Hello, everybody. It's Sam from Financial Samurai. And in this episode, I want to wish all of you a happy Independence Day, 4th of July. And I also want to talk about 10 years of fake retirement later, the most important takeaways that I want to share with all of you.

So back in February 2012, I decided to negotiate a severance to break free from corporate life. I had been working in investment banking for 13 years, and at one firm, my last firm for 11 years, and frankly, I was getting sick of it. And by mid June 2012, I was able to negotiate a severance package and collect the last of my three months of Warn Act pay.

Don't confuse Warn Act pay with getting a severance check. Warn Act pay is mandatory pay by the company. A severance check is voluntary. Overall, it's been an incredible journey. However, I'm also sad I'll never be able to get those past 10 years back. The greater your appreciation of time, the less you will want to waste it.

So for those of you who want to permanently leave your day job, maybe it's not permanent actually. This episode is for you. So first of all, why do I use the term fake retirement? It's pretty simple, actually. I consider myself a fake retiree because consistently publishing three to four times a week for 13 plus years takes a lot of work.

Even though I enjoy writing, I'm still spending about 14, 15, 16 hours a week creating instead of consuming. Then I spend another four or five, six hours a week responding to comments and emails and inbound requests. So it's really a never ending process. And the larger your platform grows, the more inbound requests you'll receive.

Also, since retiring from a day job in 2012, I did some consulting work part time at several startups for three years. These startups range from series seed to series C. And I just wanted to experience startup internet culture here in San Francisco, because I came here in 2001. And I thought it would be a crying shame if I didn't experience any of that.

So I got to experience what it was like to work in a small group, and to try to do a lot of marketing and online acquisitions and so forth. But after three years, I said, Okay, I know what I need to know, I've scratched the itch. I don't want to do it anymore.

It's only it was only 15 to 20 hours a week, but it'll still work. And the final reason why I use fake retirement is that since 2017, I've been a stay at home dad. Despite working in banking for 13 years, 60 plus hours a week, every single week, I think being a stay at home parent to two young children is at least 100% harder.

You've got to always be on otherwise something bad might happen, something really bad might happen, they could just like fall off an edge, hurt themselves real bad or worse. So it's really, it's really stressful being a stay at home parent. I've had many of those heart jumps, those mini heart attacks, because just looking, looking one way, suddenly the kid just disappears.

And you're like, Oh my gosh, where'd they go? And you find them in some precarious situation. So it's not easy being a stay at home parent. So if you have a stay at home spouse, or you see someone, you know, staying at home for three to six months to take care of their baby.

It's not a vacation, it really isn't a vacation. Compared to work, the ability to work from home, I think, you know, working from home is kind of a vacation compared to being a stay at home parent now. Oh, yeah. And there's one other reason why I use fake retirement.

Since the beginning of 2020, I've been writing a new personal finance book, right? Buy this, not that, how to spend your way to wealth and freedom. It was also something really difficult to create. And it's not just because writing is hard. But it's also because you need to collaborate with many, many minds, from the content editors to the copy editors.

There are many people trying to create a book and edit a book. So it's not easy. It's kind of like some say birthing a book baby. So fake retiree I am and I'm going to embrace that term in all its glory because the earlier you retire, the sooner you're going to find something you're really passionate about doing and you're going to enjoy doing it because you have the ability to do so.

So let's talk about the lessons learned after 10 years of fake retirement. I've been writing about achieving financial independence since July 2009, when I launched Financial Samurai. And since then, the fire movement has become more mainstream. Terms such as coast fire, lean fire, barista fire, slow fire, all these different types of flavors of financial independence have popped up to help those still far away from financial independence feel better about their progress.

And knowing you're making progress is really important when you're trying to achieve financial freedom because you can easily get distracted. You can see some shiny object that you want to spend on debt. You can see something else that someone else is doing and you want to follow them on their travels and lose discipline in your saving and investing quest to build passive income.

Achieving financial independence is a long journey. Therefore, if you can use these terms to help fit your situation, I think that's great. It'll help motivate you to keep on going, to keep on trying. When you achieve financial independence or when your investments can generate enough passive investment income to cover at least your basic living expenses, you're going to feel great and you're going to have a tremendous amount of freedom.

So this brings me to the first lesson I've learned after 10 years of fake retirement. And that is only you will know whether you are truly financially independent or not. We can come up with these terms to make ourselves feel better about our progress. However, deep down, only you know whether you are financially independent or just faking it.

And faking it is a common thing, right? We try to fake it before we make it. But faking it ultimately doesn't work when it comes to living the life you want. So really look deep down, crunch the numbers and see whether your finances really are enough or are on track.

