Hello, everybody. It's Sam from Financial Samurai. And it's year end 2019. And I've just been doing a lot of reflecting, lots and lots of reflecting, because I'm planning on changing things up in 2020. And so in this episode, I just want to talk about the surprising benefits of early retirement I never anticipated.

So to recap, I left my full-time job in investment banking in 2012. And I have in return. And it's actually been a challenge to stay unemployed for this long. In the beginning, I was fraught with doubt. Like, well, is this the right thing to do at the age of 34, going into my prime earning years?

It just didn't make sense the first year. But like everything, whatever you do, you're going to get used to your new situation. And you're going to figure out ways to adapt. So I had about $80,000 in gross passive income coming from dividend stocks, CDs, savings, and mostly rental property.

And I thought that was good enough. But as I got older, I realized I needed to make more, because my lifestyle increased. My wife stopped working also at the age of 34. And that's just the normal human condition. As you get older, you just want to do more things, like travel and maybe start a family and take care of your elders and people that you care about.

And I know over the years, a lot of people have been on the fence about whether to truncate their careers and cut their main source of income. And it's a really, really scary thing. And I also want to say that no matter how much you plan, you can't anticipate everything.

Hence the reason for this podcast on the unanticipated benefits of early retirement. So I want to go through five of the main ones. And I think as you listen to these benefits, it really might push you over the edge, because I'm reviewing that and I'm thinking to myself, I would retire right now if I had a job just because of this one benefit alone.

The first one is you might slow your aging. What's interesting is when you're working, you're going to college, you're working 60 hours a week, you start feeling some stress. Let's be frank. We all experience some amount of stress. But you don't really realize how much stress and chronic pain you develop while you're working until you're no longer working.

So when I was 33, I started sprouting my first gray hair. And I thought, hmm, finally the dam has broken, because my dad's-- he started going gray and losing his hair in his 30s as well. And I was thinking to myself, well, OK, that's it. I was finally losing my youth after years of getting beaten down by the finance industry.

Then one morning, a year-- about a year after I retired, I was looking at myself in the mirror, and I noticed, hmm, no more gray hairs. I looked. I asked my wife to inspect me like a monkey, and she couldn't find anything on the top of my head either.

So I'm 42 now, and I still don't have any gray hairs. And my hairline has also stopped receding. And I know this clearly, because I have this scar on the top left of my forehead that seems to get more and more prominent, or it seemed to. And now it's just kind of there.

And so retiring early, very well, might be one of the best ways to extend your life and allow you to look younger and happier. Now, of course, I really won't know whether having a less stressful life has helped increase my life expectancy until after I'm dead. But I'm telling you, folks, I think we internalize all our stresses that manifests itself in chronic pain, and then we just learn to suck it up and deal with it.

And I don't think that's healthy or normal. We need a certain amount of stress, but not so much so that we're just not feeling good every single day. So please take note. Two, on the same lines of feeling healthier and maybe slowing your aging, your chronic physical pain might go away.

While I was working, I experienced several chronic physical ailments-- TMJ, which is tightness in your jaw, sciatica, and also lower back pain. And I've had this since I was in college, and it came here and there. And there was one point I just couldn't walk, or actually I couldn't sit in a chair for longer than five minutes.

So I had to go buy one of those Aeron chairs that were like $800, and the firm wouldn't pay for it. But now they would if I just requested. But back then I was like, OK, I've got to do this myself. And I just couldn't drive either for longer than 10 minutes, because it was just so painful to sit down.

I constantly grinded my teeth in my sleep, and I would wake up with a very, very sore jaw. And sometimes I would grind so loudly that I'd wake up my wife. Every time I would talk longer than five minutes, my jaw and my TMJ would flare up. And so the pain got so bad that I went to a dental specialist and paid him $760 out of pocket to drill some divots in the back of my molar.

Think about that. This guy was just drilling divots, because I just had this hope, this dream, that my jaw could close more evenly so I can get some relief. And eventually I finally did get some relief in reading Dr. Sarno's Healing Back Pain. It'll be the best $9.99 you'll ever spend if you have any sort of chronic pain, whether it's tennis elbow, lower back pain, or whatever.

The book talks about how our minds can manifest chronic pain to deal with the stress and anger in our daily lives. And I really believe in this book. It's the top book I just would give to everybody who has any type of pain. So then amazingly, about 10 months into retirement, I noticed my pain had completely gone away.

So after 13 years of living and working through chronic pain, because I thought I had no choice, I was miraculously pain free. Now looking back, it's just so shocking how much I put up with this chronic pain in the pursuit of career progression, money, and so forth. So if you have pain right now, retiring early could be one of the best moves if you do it right and if you have enough investment income to cover your expenses.

Three, your infertility issues may clear up. This is really, really amazing and important for those of you who are trying to have kids. I think something like 20% of couples trying to have kids go through some type of spontaneous abortion or more serious abortion later down the road. And I think it's just not talked about enough.

And it's really difficult for some couples to have kids. They say for the average couple, it takes about seven to eight months or seven to eight tries before successfully conceiving. And it's not just about conceiving, it's about carrying the embryo to term after 39 to 41 weeks. And some folks fail during that process as well.

So it's not easy or it's not as easy as you think to have kids, especially if you're in your 30s and definitely in your 40s. So both my wife and I worked in finance, a highly stressful industry that required 60 plus hours of work weeks. Although the money was good, we were constantly tired.

The idea of children was not top of mind because we didn't feel like we had any energy left to spare. And at the end of the day, if you can't take care of yourself, how are you expected to take care of kids? And this is kind of the mantra that we've been living with for years and years and years.

And living in New York City and San Francisco, it's just so expensive. So we were just focused on trying to make as much money as possible in order to leave work for good. And it wasn't until after my wife turned 32 in 2012 that we began to contemplate seriously having children.

We had always been told that it's best to have children before age 35 to minimize health risks and maximize the chances of success. And if you click over to the post, you'll see this interesting chart that shows fertility rates really plummeting after the age of 39 and spontaneous abortions really skyrocketing after the age of 39 as well.

So we tried sporadically for one year while she was still working with no luck. Then we tried more purposefully the next year, still with no luck. She had been pretty stressed at work because she had just gotten passed over for a promotion she thoroughly thought she deserved. And I had never seen her so mad about her job before.

So she was stressed and she was angry. So this is when I finally convinced her to finally plan her exit strategy by negotiating a severance. And when she did, it was like the skies had parted. She was so happy and she was so relieved. And about a year after her retirement, we finally successfully conceived and gave birth to a baby boy.

So how much did early retirement help us conceive? I would say it was more than 50% because it allowed us to spend more time on our mental health and physical health. It allowed us to be less stressed. It allowed us to relax more, to have more time to plan.

So I would say absolutely retiring early for both of us helped us clear up our infertility issues and have a family. Four, you might actually become wealthier. Ha, surprise. Depending on what part of the cycle you retire in, there is a decent chance you could become wealthier in retirement.

Now, I absolutely recommend folks retire during a bear market instead of a bull market because when you're in a bear market, if you can retire, that means you can live off what you got right now after all that hammering. Generally speaking, there should be mostly upside in your investments and things will be much, much easier.

Now, if you retire in a bull market, which we're in right now, the 11th year of a bull market, it might be a little bit dicier. If you're expecting things to continue going the way they are, I think you're gonna be in for a rude surprise because when you're in a bull market, hmm, I would say the chances of downside are much greater, right?

Just complete logical sense. But let's say you're not counting particularly on luck to get you wealthier in retirement. You just have a lot of free time to do what you want. So during our free time, I decided to write a severance negotiation book and that book generates about $50,000 a year in passive income.

Now, $50,000 is great because that is about $2 million in capital you need to accumulate at a 4% rate of return. So right then and there, I feel that I've created a couple million dollars in wealth because I retired, because I did something that I thought was useful, helpful, and that I enjoyed.

With the extra 12 to 14 hours a day, I spent two to three hours a day writing on Financial Samurai. And as a result, Financial Samurai now also generates enough online income where I can treat my family guilt-free to Filet-O-Fish at McDonald's. And I know that's kind of silly, but I'm telling you, in the past, I couldn't get beyond the dollar menu because it's a dollar for a cheeseburger, a dollar for whatever special it is that day.

I'm not gonna spend four and a half times to get a Filet-O-Fish, but I love Filet-O-Fish, so I would treat myself maybe once a month, once a quarter, or something like that. But now it's like, okay, I'm gonna ball out, get in there, get two Filet-O-Fish, maybe some fries, okay, $1 menu fries, and then leave paying about 10 bucks.

So we fully expected our net worth to stay flat or even decline after we both left our jobs, but it's grown. A lot of it is luck, but a lot of it is also because we are doing things that we like to do. All right, finally, here's something I did not anticipate.

You may appreciate full-time work again. It's been almost eight years since I had a full-time job. And man, I tell you, I'm longing to kind of get back in that grind, to be a part of a team, to create something cool, to make some money, to get some health benefits.

During the last weekend of my employment, I ran into a huge roadblock, and you will run into this huge roadblock as well if you don't listen very carefully right now. When you're leaving, it's customary to clean up your files and to send old things back, whether it's in your personal email or you just carry a box, whatnot.

