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A frequent question asked by readers is: “What would you do if 2008 happened again?”
Would we cry? Whine to our mommies? Admit defeat and run back to work with our tails between our legs?
If you want to see what would happen if I whined to my mommy, read the book “Battle Hymn of the Tiger Mother”, and since I’d rather put a bullet through my head than go back to my previous employer, those 2 options are out.
But as much as I love touting the merits of thinking like an Engineer and having backups, sometimes you need a real life example.
Which is why I’m ecstatic to introduce you to Rob and Robin Charlton, an American couple who retired 12 years ago at the age of 43!
We met Rob and Robin in Iceland recently. I had been stalking–er I mean, reading– their blog and found out they’d be there during the same week as us, so I reached out and scheduled a coffee date. And as soon as we sat down and started talking time flew by! We could’ve easily chatted for a good 3-4 hours if we didn’t have plans afterwards. This always happens when meeting other FIRE people. We can’t even talk to our own parents for 3 hours straight, and yet, whenever we meet FIRE enthusiasts from all the world, even though we’re strangers at first, a few hours later it’s like we’ve known each other forever!.
Anyway, during our chat, we found 2 interesting facts about Robin and Rob:
1) They had regular salaries as a nurse and technical writer/coordinator, never making more than $89K combined.
2) They retired just 1 year before the 2008 financial crisis and managed to come out unscathed!
Of course, we had to invite them here to pick their brains. So without further ado, let’s find out how they did it!
Welcome to the blog, Rob and Robin!
First let us say it was great getting to meet the two of you in Iceland. We love serendipitous meetings of this sort in remote corners of the world!
Feel the same way! Okay, so what made you want to become FI and retire early?
I keep a journal and came across this interesting entry from way back in July 1995.
“It struck me the other day that if I did some easy kind of work for less money than what I earn now, I might very well have to work for the rest of my life. On the other hand, working hard now, I can save up enough to fund an early retirement and be done with it once and for all. If I’m lucky and live to a ripe old age, then 15 years of work and saving now could lead to 45 or 50 years of work-free living later.”
This was the first entry where I contemplated ultra-early retirement as a solution to my fundamental problem of having to work for a living at a job I was only okay with. I shared these ideas with Robin early on, got buy-in, and we were off and running.
I guess you could say I was never built to be a corporate drone! From a young age I always wanted to be a writer. Read: impractical. It took me nearly a decade just to get my bearings and find a career I could stand, and even longer to realize that making money could actually be a part of my escape plan from corporate America. I was past 30 before the gears began to click into place and I realized what I had to do. I had to “get in” before I could “get out,” working hard for a period of time to permanently put myself out of a job.
It’s not that I was lazy, exactly, it’s just that the kind of work I wanted to do didn’t pay anything. And since I wasn’t willing to subject my wife (and possibly kids) to a lifetime of poverty while I struggled to find myself as a writer, I felt I had to find another way. That way was investing. Back then there was no FIRE movement so we had to figure it out on our own. We made some mistakes along the way but in the end we got there.
Word! I totally agree with you on the impracticality of becoming a writer. We didn’t realize how little writers were paid until we started writing children’s novels on the side. Glad we didn’t quit our day jobs.
Okay, so you retired in Dec 2006, at the age of 43, from your jobs. What was it like living through the 2008 stock market crash as early retirees? Since this crash happened during the first 3 years of your retirement, how did you mitigate the sequence of returns risk?
The crash was pretty painful coming as it did right on the heels of our early retirement. We had one good year and then, Boom! We were in the midst of an expensive trip when the bottom fell out, so it felt a little crazy to be spending money on fun stuff at a time when our stock investments had dropped by 40%.
Luckily we had a strong bond position and that was a comfort. Bonds went up even as the markets went down, so we could withdraw money from there without feeling too bad. It’s for this reason we recommend investing in a bond index fund as your target retirement date approaches: it’s a safe haven during a storm. Bonds may return comparatively little during good market times but they’re a blessing in bad market times.
As to how we weathered the storm, the short answer is that I went back to work for a brief period of time so we could “tread water” in terms of our investments and take as little money off the table as possible until the markets could heal. A consulting job more or less fell into my lap and I jumped at it. A three-month proposal assignment turned into six months, and that more than covered our needs. In fact we ended up taking an expensive trip to Italy and Switzerland and a cruise to Greece and Turkey because of the extra cash the job brought in.
The worst of the Great Recession only lasted about two years. After that the markets mostly recovered, although it took five years before our stock funds finally started hitting new highs. Since then it has been relatively smooth sailing. Our nest egg has grown from around $925,000 when we first retired to $1.2 million today, despite withdrawing 3% to 4% per year for living expenses.