Because at the end of the day, it really doesn't matter what anybody else thinks about your financial situation. All that matters is whether you are able to do what you want or not because you are financially independent. The second point, and this is the second point out of 11 points.

Your financial needs and desires will change over time. It's really important not to think this is what you're going to need in terms of passive income or net worth because your life will change. You will experience all these unexpected things, good and bad unfortunately, that will make you feel different about how much money you need.

When I left in 2012, I thought $80,000 in passive income, good enough. It wasn't an extravagant lifestyle but I could survive in expensive San Francisco. And my next goal was to generate $150,000 in passive income by the time my wife left her day job as well at the age of 34 in 2015.

And so that makes sense, right? Basically double $80,000. But then in 2017, we had our son and we thought, well, better try to make more money. Healthcare costs, the premiums per month were about $2,000. And then we looked up the preschool costs were $2,000 to $3,000 a month. So we said, okay, $50,000 more.

So that brings us to $200,000. And then at the end of 2019, we were blessed with a daughter. So we thought, well, another $50,000 it is then. So it just kept on going up. It's kind of like inflation. It just keeps on going up and you really need to be flexible in how much you need and how much you want.

Because these are good things that have happened to us. And I know eventually, there are going to be bad things that happen to us, accidents, sicknesses, taking care of our parents and our relatives and our friends and so forth. So just because you think you'll need X amount of passive income to retire early, doesn't mean that amount will stay static forever.

And so I highly encourage everyone to start generating supplemental retirement income once your day job is done. All right, three, you will adopt a dynamic safe withdrawal rate and be more flexible overall. Because your financial needs and desires will change over time. You should also be flexible with your safe withdrawal rate.

The best safe withdrawal rate is a dynamic one. And that dynamic one I think is based off my formula, the Financial Samurai safe withdrawal rate formula of 80% times the 10 year bond yield. Contrary to what academics might say, there is no one fixed safe withdrawal rate to go by.

I'm a practitioner of early retirement who let go of a day job security in 2012. I don't have a salary. I don't have a pension waiting for me. I just can't pontificate. I really need to go through and live this life and figure things out. And I'm telling you, folks, you've got to be dynamic in your withdrawal rate and in your thought.

And one of the reasons why I think the 10 year bond yield is a fantastic barometer because it shows us it tells us what the expectations are for inflation, for economic growth, for corporate earnings growth, for unemployment. So these are all really important things we need to be aware about while we're trying to build more wealth and while we're trying to decumulate our wealth in retirement.

Every single economic situation is different. Therefore, you need to be dynamic and flexible. Four, you will eventually take your freedom for granted. This is kind of sad, isn't it? You take your freedom for granted. Unfortunately, the hedonic treadmill is the main reason why achieving financial independence won't solve all your problems.

It does feel amazing to be able to do what you want whenever you want, but it just it just doesn't last sadly. I mean, maybe that great feeling might last for about three to six months. But after that, you just kind of revert back to your mean. For example, while you were working, you might have felt giddy leaving work at 3 p.m.

to have a drink with a colleague, thinking to yourself, "Oh, you are getting paid to drink. Sweet!" But then once you have total independence, you might actually start getting annoyed meeting up so late. You'd be like, "Can we just have, you know, happy hour at like one o'clock or 12 while we're eating?" It'd be so much more efficient that way instead of three o'clock.

Once you leave your day job, you will naturally create your own routine. And this routine is just going to replace your old routine. And if you have to make commitments outside your normal new routine, you might feel agitated. In fact, I know you will. All right, fifth point, fifth takeaway, you will likely have a recurring desire to return to work.

This is a really interesting phenomenon because the longer you do something, the more you're going to miss doing that thing. Once you leave your day job, you know, you're going to start second guessing your fake retirement decision, especially if you leave very early on. If you don't retire to something purposeful, something you would really enjoy doing, the greater your desire to return to work will be.

For me, I've battled the urge to return to work at least three times. First time in 2012 when I just left work. I was like, "Oh, is this the right thing to do to give up this multiple six-figure potential job? Hmm, man, I better interview with other competing firms just to make sure I wasn't making a mistake." Second time I wanted to return to work, 2018, a year after my son was born.

I felt I needed to start earning again to better take care of my family. Just seemed like that was the responsible thing to do as the father of the household. And then after spending so much time taking care of my son at home, I started fantasizing going back to work because I felt maybe it would be like a nice vacation.

You know, you just commute for 15 to 25 minutes, you go to the water cooler and talk to your friends and then you have lunch and then you have happy hour. And of course, you do some work in the office, right? But that sounded pretty nice to hang out with a lot of adults again.

