In June 2012, at 34 years old and after 13 years of working in investment banking, I wanted out. So I decided to negotiate a severance, retire early, and live off passive income through my rental properties, stock dividends and e-book sales.
But just one year in, I realized that the life of travel and leisure I thought I wanted wasn’t for me. I found myself bored and felt a loss of identity. I needed an outlet and wanted to do work that I was personally invested in.
While it’s been more than 10 years since I stopped working full-time, I wouldn’t say I’m retired. Instead, I refer to myself as a “fake retiree” because I ended up taking on some side hustles to fill my time.
Here are six surprising lessons I learned after 10 years of being “fake retired”:
1. There’s no shame in being “fake retired.”
I’ve shared a lot about my early retirement journey, and one of the biggest pushbacks I get from readers goes something like: “You’re still doing some sort of work and getting money in return, so you’re not actually retired.”
That’s a fair point, which is why I think more people should embrace the term “fake retirement.” Many of us early retirees are writing blog posts, recording videos, creating e-courses, writing books or selling art. I still run my blog Financial Samurai, and I just spent two years working on my personal finance book, “Buy This, Not That.”
A lot of early retirees are working harder than ever by building their online businesses, 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 a “fake retiree,” I’m owning 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 evolve—and likely grow—over time.
When I retired, I was happy with my $80,000 per year passive income. But in 2015, my wife joined me in early retirement. We calculated that we’d need to generate $160,000 in annual passive income to cover the loss of her income.
We were also planning to start a family. Our son was born in 2017, and our daughter in 2019, so our financial needs kept rising. Paying $2,200 a month in unsubsidized healthcare premiums — plus $5,000 a month for preschool — adds up.
With inflation running at 40-year highs, we must generate more income once again. That’s three major overhauls of our budget in just 10 years. To keep up, we purchased more rental properties and have been investing in assets that continue to gain value during times of inflation, like healthcare stocks.
3. You may still feel the pull of traditional work.
Since 2012, I’ve battled the urge to return to full-time work several times. The first time was less than six months after I left my job. I found myself missing the camaraderie of working as a team towards a shared mission.
The second time was after our son was born. I worried we wouldn’t have enough money to take care of our family. I was also contending with how tough it was to be a stay-at-home parent. I thought having an office to go to could act as a “break” from the stresses of being a new dad.
The third time happened a year into the pandemic. So many friends who were working from home seemed to have a work-life balance that made them happy.
But ultimately, I realized that even if I got a remote job that allowed me to pop over to the beach in the middle of the day, I’d still have to answer to someone.
Think about all the times you’ve had to hold your tongue at work because you didn’t want to jeopardize your raise, promotion or reputation with your employer.
One of the biggest benefits of being financially independent and not having to follow company rules is being able to fully express yourself.
Additionally, you can confidently speak up for people who could use your support. For example, when I was approached by a producer to record an audiobook version of my book, he was adamant about choosing from three white men to narrate.
But as an Asian-American, I wanted someone who looked and sounded like me. We eventually landed on a Chinese-American narrator. Had I not felt confident enough to speak up, that narrator wouldn’t have gotten the opportunity.
Early retirement has left me with more time to be alone with my thoughts. When I was no longer confined to a 40-hour workweek, I was able to reflect on what really mattered to me — and what legacy I’d like to leave behind.
For some people, that might be endowing a scholarship at 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 lockdowns started was knowing that one day my children would go to bring my book to show-and-tell.
I’ve found that if you support the causes that are most important to you, share your blessings and act as a mentor to others, your legacy will flourish.
Do whatever you can now to give the “future you” as many opportunities as possible. Save and invest as much money as you’re able to so that when you’re ready to quit your job, you’ll have plenty of options.
And maybe you won’t retire completely. You might move to a lower-paying job that’s more meaningful or take a few years off to care for your parents. Or you may decide to “fake 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 steered me wrong: If I believe that there’s a 70% chance I’m making the right decision, I’ll go for it.
At the same time, I have the humility to know there’s a 30% chance that I will make the wrong move. And I’m okay with that; mistakes aren’t failures if you’re 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 website. 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.