45-year-old ‘fake pensioner’ shares the most surprising lessons he learned when he tried to retire early
In June 2012, at age 34 and after 13 years of working in investment banking, I wanted to get out. So I decided to negotiate a severance package, retire early, and live on passive income through my rental properties, stock dividends, and e-book sales.
But just a year later, I realized that the life of travel and leisure I thought I wanted was not for me. I was bored and felt a loss of identity. I needed an outlet and wanted to do work that I was personally invested in.
Even though it’s been over 10 years since I stopped working full time, I wouldn’t call myself retired. Instead, I consider myself a “fake retiree” because I ended up taking hustle and bustle to occupy my time.
Here are six surprising lessons I learned after 10 years of “fake retirement”:
1. There is no shame in being a “fake pensioner”.
I’ve shared a lot about my early retirement journey, and one of the biggest gripes I get from readers is something like, “You’re still doing some kind of work and getting money in return, so you are not Actually retired.”
That’s a good point, which is why I think more people should embrace the term “fake retirement”. Many of us early retirees write blog posts, record videos, create online courses, write books, or art sale. I still run my Financial Samurai blog, and just spent two years working on my personal finance book, “Buy This, Not That.”
Many young retirees are working harder than ever to build their online business, even if it’s just a short-term passion project. The extra money they earn might not be a necessity, but it’s a nice bonus.
By proclaiming myself “false retiree”, I assume the criticism. Yes, I could sit on the beach and drink piña coladas all day if I wanted to. But I don’t. I want to work and be productive during the week, which for me is about two to three hours a day.
2. Your financial needs will likely change and increase over time.
When I retired, I was happy with my $80,000 a year in passive income. But in 2015, my wife joined me in early retirement. We calculated that we would need to generate $160,000 of annual passive income to cover his lost income.
We also planned to start a family. Our son was born in 2017 and our daughter in 2019, so our financial needs kept growing. Paying $2,200 a month in unsubsidized health care premiums — plus $5,000 a month for preschool — adds up.
With inflation reaching 40-year highs, we again need to generate more revenue. These are three major revisions to our budget in just 10 years. To keep pace, we bought more rental properties and invested in assets that continue to appreciate in times of inflation, such as healthcare stocks.
3. You can still feel the lure of traditional work.
Since 2012, I have struggled several times against the urge to return to full-time work. The first time was less than six months after I quit my job. I found myself missing the camaraderie of working as a team toward a shared mission.
The second time was after the birth of our son. I was afraid that we didn’t have enough money to take care of our family. I also faced the difficulty of being a stay-at-home parent. I thought having an office to go to could act as a “break” from the stress of being a new dad.
The third time happened a year after the start of the pandemic. So many friends who worked from home seemed to have a work-life balance that made them happy.
But eventually I realized that even though I had a remote job that allowed me to go to the beach in the middle of the day, I would still have to answer to someone.
Think of all the times you had to shut up at work because you didn’t want to jeopardize your raise, your promotion, or your reputation with your employer.
One of the biggest benefits of being financially independent and not having to follow company rules is being able to express yourself fully.
Plus, you can speak with confidence for people who could benefit from your support. For example, when a producer approached me about recording an audio version of my book, he insisted on choosing from three white men to narrate.
But as an Asian American, I wanted someone who looked and sounded like me. We finally landed on a Chinese-American narrator. If I hadn’t felt confident enough to speak, this narrator wouldn’t have had the opportunity.
Early retirement gave me more time to be alone with my thoughts. When I was no longer confined to a 40-hour work week, I was able to reflect on what really mattered to me – and what legacy I would like to leave behind.
For some people, it might be endowing a scholarship to their alma mater or making an impact with a charity. For me, it’s sharing financial advice that can help other people achieve their life goals.
The one thing that kept me going once the pandemic shutdowns started was knowing that one day my kids could bring my book to show and tell.
I’ve found that if you support the causes you care about most, share your blessings, and act as a mentor to others, your legacy will flourish.
Do everything you can now to give the “future you” as many opportunities as possible. Save and invest as much money as you can so that when you’re ready to quit your job, you have plenty of options.
And maybe you won’t fully retire. You could move on to a lower-paying job that makes more sense or take a few years off to care for your parents. Or you can decide to “pretend to retire”, like I did.
Simply put, try to think about the future in terms of probabilities, not absolutes. I have a 70/30 decision-making philosophy that has rarely led me into error: if I believe there’s a 70% chance I’ll make the right decision, I’ll go for it.
At the same time, I have the humility to know that there is a 30% chance that I will make the wrong choice. And I agree with that; mistakes are not failures if you are able to learn from them and make better decisions in the future.
Sam Dogen worked in investment banking for 13 years before starting financial samurai, his personal finance site. His new book “Buy This, Not That: How to Spend Your Way to Wealth and Financial Freedom” is out now. Follow him on Twitter @financialsamura.