And then the final time I wanted to go back to work, not truly wanted to, but I was thinking about it, was a year after the pandemic began because so many people I knew started working from home, right? If you didn't have to commute, that was like my number one PITA for going to work was the commute.

If you didn't have to commute, that was pretty good. If you had a flexible schedule, even better. I had so many friends who were able to work from home who were asking me to play tennis with them at 11am, noon and 1pm. So I figured, hey, if you can make good money not having to work or not having to work really hard, sign me up.

So for those of you who have worked from home jobs, definitely appreciate that flexibility because I think it's just wonderful, wonderful, wonderful. You know what? Maybe it is a grass is greener syndrome because I do have friends who work from home and they say they can't even go to the bathroom or they're scheduling a bathroom break because they have so many back to back video calls.

So that doesn't seem fun. All right, six, you appreciate time more, not less. You would think having more time would make you become less appreciative of time. After all, increased supply generally leads to a decline in prices, a decline in appreciation. But the opposite is true. Because when you can do whatever you want, you're no longer forced to do things you absolutely don't want to do.

Therefore, every minute that is wasted has a greater opportunity cost. For example, when I was working, clients would show up late all the time to meetings. But I didn't really care because they were the client and I had nowhere else to go. I was on the job. But if someone shows up 30 minutes late today, I'm going to be really, really agitated because I could have spent that time playing with my daughter, writing on Financial Samurai, playing tennis or my favorite activity in the afternoon, napping.

When you're able to optimize your time by only doing what you want, spending your time sub optimally starts to feel pretty bad. All right, seven, you realize how strange it is to take instruction from other adults all day long. The longer I'm away from work, the more peculiar I think it is that over a billion people voluntarily listen to other adults for 40 plus hours a week.

And then once the work hours are done, we're all equal outside of work. And maybe this is confidence speaking, because, you know, we're spending a lot of hours, at least before in the office, you know, kowtowing to our superiors and our seniors. And it's just the way things are.

But you know, when you don't have to do that anymore, you realize everybody is equal, whether you see them at the supermarket, shopping for lettuce and tomatoes or at a concert, or at the movies, you know, your boss, even if she's a billionaire, doesn't have more rights than you outside of work.

And that's the way it should be, I think, in the work environment, where we're treated equally, at least respectfully equally. So the questions that I have to ask you all are, what would you do if you were already financially secure? What are you burying inside to conform? And which truths have you suppressed, so you don't jeopardize your status?

One of the biggest benefits of FIRE is being able to be who you are, without as much fear of persecution or judgment. Eight, you will lose and then regain your identity. Given our work is a big part of who we are, once you leave your job, you will lose a part of your identity.

And the longer you work, the harder the transition to retirement or fake retirement will be. It's definitely one of the negatives of early retirement I've talked about before. And if you are truly retired, you might start feeling useless to society. Many of you start feeling useless, the chances of feeling constantly sad or depressed or lonely go way up.

Because at the end of the day, we all want to feel like we're contributing something meaningful. I know I do. It's one of the reasons why I write and I respond. I spend these hours every single week for so long. It feels good to be a contributor. Therefore, nobody really retires early and does nothing.

Instead, early retirees eventually find something they would do for free because they enjoy it. So in my case, it's writing and connecting with people online. I'm writing about my experiences, other people's experiences and stories. I'm not pumping out endless search engine optimization affiliate content because that is boring. And I know it's a business and you can make money.

Yeah, I'll do some sponsor posts every once in a while, especially for those corporates supporting my endeavors such as my book. But that's not the main reason why I want to write. I want to write because it feels good. It's helpful. It's cathartic. And you will find a new identity that will replace your old one due to gaining a new purpose.

But you might have to lose that identity and figure things out for a while. Okay, nine out of 11. You start thinking more about what type of legacy you want to leave. And you really don't think about legacy in your 20s or 30s. You start thinking about your legacy, I think, in your 40s.

And also after you have children, because you know, or you hope, you know, God bless them, God bless your family, that they will outlive you. I mean, I don't want to outlive anybody in my family. So along with wanting a sense of purpose during fake retirement, you will also want to accomplish something you're very proud of.

In other words, you will want to leave behind something positive others will benefit from after you're gone. For me, that's Financial Samurai because the internet lasts forever. And also my soon to be released book, Buy This, Not That on July 19. It has the potential to help a new segment of the book reading public.

I'm confident the book will change the reader's life for the better. I can also die easier knowing I did everything possible to try and help others with their finances. Whether it's writing on financialsamurai.com, recording these podcasts, or writing this book. I don't think I could have worked more to try to help others gain financial independence.

Because trust me on this one, financial independence is worth fighting for. Those hours that you put in early on or even now, will pay dividends in the future. That time you spend learning about money, learning about investing, learning about new methodologies, just surrounding yourself with people who are on the same quest.

