Welcome to the Late Starter to FI series!
I am a Late Starter – I did not discover FIRE (Financial Independence Retire Early) concept until I was 47. This was way later, I thought than others who seem to have it all together in their 20s and 30s.
Since I started to write about my own journey, I have discovered there are many more Late Starters like me, yay! It is such a relief knowing I am not alone.
I want to share our stories, our unique perspectives and show that it is absolutely not too late for us.
So in this series, I particularly highlight those of us who start our FI journeys in our 40s, 50s and 60s. And explore questions such as ‘where do we start’, ‘can we still retire early(ish)’, ‘what are the specific challenges for us late starters’. We look at our past, not to castigate ourselves but so that you can learn from us.
Please join in the conversation in the comments below. I encourage you to share your story if you are a late starter. AND especially if your story is not reflected in any of our stories so far. You absolutely don’t have to be a blogger or podcaster to share your story.
And if you’ve missed any of the previous stories, you can catch up here – Late Starter to FI series
FI is Freedom. Amen. Enough said 🙂
I invited FI is Freedom to share his story here as his approach to retirement income is not the usual strategy of using the 4% rule (withdrawing 4% from your portfolio forever, based on the Trinity study). He changed his strategy in his late forties and still managed to retire at 55.
A little about me
I am 55 years old and live in Middle Tennessee, USA. I’ve been married for 34 years and have a daughter in her freshman year in college. I retired this March after a long military and IT career.
I have always been an avid backpacker, to the point of, probably, an obsession. I’ve hiked over 1000 miles this year since retiring in March 2020 at 55.
I just started a FIRE blog focused on monetising your nest egg to replace your salary with dividend income. Financial Independence is Freedom is my motto – www.fiisfreedom.com
Lightbulb moment (or not)
I did not have a lightbulb moment that drove me to pursue FIRE but really always planned to retire at 55. I did have a moment where I realized that to make my goal of 55 happen, I needed to change my strategy after several cycles of making money on high flying stocks, losing some, saving more, losing some, making a little more and repeat.
This led to some early fear that the volatility I experienced would never make me comfortable giving up a salary. That led to some serious planning as to how I could better monetize wealth without the ups and downs.
This planning led to passive income, which for me means dividend investing for the long term.
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My financial situation at that point
I really started to worry about the volatility I experienced as a growth investor when I knew I was going to make what I considered my number. Probably about 6 years from retirement, so in my late 40s, I knew I would never feel comfortable pulling down principal as a source of income.
At this point, I was probably 80% ready for retirement assuming an annual income in retirement from $70k to $120k. I was in a very stable “C” level technology position with particularly good income allowing me to save more in my last couple of years than I did in the previous ten.
It is easier to save enough to hit the crossover point than invest your way to success.
First steps on the path to FI
This is a tough question since saving and investing has been important my entire adult life.
Probably, opening up a mutual fund in my late teens. I can’t even remember what it was or who it was with but I had it a few years before I opened up my first brokerage account. I have always preferred picking my own investments.
I have undergraduate finance education and have spent quite a bit of time in finance tech consulting and business leadership that I feel I have the ability to analyse a business well enough. That education and experience have been crucial to what I consider my current success.
My current financial situation
At my blog, I cover one of my main portfolios in depth with full transparency. I am not comfortable sharing all my financial details but will talk about the other things at times besides this portfolio. It is a focused dividend income portfolio that I will not touch for at least the next 5 years so it will be exciting to blog about how I plan to double that income from now till I need it.
The Freedom Portfolio, as I have named it, is the IRA I’ve used since 2006 to rollover 401ks. The current value is around $550k and 12 month forward dividends should be a bit over $40k. I consider all the holdings near permanent positions. I may do some rebalancing at some point because of some positions that have performed very well. That rebalancing would be done with dividend reinvestment allocations rather than selling equities.
I am financially independent and retired at 55 last year. I guess that is considered early but if I had started early or learn my lesson in 2000, I could have done it earlier. Not sure I was ready earlier but 55 was just in time.
I am kind of surprised at how happy I am being retired, even after planning for it my whole life. Not just happy with my current circumstance – I mean I’m genuinely happy I do not have to pursue work any longer. My family is very blessed to be in the situation we are in.
The most significant step to reach FI
I would have to say the most significant step is just understanding the need to save in the first place. So many of my friends, older and younger, are so far behind just because saving hasn’t been a priority. I am retired right on time but in 2008, I got scared I wouldn’t make it.
How my relationship with money has changed
First of all, no regrets. I’ve made mistakes. I’ve made bad decisions and I learned from them. Luckily we have a long time to correct our experience deficiencies and buckle down and get serious.
My relationship with money has definitely changed. For quite a while in my career, I was earning enough to buy things I didn’t need, spend freely and still save the normal 10%.
I think my mistakes were chasing growth at all costs and getting slammed in both 1999-2000 and in 2008-2010 market crashes. 2008 especially made me rethink everything and led to my first dividend stocks.
In hindsight, which is always 20-20, I wish I had learned of dividend income as my retirement funding source a lot earlier. I had always planned to follow the safe withdrawal rate theory of 4% a year and potentially deplete my principal at death with little leftover. Now just by living off of part of my dividends, I have an eye towards building generational wealth.
Specific challenges or advantages of starting late
For me, it was pure career burnout and knowing I wanted out early.
I imagine someone else starting their retirement journey early would just have to put their head down and get serious with earning and saving.
The only advantage I would think for starting late is most should be at the peak of their earning years and hopefully beyond big expenses like saving for a home or college.
The key is to start. If you don’t start, you will not meet any goals.
The effect of COVID 19 on my strategy
Quite the contrary, 2020 has been great for my strategy. I retired on March 1st and rolled my 401k into the Freedom Portfolio in April at the market low.
All I really did was increase all of my current postitions but the yields I bought in at were like rocket fuel to not just this year but the whole five year income projection I had before retirement. Just the right time to enter the market.
Sometimes we do get lucky.
I plan to hike the Appalachian Trail beginning this Spring. Probably the only goal I’ve been working on longer than FIRE and to me, the epitome of the freedom I’ve gained. This effort will consume me through 2021.
After that, I plan to enjoy life with my family and continue to live an adventurous life. More hiking is definitely in my future. Maybe the Pacific Crest Trail or Continental Divide Trail or both. I’m not young enough to commit myself to those but that would complete the Triple Crown of hiking.
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Thank you for sharing your story and retirement income strategy with us, FI is Freedom.
I would love to pursue a dividend income strategy for my own retirement, thereby not touching the nest egg and passing that on to my niece when I die. I’d always assumed that starting late would make this strategy difficult to execute.
But after reading your story, it may be possible if I can live off the dividends and supplement it with another source of income eg working a regular evening or weekend shift and monetising this blog. Hmmm … lots of food for thought.
Wishing you all the very best for your Appalachian Trail hike – stay safe and keep us updated on your progress! It’s definitely not for the faint hearted 🙂