My Early Retirement Litmus Test

My Early Retirement Litmus Test

The following is a guest post from Rob, a fan of My Own Advisor, who enjoys retirement stories.

A recent column from Mark generated tons of buzz and a lot of heated questions.  Maybe rightly so.  However, I have a different take.

Based on the comments I read, people were quite skeptical about how someone so young (age 32) can “retire”.  As one person calmly put it, “the numbers simply don’t add up.”

I can appreciate this skepticism.  It’s par for the course these days with social media.

Yet talk to any early retiree who dares to share their story and you’ll find the same reaction. Derek Foster (profiled on Mark’s site here), MMM aka Mr. Money Mustache, Frugalwoods are a few examples but the list goes on.

I mean really, how on earth can anyone, in the case of Frugalwoods, spend under $1,000 per month outside of their mortgage?  It can’t be done!  Or can it, based on your choices?

Anyone who’s departed from the age-65-retirement model is usually looked upon suspiciously. The younger you are the bigger the barbs.  As of fan of reading these retirement stories, I put together my simple two-part litmus test to see if someone is really retired or just flat-out bullshitting you.


Test #1 – The Math

To paraphrase Charles’ Dickens famous quote:

Annual investment income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result early retirement. Annual investment income twenty pounds, annual expenditure twenty pounds ought and six, result employee.

It doesn’t get any simpler than that. If your investment income is greater than your expenses, then you really have no need to earn additional money.

Of course, the devil is in the details but in the end math will prevail.

Test # 2 – Your Mornings

This might seem like a very odd test to prove you’re truly not an employee anymore. But bear with me. 

Again, this is my post, not Mark’s.

Everyone claims so-called retirees like Kornel Szrejber or Derek Foster or many others can’t possibly be “retired” because they have businesses to run, they write books, they own blogs, and thus are wage earners just like most of us – not early retirees. I mean if you were truly FI (financially independent) then why on our great green earth would you work?

(Today, for example it was my intention to write this blog post first thing this morning. But when I got up it was like meh, really don’t feel like it, so I watched an hour of TV.  Then I wrote this post for Mark.)

Why Early Retirees Still Work

I can tell you from personal experience why…

Reason #1 – early retirement can be boring.  Sure, the slopes or trails are far less crowded on a Monday but that’s because all your friends are working.  What good is a wide-open trail if you don’t have anyone to share it with?

Not working can be lonely at times.  But here is why any early retiree works:  work is way more fun when you don’t need the money.  You can’t possibly appreciate that until you’re there.

Reason #2 – pension follows passion

I still remember the massive flame war that Derek Foster got into when he first published his book, Stop Working. The arguments then are the same now.  He can’t be retired, he’s too young.  He still works.  He makes money from his books, he’s not credible.  The names may have changed but the arguments haven’t.

When working for big money is no longer your biggest issue you can follow your passions.  And when that happens, a pension (an income from your passions) follows.

Derek Foster, Mr. Money Mustache and even our latest victim Kornel Szrejber are guilty as charged – all of them have their own business.  They work to earn some money, sure, but they don’t really need it to cover life’s necessities.

My Early Retirement Litmus Test Summary 

I realize for every early retiree there is an element of frugalness, luck, great investment timing and much more. Check out Mark’s self-made millionaire guide for a recipe that has worked for many including the names I mentioned above.

But even at my age, 57, it’s not too late – to get your financial act together (as Mark suggests) and chase some dreams.  I honestly never expected in a million years that we might be positioned where my wife can take a buyout and leave work at age 57.  Sure, age 57 is certainly not the new 32 but considering most baby boomers may never retire or some Americans have nothing saved for retirement that’s still pretty cool.

The following is a guest post from Rob, a fan of My Own Advisor from Germany.  

What’s your take on some early retirees – who still work?  Do you question their methods?  Their math?  Their choices?  Leave a comment as always below and continue the dialogue. 

My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.

