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A real life case of Financial Independent but don’t dare to retire early

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Financial Independent and Retire Early – The dream of many people

This is the topic that many people like to think and dream about. Work hard, earn high income, save more, spend less, grow your passive income in order to become Financial independent. After that you can retire early and have all the free time you have to do whatever you like – This is the daunting DREAM of many people including myself. However, how many people can really achieve this? Is it really that easy to FIRE (Financial Independent and Retire Early)?

Do you believe? Financial Independent is easy but Retire early IS NOT EASY

I can tell you that this is not easy! It is not easy. The not easy part is not the – Work hard, earn high income, save more, spend less, grow your passive income in order to become Financial independent. This is difficult but achievable. It’s the RETIRE EARLY part that is difficult. Too much time on hand is not easy. Regardless you are financial independent or not – Routine schedule, steady salary with a job is so much easier for most people. Don’t believe me? Really? Let me share a story.

Story of Financial Independent and Retire Early

Beginning of Story

Let me share with you a story that I have learnt from somewhere.

Ten, twenty years ago in a country, there lived a young chap who just started work after university. Similar to many young chaps, he is also disillusioned by the 9-6pm routine, working until you are very old in the 60s+ before retiring, then enjoy your last 20 years (if lucky) of retirement life.

How to achieve Financial Independent and Retire Early

Similar to many others, one of the most common ways to achieve this is studying for decades for a good degree, find a good job, climb corporate ladder, grow high income then Work hard, earn high income, save more, spend less, grow your passive income in order to become Financial independent. After Financial Independent, he can retire early and enjoy life, in SHORT FIRE!

He read books, study, learn investment, work hard to grow his income, reduce expenses. Like many others, he understands that Time is a more valuable asset than money. Most people are just exchanging your life energy for money. Hence, since entrepreneurship may not be easy, with higher risk of failure, he gets a decent job with good salary. Then he lives below means, save 50-80% of income, the actively read books, articles, learn from others in order to invest well and grow his investment income.

Overall, he is actively building his network over time.

Image of these books are from https://www.amazon.sg/

After slightly more than a decade of hard work…

Time flies, after slightly more than a decade of hard work. He got married, got 2 kids (one in preschool and one in primary one in year 2022) and live a life envy of many. In term of employment, although he didn’t get super high salary, but it’s decent enough for his family to live based on his income alone. Together with his spouse income and their family habits of living way below means, this family saved a lot, and achieved the following:

  • Exceeded CPF Full Retirement in Special Account only for both him and his spouse. This means that even both of them stopped work immediately, they should get at least 2.5k each (total 5k) from 65 years old onwards
  • A house that is not fully paid but can be paid off easily with CPF Ordinary account anytime. In fact, they balloted successfully for a new BTO which will be ready in 2024 which they should be able to pay off with CPF Ordinary account easily – they bought new house so that can refresh the lease to 99 years. In the worst case where they run out of money when they are old, they can downgrade the house.
  • Full Basic Health Sum for both of them
  • Medical and Life Insurance fully covered
  • Decent amount of Networth with dividend cashflow that should be able to cover their monthly expenses with a little buffer
  • Keeping to low expenses with no car (they rather save the money to invest although they can afford it)
  • War chest to invest into the markets should there be crash
  • Emergency Funds for 2 years put in Singapore Saving Bonds that can be redeem with few days to longest a month
  • Keep daily cashflow of around 1-2 months for usual spendings

Given the above and after procrastinating for at least 1 year, they decided to activate a plan that they had planned long ago since they got their first child.

Their Problem

Many would be asking what is their plan? If it the Financial Independent and Retire Early? FIRE?

The answer is no.

The main objective behind this plan is to solve a problem that is causing headache to many people – childcare when the child reaches primary one.

How to solve childcare problem? They are 4 main common options in this society:

  1. After School Care – many people took up this option! This is great. There are teachers to take care of them, help to do homework, fed them, many activities etc…
  2. Hire a helper – This option is much cheaper compared to the salaries that they are drawing now. They also get to be freer with more me time.
  3. Grandparents helping to take care – this option is great for many people.
  4. Latch key kid – Give money and keys to kid and ask kid to go home after school at 1.30pm. Most kid at Primary One should be able to do that.

Which option did they choose?

None of the above.

