Today's post comes courtesy of a blogging friend I met a few years ago at FinCon in San Diego.
At the time, she was anonymous, working in politics (I'm sure you can understand the need for anonymity!), but well on her way to early retirement (another good reason to remain hidden!). In the couple years since then, she's has continued to write one of my favorite blogs, officially retired early, and even found time during her travels to write a book about retiring early titled Work Optional (love the name!).
The book comes out this week and you should check it out. (also, a pro move is if you to request it from your local library too!)
Now that she's been retired for a bit of time, I was really eager to hear what she would've done differently if she could do it all over again and she obliged. I hope you enjoyed reading this as much as I did.
Take it away Tanja!
Hi Jim! Thanks so much for hosting me here on Wallet Hacks! Your guest post on Our Next Life about the biggest surprises of early retirement has continued to be a perennial favorite of my readers, so it’s a pleasure to return the favor and share some of what I’ve learned with your readers.
My husband Mark and I retired early a little more than a year ago, when I was 38 and Mark was 41, after saving aggressively for six years. Along the way, we made plenty of mistakes, both financial and mental. And if I can spare you a little stress by sharing them, then I'm glad to do it! This is what we'd change if we got a do-over, some of which I discuss in more detail in Work Optional: Retire Early the Non-Penny-Pinching Way.
What We Would Have Done Differently While Saving for Early Retirement If We'd Known Better
1. Use all of our vacation time
The entire point of retiring early was to have more time away from work, and yet as we got closer and closer to achieving our goal, we got so focused on reaching it that we didn't want to take time away from earning as much as we could. That came to a head in our second-to-last year of work, when we both hit a point of total burnout, and weren't even sure if we could make it through our last year of work.
The reason? We took hardly any vacation that year.
If we had it all to do over again, we would slow down just a little and use all of our vacation time along the way, because resting and relaxing are super important, and we forgot just how important self-care is on your journey.
In our last year of work, we did it right and used all of our vacation time, including taking a two-week trip to Japan that was beyond wonderful.
If you're pursuing a similar goal, focus on pacing yourself, and on living a life you enjoy while you're saving, rather than deferring all joy to the future. That future is never guaranteed, after all.
2. Institute a work complaint ban sooner
One of the very best things we did to help us along on our saving journey was institute what we called the “work complaint ban.”
Just as you are what you eat, you are what you think, and when we complain about things, we focus our minds on the negative rather than the positive. So we banned all complaining about work.
We were allowed to recount things that had happened and if something was truly egregious, we could complain about that in a very small dose, but we stopped allowing ourselves to complain about the fact that we had to work, the annoyances that would be normal in any job and the annoyances specific to our jobs that would always be true.
The result: We actually enjoyed work more and found that the journey to save for early retirement passed a lot more quickly. We instituted the ban with about two years left to work, and if we had it to do again, we would have put this rule into place much, much sooner.
3. Appreciate work more, sooner
Similarly, in addition to stopping our complaints, we also would have taken the time sooner to appreciate our work.
During my last year of work especially, I started practicing something I called “nostalgia in advance,” and it worked miraculously well to help me enjoy the work and feel more grateful for it. Whenever something I enjoyed at work was happening, I'd start a mental video recorder and say to myself, “I'll look back on this fondly one day.”
It really helped me appreciate those good moments, but even more, it helped me get through the bad ones. When times were stressful, I'd tell myself, “Someday soon I'll look back on this and laugh about how serious it felt at the time, but how insignificant it was in the long run.”
And reminding myself of that helped me keep the bad moments in perspective, which made the whole journey more enjoyable.
4. Invest more in Roth IRAs
On the financial side, our biggest mistake was not taking advantage of Roth IRAs while we were income eligible.
We were fortunate to earn six figures each in our last several years of work (unlike our early years, when we each earned peanuts while living in DC and LA, two expensive cities), and it wasn't until we were in that income bracket that we realized how helpful Roth IRA savings can be. By then, it was too late to take advantage of them.
We consider this a good problem to have, because obviously, we were better off earning more than we would have been earning less but saving in Roths, but still… hindsight is 20/20.
If we'd gotten wise earlier on, we might have put money into Roths rather than spending that money in our lower earning years.
5. Not wasting energy clipping coupons
Before we got all gung-ho on saving for our work-optional life, we were gung-ho on saving to buy our first home in Los Angeles where property is super expensive.
And before that, I was really focused on paying off my credit card, car loan, and student loan debt.
In many ways, saving for retirement is exactly the same as pursuing those other financial goals, it's just a smidge more ambitious. But during those earlier saving periods, I took a very penny-pinching approach to saving and spent huge amounts of time trying to track down the best grocery deals, which involved clipping coupons, matching them to the best deals, and shopping at multiple stores every week. (And, in all honesty, it also involved walking around our neighborhood in LA to find coupon flyers our neighbors did not pick up, so I could have multiples of every coupon)
And it's true that while I shopped that way, we were spending very little on groceries… but I was also spending a ton of time on all of it and we were eating a lot of junk food because that's what coupons tend to be for.
Looking back, it wasn't worth it.
Now we'll happily pay a bit more for groceries but eat healthier stuff and avoid wasting all that time tracking down deals and driving all over town. I learned an important lesson from it all that it's far better to look for the big opportunities to save money – like by minimizing housing and transportation costs – and to skip the savings methods that only save you a few pennies at a time, especially if those methods consume a lot of time. Your time has value, too! (That's why “non-penny-pinching” is in the title of the book!)
6. Not stocking up right before we left work
In the months before we quit working, I started to worry that we'd never be able to buy anything again, and I stocked up on a bunch of things, including new socks, underwear, soap, shampoo, and a few other random things.
In hindsight, that was so silly!
We built a strong and conservative early retirement financial plan, and we'll always be able to afford those things and much more. But the gravity of what we were doing – walking away from well-paid careers and leaping into the great unknown – got to me a bit and made me take on a scarcity mentality temporarily. Fortunately, I learned from that and got over it quickly.
7. Gotten smart about airline and hotel points sooner
We retired with about 3 million hotel and airline points banked, thanks to a lot of work travel over a lot of years.
I was always smart about sticking with one airline, and we each had United credit cards, but we didn't pay attention to other travel hacking opportunities until our last few years of work. Unfortunately, we squandered a ton of hotel points by not focusing on one or two chains. We even let some points expire.
If we had it to do again, we'd focus on staying with one hotel chain and making sure we didn't lose any points due to inactivity. We could probably have another million or more hotel points if we'd done that!
8. Enjoyed the journey more
Honestly, the biggest thing we'd change is not financial.
It's that we'd let ourselves enjoy the journey more.
It's so easy to get impatient when you see that an exit from mandatory work is possible, and we let ourselves get impatient. We had great careers with great employers, and even if that hadn't been true, we wish we'd been in less of a hurry and had focused the entire time on enjoying our lives in the moment, rather than focusing so hard on the future.
Sure, that future focus helped propel us, but if we'd taken seven or eight years to reach our goal instead of six, we still would have retired incredibly early compared to the norm.
We could have spent a few thousand dollars more a year on things we enjoyed and not slowed ourselves down all that much, and we could have appreciated work more.
We're still ultimately proud of what we've accomplished, and thrilled to be living work-optional lives now, but if I could go back and share one lesson with past us at the beginning of the journey, it would be: “Don't forget to look around and enjoy the present, even if it means going a little slower.”