56 Responses to "My Early Retirement Litmus Test"

  1. I know I’m in late and beating a dead horse but I have to respond. I am totally with SST re the comment “after a lifetime of work is not a lot of time to enjoy the golden years.” – my God give your head a shake. Life’s too short to work at something you don’t like for any length of time but 40 years so that you can enjoy 13-17 years. Every year should be a golden year – live your life.

  2. I couldn’t follow Garths column at all. He was jumping around with all kinds of different statements, generalizations, unsubstantiated questionable numbers that didn’t make any sense to me. Garth sometimes makes an interesting read but definitely can be fast and loose with numbers when he has an opinion on something. Maybe there is good argument to start early but I didn’t get it from his column. Maybe someone can interpret what the heck he is saying in coles notes??

    650@60 vs 850@65 ? It would be a bigger increase than stated by waiting. I have only 30 yrs max = $613.58@60; $857.01@65 Many people work longer and would have more.
    50% more OAS??
    what does age 60 vs 76 and CPP have to do with fun in the whole context of your cash flow plan?
    extra $150 per month????
    There’s little chance CPP will be changed from 60 to 65. Actuarilly it is in excellent shape. It’s retiree and employer funded. Not government.
    higher tax bracket by waiting? what if you’re still working @60-65 or drawing RRSP if not working to smooth taxes?
    a one fits all answer- for every situation???

    1. I like Garth for entertainment too.

      In terms of CPP and OAS, I focus on what “average” seniors are getting from these programs. Example:

      Early retirement is an issue when trying to figure out how CPP and/or OAS will play into things. For folks retiring at age 65 or 70, well, I suspect most of them are working “that long” full-time because they have to – they need every single penny from CPP and OAS to survive. Most of my generation that will be the case (Gen X).

    2. Like I wrote back to Rob, I don’t follow Garth for any math but for entertainment.

      I think there is literally zero chance CPP will be changed to age 65.

      OAS is funded by government (tax) revenues, not CPP; CPP is funded from contributions of the workforce. Better hope all us young folk keep working for you! 🙂

      1. Agree on entertainment and on CPP change.

        LOL, each generation has to hope for that from the next. You’re a bit over a half generation from me and may not be working for a whole lot longer too! I was an advocate for changing to age 67 even though it affected us for ~ a year – start would be around 66, in order to help sustainability. I’d gladly give up another year if it meant a good chance for everyone to continue with it. Seems to me younger people and governments today are big drivers of more social programs and lower self reliance mentality like I grew up with. I’m less concerned about losing OAS in that light (start 7 yrs away), and in any case we would still be more than fine if it goes. Not even certain if we’ll qualify for all etc depending on investment income/returns etc. Don’t worry about working for me!!

        I am MUCH MORE concerned about ballooning spending as a result and higher taxes that will follow. Things like capital gains inclusion rates increasing, dividend tax rates higher. It’s likely coming.

        1. I don’t think you have to worry about OAS – you’re good – you’ll get it 🙂

          I am absolutely concerned about higher taxes – there will be less people working in 20 years and far more retirees than previous generations. Millennials in particular are screwed I think!!

          1. We’ll see on OAS, however in any case I’m not a worrier! It’s only going to raise our standard of living from where we are now so whatever it might be is a bonus. It’s certainly possible with the changing number of workers/retirees and longer lives that the formula will change. ie clawback at lower levels. That’s why I thought age 67 made sense (saves $11billion/yr I think I read somewhere), which many other smart nations adopted. As we’ve discussed before the whole tax system needs a serious overall and all of these programs a revamp/consolidation/simplification in the process.

            Not so sure about millenials being screwed. I have 4 millenial nieces and 3 are doing extremely well and 4th soon on her way. Mankind has always found a way to keep moving forward and over time the generations continue to prosper. There is also a lot of wealth to be changing hands. Change is accelerating at such a pace who knows whats ahead.

