibrate my life. I was never the same again. I valued freedom more than real estate and name brands. I have a long ways to go living outside of NYC on one income but your info ia encouraging me that I can make it work if I stay committed! Thanks! … I would also be interested to see how one can only pay 11% tax. Keep on firing it up!!

    1. Hi 9laives,

      I agree with you. The freedom is the priceless. No one knows what will happen tmr. In fact, it may never come.

      It’s better to make the decision now rather than wait it later.


  13. I have two questions if you don’t mind

    1- what if the market crashes like 2008 how you will protect your investment?

    2-also, what do you think about investing through robo advisors such as wealthsimple vs low etfs?

    1. 1- We did invest during 2008 without losing any money. If it happens again, we would rebalance, just like we did last time. And while that’s happening, we’d live off the dividends without touching the principal. Another backup plan is that we’ve set aside enough cash to support 3-5 years of living expenses.

      2- We haven’t used robo advisors so can’t comment on their effectiveness. But that’s something we can look into in the future if our readers are interested.

  14. Correct me if I’m wrong but I just noticed your updated tables are inaccurate. The “Return” column formula is calculating a 6% return based on the annual contribution, not the starting balance.

    For example in the first table year 19, a 6% return on $959,200.08 is $57,552, not $3,621 (which is 6% of the annual contribution of $60,369.11)

    I suspect with corrected returns you’d reach $1 million FAR faster than 19 years.

    1. Agreed. The table appears to calculate the return only on the annual contribution, not on the accumulated total.

      I re-ran the numbers (assuming the return is based on the prior year’s balance – so the return is $0 in year 1, $2,536 in year 2, etc).

      In this case, one would end up with just under $1M ($994,639 to be precise) after 14 years – half a decade faster than the first table shows. After 19 years, one would have more than $1.65M saved up.

      (Obviously this assumes the same rate of return every year, which isn’t realistic, but it still demonstrates the value of compounding).

      1. Correct again! This proves that updating spreadsheet while simultaneously answering e-mails and messages at 2am is a TERRIBLE idea.

        Thanks for checking my numbers guys!

  15. We tried contacting your fee based financial advisor but he couldn’t get us because our initial principal is not enough. Do you recommend a directory to find good fee based financial advisors? We lost money working with 2 companies in Toronto which financial advisors are actually disguised salesmen.

    1. Not sure of your initial principal as you never stated but I wouldn’t bother with advisers until you get a good $150k+ in assets. Their fees just aren’t worth it until a certain threshold is met.

      Sadly, most good advisers require more than that still. We work with an adviser through my company and they do not take clients with anything less than $400k. It’s an excellent investment management firm but not easily attainable for many people. Garth’s firm is probably in this range, if not even higher. He must have countless people knocking on his door from his readership full of (seemingly) millionaires.

      We’ve experienced a lot of the “sales” advisers and it really puts you off using them at all. I’m quite content holding a few ETF’s until my portfolio builds into something where we can get a high quality adviser.

      1. I agree with VB. Don’t bother with an advisor until you have at least 150K portfolio. And most of them are just mutual fund salesmen anyway.

        We used TD waterhouse e-series mutual funds (0.33% MER) before going with Garth. Other readers on this blog have recommended Questrade for low-cost ETFs, so you may want to check that out (haven’t used it ourselves yet, so can’t comment)

  16. Hi Kristy,

    Great to know your blog. I have the same perception as you. Time is of essence to me. Money cannot buy back time.

    Will you be able to share the current percentage of your net worth as your
    emergency fund in your retirement?



      1. Kristy

        Thanks for your information which is very useful for my retirement plan.

        I am now in the stage of being able o pull a trigger on my full time employment at any point of time. Though my current stash is a long way from yours, however this stash has given me the assurance and ability to quit from the rat race of the corporate world. Likewise the same as you, I don’t have a house asset which will have subjected me of the burden of loan. Being debt free had given me the choice to choose the desired lifestyle.

        Do keep your postings coming. You have my support.


      2. Hi! Actually, I was wondering about the same thing. Do you keep your cash in a money market fund or high interest savings account or a 5-yr laddered GIC?

        Also, I think it’ll be easier for me to to consider cash as part of the portfolio. If that’s the case, can you confirm that it would mean a 3.5-3.75% withdrawal rate over all the assets? I remember checking the cFiresim and found that was a pretty good SWR!

        Thanks! You guys are great!

        1. We keep the cash portion in a high interest savings account. It has higher returns than a GIC and you don’t need to keep your money locked up.

          It’s always a good idea to keep part of the portfolio in cash, just in case. Not sure what you mean by whether the cash would mean a 3.5-3.75% withdrawal rate? We can get 3.5% from the dividends and fixed income and 0.5% from capital gains. On a down year, we could either reduce our expenses down to 3.5% or tap into the cash cushion so we don’t need to sell at a loss. Is that what you mean?

  17. Hey, sorry for being unclear. For me, I have a strange aversion of seeing cash in my regular chequing account so I like to keep it as part of my portfolio in my trading account. It’s a behavioural thing for me I guess.

    Earlier, you mentioned that you don’t consider your cash cushion as part of your 1M portfolio. And since you have 10% outside, I wanted to know whether that meant you are really withdrawing 3.5% instead of 4% from your portfolio combined with your cash. How you would you rebalance due to asset allocation? For example, would it now be 10% cash, 30% fixed income and 60% stocks?

    On another note, can you write a post about preferred shares, please? Your intro post was an eye opener for me but I am having difficulty grasping how it’s not as high risk as a dividend yielding portfolio.