It's so amazing and it's so worth it. Because once you get to about $300,000 in investable assets, you'll start getting that feeling like, "Hey, this could be what financial independence feels like." Because if you return 10% on $300,000, that's $30,000 and most people can probably live off that, right?

And then as you start building momentum, it just becomes so fun, so encouraging, and it is something that you want to share with others because it feels so liberating. When you look back on your life, you want to have some defining moments you'll always remember. Such wonderful moments might include graduating from high school or college, getting your first job, starting a company, winning an award, and having your first baby.

Further, the more difficult the environment, the more you will want to create fond memories to shut out those difficult memories. When I look back on the pandemic period, I will happily remember three things. One, my wife birthing our daughter at the end of 2019. Two, keeping our kids safe and providing them with lots of love, play, and attention.

And three, publishing a personal finance book that positively impacted everyone who read it. All right, 10. Nobody really cares what you do, so make sure you live for yourself. This is so important, folks. Whether you retire early to go on some huge trip around the world or you retire to start a new solopreneur business, do what you want.

The only people who may criticize your fake retirement are members of the Internet Retirement Police. They'll try to arrest you for doing anything that generates income, anything that requires time, thinking, and effort. Even if you say you are a fake retiree, sometimes, they might still lob grenades at you, especially if you spend any time on Twitter.

But the reality is, so long as you're not hurting anybody, everyday normal people don't care how you live your lifestyle. Most people are just too busy worrying about their own problems. Their own goals. The only people who get bent out of shape about how you describe your situation are those who want what you have.

So accept your fake retirement in all its glory. It helps reduce criticism. Because really, the main goal is to conserve as much of your life energy as possible to do more of what you want. At the end of the day, you're only letting yourself down if you don't pursue your dreams.

I was going to leave you with 10 points, but an 11th point came up. And that is, your courage will continue to increase. It's one of the biggest takeaways of fake retirement, early retirement. The fear in your head is often worse than reality. I see this time and time again.

In fact, fear is one of the key ingredients for achieving financial freedom. Because without fear, you won't be motivated enough to save aggressively, to invest wisely, to plan for the various unknowns. Fear of failure also makes you try harder to reduce your chances of failure. It's a very positive feeling, fear.

And as your fear dissipates, your courage grows. With regards to early retirement, courage first starts with giving up a paycheck and realizing being jobless isn't so bad. You will most likely figure out a way to make things work by trying new things. And worst case, you can always go back to work.

Remember, your financial independence number is not real if you don't change a suboptimal situation. So if you think, you know, whatever it is you have, 500 grand, a million, 2 million, 5 million, whatnot, is financially independent, but you're still in a terrible marriage, you still work for a boss you don't like, you still live in a town that disrespects you.

Whatever the case may be, you've got to change. You got to change. If you're truly financially independent, you better use your money to change and make your life better. Otherwise, you got to keep on going. One of the interesting things I've experienced is I've had a greater courage to be disliked by speaking my mind more often.

I'd much rather be authentic and lose readers than act like a power-hungry politician to grow support. It just doesn't feel right. In fact, it feels amazing not to have to pretend to be someone you are not. In competitive sports, I just realized I've played 23 United States Tennis Association matches in the first half of 2022 after taking a two-year hiatus thanks to the virus.

The thing is, it's really tough to compete because your record is online forever and people don't want to compete and lose because it's embarrassing. But I don't care. I just want to compete. I think it's fun. Yes, fear of losing and the frustration of losing is still there, but I still want to compete so bring it on.

Gaining more courage to be yourself might be the most valuable personal development gift of this entire early retirement process. All right, everybody. I hope you enjoyed the key takeaways after 10 years of fake retirement. Ten years have gone by so quickly and let us not waste a single moment of our lives.

Being able to do what I want thanks to the money that I have is one of the main reasons why I wrote Buy This, Not That, How to Spend Your Way to Wealth and Freedom. The book will provide you the frameworks necessary to build more wealth quicker in a risk-appropriate manner and it will tackle some of life's biggest dilemmas many of us will face.

So I appreciate your support in picking up a hard copy. You'll see the charts. You'll see the beautiful art by Colleen Kong Savage. Check it out at FinancialSamurai.com/btnt. Also subscribe to my newsletter FinancialSamurai.com/newsletter. And good news, Buy This, Not That is tracking to be a Wall Street Journal bestseller upon debut.

It's already a number one bestseller on Amazon in the retirement planning division and it's all thanks to you. So I really appreciate your support. Thanks for reading. Thanks for listening. Thanks for subscribing and thanks for sharing. I'll talk to you all later.