How I retired at 36

Lock & Load!I reached early retirement when I was thirty-six after a thirteen-year career. I’m forty-eight now…and holy stump-jumping gibbons of hell, did I really just write that?

Hi, folks. I’m EarlyRetirementDude, AKA ER Dude, AKA ER10years_throwaway in my other life as a mod for Reddit’s Financial Independence forum.

Getting out of the workforce so early was mainly a matter of mindset. As far as the money went, there was nothing magical to it; nothing complicated. I simply decided the birth-school-work-death cycle wasn’t for me, so I made money and kept it and put it to work so my family and I don’t have to.

You might be inclined to call bullshit on early retirement. “OK, you saved a few bucks and quit work, you slacker, but now you’re gonna deplete your funds and end your days living in a burning tire in back of a trash dump.”

Well, it’s understandable. I think far too many middle-class Americans have difficulty relating to the idea of early retirement because they’ve been conditioned to view “having a job” as the normal way of life, and are consequently ill-equipped to consider other options.

But, see, here’s where the mindset comes in.

Ask yourself, is achieving financial independence and retiring early a new idea to you? Does it seem like a pipe dream? Are you already rolling your eyes at the thought?

Don’t. Getting out of the, quote, rat race might be easier than you think. (I offer more information about starting points in  Early Retirement’s Magic Bullet and The Ten Commandments of Early Retirement.)

I’ve heard so many people say, “Wow, I can’t imagine what I’d do if I was retired.” And I always wonder, “My brother/sister…that’s exactly why you’re still working. If you don’t know where you want to be, how can you hope to get there?”

So in lieu of working towards a goal that’s commonly considered out of reach, people default to the standard trade-off: selling at the bare minimum 2,080 hours a year to an employer in exchange for a salary and benefits, with the goals of:

1) Amassing enough wealth to be able to stop working full-time before they die, and

2) Enjoying a reasonable standard of living along the way.

They lose their freedom and they put up with inconvenience and boredom, but they gain the promise of security. And maybe, if they’re lucky, they get to work at something they enjoy.

Mind you, I’m not knocking anyone who chooses this lifestyle. It’s the way I was raised and it’s worthy of respect.

But it does in fact offer plenty of room for unconventional thinking. If you’re interested in escaping the tradeoff between freedom and security, you might choose to apply your creativity and energy to your own life first—in other words, you might choose to work at least as hard for yourself as you do for your employer, with the goal of attaining a situation where you don’t need to earn a salary to get by.

So how do you accomplish that, exactly?

To start wrapping your head around that, you need to read Early Retirement: The Magic Bullet. But before you click ahead, I need to give you a bit of straight talk.

Don’t consider what you read in this blog to be financial advice. Please. I’m not showing you The Way or anything like that; I’m just trying to help you learn to navigate.

Which is an awful metaphor, I admit, but understand that there are many paths to the same goal, here, and it’d be both presumptuous and terribly, terribly irresponsible of me if I were to say, “Here’s the Straight & Narrow…& woe betide ye who fail to Cleave to my Wisdom. I want you to immediately get up from your chair, sell the chair, also your cars, house, and esophagus. Dress your kids in sackcloth, put five percent of your assets in gold, twelve percent in Bitcoin, eighteen percent in pumpkin futures…and oh, yeah, did I mention that you’ll be paying me thousands in fees for this advice?”

No. That’s not what we’re doing.

Because: think about it. Let’s say you begin to trust my opinions. Maybe something I’ve said strikes a chord with you and helps convince you to make a major life decision. Move across the country, buy/sell a house, change or quit jobs, alter a relationship with a significant other, be secretive with family/friends/coworkers, burn bridges and close doors, put life-changing amounts of money at risk…yeah, these are all big-ticket events, and potentially disastrous.

So I find writing about ways to approach these decisions to be as sobering as hell; an act carrying heavy, heavy responsibility. I don’t undertake that lightly. Right?

Right. OK, enough of the preamble. Let’s go have some fun.


If you’re in financial trouble or just looking to establish a sounder financial footing, I highly recommend Dave Ramsey’s The Total Money Makeover. While Ramsey himself may be a controversial figure, apply his step-by-step approach and you’ll have a solid foundation on which to build your financial independence.

