{"id":4676,"date":"2022-09-28T23:25:31","date_gmt":"2022-09-29T05:25:31","guid":{"rendered":"https:\/\/modernfimily.com\/?p=4676"},"modified":"2022-09-27T06:59:08","modified_gmt":"2022-09-27T12:59:08","slug":"we-did-it-we-reached-fire","status":"publish","type":"post","link":"https:\/\/modernfimily.com\/we-did-it-we-reached-fire\/","title":{"rendered":"It’s Happening! We Reached FIRE and Retired Early In Our 30s!"},"content":{"rendered":"

Fa la la la la, la la la la!!!!!!!!! WOOOHOOOOO!<\/p>\n

Well guys, it’s official!\u00a0 I have decided NOT to return to my sweet part-time shift-work gig meaning Nic and I have both retired early!<\/p>\n

Our Back Story<\/h2>\n

First off, we know this post will likely come off as a brag to some readers, but we truly are writing this (and every blog post on here really) to help inspire and motivate others. Here’s a bit of our backstory to see how we’ve been able to pull this off.<\/p>\n

Nic stopped working back in 2018 at the age of 30 when our daughter was born and my last day of work was back in June 2021 at the age of 35 when our son was born. I’ve since been on parental leave for over a year (earning $357\/week – woop woop!) and recently made the decision to not return back.\u00a0 The timing has worked out pretty perfectly for us both to be able to take 15-18 months off when each kiddo arrived (thank you Canada!) and then not head back to work.<\/p>\n

We are so so thankful of the work we put in during our 20s to be able to create the life we live today in our 30s.\u00a0 While we didn’t really know what we were doing back in the day, we understood the importance of a high savings rate and not letting lifestyle creep interfere with our long term plans.\u00a0 We are also incredibly fortunate to have been able to participate in the upward bull market since we started our careers (2009 for Court and 2013 for Nic).\u00a0 We are also so incredibly thankful that we’ve both been able to test the FIRE waters out during our long parental leaves to confirm that this is indeed the lifestyle we want to live.<\/p>\n

We started off with over $100,000 USD in student loan debt combined ($65,000 for me and $40,000 for Nic).\u00a0 It took us 9 years to pay off the debt and reach the $1,000,000 net worth mark.\u00a0 \u00a0Our net worth is now in the ~$1.65M range and we have a passive income portfolio of ~$1.15M. We didn’t receive any sort of inheritance – we simply worked hard and were boring long term investors (simple concept to grasp but very hard for many to actually implement).<\/p>\n

On average, we earned $113,000 per year combined between the two of us from our employers (when we were living in the States this number was in USD and when we were in Canada this was in CAD).\u00a0 We also house hacked<\/a> and had rental income coming in for multiple years (2012-2017 and 2020-2022). Nic worked for a total of 4 years and I worked for 12 years. I transitioned to part time work in 2019 – and would highly recommend it!<\/p>\n

I first discovered FIRE back in 2011\/2012 thanks to a co-worker at the time.\u00a0 I already had a frugal mindset and had aggressively paid off my student loans and was saving up for a downpayment so the timing was perfect as my next question was “now what do I do with this excess cash?”.\u00a0 Enter, index funds, travel hacking, house hacking, etc.\u00a0 We travelled to over 25 countries and then in 2015 we took the plunge to both quit our stable jobs in Florida, travel for a bit (all over the US, Canada, Iceland, and Norway) with the intention to figure things out later in the year with an eventual move to the Calgary area planned.\u00a0 We then added two kiddos to our clan and our “why” shifted from travelling the world to being able to be present parents and spend time with our kids.<\/p>\n

Was It A Hard Decision?<\/h2>\n

Yes and no.<\/p>\n

It is extremely\u00a0<\/em>rare to have a part-time job in my field.\u00a0 The only other person who I knew of who had one was my co-worker, Z, who I was splitting this shift with.\u00a0 And the only reason she was able to work part time was because of health reasons.\u00a0 Her other half of the schedule was being filled by OT pay from other team members.\u00a0 Then in I swooped to “save the day” (company no longer had to pay OT and less people feeling burnt out having to constantly cover shifts) by taking over her other half of the shift schedule.<\/p>\n

Unfortunately, back in January she passed away unexpectedly in her sleep at 45.\u00a0 This was the same month when one of Nic’s best friends passed away in a freak ski accident at 33 and Nic’s brother-in-law was diagnosed with Stage 3 cancer at 41.<\/p>\n

As awful as these back-to-back-to-back events were, it was the reminder we needed that life is indeed precious and short.\u00a0 And we are not going to waste it on One More Year Syndrome<\/a>. The goal posts can forever move further and further back, but we’re not going to let that fear stop our plans.<\/p>\n

