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Reflections on Retirement: A Year Living Off My Dividend Portfolio
In January 2023, I embarked on a new chapter of my life—retirement from my 9-to-5 job while living off my dividend portfolio. After over a decade of hard work, savings, and investment—including significant efforts in real estate and various side hustles—I faced an unexpected fork in the road after being laid off from my software sales position at the age of 37. At that moment, I had two choices: scramble to find a new job or utilize my existing dividend portfolio to cover my living expenses while embracing early retirement.
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However, I quickly realized that my dividend income did not entirely cover our expenses, which led me to opt for a path known as "Barista FIRE." This approach allows for early retirement while still working part-time—in my case, creating YouTube content. My wife, who continues to work in tech, helps us manage our expenses, particularly concerning the high costs of healthcare—a significant consideration for many households in the U.S.
As I commence my second year in this new lifestyle, I want to share some insights from my experiences navigating life after leaving regular employment.
Highlights of the Year
The past year has brought several remarkable highlights that affirm my decision.
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One of the most significant benefits has been the freedom to engage more deeply in my existing hobbies. I did not adopt new pursuits but found joy in dedicating more time to past interests. For instance, I substantially increased my hiking activities, often taking my three-year-old son, Lucas, along with me. These father-son outings provided golden moments of bonding and learning about nature, something I could not fully experience while balancing a full-time job.
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Additionally, my family took advantage of travel hacking strategies, allowing us to enjoy vacations by utilizing credit card points. Intentional spending and responsible credit management transformed these experiences into virtually free adventures. As we're gearing up for more planned trips in the future, I can confidently say that travel hacking has become a cornerstone of financial freedom while exploring new places.
Perhaps most rewarding was the overall shift in pace. I transitioned from the relentless hustle of work life, often characterized by stress and being in constant motion, to a slower, more contemplative lifestyle. This change catered well to my introverted nature, allowing me to recharge and enjoy intimate moments with my wife and son.
Low Lights of the Year
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However, the experience has not been entirely smooth sailing. There were several challenges and lessons learned throughout the year.
One notable misstep involved taking on more financial risk than I should have, particularly through cash-secured puts—which I now view as a stressful and excessive gamble. It became painfully evident that risk tolerance can be drastically different in retirement compared to when one has a steady paycheck. This miscalculation nearly jeopardized our financial security, serving as a harsh reminder of the need to prioritize stability over speculative profits.
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My work with YouTube also posed challenges. Initially, I increased my output to two videos per week, driven partly by financial necessity. While more content produced led to higher income, I found myself feeling burnt out. Striking the right balance between work and personal life will be crucial going forward, and I recognize the need for some distance from social media to maintain my mental well-being.
Finally, my health has become a prominent concern as I realized the inevitability of aging and how physical fitness impacts overall quality of life. Although I previously took my health for granted, I now recognize the importance of prioritizing my physical well-being to enjoy retirement fully.
Financial Overview
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From a financial standpoint, the year was stable but unremarkable. Our dividend income for both 2023 and 2024 hovered around $50,000, reflecting minimal growth. This plateau is attributed to factors such as dividends being cut from some investments within my portfolio, emphasizing the need for diversification.
Our monthly living expenses totaled approximately $6,000, dominated by housing followed by food costs at $1,300. While healthcare expenses were relatively low due to my wife's continued employment, these costs will surge when she eventually leaves her job. Balancing our budget has been a tightrope walk that requires careful planning, especially regarding medical insurance.
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My income sources consist predominantly of dividends, YouTube earnings—which have peaked to about $4,000 monthly—and options income around $8,000. The mixed nature of these income streams illustrates that maintaining financial independence hinges on a balanced portfolio with both steady dividends and variable income sources.
Major Takeaways
Reflecting on the year, I've distilled several key insights that shape my approach to this new lifestyle.
- Risk Awareness: I am less risk-tolerant than I initially believed. The stressful experience of nearly compromising our financial future teaches me the importance of maintaining a conservative investment strategy as I move forward in retirement.
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Balanced Living: It's vital to strike a balance across all dimensions of life. Too much of anything can be counterproductive, even the hobbies and interests we love.
Finding Happiness Beyond Money: The realization that happiness is not contingent upon monetary spending has been profound. Simple pleasures—like a day spent outdoors or quality family time—often yield the greatest joy.
Health is Wealth: Prioritizing health must become a cornerstone of my lifestyle if I hope to relish my early retirement. Ensuring I stay active and vigilant about my well-being is essential.
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- Mindset Matters: Ultimately, happiness stems from within. The mindset you carry into retirement influences your overall experience. I choose to foster optimism and gratitude as I continue to navigate this uncharted territory.
In conclusion, my journey into early retirement has been a mosaic of highs and lows, wisdom and missteps. As I steer through this second year living off my dividend portfolio, I am fueled by the desire to make the most of my newfound freedom, embracing experiences, family time, and life's countless opportunities. Thank you for joining me on this journey, and I look forward to continuing to share my experiences along the way.