If the consulting job hadn’t conveniently appeared, our Plan B was to move temporarily to an inexpensive country overseas and live as cheaply as possible while we rode out the storm. Some place like Thailand or Mexico. We figured we could get by on $25,000 per year in a place where our dollar stretched further – and the travel we’ve done since then has borne this out. So remember, if the worst should happen, move to Thailand! Or Cambodia or Guatemala or Eastern Europe or a whole host of other countries or regions where your dollar stretches further. The move doesn’t have to be permanent, but what a fun temporary answer! And since you’re overseas anyway, you may as well consider renting out your home or condo if you have one, giving you another passive income stream to draw upon, one that’s not tied to the stock market.
Great minds think alike! That’s why we like to say: “If shit hits the fan, we’re going to Thailand”!
Speaking of Thailand, you’ve been traveling since retiring, but unlike us nomads, you have a home base ( a condo in Colorado). Tell me about your decision to have a home base. Have you ever considered being nomadic?
Well, this takes a little explaining. We actually have been nomads for about half of our early retirement years. When we first retired we sold our home for around $300,000 and invested the money in a bond index fund, then spent the next two years traveling around the U.S. and abroad with no home at all. Our expectation at that point was to stay nomads forever. But in the end we missed having a home, so during the depths of the Great Recession we bought a small condo in Boulder, Colorado, our old stomping grounds where many of our friends are based.
We’re probably the only people in Boulder who paid just $95,000 for a home in the downtown area, which is unheard-of low in Boulder. We bought the condo outright using proceeds from our bond fund. Mind you, it’s only 380 square feet but it gives us a nice place to call home when we’re not traveling. The condo has since appreciated to $230,000 per Zillow. The takeaway message is to keep your eyes open for opportunities even once you’re retired and to “think contrarian” – buying when others are selling and vice versa.
To carry on with our story, we happily lived in our condo from 2009 to 2015 in between travels, but eventually we came to realize the condo was just sitting empty for long periods of time so we decided to rent it out. We found a great renter and have since been on the road nonstop. It’s been three years so far and we expect to add a fourth year before settling down again. So I guess you could say we’re periodic nomads.
We’ve discovered renting out the condo makes for an excellent secondary passive income stream. It rents for $1,500 per month, which we can put towards other lodgings around the world. The income has helped us ride out the winter in a beachfront condo in Florida, hike the 500-mile route known as the Camino de Santiago in Spain, and rent Airbnb lodgings by the month in places like Ireland and Quebec.
Wow, $95K for a condo in Boulder is a fantastic deal! With the rent at $1500, you’ve even managed to get a place that follows the 1% rule of real-estate investing. Well done!
And I can see why you’d want to go back on the road again. The travel itchy never goes away–it ebbs and flows. Meeting in Iceland was so much fun and it made me realize that we all have the travel bug. Tell me about 3 of your most memorable travel experiences.
Same here! It’s usually when we’re traveling that we meet people who we think of as kindred spirits – people who love to travel and have a zest for life, and who like collecting memories and experiences more than stuff.
1) Our first trip immediately after retiring was to New Zealand and Fiji, a five-month trip altogether. After 15 years of full-time work and limited two-week trips, we were bursting at the seams to get started with “real travel” and couldn’t have picked a better first destination. We purchased a used car in New Zealand (selling it back again at the end) and started exploring. A definite highlight was “Adrenaline Week” in Queenstown when we went bungee jumping, skydiving, tandem hang gliding, jetboating, and aerobatic flying all in one crazy week. One adventure just seemed to lead naturally into the next. Over the course of our trip we also went zorbing, swam with dolphins and seals, kayaked in Doubtful Sound, and hiked more than half of the Great Walks in New Zealand, logging some 300 miles on foot. Three weeks in Fiji relaxing on three different islands afterwards made for the perfect reward.
2) The Galapagos was a dream destination for us and it lived up to our dreams. We spent a week on a yacht (half price if you purchase it last-minute in Quito) and another week island-hopping. We knew about all the unusual land animals in the Galapagos but were surprised at all the underwater fun – like getting to snorkel with penguins! Watching them zip around at what felt like light speed chasing fish was something we’ll never forget. Equally memorable was diving into the water and immediately being confronted by an enormous manta ray with a 20-foot-long wingspan – every bit as big as the dive boat we were on.
3) We were also surprised at just how much we enjoyed the Camino de Santiago, a 500-mile trek through northern Spain. It mixes history, spirituality, camaraderie, and nature in roughly equal parts. (And wine: don’t forget the wine.) You hike from one town to the next and sort of fall into a rhythm that’s deeply relaxing. You take your meals together at “pilgrim dinners” most nights. We chose to sleep in private rooms as dorm sleeping isn’t really our thing, but that’s the beauty of the Camino: you can tailor it to your own needs. You can also go as fast or as slow as you want, it’s all up to you. We made great friends along the way and felt uplifted by the whole experience.