25 thoughts

  1. Hi, love your blog. Please add me to your email list. By the way, what was the balance of your investment accounts when you started retirement? How did you weather the 2008 economic downturn?

    Thanks!

    1. Thanks! Couple of things:

      -There’s a “sign up for email” field over on the left-hand side. Please use that since it’s an automated double-confirmation system.

      -Here’s an excerpt from the “ER History” page from the top menu bar. I encourage you to read the whole article. One of the main things, though, is that due to some lucky loss timing of our loss harvesting, we had roughly a year’s worth of our budget on hand in cash, which meant that we were able to live through the bubble without selling off any investments. Kept us from taking a big hit.

      “I ran some rental housing at the time, but I never speculated; never even owned real estate investment trusts. But the housing bubble was an agonizing reminder to me that the best long-term investment strategy has been to stay the course. Dollar-cost average into broad indices, throw your purchases on the pile, and try to forget about them.

      I’ve deliberately used the words “excruciating” and “agonizing”. In fall of 2008 I was visiting my in-laws when the markets crashed. I FREAKED. I was three years into early retirement, my skills were outdated, and I knew, just knew, that I had to sell out while I still had some money left, and I needed to circulate my resume despite it having a grapeshot-sized hole in it.

      But a good friend of mine—I mean, a really good friend—convinced me to hang in there. “Don’t be a dumbass,” were, I believe, his exact words.

      And sure enough, within two years my net worth had doubled back up to pre-crash levels. I’d gnawed my fingernails up to my elbows, but the question of whether I’d be able to stay retired for at least a little while longer was settled. Since then my forearms have grown back.”

  2. “Don’t consider what you read in this blog to be financial advice. Please. I’m not showing you The Way or anything like that; I’m just trying to help you learn to navigate.”

    Thank you! Know what you know, and know what you don’t know. As for not selling out at the bottom, congrats on hanging tight. I’m interested in seeing how all my newer fellow FI lovers will emotionally handle seeing “their number” cut in half someday. It’s exhilarating through one set of eyes, but seemingly life-threatening through others.

  3. Genuinely curious how you were able to save more than $100k per year during the 13 years you were working. How much were you making per year and did you get any windfalls?

    1. Hi there. No windfalls, but our income ended up being back-loaded. Bear in mind this is twelve years ago and I’m not consulting records, but just quoting from memory.

      During my first year of corporate employment I earned ~$36,500; during my last year of employment my family’s income from all sources was, I think, $350K. Both those numbers are pre-tax. $350K is a lot of money, but a good bit of it was triggered by my exit. I’ll explain further along.

      1) Worked long enough in the public sector to acquire job skills; then hopped into the private sector and made more money.

      2) Moved from a smaller southern town to a major northeastern city–salary arbitrage.

      3) Ran rental real estate and lived in one unit.

      4) My wife and I both had good jobs. She was working as an engineer for a local utility for, I believe, $60K a year, whereas I…

      5) …I worked for a small company that grew a lot in the eight years I was there. I came in as a front-line manager at $80K and went out as a senior director (salary details below.) Had a bonus program and got some stock options grants. Again, remember that these were salary numbers in a big city and at the time were middle class-ish.

      6) Always always always put as much into our 401(k)s as possible, During the last few years we maxed out.

      7) Once we had “enough” money, we cashed out of everything and returned to the rural south. Tremendous amount of geographic arbitrage–the appreciation on our big city rental property paid for our rural home and land outright.

      8) I left under ideal circumstances. My company went through a buyout and a considerable downsizing and I was able to engineer my own layoff, which means I got a severance package and was able to draw unemployment afterwards (all proceeds from the unemployment went to my daughter’s 529.) I also cashed out of those stock options I mentioned.

      Again, all numbers from memory.

      1. Follow-up:

        I get that people will look at our income towards the end, especially that $350K I mentioned, and think, “Damn, THAT’s the only reason he was able to retire so early.”

        Not so. Three reasons:

        1) I maintain that the methods I used were and are accessible to many people. Maybe not such a high salary level, but rental real estate and working a few more years and a double geographic arbitrage can make up for that to a large degree.

