I appreciate everything that Myles shared, and I enthusiastically agree with much of it. There were, frankly, things that I did not agree with. But that is valuable too, and I was excited to share his perspective.
I accept that some of the views I currently hold may be wrong. In fact, learning is one of the reasons I started this blog. If I hold a view that is wrong or could be improved, I want to change how I am thinking.
For instance, Myles advocates never retiring. He has a good argument for this. I still believe, though, that forms of early or traditional retirement can be a good fit for many people, if prepared for correctly.
That being said, here are five challenging takeaways I came away with after the interview — ideas that I believe will help sharpen all of us.
I’m going to be using the word “wealth,” but I’m not just talking about people who have dozens of millions of dollars. These principles apply to early semi-retirement, or even just having a comfortable traditional retirement.
1. The shareholders win, the workers lose.
Myles told me that “The problem in the USA is that the vast majority of the population here have been swindled into a way of life that is predatory. If you get a job with a corporation, someone wins and someone loses.
Typically the shareholders win. The workers lose. It is a set up. In order to feed this machine, you need indentured servants. You need trained worker ants and the college system is designed to provide that.”
Regardless of anyone’s opinion about the amount of malice and intentionality involved, I think we have to agree that the shareholders come out ahead in the long-run.
Therefore, become a shareholder. Invest while you’re working. Then, keep investing.
Start the train now
Building wealth is like a train trying to get up to full speed. It starts very slowly, barely moving. But it builds momentum consistently, and eventually it is cruising with a thundering roar.
You can build wealth with equities (stocks, mutual funds, index funds, ETFs), bonds, real estate, or by owning a business. But you won’t earn wealth from earning an income and spending it all.
If you want to have wealth, you need to start building momentum. Start the train now. You need to own assets that make money for you, otherwise you lose.
You cannot build wealth with brute force and energy without investing. You can’t only trade your time for money, or you will get your butt kicked. Your money needs to be generating more money, because you can’t work forever.
2. You need the ability to react to change with strength.
Myles said “Life throws a lot of challenges at us. Health issues, accidents, divorce, etc. We will all go through most of these in our lives. If you don’t have the ability to react to these things with strength, they will consume you.”
Now, I am married, and I am literally praying that our marriage is healthy for us and that it does not end in divorce. I don’t believe that it will. But the point remains — life throws plenty of curve balls at us.
If it’s not divorce, it will be a health problem, or some other emergency.
Therefore, our ability to react to change is critical. We need to have flexibility, especially later down the road in our lives financially.
Myles criticized the FIRE movement, for this very reason.
I know that many people in the FIRE movement do have enough saved to account for emergencies or unexpected changes. And many in the FIRE movement would be willing and able to go back to work if necessary. But not everyone is, and that is a real concern.
Worse still, traditional retirees may not have the option to go back to work if needed, due to their age or more limited physical capabilities later in life.
To me, this is one of the greatest strengths of early semi-retirement — the flexibility. You can retire from your full-time work early, but you are also prepared to react to changes in the market or in your own life.
Beyond the financial side, we need to be prepared intellectually. Life changes.
3. You need to have a plan to protect yourself and your family.
Here’s the quote from the interview:
“If you really value your time and all the work you have done pursuing FI, you better be ready to defend the results of it at all costs. And geographic decentralization is the only option. Second passports passports (or more) are the minimum. Even if that means you take $200K of your hard earned gains and buy a passport in a country that embraces citizenship by investment.
You need to have a plan to protect yourself and your family. Those with a lot of cash are the first targets of the bad guys. Knowing who the bad guys are is key — it isn’t the drug addict in the hoodie on the street. It is the bad guy in the suit that you have to worry about.”
This is one of the portions of the conversation that I have mixed feelings about.
Certainly, there is a chance that tax rates could change, even for tax-advantaged retirement accounts. Under current policies, I think the social security system is the most suspect potential catalyst. I don’t think policy-makers would bat an eye at taxing the relatively wealthy in order to provide for the basic needs of others.
Furthermore, universal healthcare, “free” college, and a universal basic income are all new possible benefits that are gaining popularity in the US and globally. That’s not to say that implementing any of those policies would be a negative outcome, but the funds have to come from somewhere.
Myles advocated for a very globalized approach, including dual-citizenship. To some extent, I understand the advantage here. I’m going to be honest though, this is not something I personally intend to pursue, at least in the near future.
How you can protect your family
Myles used the phrase “geographic decentralization” — I do think there is a way to partly achieve this even through investment diversification. Investing a percentage of your retirement savings in international index funds or ETFs can be a great way to protect your wealth.
Even the major US corporations themselves are becoming more international through their own globalization, so by investing in blue chip stocks you also receive a slice of the international business pie.
Having proper insurance coverage is another critical way to protect your family. Do you have the correct car, home, auto, disaster, life, and/or umbrella liability insurance policies in place?
Finally, having an emergency fund and being a life-long learner are two more ways to protect your family. Surprise expenses will come your way. And, if you retire early, don’t let your skills become totally outdated in case you want or need to go back to work.
Just be prepared for the unexpected — as you can see, these 5 learnings all tie together.
4. You can consider alternative healthcare if, at some point, you won’t be working full time for an employer.
The most common criticism of early retirement that I see relates to health insurance. How will you possibly afford healthcare without your employer? Private policies can be outrageously expensive, and Affordable Care Act (ACA) subsidies may not be as affordable if you claim income from your investments to live off of.
Well, here’s the takeaway from the interview. It’s feasible.
Myles shared that he has a three-pronged approach. I think his strategy captured all of the possibilities succinctly. Here’s what he had to share (abridged):
“In the USA, the problem is that people do not avail themselves to pro-active treatment and leave medical procedures so that they eventually turn into emergencies…
We break healthcare into 3 categories and address them all equally:
Eat healthy, exercise at least 3 times a week (intense), use technology, monitor vital signs, organic foods where possible, etc.
We go to Mexico and spend cash to get elective work done. Last week I took the family to Los Algodones, a small town on the border with Yuma, Arizona, that has the largest array of dentists and opticians in a 4 block area in the world.
I spend about 20% of the same costs we would pay in the USA…
For emergencies, we carry insurance. We’ve used this only on a small number of occasions. In 2016, my wife fell down some stairs in Florence, Italy and suffered some head trauma and we used it to get treatment at an Italian hospital and then she recovered in Tuscany for a week or so. Not a bad place to recover!
…’Go where you are treated best’.”
So you might have to be creative, but it’s possible.
Depending on your exact financial position, the ACA or medical share programs may be other good options for you.
5. Money is just a score. It is how you play the game that matters.
Myles says that wealth, ultimately, is having the choice of how to spend your time. And I agree.
We spend a lot of time talking about how to optimize our money. But ultimately, you can always get more money. But you can’t get more time. Since time is what’s most scarce, spending it how you choose is the ultimate goal, and the ultimate sign of wealth.
So, I know it’s cliche, but we need to remind ourselves every day to appreciate life. If you’re saving for an early retirement, it’s easy to wish away the years between now and your target date. I’m guilty of that too. But, thinking “I’ll be happy when _____.” is toxic and we need to combat it.
The truth is, when you get to the “_____” moment, you’ll give yourself another future one. “Well, I’ll really be happy when….”
Don’t wish your life away. Find moments every day now that you can enjoy with the people that are most important to you.