We’ll honor your three-trip limit and stop there! But for those interested, we detail all of our travels on our webpage, Where We Be.
Sounds like a blast!
During our chat in Iceland, you mentioned that both of you had to take some time off traveling to take care of elderly parents. What was that like? Did it change your perspective about early retirement or travel? Did it change any financial goals?
When Robin’s mother had a stroke, Robin became her primary caregiver. She spent close to four years caring for her, and having the time to do that was precious to her. If Robin had still had her full-time job in Colorado this would have been impossible for her, since her mom lived in Maine. Of course our traveling was limited to shorter trips during this period of time, but this is where the perspective comes in and you realize there are other things more important than travel when it comes right down to it.
Being financially independent let us do what we needed to do without worry. We could follow our hearts and be where we needed to be without concern for money. When my dad passed away around this same time, I was able to spend time with my mom helping her through that transition. And more recently, when my mom’s home flooded during Hurricane Harvey, we were able to devote several months to getting her back on her feet again. The point is, when the unexpected happens, financial independence makes it so much easier to be where you need to be and do what you need to do. If anything we spent less during these periods than usual since we weren’t traveling as much. We find life can be pretty inexpensive when you’re mostly cooking in and staying put.
While Robin was caring for her mom, I found I had more time on my hands than usual, so this was when I ended up writing the book on How to Retire Early. The lesson here is that even when life takes you in a different direction than you expected, you can make the most of it and achieve life goals that are important to you.
Of course elder care becomes more likely as you and your parents age, so if you have no kids, then there can be a nice little window in your thirties and early forties when it’s easier to be footloose and fancy free. If you happen to retire extra early, this could be one of your best chances for carefree world travel.
Great point. We’ve also found that after FI, we’ve had more time to spend with our family and friends, despite all the travelling. And eventually when we’re needed, we’ll settle down and help out with parents, as you did, but it makes sense to get as much travelling under our belt as possible before then.
Let’s talk about your book. You co-wrote “How to Retire Early: Your Guide to Getting Rich Slowly and Retiring on Less” and it’s getting great buzz through word of mouth in the FIRE community (the book is what led me to your blog). What inspired you to write it?
A year or two before our book came out we were just living our retired lives and traveling around the world and loving it. We had no thoughts of writing a book, but we did have a bulleted list of twenty tips on Where We Be about how to retire early for others who might want to do the same. A journalist happened upon this page and asked to interview us. Her article ended up getting featured on Yahoo, so one day we woke up to our own mugs smiling back at us from Yahoo’s homepage:
The result of our fifteen minutes of fame was a flood of emails in our inbox and 130,000 hits on Where We Be, which up until then had received so little traffic we thought of it mostly as a travel sharing site for family and friends. The flood of questions we received was the impetus for the book. We came to realize we had a story to tell, and that a fair number of people were starving for the kind of information we had right at our fingertips from having just lived it – information on the practical aspects of how to retire early.
The emails we received were filled with specific questions, many of them about health care, but also about how much money we retired on. Others asked how much of a nest egg was enough, where did we invest our money, how much did we withdraw each year, and oh, by the way, didn’t we worry about running out of money?
As we responded to these emails we began to realize we had the initial building blocks for a book. We decided to provide the kind of book we would have liked ourselves: one that was heavy on details and provided hard numbers that could be used as a sort of yardstick to measure one’s own progress on the road to early retirement. I had searched for exactly this kind of book as we were planning our own early retirement and hadn’t been able to find one.
Keep in mind we started investing in earnest back in 1995 and retired in 2006. There was no FIRE movement during our investing years and virtually no books about retiring early that you could put your hands on. None provided the kind of concrete details we were looking for about exactly how to retire early. Your Money or Your Life influenced us on the frugal living side but not so much on the investment side, focusing as it did on laddered bonds back in a day when bonds had provided substantial returns. What I mostly relied on was Kiplingers articles about how to save for a typical retirement at age 65. As our savings grew I created an Excel spreadsheet to track our investments and carefully noted our financial totals at the end of each year. All of these details came in handy when writing the book.
“So you were more or less flying blind towards your goal,” is the way you put it to us in Reykjavik, and that’s about right. We tried to make what seemed like wise financial decisions and hoped for the best, but we had no real role model to follow when it came to the specifics of retiring early. You might say we served as human guinea pigs for what does and doesn’t work.
The FIRE movement that has since blossomed has been wonderful to watch, and we’re excited to see so many young people getting off on the right foot from the very beginning. There’s a lot of great information out there now, and people like you are achieving financial independence much earlier than we did. Retiring at 43 is starting to look a little mundane by comparison!
