Happy Friday, one and all! Today, I have a guest post from a couple who are just a few short years away from early retirement. But instead of charging through to the finish line, they are taking a gap year and delaying retirement. I love their style!
Imagine this scenario: You’re a healthy, young couple with a decent income and some good financial habits. You discovered the world of financial independence and early retirement not long after starting your jobs at age 23 and have been saving aggressively to reach FI for the past 4 years.
In fact, thanks to a couple of raises and minimal lifestyle inflation, there’s a good chance you could retire from work forever in another 4 years at the age of 31!
Are you with me so far? Sounds fantastic right?! Getting out of the working world decades before most people and the entire world opening up to whatever you want to do, for every hour, of every day, from then on out just seems perfect. (Alright, that last part might be a little TOO idealistic…)
Anyway, now imagine throwing a HUGE wrench into that scenario by quitting your jobs NOW to travel around the country (aimlessly) for a year!
That’s where my wife and I find ourselves at this point in our lives and the reactions have been interesting to say the least. We’re calling this huge lifestyle shift our “Gap Year” and we’re planning to leave the whole thing open ended to whatever seems right in the moment.
Let’s look at some of the questions we’ve gotten after sharing the news with friends and family and our answers to those questions.
I suppose the cliche response would be: Why Not Now?
There are always a million reasons NOT TO do something, so I think it’s more important to focus on the reasons TO do something. The most important (although very vague) reason is it sounds like a ton of fun! Who wouldn’t want to travel around the world with the person they love?
Also, our current job situation. My wife is a nurse and advanced quickly from a regular staff nurse to a charge nurse, and eventually into a supervisor position (in four years, no less; she’s a superstar!).
Unfortunately, this changed the day to day work significantly and it ended up being at least one step too far. She stopped enjoying the work, and that commute every day just became a grind. Plus, some of the stress spilled over into the rest of her life, which isn’t good for anybody.
I am happy to report that she’s already quit her job and couldn’t be happier! She’s been hard at work at some of the logistics of our upcoming trip after a well deserved period of relaxation.
Next up is me, the cliche software developer, pursing FI, that plans to retire at a young age (is it just me, or are there a lot of us in the FIRE space?). I’ve been with the same big tech company for the past 4 years and some of the excitement has worn off at this point. Like most big tech companies, the turnover rate is huge as people bounce around for a while pursuing raises and stock compensation packages (which are apparently readily available). By staying at the same place for over four years, I’ve managed to outlast every single person who was on my team when I first joined!
Plus, my original compensation package from when I first started out of college had various incentives to stick around for four years and I’ve made it past that mark at this point. In fact, I might actually make less in my 5th year than I did in my 4th – if I stick around. Needless to say, my resume was already getting tuned up, regardless.
So there you have it, my wife wasn’t going to stick around long as a supervisor (by choice), Gap Year plan or not, and I was going to be jumping ship soon anyway. Why not just take an extended break in the middle?
You Can’t Just Wait 4 More Years?!?
We have a good reason to get out of our current jobs, but not as great of a reason to not immediately get new ones. (I mean that’s what normal people do, right? Line up a new gig before you leave the current one?)
A good portion of our life began to feel very routine, and routine just isn’t as much fun as new and exciting things!
Sure, we could switch jobs to something similar, grind out another 4 years, and then have the world open to our every whim. That’s the standard FI path after all: Save until you never have to work again, quit your job, then find yourself, work on your own projects, travel, or whatever else sounds good to you. Freedom is the key and I think what most of us are after.
But what if we could get a lot of those benefits of freedom TODAY, instead of waiting until we’ve locked down a rock solid 3.5% withdrawal rate financial cushion to get us through the rest of our lives?
I’m of the opinion that many people in the early retirement space are far too conservative (but not those super leanFIRE folk, some of them scare me a bit). If many of these people are like me, “retirement” isn’t going to look anything like what most people picture when you say the word “retirement”.
Most people imagine golfing, relaxing on a beach, and maybe spending a lot of time reading and catching up on the latest TV shows. While I have no doubt we’ll get our fair share of each of those activities, I’m also sure we’ll end up doing something here and there that makes us a little bit of money. (I can hear the Internet Retirement Police starting up their sirens already…)
Over the years, I’ve met a lot of other people on the FI journey, both in pursuit and those that have already pulled the trigger. It’s very rare to find somebody who isn’t making a little bit of money with random side gigs and various projects. But nobody ever takes this into account! There are so many FI people out there (several bloggers in particular) that reach FI, but never withdraw any investments because they managed to “accidentally” cover their expenses a different way. Even if they do withdraw from their investments for spending, the growth of their investments outpaces it significantly and their net worth just keeps going up.