So yes it was hard to give up a very rare opportunity to work part-time but no, we need to live the life we’ve created on our own terms.\u00a0 Now.<\/p>\n

Here’s a brief run down of what went on this year work-wise:<\/p>\n

January: Z passes away<\/p>\n

March: My boss contacted me to let me know that when I return, it would be for a full-time spot not part-time as the part-time gig was only created\/needed because of Z.\u00a0 He told me to take some time to think it over as he knows how much I enjoyed the part-time setup with the kids.<\/p>\n

April: I put on my big girl pants and told my boss I was not looking to take on a full-time role and was not coming back.\u00a0 I was\u00a0antsy<\/em> throughout the whole call, but I did it!<\/p>\n

May: My boss calls me for a quick “Mother’s Day Chat” to let me know he spoke to his bosses boss and they created a part-time spot for me to come back to.\u00a0 Happy Mother’s Day. Bye!\u00a0 Uh… what? Noooo.\u00a0 Is this a sign?\u00a0 Am I supposed to go back?\u00a0 Noooo!<\/p>\n

June: My boss gets in touch to go over mid-year goals (which is odd since I’m off but whatevs).\u00a0 Now I have to have\u00a0another<\/strong> chat to tell him I’m not coming back.\u00a0 And I am\u00a0SO<\/strong> non-confrontational!\u00a0 So what do I do?\u00a0 I panic and the words don’t come out!\u00a0 I head into the living room afterwards and told Nic “I couldn’t do it!” and she quickly shouted “WHAT do you mean!?!”<\/p>\n

July: After multiple hours of editing, I send my boss and email stating that I am humbled that they created a part-time position for me, but I am not returning.<\/p>\n

August: I met up with my boss at the office to hand in my work phone and badge.\u00a0 We left the door open to possibly returning part-time in a few years. We celebrated with a meal out at Finn’s favourite place – our local Vietnamese restaurant.<\/p>\n

PHEW.<\/p>\n

It was honestly so taxing and exhausting from my end that I didn’t even feel like celebrating after sending that email out in July when it all became “official”.\u00a0 Instead, I felt sorry for leaving a gap in the schedule for my boss to have to fill.\u00a0 Now I know<\/strong> I am just a number in the corporate world and turnover is very common on my team, but I still felt bad.\u00a0 By the time August rolled around and it was time to turn things in the jitters calmed and I’m back to feeling very excited and zen about it all.<\/p>\n

Here’s our celebratory selfie in August before driving to downtown Calgary to hand in my work supplies:<\/p>\n

\"\"<\/p>\n

What Are We Giving Up?<\/h2>\n

The biggest thing of course is a steady paycheque.\u00a0 I was earning $56,000 as my base salary for my part-time gig.\u00a0 I also received annual bonuses that happened to be well above this annual pay the past 2 years (which I was NOT expecting).\u00a0 I also was able to receive the same health\/financial benefits as my full-time counterparts.\u00a0 For us, the highlights included 4 massages per person per year and 70% coverage for dental, vision, and prescription costs.\u00a0 My company was also contributing a small amount each month into my DC (defined contribution) pension plan – which currently has ~$8,000 in it from 1.5 years of part-time employment.\u00a0 Nothing huge but still something.\u00a0 Lastly, last year I received RSUs (registered stock units) as part of my bonus pay which means I’m giving up on $13,000 in March 2023 and another $13,000 in March 2024 for not sticking around until those payout milestones. It’s pretty hard to walk away from $13,000 when all it would take is 6 months back in the office.\u00a0 But, we know there is more to life than letting work drag on (aka the proverbial golden handcuffs).<\/p>\n

Are We Worried?<\/h2>\n

We’re now entering the wild wild west of early retirement.\u00a0 We’re starting things off in a recession where the stock market has plunged ~20% during the first half of the year.\u00a0 YIKES.\u00a0 We’re starting things off during record high inflation.\u00a0 WOWZA.\u00a0 We’re starting things off with a war going on, a pandemic still ongoing, and energy prices skyrocketing. SHIIIIT.\u00a0 We’re starting things off during a time that most similarly replicates the 1970-1980s when the 4% rule didn’t look so hot. UH OH.<\/p>\n

And guess what? We’re actually feeling really confident with everything.<\/p>\n

Pardon me? Why?<\/p>\n

First, we have been super conservative with our figures. Even though we only spent ~$40,000 last year, our investment portfolio of ~$1,150,000 allows us to withdraw $46,000 using the “4% Rule” and our current spend is closer to the 3.4% withdrawal range.\u00a0 This gives us a decent amount of wiggle room for one-off spends that will come up over time. When I calculate our “Fat FIRE” number it’s around $60,000. I’m sure there will be some years where we do end up spending that much but the majority of the time I’m estimating we will be spending well under $46,000 and very likely closer to $40,000.<\/p>\n

