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Retired at 30, now I will return to work at 40
Down angle icon An icon in the shape of a downward pointing angle. Sam Dogen gave up financial freedom to give his family a bigger house. Courtesy of Sam Dogen
- Sam Dogen retired from his role as vice president at Credit Suisse in 2012 after more than a decade of intense savings.
- He planned to live off passive income from his stock and real estate investments.
- After having two children, Dogen intends to work again to meet his family’s financial needs.
This recounted essay is based on a conversation with Sam Dogen, a 46-year-old man from San Francisco. It has been edited for length and clarity.
Even as a child, I knew I didn’t want to be poor. I lived in five countries before settling in Virginia, USA, and I saw the clear dichotomy between rich and poor. I wanted to understand how people made money so I could live like the rich.
I studied economics at the College of William and Mary in Virginia because it was the cheapest option.
After graduation, I got a job as a financial analyst at Goldman Sachs on Wall Street in 1999.
My first day at the office lasted 14 hours. The first month was exhausting and stressful, and I realized I wouldn’t last another 40 years on Wall Street.
I was making $40,000 a year in semi-annual payments. If I invested 50% of my income for 20 years, I would save at least 20 years of living expenses. I could work until I was 42 and then live off 5-8% of my savings, stocks, and potential real estate income each year to get to 62. I would be set for life.
It was easy to save money because I was working a lot
I started saving just a month after starting at Goldman Sachs. Every month, I invested half of my salary in the S&P 500, a handful of random tech stocks, and 5% of that half in the general market. savings account.
After being advised by someone in our HR department, I maximized my 401(k). The less taxes I had to pay, the better for my savings goals, and there was a 401(k) match at my company.
I was able to save a lot because I was very frugal. For the first two years at Goldman Sachs, I lived in a studio in Manhattan, paying $700 a month in rent.
One of the advantages of working after 7pm was being able to enter the free cafeteria. I would have dinner there and take home leftovers for the next day. I also kept a budget for myself.
It was a plan born out of poverty. I worked 60+ hours a week, every week.
A promotion and move to San Francisco put me up the real estate ladder
In June 2001, I was recruited to join Credit Suisse and moved to San Francisco. My base salary jumped to $85,000. Now I was earning more, I saved 60% of each paycheck by putting money into long-term investments CDswhich are savings accounts with a high fixed interest rate that you cannot withdraw money from for a fixed period.
In 2003, at age 26, I decided to buy a two-bedroom apartment in San Francisco with the money I earned and saved from 1999 to 2003.
My goal was to diversify my wealth from stocks to real estate. I used 80% of my savings and liquid investments to put a 25% down payment on a condominium. I lived there with my then girlfriend, who helped pay some expenses.
At age 27, I was promoted to vice president of Credit Suisse and my income jumped to six figures, plus bigger potential bonuses. I saved and invested about 70% of my after-tax income in 2003, 2004, and 2005. In 2005, I bought a house for $1,520,000 in San Francisco and rented out my condo until I sold it in 2017. I had used up all of the my money. savings and investments to buy the house. It was a huge risk.
The 2009 crisis reduced my net worth but launched my career as a blogger
I continued my savings plan until the housing and stock markets crashed in 2009. I wasn’t laid off during the crisis, but I lost between 35 and 40 percent of my net worth in six months when stock and property prices plummeted.
I started my blog, Financial Samurai, in 2009 to cure. The more I wrote, the better I felt, because I connected with other people going through the same fears on the road to financial independence.
In October 2011, at age 34, I was earning a base salary of $250,000. Credit Suisse suffered several layoffs during the global financial crisis. I spoke to my HR manager who said more layoffs were coming. This was my way out of early retirement. I spoke to my manager and asked him to consider terminating me with a severance package and deferred compensation if I stayed on to train my junior employee.
In April 2012, I was laid off and received the severance package I had negotiated. It felt scary, but also like I had won the lottery. The compensation covered several years of my projected living expenses.
Retiring at 34
I retired at age 34 with a net worth of about $2.5 million after saving and investing 50-75% of my income for 12 years. I made about $80,000 from passive income of rent, stock dividends and CD income per year. I continued to save 50% of my income and live on $40,000.
In my last year of work, I saved even more of my income, about 80%, so the adjustment to living on less wasn’t huge. It was offset by the increased freedom I had. After I retired, I realized that I didn’t need as much money as I thought to be happy.
In 2015, my wife also retired. She is three years younger than me and we planned for her to retire at 35.
After she left, we had to pay for all her health benefits. It cost us about $1,680 a month in healthcare premiums because we didn’t qualify for subsidies.
Having children consumed a large part of our passive income budget
After our son was born in 2017, we started spending more of our passive income. We spent even more of our passive income when our daughter was born in 2019. We now pay $2,500 a month for unsubsidized health premiums for a family of four. Preschool for each child came to $3,200 a month. We are spending almost 100% of our passive income now.
I believe I failed at early retirement. Despite being without a job for 12 years, I recognize that I need to save and earn more to generate more passive income. I didn’t expect to have two children after trying so long to have one.
When we retired, my wife and I were looking forward to living on less than $100,000 a year in early retirement. But our annual expenses are over $250,000 a year. We chose to have two children and stay in expensive San Francisco. As a result, we must pay the price accordingly.
I want to go into technology consulting part-time
I vowed to be a stay-at-home dad until my kids were in school full time. My second child will start school in September, so I’m thinking about going back to work part time.
I would like to consult part-time for a technology startup in San Francisco, where there is a lot of buzz around technology and AI.
In retrospect, retiring at 34 was too soon. If I could retire again, I would have tried to hold out until I was 40. But I’m not sure my health would have cooperated or if we would have been able to have children if I did. I was very stressed at work.
My challenge now is finding meaningful part-time work. I tried consulting part-time at a fintech startup earlier this year, but it took a lot out of me and interfered with my parenting duties. At least I know better what to look for this fall when my daughter starts school full time.