    3. I agree Garth can be entertaining. He’s a good writer. I pass over the endless obsessive RE stuff though.

      One has to do or get exact calculations in order to figure out their CPP benefit. There’s a ton of general examples that aren’t accurate especially for earlier retirees with fewer than 39 years contributions. I’m generally in agreement with what you’re saying about the transfer of risk going early vs later. Garth does not even consider the risk of outliving your invested money & value of indexed govt pension $.

      The CPP numbers in my post are precise for me.

      Not following your $420 number vs. 850 or the $50K?

  3. re: after a lifetime of work [13-17 years] is not a lot of time to enjoy the golden years.

    Guess I deviate from this mentality. To me, my entire life is “The Golden Years”.

      1. Yes, hard to say when to take CPP. I certainly think there is merit in taking it early, i.e., at age 60.

        GIS is only for lower-income Canadians but that social safety net is growing…


  4. Rob, I have a much different take and a much simpler answer to the point you’re raising.

    Do you work? No = retired Yes = not retired

    Many probably won’t agree with this. There seems to be more definitions of retirement today than there are shades of colour. You might simply switch careers and call yourself retired or “purportedly” be “financially independent” working FT at same job, working FT on your own, working PT for someone, working PT for yourself, have a spouse working paying the bills, doing volunteer work FT or PT. All of these seem to qualify for being retired today so all this FIRE stuff isn’t particularly meaningful as a real definition of being “retired”. It doesn’t matter other than for blogs/entrepreneurs trying to sell a dream as a side or main hustle/job to benefit financially from it. Most of the FIRE claims are bunk.

    People should do what they need and want to do for as long as they want to make themselves happy and financially secure. Retired or not that’s what matters.

    1. Agreed. Actually, the entire term “Financially Independent, Retired Early” is completely bogus.

      Firstly, money, and therefore income, is always dependent on a source — always. It will never be independent. Furthermore, and I will argue, that a non-working person who relies on “passive” income is far more dependent than a working person. The worker is dependent on themselves for a source of income; the non-worker’s income has many more ties of dependency — government(s), market participants, public sentiment, corporate executives, et al.

      Secondly, as you said, retired = not working; the accepted definition of retired being “having left one’s job and ceased to work”. Perhaps their marketing slogan should include a descriptor, such as “Retired Early From…”. Or perhaps a post-script, “Now Working As…”

      Seems to me that the FIRE crowd either a) has no literal understanding of their own motto, or b) is inventing their own form-fitting definitions to support their cause. Either way is unacceptable.

          1. I certainly don’t want to quit my job nor live like MMM. If I wanted to, I would have done that by now.

            I offer my own content, some guest posts, interviews, media stories, sponsored articles from time to time and more here – so while there is income generated on this site it is on my own terms and people are happy to ask me about it.

            You don’t think MMM earns income on his partnerships such as Republic Wireless?

            At least I put (partnerships) after my links 🙂

      1. I see both sides of the debate SST although I certainly won’t argue there are some people, including bloggers, that absolutely can’t see your point of view
        – on FIRE. It’s really personal finance marketing jargon.

    2. No I didn’t miss it. We just see things differently.

      The headline is :

      “My Early Retirement Litmus Test” – key words “early retirement”, and throughout you refer to “early retirement”. Have a look at the definition of “retirement” from a credible source = ceased to work, having left a job…nothing about passsive income exceeding spending, nothing about being bored, nothing about side hustles on your own etc. Nothing simpler than that.

      The part of what you’re saying that could be right for some is “retiring early can be boring. Not working can be lonely at times.”

      But then you say:
      ” But here is why any early retiree works: work is way more fun when you don’t need the money. ”
      All credible defintions of retirement say you aren’t a retiree if you work. FIRE worshippers or claimants come up with all kinds of other definitions of being “early retirees” that all involve work. The reason they work, or the type of work, or the need for work doesn’t matter. They work. They aren’t “retired”. Most of the blog people claim it or sell it to make money from it. By working.

