This guest post is from an anonymous lawyer who plans to quit law within the next 5 years. Check out his blog Thoughts of an Anonymous Lawyer. For the blog of another lawyer who quit the race, check out Adventures in Voluntary Simplicity.
I am 30 years old and on track to retire early in five years. It wasn’t until recently that I decided to pursue early retirement. You see, I have always been very ambitious. I always wanted to climb to the top. In my chosen field, this meant making equity partner at a prestigious law firm. Making millions a year and getting a corner office with a skyline view. But, somewhere along the way, my enthusiasm for my profession waned. I saw my role as a lawyer for what it really is: a corporate pawn who fights frivolous lawsuits. I started to see my job as a waste of my time . . . and for what? And at what cost? Lawyers routinely work very long hours for many years before they even have a shot of attaining the type of success I sought. And I just couldn’t see myself on my death bed, after having worked four decades as a lawyer, being satisfied with how I lived my life . . . sacrificing all the things that really make life worth living. I realized I needed to live, not for work or professional success, but for the more important things: family, friends, personal development, love.
My initial reaction was to quit my job outright. Assuming I could cut back on spending, I estimated that I had about six years of living expenses saved up. (This was before I learned about safe withdrawal rates, etc.) I thought I could start up a business writing and selling mobile software. And in a few years when I started running out of money, I could start over again and get another corporate job. Now I’ve always been able to defer gratification, but this is totally opposite. This would mean living my life now at the expense of my future. Who would want to hire a 40 year old former attorney with no real experience in the last ten years? Also, a few months later, my enthusiasm for writing mobile software subsided and I was left with the realization that I was just unhappy with my job and looking for a way out.
One day, someone suggested I consider early retirement. I had no idea what this entailed or how much money I would need to save. Initially, I brushed aside the suggestion, as the thought of continuing to work was unpalatable. But some days later, I began to explore the possibility and developed a plan. In the coming months, I developed a clarity of purpose and became convinced that early retirement was a goal that I should strive for even if I should prove too weak to reach the final destination.
My plan included three primary elements:
- lower expenses;
- increase savings; and
- develop investment plan.
Lowering expenses was somewhat difficult, as I was under the belief that my expenses were already quite low (by my standards). Many lawyers are encumbered by massive debt from law school. Fortunately, my previous employer sponsored my law school education. This is where I consider myself the luckiest (aside from my good looks, of course). Many of my colleagues are not in a position to retire because of the $75-150K in debt they had to take on for the privilege of calling themselves lawyers. In my case, the biggest expense was rent, which at $2,500 a month, constituted over half of my total expenses. I recently took care of that by moving to an apartment with a roommate for $900 a month in rent. I stopped eating out on a regular basis. I also started monitoring and categorizing my spending on a daily basis using an on-line tool. Now I know where every dollar goes and I can track my performance over time. I am planning to spend $30K a year going forward, now that my budget is on a diet. I can do this without sacrificing the things that are most important to me, such as spending time with friends and visiting family.
Increasing savings goes hand in hand with cutting expenses. Right now, I am planning to save 25 times annual expenses of $30K, for a total of $750K. This will take approximately five years based on the amount I’ve currently saved and my current savings rate of $70K a year (not including 401(k) and IRA contributions). A withdrawal rate of 4% is cutting it close, but the thought of working long enough to save that amount of money is enough to make me sick. I am open to the idea of working part-time or on a consulting basis to make money as necessary, for example, to help my parents or to pay for my children’s educations.
As for my investment plan, this is where I need the most work. Despite the stock market’s continuing rise, I firmly believe that the fundamentals do not support current stock prices. I know market timing is not a good idea, but I cannot overcome my convictions that the market is overpriced. I never buy anything I don’t believe is a good value, so why make an exception for stock prices? Thus, all of my non-retirement savings are currently in cash or cash equivalents. Hopefully, the market will cool down so I can implement my plan to invest 60% of my non-retirement funds in Vanguard Total Market Index (VTI) and the remaining 40% in Vanguard FTSE All-World ex-US (VEU). I currently hold a mix of stocks and bonds in my retirement accounts, and once fully invested, my asset allocation will be 80% equities and 20% bonds.
The biggest question is whether I will be able to last another five years. Changing law firms, while difficult, is still possible in this economy. However, as the saying goes, same shit, different day. I could work as corporate counsel, but the thought bores me as well. Am I making a mistake by spending the next five years in a job I dislike? I am trying to make the most out of my time outside the office, but that is making my work existence all that more difficult. Your comments are welcome in the comments section below, as well as as on my personal blog Thoughts of an Anonymous Lawyer.
Daily Yakezie Short Carnival: How I Paid Off Over $70,000 in Debt and Quit My Job @ Eventual Millionaire, Student Loans @ College for 10k, & Cohabitation Agreements and What You Need To Know @ Young and Thrifty