That $1,150,000 portfolio value also assumes everything is in CAD (the currency we spend), yet a large majority of our investments are in USD.\u00a0 If we convert the USD portion to CAD based off today’s exchange rate, we are looking at a portfolio size of ~$1.4M CAD and we are well under a 3% withdrawal rate. Using the “4% rule”, this puts is closer to our “Fat FIRE” figure which we know we are not going to consistently be spending.<\/p>\n

We also built in some cash into our plans so we don’t have to sell in a down market (we are holding 2-3 years of spending in cash).\u00a0 We plan to implement a rising equity glide path – thank you Wade Pfau and Michael Kitces!<\/a> – where we are currently sitting ~80% stocks and will be shifting up to 90+% over time.\u00a0 While a lot of it is more of a psychological benefit, spending from our cash cushion provides a buffer asset during these first few years so we do not need to sell from our stock portfolio if the markets are down to start things off (ahem 2022).<\/p>\n

Additionally, during these first ~17 years of early retirement when one or both of our kids are under 18, we will be receiving Canada Child Benefit (CCB).\u00a0 When playing around with the online calculators, starting in July 2024 we should be receiving close to $18,000 in tax-free money from the CRA between CCB and a few other federal and provincial benefits we qualify for.\u00a0 This is WILD<\/strong>.\u00a0 Absolutely wild and this clearly drops our withdrawal rate even more. If we factor in the USD\/CAD exchange rate and<\/span> CCB, were sitting at a withdrawal rate of ~1.5% even in this depressed market.\u00a0 And then once CCB is gone, that also likely means that kiddo related expenses are gone\/lower too so we should see our annual spend drop around that timeframe too. Please note that we are not<\/strong> relying on these external benefits to make our FIRE plans work, they simply are icing on the cake.<\/p>\n

[Note for anyone interested in learning more about CCB, this is the topic I am focusing on at the Canadian Financial Summit!\u00a0 I will be posting about the summit in more detail next week, but if you’re interested in attending this free event you can sign up here<\/a>.]<\/p>\n

Lastly, what any FIRE naysayer doesn’t understand is that we are not robots.\u00a0 We are flexible humans who are not going to see our portfolio go down, down, down to $0 and shrug and say “ah crap, it didn’t work”.<\/p>\n

For the majority of retirees who follow the 4% rule, the opposite usually happens where their final portfolio value is actually higher than their starting value even when withdrawing each year.<\/p>\n

But let’s say we enter this crazy Great Depression era where the portfolio can’t keep up with our spend.\u00a0 We are very capable of earning $5,000 each ($10,000 total) from a fun part-time side gig if we want to (and likely will someday – I’ve got my eyes on you casual position at the library and Nic is eyeing seasonal lawn mowing for our town).\u00a0 This $10k may not sound like much, but when your spend is ~$40k, that’s 25% of your expenses covered which is HUGE and likely a make or break for your portfolio to recover.\u00a0 Or, worst case scenario – Nic and I have to go back to work for a few years to make enough to cover our annual spend while we coast and let our portfolio rebound back.\u00a0 Based off our current spend, that would mean both earning $20,000\/year.\u00a0 Again, this can be accomplished by a low-stress job.<\/p>\n

There is this weird stigma in the FIRE community that if you retire and then end up making money afterwards that you’re a fraud, or phony, or did it wrong.\u00a0 But the reality is that most people who are able to pull of early retirement are your very organized type-A go-getters and their brains will<\/em> find something to do – be it paid or unpaid. We know that we can’t turn off the hustle button just because we no longer have<\/em> to work.\u00a0 For reference, last year we made ~$5,500 on the side from various gigs we’ve done (coaching, blog related stuff, selling items on FB marketplace, etc).<\/p>\n

Also, not all of our spending is considered “fixed”. About 40% of our spending is what we consider discretionary spending and thus we have the flexibility to also reduce our spending if sequence of returns risk (SORR) is shaping up to not be in our favour during these first few years.<\/p>\n

Dave from Strong Money Australia recently wrote a great post on your “personal flex rate”<\/a> which I thought was a great read. After going through this FIRE journey ourselves, I wholeheartedly agree with him about backing down from your stressful full-time position even prior<\/strong> to reaching your FIRE number.<\/p>\n

[Note, this is the topic that Brad from ChooseFI and I recently dug into, so if this interests you, be sure to check out our upcoming ChooseFI podcast episode! Will let you know when it’s released.]<\/p>\n