Okay, I’m pretty sure the Internet Retirement Police is going to be all up in arms now that I’ve mentioned you’ve written a book. Did you ever expect to make income in retirement? Has that changed your finances at all?
Well, I’ll go ahead and state the obvious: Financial independence simply means you get to determine your life goals without particular concern for money. Money is no longer the primary driver. It doesn’t mean you can’t work or can’t make money, but since you presumably already have enough to live on happily, it’s typically a secondary or tertiary consideration at best.
For instance, I like to write and have always dreamed of being an author, so for me it’s a fulfillment of a dream to write and publish a book. This is very different from having to work a 9 to 5 job, one that I may not be all that thrilled with in the first place, just to make ends meet. Some people love their jobs and I say great, more power to them, but for me a job was always something I had to do, whereas writing a book was something I wanted to do. There’s a big difference.
The book has provided us with a small amount of income, typically about $4,000 per year, and we even document and include this income in the second edition of our book (which just came out in July 2018). The $4,000 is nice but not life-changing, nor is it enough to retire on. Far nicer in our opinion is receiving an email from someone whose life has changed as a result of reading the book. Now that’s satisfying.
Nice! Screw the IRP and hooray for changing people’s lives!
Okay, so how much per year do you live on now in retirement? Has that changed from how much you spent while you were working?
We live on an average of $42,000 per year in retirement. We started at $40,000 and have allowed that number to trend slightly higher in recent years as inflation has begun to take a toll after more than a decade of retirement. Some years we’ve lived on $45,000 or $50,000 but we’ve done the math and it averages out to $42,000 from all sources, including investment income, condo rental, and book income.
The $42,000 per year represents perhaps a little more than we were living on during our working years. Back then a big part of our income was going towards investments (not to mention a mortgage). What has changed isn’t so much the amount of money as how it is being divvied up. Now a significant chunk of our income is being spent on travel – which is to say, on fun! We tend to live frugally when not traveling and a little more expansively when traveling, and that works well for us.
Now that you’ve been retired for 12 years, is there anything that surprised you? Anything you would change?
Well, first of all, we’re surprised it’s been 12 years already! It turns out time really does fly when you’re having fun.
We’re surprised at how inexpensive health care has been for us since the Affordable Care Act came into being – on the order of $120 per month in premiums for the two of us for a basic bronze-level plan in Colorado. Note that this only applies if you’re an early retiree on a budget and qualify for subsidies (e.g., income under $65,840 per year as a couple in 2018). We’re also surprised at how inexpensive medical and dental care can be overseas – and we’ve learned to take full advantage of it. For example, an extremely thorough “well man” and “well woman” exam in Malaysia only ran us about $200 each.
We’ve learned that too much intensive travel over too many months can become almost like work, especially with all the documenting we do. That was a surprise to us. So we’ve learned to pace ourselves and build in downtime, whether on trips or between them. We’ve come to savor our month-long stays in quiet places where our responsibilities are minimal and we can just relax and commune with nature – and maybe binge-watch our favorite TV shows in the evening!
We’ve discovered we don’t get bored easily and our days seem to fill up without really trying. Being retired is like having a delicious series of weekends strung together, and who gets bored with weekends? Weekends are fun! The surprise is how full our days seem to us, and we frankly don’t know how people with jobs manage to fit everything in. We suspect their stress levels are much higher than ours.
Is there anything we would change? Not really, we’re pretty happy! I suppose if we had to do it all over again we both would have picked practical careers that paid more straight out of college and retired even sooner. Kind of like you guys, come to think of it! Our path to early retirement was perhaps a little harder than it had to be, but hey, it’s our life story and we’re sticking with it.
Well, you still managed to retire early, even with a career change in the middle, so kudos for showing it’s possible to become FI without engineering salaries!
What advice would you give to those on their way to early retirement?
Simply this: Trust that from small beginnings great things can come.
LOVE it! Thanks so much, Rob and Robin, for sharing your inspirational bad-ass story with us!
If you want to find out more about Rob & Robin, check out their blog “Where We Be” and their 3 most popular articles:
You can also check out their awesome book on early retirement: “How To Retire Early: Your Guide to Getting Rich Slowly and Retiring on Less
(Note: this is an affiliate link, so I may get a small commission if you choose to buy it)
UNRELATED UPDATE: We’ve recently been featured in the New York Times, along with Mr. Money Mustache, Carl from 1500days (who will be speaking at Chautauqua with us in Oct), Vicki Robin (bestselling author of Your Money or Your Life), Scott Rieckens–director of the documentary “Playing with FIRE“, Jason Long, and many other early retirees:
Looks like everyone’s getting FIRE’d up! Burn, baby BURN!
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