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Top 5 Ways to Derail Financial Independence & Early Retirement


Avoid these five mistakes that can run your financial independene train right off the tracks, derailing any dreams you may have had of an early retirement.

Does the concept of financial independence appeal to you? Would you like to have the option to retire early? Great! Me too!

One of my goals is to help give you the knowledge and motivation to help make FI a reality. I've talked about why you might want to retire early and how to go about it. I would be remiss if I didn't talk about how not to do it.

Presenting, the Top 5 Ways to derail your FIRE plans.

1. Live Beyond Your Means

This one is obvious. The only way to accumulate the money required to call yourself financially independent is to not spend it all. The higher your savings rate, and the lower your expenses, the sooner you will be FI. If your spending grows along with your income, you might save the same amount, but you're actually delaying FI further by having higher expenses, therefore requiring a bigger nest egg. A smaller money requirement is just as important as the ability to acquire it, perhaps more so.

If you want to stay on track for FI or RE, aim for relative frugality when it comes to the big ticket items (house, cars, schools, etc.).

You can't afford the Oprah suite, but you can take the tour.

2. Trust the Wrong Person to Handle Your Money.

Who is going to have your best interests in mind better than you? Nobody. You may not know that much about personal finance, but the truth is, you don't need to know a whole lot. You're smart enough to have become a high earning professional, you're smart enough to have found this obscure website. By golly, you're smart enough to learn how to make simple investment decisions.

If you choose to outsource that task due to a lack of time or interest, do yourself a favor and make sure the costs are detailed, transparent, and low. If your money is with the friendly neighborhood storefront (see #4 in this Top 5), your total fees could average 2% to 3% per year. What's 3% of millions? Millions.


$100,000 a year invested and compounded monthly at 7% grows to $10.2 million over a 30-year career.

$100,000 a year invested and compounded monthly at 4% grows to $5.8 million over a 30-year period, a difference of $4.4 million. Factor in unnecessarily stunted growth over an additional 30-years in retirement and the 3% difference between the two approaches could approach or exceed 8 figures.

Now, are you sure you don't have time to figure out this personal finance stuff?

3. Start Late.

One of my classmates in medical school was a grandfather when he started. Sorry, Gramps, you missed the early retirement train entirely. I suppose it's hard to be derailed from a train you never boarded.

My medical school offered all students the option to defer for a year prior to starting year one. A single year isn't going to make or break it for you, but I declined, keeping my eyes on the prize. The sooner you start, the sooner you can finish.

Some who defer one year defer indefinitely, and never realize their dream of becoming a doctor.

lead singer of The Cure

Robert Smith, , running back for the Ohio State Buckeyes and Minnesota Vikings, was reportedly heading to medical school after his playing career was done. You can still see him behind the booth on ESPN. Nathaniel Motte of the one-hit wonder duo called 3Oh3! deferred med school at UC Denver for four years before deciding to focus on music exclusively. I've never heard another song of theirs since Don't Trust Me made the Top 10 in 2009.

Oh, yeah… this is the part where you're supposed to see some graph that compares investing $1000 a year from age 20 to 30 compared to saving $1000 a year from ages 30 to 50. Hopefully you've seen something like that before. Spoiler alert, the early saver comes out well ahead, despite putting in only half as much money. Compounding is mathematical magic.

4. Get Divorced.

There's nothing like divorce to instantly transform you from "financially independent" to "half-way there". I've explored the financial details previously. Interestingly, one reader commented that her divorce put her in a better spot financially. Parting ways with someone who likes to spend every paycheck can be a good way to actually start on a path to FI for the first time.

Your mileage may vary, but most often, a divorce will derail you from your FI track. Once again, if you never boarded that train in the first place, there are no rails to be derailed from. Once life has stabilized, you can board the train at the next station!

All aboard! P.S. Thank you, Tony.

5. Commit a Felony.

I've filled out many credentialing applications and applied for many state licenses. Every single one of them wants to know if I've ever committed a felony. I haven't, or at least, I've never been charged ;). Unfortunately, I know other doctors who have, and I've seen a couple careers end in an abrupt and spectacularly tragic fashion. I don't think every felony is an automatic career-ender, but I've seen it happen more than once.

You could argue that committing a felony doesn't belong on this list. After all, these doctors were forced into very early retirements. On the other hand, they were likely nowhere near financial independence, and will be relying on other people or second careers to have a prayer of getting there.

Avoid these five traps and you could be well on your way to a financially secure future.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice