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  • Nate Carter

Early Retirement: Six More Observations After Three Years

After working overseas for nearly 20 years I retired in 2021 at age 50. I will quickly answer the two most common questions I am asked. Do I miss my career working as a diplomat? Nope! Do I have any regrets about retiring early. Absolutely not! The last three years have passed quickly, and I cherish spending more time with friends and family as well as enjoying hobbies old and new. Below are six observations of early retirement after three years. Here are the links to my initial six observations upon retiring, and a few more observations six months into retirement.

Limited Summers, Fewer Active Summers

We have all heard the sentiment, "life offers an unknown and limited number of summers." This feels more relevant in my 50s as many summers have passed. But what many people fail to recognize is the even fewer number of active summers. This was a key driver in my decision to retire early. I wanted to be physically active in retirement. Since retiring I have taken several months of jujitsu classes which was on my bucket list for years. Jujitsu is a challenging workout and not something I could probably do were I were much older. Also, after decades of riding street motorcycles I switched to offroad adventure motorcycles. I am still I novice, but I love the physical demands of riding on trails. My wife also has a motorcycle, and we plan to spend more time in nature on two wheels.

For those delaying retirement, my first observation is, this decision may cost your active summers. Depending on your passions this may mean missing out on skiing, mountain biking, or a life goal of hiking the Application Trail. As you map your retirement timeline, do not overlook the value of having the energy for an active retirement. (For more on this topic see Don't Die With Your Boat in the Driveway).

Flexibility in Investment Strategies

The second retirement observation is maintaining a flexible investment strategy. We are long time buy-and-hold real estate investors, but the current real estate market makes this a challenge. Single family home prices and mortgage rates are high, and rent increases have not been commensurate, making it difficult to find profitable acquisitions. Concurrently, the cost of home repairs rose dramatically limiting the ability to renovate properties to force appreciation higher.

When an investment strategy no longer works, it is time to pivot. Certificates of deposit (CDs) are offering annual returns above 5% which is significantly higher than previous years. Buying a $100,000 CD generates $5,000 in income and does not require dealing with tenants or managing repairs. CDs are also a fire-and-forget investment which supports our core investment strategy of diversifying investments for both risk and time commitment. CDs take zero time to manage once acquired, freeing up time to focus on other activities or investments. Higher CDs rates won't last as interest rates fall and when that happens it will be time to pivot our investment strategy again.

Home Repairs Costs Have Doubled, Plan Accordingly

As mentioned above the cost of home repairs spiked with the onset of the pandemic. This brings us to the third observation, which is to plan for higher prices to maintain properties. As real estate investors we set aside a percentage of monthly rents for these inevitable repairs and capital improvements. Setting aside money each month helps avoid the shock of major repairs.

In the last six months we replaced one roof, three water heaters and two HVAC systems, all earlier than expected. We also replaced a sewer line and a main water line. These repairs could total $60,000 to $70,000 depending on your location. Fortunately they were funded by our reserves, avoiding a devastating hit to our annual spending. This builds on a point I made in the second article in this series, which is to expect the unexpected in retirement, and have extra cash saved to navigate financial emergencies.

Pay for Property Maintenance Before Retiring

Prior to retiring we completed several repairs on our primary residence and our rental properties. This included painting, new appliances, and plumbing work. We are very glad we did this work, because we paid much lower pre-pandemic prices, and we eliminated these expenses prior to retirement. This is the fourth observation, make a list of future property repairs and complete them prior to retiring. This includes your primary residence and any rental properties.

This strategy may require working a few months longer or taking a part-time job in retirement to cover these expense but it will provide a stronger financial cushion in retirement and more peace of mind. (Also see the article on planning for replacement costs in retirement for a detailed list of these types of expenses.)

How Much Do You Want to Work?

Since retiring there have been various employment and business opportunities that have come my way. I have tried to find a balance between working on projects that are interesting while retaining the flexibility of time I cherish. The fifth observation is, finding this balance can be a struggle for some early retirees.

I recommend keeping a running list of goals and priorities to help assess the level of work you want in retirement. Defaulting back to full-time work, even if you do not need the money, can be a trap for people looking for more structure in their day or a sense of value for their time. In reality, it means you are not asking yourself the important questions to find out what matters most in life and how you really want to spend your time in retirement.

Personally, I keep in mind that we spend 95% of the time with our kids by the time they are age 18. We only have three years left with our kids before they both leave for college and our time with them is our priority. I can always work more when they are in college if that becomes preferable, but this time at home with them is finite. I also regularly review our list of goals to map out the best way to spend our time once they leave for college.

Time Has the Highest Value, Not Status

The sixth observation is recognizing that time, not money or status, has the highest value. I have friends and former colleagues who want to retire but are afraid of losing a perceived sense of social status afforded by their jobs. In reality any status derived from a job is an illusion. Most people are too focused on what is going on in their own lives to be weighing your employment.

And just to be clear, this should not be confused with joy derived from a job. Loving your work and the happiness it brings has real value. But deriving joy from work because you think other people view it as impressive or important is setting you up for a fall. One's self worth should never be linked to an occupation. I have personally found that many of the people focused on job status are also the ones who have let their physical health slide. They end up depriving themselves of both active years in retirement and good health.

Life may be short, but a healthy and active retirement is even shorter. Letting go of any attachment to job related status opens the door to focus on the aspects of life that bring true enjoyment and a more healthy and fulfilling life. Recognize the value of taking the time to prioritize what you want from your retirement and don't be afraid to make the post-employment leap. For a complete guide to navigating the retirement planning process and securing financial freedom see Become Loaded for Life.

observations from early retirement, six lessons

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