  18. Family of five here spending quite a bit more than $40k/year. Justin at Root of Good is quite impressive in his frugality and I love his blog just like yours. But I think it’s important to note that his expenses don’t include rent/mortgage or child care.

    If you have two parents working and don’t have grandma available for free labor, then you likely need childcare. We have very affordable childcare and it still sets us back $22k/year. Rent…well I won’t even mention how much we pay yearly in rent, because it’s god-awful!

    Here’s how Justin keeps his family budget for 5 at $40k:

    1. There’s also child tax benefits that we’re forgetting about here. According to Jeremy from GoCurryCracker, with the child tax benefit he actually ends up having money left over after child costs. In Justin’s case, I don’t know how much he’s getting for child benefits (he mentions $3,000 child tax credit, but I don’t know if that’s per kid), but that also helps bring down the cost.

      There’s also this amazing family who are planning to retire with 13 kids:

      It’s more difficult with kids, but still doable. And the childcare costs go away after you a) retire or b) they go to school (around 4). It’s not an indefinite cost.

      1. I definitely agree it’s possible to retire early with kids. I just question the ability to have two working parents and only $40k in annual expenses. In the US public school starts at age 5. Our local elementary school’s hours are 9 – 3:30 pm. Sadly, my spouse and I both work longer hours than that. Before and after care is offered at the school for $615/month. So while the cost of childcare is certainly finite, it’s not only until age 4.

        I wonder what child care costs Jeremy and Winnie have since they both are early retired? Whatever it is, it’s likely quite low because it’s not full time childcare, ergo the tax benefit in their case might outweigh their costs. I assure you there are not $22k of tax credits to be had to cover our rather modest childcare costs.

        Loved seeing the pics of Kuala Lumpur. Looked amazing!

        1. Is there anyway you can shift one of your work schedules? Or maybe only shift the schedule for part of the week for one of you, and arrange with friends to watch each other’s kids?

          Also, is the $615/month per kid?

          1. Yes, $615 per month per child. $615 x 3 kids x 12 months = $22,140 annually.

            In our current careers , flexing our hours to avoid childcare is not an option. Especially since our young children are not in school yet. But I like your creative thinking!

            We’re not sweating the $22k/year too much because we are well compensated for our work which is also personally rewarding. And we are still able to save around 65% of our income. By working at the same time during the work day, we are also OFF at the same time allowing for more family and couple time. If one of us could flex our hours to avoid childcare [like one of us works graveyard shifts and then watches the kids all day (yikes, no thanks!)], that would seriously cut into the time we have together as a couple and as a family.

            Note of clarification: Justin mentions the US child tax credit ($1000/child) which is available to couples making less than $110,000. We don’t qualify. I saw Jeremy’s 2017 roll up of expenses today and didn’t see childcare in there, but maybe you had seen them in prior posts.

            Ultimately, you millennials who are setting yourselves up for retirement BEFORE having kids have really solved the riddle 🙂 Once you have kids, saving is harder. Working is more expensive when you have kids, no matter how many bloggers try to tell you “kid are so cheap!”

  19. Hi FC,

    This is a different prespective. I think that it is all down to the mindset. The willingness to adopt the flexible change is the way to shorten the retirement timeline.


    1. I would say around 65% for a single person, because they don’t have the advantage of sharing accommodations like a couple would.

  20. What are your formulas or calculations for this table? I’m new to all of this and am trying to make my own table like the one you show above but I’m trying to follow your logic.

    1. Return = Starting Balance * 0.06 (assuming conservative 6% return a year)
      Total = Starting Balance + Annual Contribution + Return
      Starting Balance = previous year’s Total

      1. Thank you! Where I’m getting confused is how the annual contribution is growing. Do you take that years’ starting balance and add your annual contribution? If so, it seems as though you only contributed $845 in year 2. I doubt that’s the case. If I plan to max out mine and my husbands’ IRAs, each at $5500/year. Wouldn’t it be the years’ starting balance plus $110,000 per year as the total contribution?

        1. In each “year” row, we’re assuming beginning of the year. So your annual contribution will be generating investment gains throughout that year. That’s why the return isn’t calculated until beginning of the next year.

          Feel free to make your own chart using end of the year, if that makes it easier for you. But just remember that when you look at the final result (years until retirement), you’re looking at end of that year, not the beginning.

    2. Hi Luci,

      I think that the above serves as a general guide. You need to create your own version in accordance to your prevailing circumstance. It will reflect more relevant to your situation.


  21. I came to the U.S. in 2000 as a foreign student. Finished my college in 2003 and found a job starting at $45K/year (never make more than $70K). After 10 years of full-time and 6 years of PT, I have accumulated a net-worth of $550K on my own, not counting on my spouse. Now I only work 15 hours per week and the rest I spend with my family, play tennis, gym, park, library, cooking, watching Netflix, etc. It is a great feeling when you have financial options. Our family loves to travel internationally too. From day 1 of working, I already knew about maximal savings while still living well. You don’t need to make a six figure income to be able to accomplish an ER goal.

  22. I make 40,000 a year and I’m single but the numbers above where for two people so you can live off half of that. So is my number of years just doubled because im not making 100k or is there another way retire in 10yrs?

  23. Newbie here :

    Travel question- When I convert from CAD to USD I end up with basically the same amount of money spent.

    So won’t USD converted also equal the same amount?

    Just wondering how making a US salary can give you more in a different country.

    Any website with info is greatly appreciated! Looking to learn.
    Thank you🙂

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