A few years ago, I became frustrated with repeatedly hearing the flippant FIRE mantra that you should retire as soon as possible. Conventional wisdom among the FIRE crowd is that in a worst case scenario you can always “just go back to work.”
In response, I wrote a detailed analysis of why once you exit a high paying career, it can be hard to go back to work. This decision shouldn’t be taken lightly.
For the past three years, I’ve been keeping my options open if I chose to return to my career as a physical therapist. On December 31st, 2020, I allowed my license to expire. This action, or I suppose inaction, makes it much harder and less likely that I’ll ever return to my old career.
I’ll share what financial, psychological, and practical considerations changed that led me to this decision. Hopefully this helps others struggling with when it is time to let go and move on from your careers.
Let’s start by defining some key concepts that will inform your decision about leaving your career: financial independence and early retirement. It’s important to understand these two ideas are related, but not the same. They also don’t have to occur in a particular sequence.
I’m defining retirement as leaving your career completely and permanently. Early retirement simply means retiring in your 40’s or 50’s (or earlier in more extreme and rare cases).
Financial independence is more challenging and imprecise. Understanding the degree of financial independence you possess is a big factor in whether you should leave your job and career behind, i.e. retire.
Defining Financial Independence
I define financial independence as having assets that produce enough income to maintain your lifestyle without ever having to work for money again. My uncertainty about our financial independence is the main reason I kept the door open to return to my career if needed.
Financial independence is better viewed as a continuum than a strict dichotomy. I have a good deal of financial independence. But I was not, and still am not, certain that I’m permanently and completely financially independent.
Many people who tell you with certainty they are financially independent aren’t. Instead, they are naive or lying.
Other are likely financially independent. Some worked longer and saved far more than was likely necessary. Some benefited from a fortunate sequence of market returns in the early years after retiring. Either scenario makes it more likely they actually do have enough money to last indefinitely.
Determining when you have enough is hard. We only know exactly how much we need with certainty when looking back after the fact. Quitting too soon or working too long each have advantages and drawbacks.
The first reason I now feel comfortable completely walking away from my old career is that our financial circumstances have changed over the past three years.
In December 2017, when I initially left my career our assets were 24 times our projected annual expenses. This put us somewhere in the ballpark of having enough money to retire. If one word could summarize my mindset, it was uncertainty.
We had considerable uncertainty with our future spending. We were preparing to move to a new area of the country and start a different lifestyle. Our young daughter hadn’t even started kindergarten yet. We had no long-term plan for health insurance. Errors in our spending assumptions would be compounded over a potentially 50+ year retirement.
The other side of the equation was how much income we could safely generate from our portfolio. I left my career at a time of high market valuations and low interest rates, putting us at increased sequence of returns risk.
We planned to semi-retire and gradually transition to full retirement. This would allow us to start living a more desirable lifestyle sooner, without the financial risk of full early retirement.
Kim was still in a relatively new position, working part-time for a startup company when I left my career. We weren’t certain how stable the company or her position in it were.
I was starting to work on my book and starting a partnership on this blog. I hoped each would produce income, but that was not guaranteed. For all of these reasons, it made sense to keep the option to return to my old career a viable one.
…To Financial Confidence
Over the past three years we’ve gained more certainty, security, and confidence with our finances on several fronts. We’ve spent more than we were anticipating, but most of that was voluntary– improving our home, upgrading outdoor gear, and increasing charitable giving.
Our estimates of our core spending were pretty accurate. It has been reassuring to see what we’ve actually spent rather than projecting what we thought we would spend. The one exception is still not having a good grasp on our future health care costs.
Our investment balance has increased greatly since I left my job. After a rough first year in 2018, our portfolio value is up 41% over the last two years. Taking 4% of our current portfolio value would easily cover all of our current annual spending. Even starting with a 3% draw would provide a comfortable lifestyle.
My income was minimal in 2018 and 2019. In 2020, I finally made a five figure income from my writing. This is nowhere close to covering our annual spending or my salary potential as a physical therapist. Still, I am now confident my writing can produce enough income to allow us to live on only portfolio income without drawing from principle. This would eliminate sequence of returns risk.
Kim’s employment situation has worked out well. We don’t know how long or how much she’ll want to continue working, but we’re much more confident she will have a choice in the matter than we were three years ago.
For all of these reasons, I feel more comfortable with the financial decision to completely leave my career now.
Psychological Factors Resolved
Fear of not having enough money was one psychological reason I had been keeping my options to return to my career open. It was not the only one.
I felt a sense of obligation not to give up the professional credentials I worked so hard to obtain. As a first generation college graduate whose parents invested heavily in my education, I also felt a sense of responsibility to them to get the most out of my career. There was a sense of guilt for walking away so soon.
In retrospect, I wasted more mental energy on these concerns than was warranted. There are plenty of capable people able to fill my professional role. I know my parents had some initial reservations and maybe even disappointment when I left my career, but all parents want what is best for their kids. Being trapped doing something out of a sense of obligation isn’t good for anyone.
Like many professionals, particularly those in health care fields, what you do becomes a big part of who you are. I worried whether I would struggle with a sense of identity and purpose. Would I miss being a physical therapist?
After three years, I don’t miss my old career at all. I’ve certainly had struggles adapting to a new way of life. Early retirement is not a panacea for all of life’s problems. But I haven’t experienced one morning in three plus years when I woke up wishing I had to go to work that day.
I don’t regret taking time to evaluate my decision. But after three years, I’m confident retiring from my career is the right move for me. There’s no longer a reason to keep looking back.
It is hard to imagine being able to return to work in almost any profession after more than a few years out of the workforce without considerable retraining. Entering 2020, I knew the clock was ticking.
If I was going to ever go back to my old career, I’d have to do some work to maintain my skills and professional connections. Early in the year, I was pondering looking for part-time work or doing one six-week travel assignment.
When the impact of the pandemic became apparent last March, everything suddenly changed. As an overnight homeschool family learning on the fly, I was extremely grateful to not have to go to a job. Seeking out work became the furthest thing from my mind.
As the pandemic went on, the working conditions of health care professionals not directly on the front lines were substantially impacted. According to the American Physical Therapy Association, 54% of physical therapists and 64% of physical therapist’s assistants had their hours cut last year. Even if I wanted to work, suddenly there was little demand for my services.
Assuming a best case scenario where there is certainty that schools will remain open and safe and professional demand for physical therapists completely recovers to pre-pandemic levels by the end of 2021, I will have been out of the workforce for four years.
For practical reasons, it made sense to leave my old career behind and move on to new challenges and opportunities.
A New Chapter
Leaving behind your career is a challenging decision on many levels. I talk to many people who are trapped in fear. They work at jobs and stay in lifestyles they don’t like longer than necessary because change is hard … and scary.
Others don’t put enough thought into the decision of when to leave their career. They follow fickle advice and quit too soon, leaving their fate to chance and luck.
Finding a way to gradually make changes is a smarter and safer middle ground. Still, at some point we all have to decide when it’s time to completely cut the cord. That time has come for me.
It feels good to free myself of the substantial mental and small financial burden of maintaining the credentials, skills, and professional connections that would enable returning to a career I am ready to be done with. Hopefully, being transparent with my decision making process can help some of you struggling with similar decisions.
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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at firstname.lastname@example.org.]
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