That last part is mostly a product of the raging bull market we’ve been in for a while, but there are also some that end up spending way less than they projected to start with.
Side note: If you’re anything like me, you’re excited to see how various blogs, forums, and other parts of the FI community change when we do finally get that big bear market. Will there be panic in the streets or business as usual? Should be interesting either way, but I’m rooting for there never being another market crash ever again… (Ha! Like that could ever happen)
Anyway, even though we’re not FI yet, we’ve built up a comfortable financial cushion (probably about half-FI) and don’t plan to touch the investments at all during the trip. Instead, we’re currently building up a cash cushion to last for as long as it lasts (hopefully at least a year) and maybe we’ll even add to it one way or another. Once it does run out, we’ll have to make some big decisions about what we want in the next stage of our life. Full-time nomads with some sort of remote position(s)? Back to our current home with similar jobs? Move to a totally new place and get totally new jobs? So many options!
Speaking of which, how do you feel about resume gaps?
What About Finding a Job When You Get Back?
We’ve gotten this question from a few people and I think this entire aspect is overblown. Part of this probably stems from both of us being in very in-demand job fields (nursing and tech), but I find it hard to believe that anyone who is good at what they do couldn’t find a similar position after taking time off.
The company is only paying you a salary because you are somehow adding more value to the business than that salary (or at least they think you are!). Most likely, there is going to be another company (or even the same one) that you can find some way to add value to when you return.
This level of optimism may be a bit extreme for everyone, but I’m pretty sure the world will still need nurses and people who know software a year from now (or 2, or 5 or 10 years from now!).
Now to the most popular response to our Gap Year plans:
Huh, I Wish I Could Do Something Like That
For whatever reason, many people feel obligated to share why they have not done something similar or don’t have plans to do something similar when we tell them about our upcoming Gap Year.
I think it’s particularly weird because we’re definitely the odd couple in this situation! It’s not like the majority of people are leaving full-time work in their 20’s to go travel full time. We should be the ones justifying our choice, not the other way around! (Or people just like talking about themselves…)
The most popular reasons are related to what I’ve already covered above: finances and job worries.
The finances part isn’t a surprise. While I know very little about the actual financial situation of most of our friends (it doesn’t come up when we hang out and I’m certainly not going to be the one to bring it up), just looking at the average person’s financial situation in this country paints a grim picture.
The majority are barely able to save 10% of their take-home pay, let alone the 50%+ that many in the FI community do. On top of that is mountains of various types of debt and a tendency to live paycheck to paycheck with very little buffer. Of course, taking a year off to travel just isn’t in the cards.
While our friends spared us the details, it definitely came across like taking a year off would be financial suicide for some of them. A calamity.
Another friend mentioned a form of “Golden Handcuffs“, where they were certain they would never be able to find as good of a job as the one they have now. By all means, if you have a job that you’re excited to wake up for every morning and get to, then savor that for as long as you can!
It seems to be a rare find in today’s world, but I think my friend was more worried about another job being worse, not that his was “totally amazing”.
At the end of the day, other people’s finances and career plans simply don’t concern me. While I enjoy talking about the topic, I’m not one to judge others for their financial choices. Sure, I wish everyone had a solid financial education and at least knew FI was an option, but I’m certainly not of the opinion that FI is the one and only true path through life. I have no doubt there are a ton of people that worked for 50 years of their life, spent every dime that came their way, died with nothing to their name, and enjoyed every single second of it to their last breath.
Who knows, maybe this whole “traveling around and not working 40 hour weeks” thing won’t even appeal to us. It’s hard to imagine now, but “the grass is always greener” and all of that. Oh well, I suppose the worst case scenario is us returning to one place and picking up a couple of full time jobs.
Wait! The worst case scenario is what we’re doing right now!?! I can’t believe it took us this long to take a Gap Year!
Thanks to Steve for letting me rant a little bit in this guest post! Hopefully you found it useful, entertaining, or some combination of the two. If you want to find out more about us, our upcoming Gap Year, or numerous other things, but sure to stop by my own blog, Money Metagame, where I talk about FI, travel hacking, and other fun stuff. The Gap Year planning is in full swing and the current plan is to give notice at my job very early next year (they don’t know yet, so don’t tell them 😉 ). For now, we’re selling all of our stuff, finding a property manager to rent out our house, comparing healthcare options, and a dozen other things to hopefully make this a smooth transition. Thanks for reading!
Steve is a 38-year-old early retiree who writes about the intersection of happiness and financial independence. Steve is a regular contributor to MarketWatch, CNBC, and The Ladders. He lives full-time in his 30′ Airstream Classic and travels the country with his wife Courtney and two rescued dogs.