My Plans After Reaching Financial Independence
My investments and savings can now cover my cost of living, that is my definition of financial independence. I have worked diligently to get my overhead as low as possible. I moved to a cheaper State, got rid of my car and bought a cheap, low maintenance condo. It’s only been a few days since I realized I could walk away from my job and I still wake up every morning elated, feeling very free.
I wrote before that once a person reaches FI their mindset will change. I can already feel the difference, I’m now looking for income generating opportunities and not just focusing on maintaining my current job. I’m not trying to start the next Amazon… but looking for a business idea that interests me, is good for the world as a whole and is something that I can run without needing to kill myself.
It still feels a bit surreal, to the point of wondering if I did the math right. Thankfully I have plenty of nerdy friends interested in this early FI goal who have confirmed that I indeed have reached this milestone. My plan in the past was to go live overseas somewhere once I hit FI – not permanently, but for a few months/years in order to gain a different perspective.
I have thought about living in Germany for a few years. I’m not a traveler in the American sense of the word. Backpacking, vacationing and sightseeing is as chaotic and consumer-minded as going to a Black Friday sale. Knowing that my investments here in the US will keep pumping out cash regardless whether I live here or not gives me the peace of mind to move to another country, rent a small space, find a part-time job and learn the language.
I have also mentioned in the past that an ideal medical career would culminate with the majority of time spent teaching and volunteering. I’ve volunteered at a lot of free clinics and the thought of just starting every other patient on Statins and BP meds, handing out Lamisil tubes, and checking blood sugars is nauseating. This year I’ll spend a good deal of time looking for that right opportunity.
Virtual medicine is huge in my medical group – and very well executed. The internet has so much to offer besides porn and kitten videos. It can offer free healthcare and more importantly health education to the destitute. If I can combine what I have learned at my job and somehow build a free platform online for the less fortunate then I think I would have a winner.
Back to my personal finances. I have checked with my financial adviser who congratulated me and confirmed that I could indeed walk away from my job and never look back. However, he would like for me to build in a bit of a buffer which I totally agree with.
Currently the majority of my savings/investments are in tax-deferred accounts, also called qualified accounts. For me it’s a mix of 401(k), cash-balance plan, IRA and money purchase plan. I have only 10% of my money in private accounts or taxable accounts – my goal is to increase my taxable holdings because it’s always easier to access this.
Real quick review. When talking about investments we often talking about either taxable or tax-deferred. An example of taxable account would be opening your own private trading account on Etrade, Fidelity or Vanguard. You fund that account with money that already got taxed (your paycheck) and you buy whatever you want. You can access this money very easily without having to jump through IRS hoops.
A tax-deferred account is basically a 401(k) or an IRA. There are a lot of different types of these which is why they are just called tax-deferred or qualified accounts (they qualify for the IRS approved tax-incentive). You can generally access these at age 65 or as early as 59.5. They can be accessed at age 55 in more specific circumstances. But pretty much anything under age 60 requires you to get quite intricate and there are hoops to jump through and if you don’t do the math right you will be hit with hefty penalties. But remember, it’s your fucking money, you can access it whenever you want – if you are clever enough.
My FA wants me to build up my taxable account a bit more, create a thicker cushion, and to continue funding my retirement accounts. On the other hand I feel that it’s easy for me to just continue working my job like many people do despite being able to actually retire early. What should come naturally after being financially independent? Retirement, right?
I am going to take things slow. I will keep working at this job for now and get a plan together. There are numerous income generating opportunities… right now nothing is jumping out at me. This might be the right time for me to just get in on something to get my feet wet… start small. I’ll keep you posted so check back.