Their Plans and Beliefs

Let me go one step backward to share their beliefs first. They believe that a child should have someone to accompany when they are growing up so that the child feel that home is safe and can share theirs thought. Home will be their safe Habor. The question is who is that someone? They have analyzed the 4 options above:

  1. After School Care – they don’t want to put their kid into this. Their primary one kid was put in infant care since the kid was 3-4 months old because they need to work to get income. They have missed so much time with the kid already – kid is only young once. Once the time missed, it will never come back.
  2. Hire a helper – this is possible, but they have to get a good helper. But on second thoughts, even with a very good helper, they don’t want a scenario such that when the kid needs help, need someone to talk to/share feelings with (example fall down, feel sad/emo/happy due to whatever things happen in school) etc, to find helper instead of parents. Worse case, helper become the kid’s “Mom” instead of the real “Mom” (this is true, if you observe surrounding carefully).
  3. Grandparents helping to take care – this option is great for many people but not for them. Their parents are too old to be able to take care of young children and different parental beliefs.
  4. Latch key kid – They feel sad to create another latch key kid. It’s sad to go home and see empty nest. Most of the time, the kid just hangs out with other kids or something else which might lead them astray?

Oh No! All the 4 options don’t work. What can they do?

The Decision

They decided to give up one of the high salaries and has one of them stay home for 5 years (until the kids can manage on their own independently which is around 5 years). This mean a change from dual income to single income. However, with inflation, ever rising cost of living, this is a very tough option. It is a big risk that they are taking. Moreover, who is the one to stay home?

Who?

After much deliberation, the answer is the young chap. Why? Isn’t usually the wife who stay home to take care of kid? It is out of society norm to has husband stayed home. He will be laughed at! After finding out more from them, these are the reasons that they have given me.

  • In term of monthly salary and yearly bonus, the wife earns much more.
  • In term of flexibility in terms of hours/working from home etc, the wife’s work gives better flexibility.
  • In term of career progression, the wife’s job has higher salary/corporate ladder progression
  • The wife loves her job as she feels it is contributing to society.
  • The husband doesn’t like his job, treat it as something that generate money paycheck.
  • The husband is the one the spent more time with the kids whenever he is free after work. The wife preferred more free personal time. The husband is the one managing all the finances/investment, doing side hustles to earn more income for family etc. All these takes up time. If the husband quits, he will free up time for all these MORE IMPORTANT things.
  • Mentally the wife is stronger, the husband has childhood trauma with his parents, this might be a good time for him to take a career break to heal.

Additionally, since their cashflow from investments cover their expenses (as mentioned above), changing from dual income to single income should work.

Advantages of this option

Exercising this option have numerous advantages.

  • The kid has an adult (his own beloved parent) to grow up with them.
  • Someone will be there anytime rather than physically is there but mind is not there during work from home days. Those unexpected moments when the kids what to share things with them happen usually after they are at home in the afternoon after school. He challenged me that if I don’t believe this point, I can go ask my kid to share what had happened to the child in school today at around 7pm when I am back home from work.
  • Don’t need to worry who take leave when child sick/no school due to any special event etc.
  • Don’t need to worry about childcare arrangement for Jun/Dec school holidays.
  • The husband will have more free time to think through his life.

Risks of this option

After careful analysis, of course there are risks to this option. Below is what they have told me:

  • Although their cashflow from investments cover their expenses, but innately most FIRE people still have the fear of running out of money. What if there are sudden medical expenses? What is inflation/eve rising cost of living raised the expenses so high that their investment cashflow cannto cover the expense?
  • What if financial crisis strikes? Can their portfolio take the hit and maintain enough cashflow to cover the expenses? Of course, the wife’s salary can cover but this is still a risk.
  • What if the wife loses the job and at the same time investment cashflow turns into issue?
  • Both of them are late thirties, it is a big risk to retire early/career break early. What if they run out of money and want to go back work but no one want to hire back the husband? Resume with career break usually will be questioned by the employers.
  • Husband stayed home is against society norms. Can he take it?
  • Identity Crisis – what should he call himself? Stay at home dad (SAHD), Someone taking Career break? Unemployed? Someone Financially Independent and retire early? Penguin Daddy?

Benefits outweigh the Risks

After considering the pros and cons of the above method, they decided to still go ahead with this option. The husband tendered his resignation with last day at the end of January 2023. On the day where he broke the news to his boss, he was nervous and scared.

Nightmares begin

Few days after he tendered; the nightmare began.

Too much free time

He suddenly felt very loss. He was given less roles in his current jobs as he prepared for the handover. Suddenly he has so much free time. He suddenly realized that he might have made a big mistake. Too much free time is scary. How can he fill those voids of empty time?

Let’s say he identified himself as the Dream status of many people – FIRE! Now he achieved it. Remembered my first paragraph above (copied and highlight in yellow below for easy reference)? However, he suddenly realized what I meant by

Routine schedule, steady salary with a job is so much easier for most people.