      I also say work isn’t WAY MORE FUN when you don’t need the money. I’ve been there. Lower tolerance for BS = yes. Fun = no. I’ve almost always enjoyed my work, the challenges and accomplishments but other than periodic moments has it truly been FUN. It’s work. Some may find that in their occupation. I didn’t and neither did my wife or anyone I can think of for that matter. There are some other benefits to working like social interaction, satisfaction of accomplishments, feeling valued, MAKING MONEY but those aren’t really related to FUN when it comes to work, even when a person thinks they don’t need the money. At least for me and I suspect for many.

      As has been stated by SST I also don’t really believe one can be truly independent since there will always be some income or capital to be relied upon that could be variable at one of many sources.

      1. Nothing wrong with different points of view!

        I also believe my tolerance factor (i.e., bullshit ratio) will go down the closer I get to some form of semi-retirement. Meaning, I will still work but won’t need a certain salary to cover expenses. I like my work, don’t get me wrong, but there are many days where I shake my head.

        1. Yes, I’m sure the tolerance factor will go down. You’ll probably feel a little more empowered. In my case my final employer at all levels knew my (~FI) situation also being self employed previously, and seemed to value me, so it really gave me significant independence and no BS. All good. They wanted and I would have stayed for a few more years but couldn’t get down to less than 60% or have any flexibility on extended vacations without pay-nature of work. Both were non negotiable with me.

          I’m also sure many of us had/have days when when we shake our heads. I certainly did but am always forward thinking and able to focus on what I can impact and control so only found these things fleetingly troubling. The good times outweighed the bad by a long shot.

    3. If you don’t work = retired. If you do = not retired. Traditional thinking but largely correct. The personal community I agree, has bastardized what they mean by retirement. Whether or not you need the money, if you’re working for a living for income you are working. Heck, work any comes in the form of non-monetary gain. Example: I worked on my yard for 4.5 yesterday. (I actually did!)

      This FIRE stuff is really supported by younger 30 and 40-somethings. You don’t hear many 50-somethings running around yelling I have achieved financial independence!

      “People should do what they need and want to do for as long as they want to make themselves happy and financially secure.” We’re working on just that RBull. Life’s journey continues…

      1. Agree. By the loose definitions of FIRE espoused by some I was “retired” at age 44- passive income/left main career etc (although my wife still worked for another 7 years). I didn’t think or speak of myself as retired because I wasn’t, until I stopped work 10.5 years later. “if” I ever go back to working at something P/T I’ll call myself semi retired or formerly retired and now working.

        It doesn’t really matter to me other than the zealots selling loosely defined false dreams to people, while they try and benefit from it.

        Yes you are and so are we. Best wishes to you. Life is very good.

  5. Great article Rob. I’m not sure why early retirees are looked at so skeptically. I think it is something that should be celebrated rather than questioned. When I was in my 20s, I told my parents I was going to retire early, get out of the corporate world and do whatever I wanted with my time. They looked at me like I had two heads. I can relate to so many of the points in this article. Working is a lot more fun when you are doing something you enjoy and money is only a secondary side benefit. Tom

    1. I “bought” my first RRSP at 19, didn’t have a clue what I was doing but I was HOOKED. This was the second best, total-lack-of-knowledge move I ever made.

    2. (Looks as though the interweb gremlins ate my comment…so I’ll do my best paraphrase.)

      re: When I was in my 20s, I told my parents I was going to retire early, get out of the corporate world and do whatever I wanted with my time.

      I’ve read this type of statement many times from FIRE cheerleaders, yet it continues to confound me and resonate as bizarre logic. I hope, by inquiring once again, those in the FIRE camp can enlighten my thinking.

      You were astute, wise, and insightful enough in your twenties to know you wanted to retire early (and how to retire early), leave the corporate world, and do whatever you wanted with your time. Yet you were not astute, wise, and insightful enough in your twenties to know what you wanted to do with your time and/or how to do what you wanted with your time…besides working in the corporate world…so you continued to work in the corporate world.

