Reflections on Early Retirement: A Candid Conversation with Sam Dogen

In a world where the allure of early retirement often overshadows the realities of financial stability, Sam Dogen’s journey offers a unique perspective. At 48, Dogen, an early retiree, author, and stay-at-home dad based in San Francisco, reflects on his decision to retire at 34 and the lessons learned along the way. His story is a testament to the complexities of financial independence and the emotional nuances that accompany such a significant life change.

The Decision to Retire Early

Dogen and his wife made the bold choice to retire early, he at 34 in 2012 and she at 35 in 2015. For over a decade, they have relied on passive income and investments to sustain their lifestyle. However, in 2023, Dogen made a significant financial decision that would alter their situation: he purchased an expensive home, becoming "house-rich and cash-poor." This choice led to a decrease in their liquid assets and passive income, creating a sense of unease about their financial future.

Reflecting on his early retirement, Dogen admits that it may not have been the optimal path. If he could speak to his younger self, he would advise him to work for another five years, potentially saving an additional $1 million. This extra cushion could have provided greater financial security and peace of mind.

The Bull Market and Missed Opportunities

From 2012 to 2017, the real estate and stock markets experienced a significant bull run. Dogen recognizes that had he continued working during this period, he could have capitalized on these favorable conditions. The prospect of earning an additional $40,000 in passive income at a 4% return rate is a sobering thought for someone who has already taken the leap into early retirement.

Moreover, Dogen reflects on the possibility of transferring to a different office within his firm, perhaps in London or Hong Kong. Such a move could have rejuvenated his career and provided new experiences, allowing him to enjoy work more and avoid the regrets of wondering what could have been.

The Psychological Toll of Early Retirement

One of the most profound challenges Dogen faced in early retirement was the psychological impact of financial insecurity. After selling stocks and treasury bonds to finance his new home, his passive income plummeted from $380,000 to $230,000. This drastic change triggered intense fears about his ability to care for his family and maintain their lifestyle.

Dogen describes this fear as a loss of identity and purpose. The risk of not being able to return to the workforce loomed large. However, he found solace in joining a FinTech startup part-time, which allowed him to reconnect with a professional community and regain some financial stability. Yet, after four months, he chose to leave, realizing that the corporate environment was not conducive to his well-being.

The Joys and Challenges of Parenthood

Dogen’s decision to retire early also allowed him to embrace fatherhood fully. He dedicated himself to being a stay-at-home dad during the formative years of his children’s lives. However, he acknowledges that having children later in life introduced new financial pressures. The desire for financial security, status, and opportunities for his children became paramount.

This realization underscores the importance of careful planning for those considering early retirement, especially if they wish to start a family. The intersection of financial independence and parenthood can be a challenging balance to strike.

Practical Advice for Aspiring Early Retirees

Dogen emphasizes the importance of preparation for anyone considering early retirement. He advises potential retirees to test their financial resilience by living on 50% or even 80% of their income for six months to a year. This exercise can provide valuable insights into whether their desired lifestyle is sustainable without active income.

Additionally, he recommends securing a good severance package and saving diligently before making the leap. Many who retire early find themselves overwhelmed by uncertainty and regret shortly after leaving the workforce. A well-planned transition can mitigate these feelings and provide a financial cushion during the adjustment period.

Conclusion: A Journey of Reflection

Sam Dogen’s story serves as a powerful reminder that early retirement is not a one-size-fits-all solution. While it can offer freedom and flexibility, it also comes with its own set of challenges and uncertainties. His reflections encourage others to approach early retirement with caution, thorough planning, and an understanding of the emotional and financial implications involved.

As he shares his experiences on his blog, "Financial Samurai," Dogen hopes to inspire others to make informed decisions about their financial futures. Whether considering early retirement or navigating the complexities of parenthood, his journey highlights the importance of thoughtful reflection and preparation in achieving true financial independence.