Loss of identity is real

Although this was one of the risk items that he has already identified earlier but He suddenly realized that this becomes real. He really dont know what to call himself now, he doesn’t know how to cope now. He was a manager. Now what is he? Stay at home dad (SAHD), Someone taking Career break? Unemployed? Someone Financially Independent and retire early? Penguin Daddy?

Something really felt wrong when he called himself all these. Until today, he still doesn’t know what to call himself.

Loss of Purpose

He suddenly felt a loss of purpose. This wasn’t one of the risk items that he has listed earlier but it just came out. Everyone in this world is always seeking for the purpose of life. What is his purpose of life now? Just to take care of young kids which they might not even remembered/understand the sacrified that their dad made when they grow up? Stay home dad? FIRE and enjoy life while his wife still working?

Childhood Trauma

From what I know about him, he was suffering from childhood trauma. His parents never believe him, even when he is late thirties now. He once shared a story with me – One day when he cycled with his kids on bicycle to visit his parents to their houses, the first thing they told him is “You can cycle the kids safely meh?” Then they would nag and “teach” him that he must go on pavement instead of roadside, must go this route that route etc, then end with the line to tell him better he doesn’t cycle as he cannot. Whatever he wanted to do, shared with him parents what he wanted to try and do, is always ended with “You cannot do it”.

Hence, he grew up with a void, with no confidence in anything he does. He felt that he is useless although in fact his achievements are decent (met FRS, house no issue, emergency funds no issue, insurance no issue, decent cashflow from investments, nice family with supportive spouse and kid etc). Anyway, this is one of the key reasons(s) why he wants to grow up with his kid (to relive his childhood and be a supportive parent).

Worries Worries and more Worries

Back to the story, this weakness of him suddenly reality struck after he resigned. He became more and more worries every day. What if he can’t find a job after 5 years? What if his investment fail? What if his wife also falls sick and cannot work (hence no buffer should investment fail)? What if he got too much free time after Jan 2023 and really don’t know how to fill the time? What if he can’t be a good parent at home with kid? What if he really loses his sense of identities and sunk into depression? What if he can’t find his purpose of life? What if he really become useless? He Might sunk into depression…

What I have advised him

This is what I have advised him.

Will you regret missing out the time spent with your kids or regretting not working for another 5 years to earn more income on your death bed? Do what is important NOW that will not make you regret. But ultimate decisions belong to him as I am not him.

Conclusion: Do what is important NOW that will not make you Regret

Until today, he is still worrying, wonder if he did make the right decision. Everyday emoing, feeling worries… I can’t help him much, but I told him:

Do what is important NOW that will not make you Regret!

To whoever is reading this story out there, trust me.

Regardless of many Financial Independent Retire Early (FIRE) stories/articles that you have heard/dream of achieving, Financial Independent difficult but achievable. It’s the RETIRE EARLY part that is difficult.

Lastly, I want to end this article with my banner to remind everyone to CAREYOURPRESENT!

Anyway, this story will be continued again later. Those interested to know the update, please come back to read again. Please leave your comments if you have any advice to teach this young chap.

Good articles that you should read!

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CAREYOURPRESENT

Money just buy you the chance of freedom.

When you are young and working, you exchange time for money. When you are old, you can have lots of money but you can’t buy time back, especially the things that you have missed while busying striking out in career. Of course, if you love your career, and consciously know that you are missing out the first time your child walk or talk, that’s ok, but if you are the other spectrum, please do something about it.

Your kids grew up and they no longer need you to accompany them. They no longer want to sit on your lap to share/do things with you…all these time you spent in your 9 to 6 or even longer cubicles…can the money that you have earned by you back these?

We always thought we have more time with our old parents, but we are wrong. Time with them is ticking away every day. One day it will suddenly be gone. There is no regret medicine, no reset in time. Gone is gone and cannot come back. No matter you are billionaires or millionaires, you cannot reset this.

We always thought that we have more time with our spouse every day, but we are wrong. One day they will be gone too. When you read this, please go tell your spouse that you love him/her and he or she is the best thing that you ever had in your life.

I have picked out some of the more life reflecting articles of the CAREYOURPRESENT series. Do read them:

You can read more about my articles on Careyourpresent via the Category “Careyourpresent” or simply click “Careyourpresent” via the main menu bar.

REMEMBER:

Love your life daily.

You have one less day with your spouse, parents, children and yourself.

Time is ticking away.

For each passing day,

Enjoy and Treasure your Life!

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1 thought on “A real life case of Financial Independent but don’t dare to retire early”

  1. Pingback: Farewell Mum. You are always in my mind - Careyourpresent

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