Are we anticipating needing to do any of this?\u00a0 No.\u00a0 With our extremely low withdrawal rate, we should be\u00a0more<\/strong> than fine.\u00a0 But these are our “worst case scenarios” and guess what?\u00a0 They still beat what most adults do… work full time!<\/p>\n

What Are We Gaining Instead?<\/h2>\n

We’re gaining freedom<\/span>.\u00a0 We’re gaining choices<\/span>.\u00a0 We’re gaining optionality<\/span>.\u00a0 And we’re damn excited for it all.<\/p>\n

We’re gaining TIME<\/strong><\/span> to spend how we want.\u00a0 For us, that means being involved parents.\u00a0 It means getting to witness many of their “firsts”.\u00a0 It means being best friends with our kiddos and creating life-long relationships with them.\u00a0 It means letting the kid in us shine through.<\/p>\n

It means being able to escape the Alberta winters and slow travel to different warm regions for a few months each year… Portugal, we’re coming for ya this winter!<\/p>\n

It means having the privilege to be able to explore alternative schooling options for our kids if that’s something we all want to pursue.\u00a0 Homeschool? Unschool? Worldschool? Hybrid learning? These are all routes we can consider because we are no longer strapped to a desk.<\/p>\n

It means shaping our days however we want.\u00a0 Zoo on a Monday? Yup. Skiing on a Tuesday?\u00a0 Right on.\u00a0 Science centre on a Wednesday? Let’s go.\u00a0 Hiking on a Thursday?\u00a0 Which one?\u00a0 Swimming on a Friday?\u00a0 For sure.\u00a0 Hibernating on the weekends when the majority of the population is trying to cram everything in for the next week?\u00a0 Absolutely.<\/p>\n

What’s Next?<\/h2>\n

We still haven’t told many of our family and friends what’s really going on.\u00a0 Instead, we’ve been telling them that I’m not returning to work and instead switching to be a financial coach.\u00a0 This *technically* isn’t a lie as I do coach people<\/a> (and truly enjoy it) but little do they know how few hours I actually spend coaching others… I try to limit it to 5-10 clients a year! We thiiiink they are catching on that we really don’t work anymore. Eeep!<\/p>\n

Even though this is the “official” start to our family’s post-FIRE life, we have both been living the RE lifestyle for awhile now.\u00a0 So really, it’s more of the same of what we’ve been doing.\u00a0 It’s a bit anti-climatic really haha.<\/p>\n

We are now *officially* transitioning occupations from nurse and energy trader to teachers.\u00a0 We want to be the best teachers for our kiddos and for our surrounding community.\u00a0 We want to help others.\u00a0 We want to use our time wisely.\u00a0 We want to be life long learners.<\/p>\n

Most recently, our time is being spent researching alternative schooling options for our kiddos and also researching where to travel this winter.\u00a0 I have a feeling that these two topics will remain at the forefront for a few years.<\/p>\n

It’s exciting to see how our passions can (and will) evolve over the years. It is interesting to witness this firsthand in that FIRE has been a\u00a0huge<\/strong> part of my life for the last 10+ years and now that we’ve reached the holy grail, I can see how my interest is fading – I’m more focused on simplifying things from a financial standpoint – and shifting my focus on other things.<\/p>\n

I heard a long time ago FIRE being defined as “financial independence rewired<\/em> early”.\u00a0 I really like that R being “rewired”.\u00a0 We’ve escaped the rat race.\u00a0 We’ve figured out that living a contrarian lifestyle can be a good thing.\u00a0 We’ve rewired our brains to stop chasing the next shiny new thing.\u00a0 We’ve figured out that a simple life really can be a happy life.\u00a0 We understand what it is that we, personally, truly value and focus on that.<\/p>\n

So there we have it – a mushy post highlighting all our thoughts and feelings.\u00a0 We are\u00a0so<\/strong> excited for this next chapter and looking forward to seeing what’s next in store for us!<\/p>\n

Any additional questions for us??\u00a0 Anything you were hoping I would have covered but missed?\u00a0 More than happy to do a follow up post if there are additional topics you’d like me to cover.<\/p>\n

Support This Blog<\/b><\/h2>\n

If you liked this article and want more content like this, please support this blog by sharing it.\u00a0 Not only does it help spread the FIRE, but it lets me know what content you find beneficial.\u00a0 Writing is NOT my strong suit and it honestly takes me hours to write each post so the more encouragement the better!\u00a0 Engaging in the comments below keeps me motivated.\u00a0 You can also support this blog by subscribing to receive emails anytime a new post is published.\u00a0 Thank you FImily!<\/p>\n

We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.\u00a0 Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:<\/p>\n