What can happen in five years?

Since we are now less than 5 years from my planned early retirement date (the date is based on me reaching a certain age, and my birthday is in June), I think it makes sense to review what I’ve done over the past five years.  I read somewhere that people generally over-estimate what they can accomplish in 1 year, but under-estimate what they can accomplish in 10 years.  Based on my experiences, I think that is a pretty accurate statement.

Here are some accomplishments and life events my wife and I have experienced over the past five years:

  • I got engaged, and then married
  • My wife and I have welcomed two beautiful children into the world
  • My wife and I have bought and sold a house
  • I have lived in three different states
  • I’ve been with the same company for the five years, but have been promoted twice, and my base salary is now just over 150% of what it was when I joined the company
  • I bought a car, originally financed over 4 years, but I paid it off in about 2.5 years; my wife has a paid-off car, as well
  • I paid off all of the student loans I had from graduate school, after graduating with my MBA in 2006
  • I have increased my investible assets by over $300,000, growing my taxable brokerage accounts from $0 to six figures
  • I’ve read countless books, including fiction books, as well as non-fiction books, including history, philosophy, finance, investing, and self-help/motivation
  • I started a blog called Turtles’ Tipping Point

While life is not linear, and it’s difficult to predict what will happen in the coming months and years, here are some goals I plan to accomplish, and their deadlines, during the next five years:

  • Continue to raise two healthy children, being the best father and husband I can be – ongoing
  • Keep my mind healthy, focusing on the future and positive thoughts and actions – ongoing
  • Move to the same place where my wife lives, either through a job with my current company, or a new one – by late 2016
  • Dividends at an annual run rate of $3.5k – December 31, 2016
  • Gain financial freedom – June of 2021
    • Dividends at an annual run rate of $100k – June of 2021
    • Have contributed >$50k to each child’s 529 college savings account – June of 2021 (tracking the contributions because I have (at least some) control over the contributions, but really no control over how Mr. Market behaves over time)
  • Weigh < 160 – December 31, 2016

There are many other short-term goals I need to accomplish while on the way to accomplishing those goals, but those are the main ones I’m focusing on at a high level for the next five years.  Examples of the nearer-term sub-goals I am working on include things like improving my savings rate, promotions and raises at work, and fitness goals, such as running a certain distance in a certain time, or lifting a certain amount of weight.

What about you?  How have your last five years gone, and what are some of your goals and expectations for the next five?

Should you pursue early retirement?

This may seem like an easy question, but I’m convinced that the answer is not necessarily easy, and is not the same for all people.  While I know I want my family to achieve financial freedom by June 2021, the reality is that I don’t anticipate a conventional retirement of playing golf and lounging around all day.

In his book, The Happiness Equation, Neil Parischa points out that there are 4 S’s we derive from work; Social, Structure, Stimulation and Story. He goes into a bit more depth on each topic, but the gist of his theory is that we need the social interaction, structure to our days, mental stimulation of completing tasks, and the stories of the companies or organizations for which we are working in order to feel happy.

I can’t disagree with any of Parischa’s points, and when I consider my pending financial freedom, I realize I will need to satisfy those human needs I had been meeting from work through some other means besides a normal 9-5 job.  This was an interesting realization to me, as when I first began thinking about financial freedom, I had this idea that I would sit around all day doing nothing, and I would be happy in that situation.

Since reading Parischa’s book and a few others, I’ve come to imagine a different life once my family has reached financial freedom.  As I mentioned in an earlier post, I have a better idea of the items I plan to leave behind once I leave the work force (primarily office politics, stupid pointless bureaucracy, dependence on an employer and boss, etc.) than I do of the lifestyle I have at that point.

I also read The 80-20 Principle by Richard Koch, and he put together a really interesting framework for people to consider what type of work would be best for them.  There is a vertical axis that represents person’s need for achievement, while the horizontal axis is divided into different types of organizations or structures in which the person should work (working in large organizations, self-employed, and employing or organizing others).

The combination of these two books got me to realize that while I think we should all strive for financial independence sooner rather than later in order to have the option to stop working for a time, or take a lower-paying position that we may enjoy more, early retirement is not for us all.

I think it’s key to realize what drives us when we are making big decisions, like changing jobs or quitting the workforce altogether.  I know myself well enough to realize that most of the work-related stress I’ve had and my desire to reach financial freedom quickly stems from me not particularly liking working for other people or having people work for me. There are people who desire power, and enjoy ordering people about and organizing them to complete tasks, but I just do not get a lot of happiness from this.

I prefer to not need approval or get approval from anyone; independence is what I crave most.  I also do not have a strong need for achievement.  I know this in part because I know people who do have a strong need for achievement, and who prefer working in large organizations or managing others, and I can sense that I just don’t have the same ambition or desire in those situations as those people have. I’ve still managed to get promotions, and do well in corporate life, but admittedly, not as well as some peers of equal or less (in my humble opinion) ability.

Before reading Koch’s book, I would sometimes wonder why I just didn’t have same desire to move up the corporate ladder as others had.  I wondered why I was so detached and un-engaged on occasion, but now that I know Koch’s framework, I understand the reasons, and understand that I am better suited to working as an independent contractor or consultant of sorts, or not working at all.

How about you?  Is it early retirement or bust for the readers out there????