Well, I made a mistake of emailing a confidential client file back to my personal email address. And guess what? HR tracks everything during transition because HR wants to protect the company instead of you. Think about this, please. Know this. Human Resources, the department, is out there to protect the company from lawsuits and everything.

And you are secondary, folks. Given you are secondary, don't divulge your deepest, darkest secrets and your frustrations and your fears to your HR manager because the HR manager will inevitably tell your boss or your boss's boss and put you at risk, and they're gonna start a file on you.

So please be careful on who you trust, especially in HR. But if you can skillfully befriend your HR head or someone high up in the HR department, do so because that will help you during your exit period. So I thought my severance package was doomed because I had sent this private file to my personal email address and it was flagged by HR.

And they said, "Sam, we're gonna have to get back to you on your severance package because you violated one of our terms of agreement." And I thought to myself, "Oh my goodness, I cannot believe I screwed myself." 'Cause that was a Friday. And I was just like, "Oh my gosh, please, please, please let me not screw myself." And I looked at what file I had sent and it was a five-year-old file.

And so I was thinking to myself, "Well, at least it was a five-year-old file." It was like client contact information and stuff like that. And I just kept on telling them, "Look, I did this not on purpose. I don't plan to stay in the industry or bring this information to a competitor.

Please, folks, this was a honest mistake. Please forgive me." And they said, "Look, we'll get back to you." So as you can imagine, I mean, this severance package was worth over a half a million dollars because it paid out all my deferred compensation in terms of stock and it gave me a severance and all this stuff, right?

So over the weekend, I went to the Hastings School of Law Community Fair where their law students and law professors helped address any legal concerns and questions residents had for free. It was their way of providing community service. And it was awesome because it was just different types of legal issues, helping different types of people.

And my wife and I, we stood in line for two hours and I kept on telling myself while I was in line, "If I can get through this and get my severance package, I promise I will never, ever go back to corporate America again. I swear, I swore it." And right now, eight years later, I'm thinking to myself, "God, I wanna get back to corporate America because I need to feel alive again and I need to make some money and provide for my family." And so it's really interesting that once you've tasted the sweet nectar of financial freedom, you think you never wanna return to work again, but things change because financial targets are always moving.

And here's the other thing. Once you've had that long of a break, you just get accustomed to it. It's just like everything. Think about back when you were in school and you had a two or three month summer vacation. I don't know about you, but after three months, I was dying to go back to school, even though there was homework and stressful exams and so forth.

I just wanted to see my friends and see what I could learn and play tennis and all that good stuff. And it wasn't like just staying at home and relaxing and watching TV and stuff was the best. It just got boring after a while. So I've been out for almost eight years and I'm looking for a change.

And that's why in 2020 and beyond, I'm gonna have a different type of writing style and I think a different adventure to bring you guys on. And I think it's gonna be really, really fun. So I hope you guys stick with me and stick it out. In conclusion, I wanna say that retiring early is scary, but it is really great if you do it properly.

I've seen too many people retire early only to feel extremely stressed because they underestimated how much they needed in retirement or they overestimated how much joy they'd experience with all their free time. You just never know until you do it. But I will say that you need enough assets to generate enough investment income to cover your desired life's living expenses plus an extra buffer.

I think that extra buffer should be about 20%. So if living off $100,000 a year in gross investment income makes you happy, then it's probably best to generate about $120,000 a year in investment income. And to generate $120,000 a year in gross investment income requires $3 million of investments generating a 4% rate of return.

So I know many, many folks who think, "Oh, I've retired, I'm good." But then they spend like 10 hours a day trying to figure out how to make more money to cover their desired lifestyle because they didn't plan properly. Don't be in such a rush to retire early because you hear other people retiring early.

You need to really plan thoroughly. And please, please don't quit your job, folks. I'm trying to get this message out as best as I can. If you're gonna try to retire early and leave and not come back, you might as well try to negotiate a severance because there is no downside to trying to negotiate.

The last thing you wanna do is sacrifice your working life to retire early and then sacrifice your retirement life by living in or near abject poverty. It makes no sense. Instead, it's a much better route to find a more enjoyable job and delay retirement. Live a little, you know, a little balance here and there.

For me, it was not that balance, okay? I was like, "Go, go, go in my 20s and early 30s. "Get out and then like see what's up in the world. "Relax a little bit." Right on Financial Sam right now, it's like, "Okay, maybe things need some changing." So I hope these five unanticipated surprises about early retirement help you make a more informed decision.

It's a great, great adventure. Treat life as an adventure. You're never gonna get everything right. Just do your best. Try to plan for the future. Expect some curveballs, twists and turns. But I think everything is gonna be all right. So I hope you guys have a great rest of the holiday.

And I will definitely be in touch because I've got so much to talk about and write about in 2020. Thanks so much, folks.