        2) Early retirement was the number one plan for our entire working life, and I mean number one. So our savings, etc., were commensurate with that goal. We went through a lot of discomfort, especially living in a shitty little apartment in a bad neighborhood that was re-gentrifying.

        3) Didn’t have a kid until the year we were ready to split, and it was only one kid.

        1. Thank you for your detailed and thoughtful response! I am also striving for FI/ER but got a later start than you – you provide a lot of inspiration. It may sound funny but my friends think I’m crazy to plan on retiring in 7 years at the age of 54. They are all planning to work late in to their 60s just because they think they need to. All they will end up doing is trading many healthy years for more money to leave their kids. It’s hard to get people to shake that mindset.

  4. What is your advice about buying house, is it prefer to take mortgage or I have to save some money for several years to pay in cash?

    1. A few things for you to think about before you make that decision.

      A mortgage has a notional APR, but the “effective” APR can be a lot cheaper, such that when you compare it to average annual stock market returns, the loan starts looking like free money.

      Here’s a grossly oversimplified example of how I’d break it down if it was me. Say I get a thirty-year 4% APR mortgage. The inflation rate is 1% and I’m in a tax bracket that allows me a mortgage interest deduction that gets me back 25% of my annual interest payment. I’m now effectively borrowing money at 2%, and when I compare that to average annual stock market returns of 7%, the mortgage looks pretty inviting. Assuming the averages hold true for the thirty-year life of the loan, I’m paying two to get back five.

      On the other hand, there’s a sense of security that comes from outright ownership–as long as you can come up with your annual tax bill, nobody can foreclose on you if money gets tight and you can’t meet a monthly payment.

      Like I said, there are several things to balance. Point being that there’s no “right” answer. It all depends on you.

  5. Howdy! New to your site, so nice to meet you. Are you still on Reddit? I’ve never really tried getting active there. Is it a fun community?

    I write about early retirement occasionally on my site, but try to expand to a lot of other subjects as well.

    Sam

    1. Hi, Sam! Definitely still on Reddit although I now mainly comment on personal issues people bring up rather than actual money mechanics. In many ways it acts as a support group–encouragement, empathy, good humor, etc. Fun place for sure. Hope to see you there.

  6. Hmmm, interesting post and very helpful.

    Though, since the title was “how I retired….”, I was expecting you talk about how YOU retired at 36. What did you do? How much net worth you had when you retired? What are you doing currently. what is your monthly nut? your family situation etc…. Real life example how this works in practice.

    Nice blog though.

    1. First off, thanks!

      >What did you do? How much net worth you had when you retired? What are you doing currently. what is your monthly nut? your family situation etc….

      Yeah, you’re right. Those are big damn questions and consequently their answers are peppered throughout this blog, but a summarization would be helpful. I should do that soon. I appreciate the suggestion.

    1. 🙂

      Yeah, it’s funny. When I set up my FI account I was running another one, a “main” one for the rest of Reddit. And I’ve since abandoned it. Longest-running throwaway in Reddit’s history?

      1. I’m 100% positive that I have a friend (no, really, a friend) who uses a throwaway for the more, uh, shady corners of reddit. Most likely been using it for a decade. But you could be the frontrunner for SFW subs!

  7. Damn ER Dude….I’ve been a lurker in the ER areas for a while and finally ran across your blog after your recent interview. I read all of my thoughts in it from the eyes of someone who went through it 13 years ago.

    35, hit our number not too long ago, dealing with a recent medical scare of “life’s too f-ing short”, and going to pull the plug soon from the big city and probably go back to the Appalachian mountains.

    I’d give me right arm for a severance, the windfall would be incredible. Would you have been able to leave as easily if not for the severance? My income is also back loaded, didn’t really start making good money until 29 and consistently good money until 33.

      1. Thanks! Will email soon, been consciously splitting out my Twitter handle as I get specific to early retirement, don’t want someone to spill the beans before bonus period

Leave a Reply

Your email address will not be published. Required fields are marked *

Rockstar Finance

Important Disclaimers