Learning the True Value of Financial Independence

Over the past five months, during which I have been absent from posting on the blog, I have had a number of significant life experiences. My father passed away after a long battle with cancer, my daughter graduated from high school and then went off to college – my wife and I are now “empty nesters.” Experiencing these life changes has caused me to reflect on the value of financial independence.

When my wife and I originally embarked on our journey to financial independence, we believed the goal of accumulating enough assets to retire on was so we could buy anything required to be happy without the need for employment. Basically, it could be summed up as being able to have material things or experiences without working for a paycheck to purchase, maintain or enjoy them.

Once we determined that this was our desired path, we set an aggressive savings rate of 20-30% and invested the proceeds for the future. (FYI, this was in the 90’s – that was considered a high savings rate before personal finance blogs touting 50%-plus savings rate were a thing.) Fast forward 20 years and we found ourselves effectively “financially independent” where our financial assets could support a comfortable level of expenditures at a moderate withdrawal rate (3-4% per year).

A few years later, at age 50, I decided to “retire” from my corporate job. Earning a paycheck wasn’t a requirement any longer and I was tired of doing the same routine every day. I thought to myself, now this is what that saving & investing effort was all about!

News No One Wants to Hear

In December 2015, the month I “retired”, my father was diagnosed with Stage 4 inoperable lung cancer. In some ways, my “retirement” was timely. (Can you tell that I really don’t like the term “retire”?) Over the next 2 ½ years as my father fought his valiant battle with cancer, I was able to travel back to the East Coast and visit him on numerous occasions. I didn’t have to worry about taking time off from work or concern myself with work-related issues while visiting – I could spend all of my time with my father and other family members during this difficult period.

When my dad’s health deteriorated near the end, I was able to be there without any other obligations and with an open-ended timeline. I was able to be with him day and night until he ultimately lost his battle. I will cherish this time I had with him for the rest of my life.

After my dad’s passing, I wasn’t obligated to rush back to the demands of a job. I stayed and supported my mother for a good length of time. Emotionally, I believe this was beneficial for both of us.

Financial Independence gave me an opportunity I might not have had otherwise. Through this experience, I became aware that the ability to manage your own time is the true benefit of financial independence, not material possessions, the ability to pay for things, or anything of the sort.

Something to Celebrate

At the same time, the past months have also been a time of great joy for our family. My daughter graduated from high school this past spring. We were able to have a very meaningful family vacation shortly before her graduation, again without the disruption of any work-related obligations that always seemed to intrude and take precedence during past vacations when I was employed. We celebrated her achievement without these distractions.

Starting the college journey is a big transition for students and families alike. Often, one of the most stressful issues for both the family and student is the challenge of paying for the high cost of college. When my daughter was born, we committed to socking away some money toward her future education on a monthly basis. (Having only one child made this a little easier for us to do.) Fully understanding the concept of compounding by then, we made our best estimate in calculating what might be required to save enough to fund an in-state university. We set a goal of making these fixed monthly contributions for 18 years. (We made a point of sticking firmly to this goal.)

We decided that whatever was in the account at the end was hers to use for college (and possibly beyond). If there wasn’t enough there for her desired school, she would need to make up the difference through loans and/or working. If there was excess, she would be able to use that as a nest egg to start her adult life after college. Knowing this, she wisely chose an in-state university. She will have the resources to pay for four years of college with some excess left over. The elimination of financial stress for both us and our daughter during this college process is a testament to the benefit of long-term planning (and compounding).

This entire transition from high school to college has been one of pleasure and excitement – other than missing her of course! We were able to enjoy this time with our daughter, rather than worrying about how to pay the bill.

The Lesson

In reality, our financial independence allows us to be present with a clear mind, absent of distractions. Time far outweighs any things money can buy.

One Last Thought

I have been struggling with some of the terminology commonly used by the FI/RE (Financially Independent / Retire Early) community, specifically the notion of calling oneself “Retired (Early)” and “Financially Independent”. Recently, I came across a video interview by Christine Benz on Morningstar.com with Brian Portnoy, author of The Geometry of Wealth. Brian used the term “Funded Contentment” to describe the philosophical intersection of life and financial goals. That phrase really struck a chord with me – I really like that one!