Semi Retirement at Age 32

The Great Salt Lake, Utah

I will be leaving my job of 8 years next month. It's been a long 8 years coming. Since the beginning, I ended up being put on a cluster fuck of a project and ended up having many long work days. After I had some seniority and ended up with easier work, I still had a manager looking over my shoulder making sure I'm not slacking off from 8:30AM to 5PM Mon-Fri. This was getting to be really really really old. Also, I could never fit into the corporate office culture. I just did not enjoy it. Every day I was there I just felt like I could be doing something better with my life.

Pretty soon after I started working, I found about the Financial Independence community. There is a whole community of people on the internet who hates their jobs like I do and are trying to retire early. Simply put, they accomplish this by increasing their savings rate. You can mathematically show that if you invest 80% of your income and live off the other 20%, you can retire in 5 years as long as your spending stays the same. Don't believe me? Here is a simple Excel chart that I created as an example.

In this example, I am not looking at the dollar amount and I am just looking at everything as a percentage of yearly income from first 5 years. Also, for simplicity sake, I am assuming that yearly income from the first 5 year is the same. I am also assuming that you are earning a modest 5%APR return on your investment (Past few years for total stock market have been about 13%).

Do you see that even after you stop investing any new money after year 5 and you are taking 20% of first 5 years yearly income out, your asset in the accumulation column increases? This is the power of compound interest!!! As long as you keep living frugally as you did the first 5 years, you will still be earning more money than you spend even if you don't go to work!

Now, this is not a easy feat for most people. From what I have seen around me, people do not like living frugally. They will spend spend spend! As they make more money, their lifestyle expenses will creep up on them. In order to live off just 20% of your income, you will have to pack your own lunches to work, shop frugally, garden, learn how to work on your own car or go no-car, live with roommates, get cheap or free 2nd hand electronics, put off going on vacations, etc, etc. I personally hate consumerism and like to DIY so, I actually enjoyed doing most of this.

So, as you can see from the example, I am probably not going to be able to retire in a traditional sense yet since I will still have to live very frugally and DIY everything. But, it is a good feeling to know that all my basic needs will be covered without having to do the corporate 9 to 5. 😎