      I truly fail to understand why someone hell-bent on doing whatever they wanted with their time would spend an inordinate amount of time doing something they didn’t want to do instead of finding a way to engage in their preferred activity. As stated, “working is a lot more fun when you are doing something you enjoy and money is only a secondary side benefit”; yet what I observe, overwhelmingly, is the FIRE community working for money as a primary benefit and doing something they enjoy is not even on the radar, instead being delayed until actual “retirement” (or never at all).

      Perhaps what the FIRE niche truly means by “do whatever I wanted with my time” isn’t so much creating a fulfilling new career or mastering a hobby, but more realizing their natural mindset of “I don’t want to have a boss/someone telling me what to do”; e.g. “Today, for example it was my intention to write this blog post first thing this morning. But when I got up it was like meh, really don’t feel like it, so I watched an hour of TV.”

      Perhaps I’m blighted with a much different attitude about work and jobs and creation of value (and life in general), which will always put me at odds with those pushing the FIRE agenda, especially if it’s for self-promotion.

      1. I largely agree. Why bust your butt in working so hard in something you don’t want to do instead of leaving that work and working longer at something you really DO want to do? Makes little sense over time but to each their own.

  6. This topic has been hashed over and most of the valid points stated previously. Even if one has sufficient income to classify themselves as Financially free to quit their day job and begin doing things they prefer, does it really mean financially free forever? At 35 or 40 how much annual income is sufficient $30k, $40k, $50k? Does that amount allow them to continue to grow their savings or is it just enough to meet expenses and cover inflation. What if they want a new car, buy a bigger house, go on more than one expensive holiday? At 50, 60 or 70 will they continue to have enough income to cover expenses or do they expect to be spending less. What if one or both suddenly have medical conditions that will cost $20k, $30k, $50k or more per year? Life changes as do future needs. If they are lucky maybe they can “retire” at a young age, but they better keep planning and forecasting for the “Long-Term”

    1. The older I get cannew the more I think about FIRE as something, while very interesting, is not for me. Meaning, I will always want to work and intend to work at something so in essence, I will never “retire” in the traditional sense. I will work as long as my body and mind able me to. That’s a good thing I think.

  7. You can learn from the mistakes or the experience of others, or you can make your own and learn from them. The choice at the end is yours. The bloggers are, at the end of the day, giving you a point of view, you have to use your own wisdom or experience. No one size fits all, but I do love learning from the experience of others and it can be done?. So, Thank you from one reader, your effort to share is appreciated.

  8. I see both sides of the issue. I doubt the numbers from many of the FIRE folks but acknowledge it may be possible in some cases. I don’t believe the “retire at (insert incredibly young age here)” is the norm nor do I think it is as easy as made out.

    I intended to retire at fifty but medical issues in the family made it necessary to go to fifty five. And whilst I am now retired, I still run a small farm for fun and yes it does earn income (much to my chagrin at tax time). I’ve often said to friends and family that success is the result of a perfect storm of hard work, good luck and opportunity. Not everyone gets there.

    And I’m not anonymous


    1. “I’ve often said to friends and family that success is the result of a perfect storm of hard work, good luck and opportunity. Not everyone gets there.”

      How true. Thanks for the link Lloyd and continued success on the hobby farm.

    2. Good for you Lloyd. Great story. Darn that extra money from your hobby farm!

      I’m an ex Manitoban myself transplanted decades ago to the East Coast.

      Amazing you guys are so behind the curve in composting/recycling. You’re a pioneer out there!!

      Our city was on the leading edge starting in 1998.

      1. lol…it was easy to get local council to think outside the box. The provincial government is another story. They are so “good old boys network” it makes me want to puke.

  9. re: work is way more fun when you don’t need the money….When working for big money is no longer your biggest issue you can follow your passions.

    Completely disagree. Then again, we all believe what get’s us through the day. 🙂

    The thing with the internet is that there is no accountability. None. Even this site’s owner, Mark, could be making the whole thing up; we just don’t know. There’s even well known bloggers who sell their product yet still hide behind pseudonyms (e.g. Frugal Trader). Lots of trust asked, exceptionally little given in return. Then you have young sensationalists who lie, cheat, and steal just to try and claim some fame. It’s as though shouting FIRE is the new business card in some neurotic niche networking mob. Funny, I don’t ever remember Buffett, Soros, Gates et al taking out full page newspaper ads proclaiming their financial independence nor date of “retirement”. Guess real wealth plies ego to greater matters than popularity.

    1. You raise a great point about the internet. You don’t HAVE to tell the truth for sure! The thing you need to keep in mind is, some people do because that’s how they are wired. No trust is asked on this site actually, while I do my best to fact-check. From my disclaimer page:

      “The information posted on this site are the opinion of the author and should never be considered professional financial advice. While I do my best to ensure the information on this site is accurate, I do not claim all content is. I am an amateur investor. My Own Advisor is not a financial professional, tax expert, insurance guru or accounting whiz. My Own Advisor is not responsible for any investment decisions you make. You should consider consulting a financial professional before making any important investment decisions. All financial decisions are yours and your responsibility.”

      That said SST, my journey is absolutely legit and what I post about dividend income, how I invest, where I invest, what I struggle with, etc. is all true. You are welcome not to believe it if that’s how you feel.

      Buffett, Soros, Gates et al likely don’t take full page ads proclaiming their financial independence nor date of “retirement” because they don’t feel compelled to market themselves that way. Don’t kid yourself – they’ve decided to market themselves (write books, get paid for speaking engagements, etc.) in other ways.

      1. re: Wow dude you’ve watched the Matrix too many times, there is no red pill please take this blue pill!
        Funny that you mention ‘The Matrix’ as that’s what many FIRE pundits refer to as the working world.
        Perhaps you don’t think bad people do bad stuff (or even good people do bad stuff) but when the POTUS has no problem spewing daily falsehoods without repercussion, this gives even more boldness and credibility for others to do the same. Closer to home, when the watchdog of the financial sector is basically a toothless lamb and incentives rule the behaviour of the professionals, it’s safe to say that those amateurs seeking fame via FIRE could very well adopt those same behaviours.

        re: “Buffet Soros and Gates have no need to shout, the moment they open there mouths it’s front page news in the business section.”
        Really? Even when they were 27 or 30 and had vast wealth but no fame or market/political power at all? Sure, TODAY they are famous and pursue different types of personal marketing, but 30-50 years ago…

        re: “These days…“the internet has made distribution costs zero”. Anyone can start a blog and if you’re good get an instant world wide audience. Want to publish a book, KDP print on demand…”
        Exactly my point. In days of yore there used to be very real barriers to entry in the publishing world: peer reviews, editors, publishers, proof readers, etc. Nowadays it’s a chaotic free for all. Consider the volumes of scientific publications which are being revealed as fraudulent in one way or another; if the rigours of science can allow this to happen then certainly publishers of personal finance material are subject to their own voodoo. Seems as though in this age of entertainment, where ‘famous’ is a vocation, some people will do just about anything to achieve any semblance of that. If you think personal finance is devoid of such people, well, perhaps I should buy a few blue pills off you.

        re: “Lots of trust asked, exceptionally little given in return”. I think you got that backwards. Bloggers give much and ask nothing beyond a few moments of your time.
        For the pure bloggers this may be true. For those SELLING products, it’s exactly right. You make mention of four of them: Derek Foster, Mr. Money Mustache, Frugalwoods, and Kornel Szrejber; I’ll add Sean Cooper. ALL of them are trying to SELL you something — that very act requires a basic foundation of trust. Seeing as how at least one of the listed has admitted to lying to the public in order to secure an on-camera interview…in order to advance his personal brand…putting his ego above the trust of his audience… Speaks volumes of the mindset of the FIRE crowd who crave to be popular (without providing anything of value). Are all like this? Basic stats says no, but that also doesn’t mean I have to buy what they are selling, in any shape or form.

  10. I don’t question all early retirees. For example, retireby40 and mrtacoescape show numbers that make sense to me. But if I was not shown the number, I cannot believe.


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