Reassurance for Early Retirement Loving City Mice
I t’s been a strange Q1 for me with far less structured thinking time than I’m used to and a lot of hesitation over early retirement in New York City. The upside is this means that I completely enjoyed my time away and that those trips were money and time well spent. I also read a lot of other personal finance blogs (and stumbled across a gem called The Wealthy Accountant who incidentally is the CPA that Mr. Money Mustache recommends). The broad blog survey depressed me when I realized that none of the bloggers live in a tier one metropolitan city and that few of them address the early retirement pitfalls of when both you and your partner are climbing career ladders in solidarity. The tax code in the US is one of the most effed up ones I’ve seen, and it punishes dual income couples who want early retirement and *gasp* are both working to try to get there faster. So today I want to share some of the self-help messages I’ve been giving myself as I ponder early retirement in New York City.
The Town Mouse and the Country MouseI n Aesop’s fable, the country mouse huffs off after a quick visit to the town mouse’s den and says “You may have luxuries and dainties that I have not, but I prefer my plain food and simple life in the country with the peace and security that go with it.” The moral of the tale is that poverty with security is better than plenty in the midst of fear and uncertainty – something that I’m not sure I quite agree with (honestly what security is there in poverty? and why is poverty even considered good?). But this also made me wonder about the benefits of city living, and whether I was a schmuck for preferring it to suburban or even country living.
H aving grown up in LA and come of age without a car, I often have the feeling that my life really started during my scholarship year in Germany after high school. While it is the ultimate symbol of freedom, being dependent on a car to conduct many parts of your life is really just unnecessary friction, and it is a drag on your finances when you tally up the cost of ownership or renting. That year in Germany was the first time I was free to move about as I wished due to the phenomenal public transport system there (and really throughout Europe).
Driving Has No Redeeming QualitiesC ity living frees you from the need to drive which no offense is a colossal waste of time and the killer reason why city living ranks so highly for me. To avoid accidents, you can’t do anything while you’re driving except drive, so that time is the epitome of unproductiveness. You aren’t earning money, you aren’t learning (eh you could listen to audiobooks but shouldn’t you really be concentrating on the road and not getting into accidents?), you are becoming unhealthier since you’re not exercising, and you sure as hell have no control over your schedule if you face traffic. My LA lawyer friends have confessed that they’ve sometimes arrived late to court because of traffic.
G enerally, I can see no redeeming qualities to driving that public transportation or ride-sharing don’t already have. Also, time is the only resource we have that we can’t generate more of. You can always figure out a way to make more money, and you can always work to improve your health, but you cannot generate more time. Driving is the worst offender that I can think of when it comes to operationalizing holistic prosperity.
Ideas Win The DayM oreover, city living, and tier one cities in particular, expose you to a high concentration of cultural institutions and attitudes that expand your horizons and make it tolerable if you can’t travel as much (admittedly, travel is a pretty expensive hobby, especially if you value comfort). If you can travel, city living makes it easier to jet away as connections are more plentiful from key hubs on the coast. The way to financial independence is being creative enough to see problems and solve them, and being in densely populated areas exposes you to the greatest number of problems in the shortest amount of time so you can start thinking about how to solve them. The bonus of having access to disparate stimuli that shape the way you think and approach the world means that you have a better shot at coming up with something of value that fulfills you and makes other people’s lives easier.
You Can’t Become Rich If You Don’t Have a JobF inally, the access to jobs and the ability to find one in multiple fields of interest makes city living the right choice for those who strive for financial independence but aren’t ready for entrepreneurship or haven’t hit on the right idea just yet. The quickest non-starter for financial independence is not being able to earn money – full stop. Having access to a variety of jobs and being able to easily network with others is where the city shines.
A lso, not to be daft about it, but being in a city requires you to adapt quickly and think on your feet. Your subway line is down? Ok, do you take another subway line, walk, hail a cab, or get an Uber? We live in an age of rapid change where you can’t even count on your college degree to see you past the first five years of your working career. Artificial intelligence is poised to make leaps and bounds, and the technological advances happening concurrently have opened up new areas of opportunity for the skilled. I’m pretty sure the angry white males in America are acting out because they can’t keep up with the pace of change. On the surface I understand the sentiment, but at the same time, none of us are owed anything so we must train our brains to think quickly and be adaptable. The city is a great mental jungle gym for this sort of critical thinking.
Is Early Retirement Possible in NYC?O bviously I’m still working through this assumption, but I’m sure the answer is yes – it just takes longer. On the flip side, can you really place concrete value on your quality of life? Being well-rounded and knowledgeable about how to interact with others is a skill that will serve you for life. This is where city living excels and pays dividends, even if it’s not monetary. I can’t imagine valuing my life as much if I didn’t feel connected to the rest of the world.
T here are ways around the pitfalls of city living, but you have to be prepared to make the tradeoffs. Take housing for example. Right now, virtually every apartment building in a 5-10 minute walk of me is rent stabilized for the next 10-15 years and we are talking about brand-new buildings with shiny amenities and finishes. The units are smaller than any house I have ever seen, and the starting rents are market rate, but you have the assurance that your rent will only go up so much in any given year and usually in the single digits (as compared to most landlords who jack rent up to however much they wish). The convenience of having a short commute during which you can do other productive activities can’t be stated enough and will give you more time with your loved ones, but it will mean that you do not have a lot of square footage.
T he city also pays you back with more free and low-cost events than you can hope to attend, a variety of affordable food options (particularly in non-western European/non-American cuisines), and an excellently networked transportation system. The low-cost barrier to learning about new hobbies, fields, or sports means that you can much more quickly pinpoint what your passions are and make plans to break into fields that matter to you. There is always a new path that beckons if the current one you’re on doesn’t appeal anymore, and that optimism of remaking yourself is priceless.
Always Buy Low and Sell HighW hile reaching early retirement in a major city is feasible, you may decide that you don’t want to spend retirement in the city, and this is where the concept of buy low, sell high applies to our lives. When you’re young, you will never feel like things are going really well because it will be a constant financial struggle to hit each life milestone (paying off education loans, getting married, buying a house, having children, etc.). This is actually a good thing because typically, people want to take over projects when they are doing really well and they stick around until those projects become disasters. This action is the epitome of buy high, sell low.
I n an age of rapid change, I think it makes more sense to tough it out in a challenging environment while you still have the energy and drive to make things happen. In this way, city living even if you’re pursuing early retirement makes sense. Many of us suffer from uncertainty about our passions, and cities give us the chance to work out what those drivers are so we can do something about them. Not having as much money as more established professionals allows us to buy into city living at a lower cost and sets us up to leave on a high note when we’ve established networks and worked out how to lead purposeful, holistic lives.
G etting to early retirement will be slower if you live in a city, but you have a much higher chance of discovering the path you were meant to tread on and be able to capitalize on that clear vision. Spending time considering options and prototyping what a life could look like before jumping into it is valuable, and honestly, what the hell were you going to do in early retirement if you didn’t have a pet project to do? The myth about early retirement is that you can stop working, but unless you have a serious war chest of funds and no dependents, you still need some recurring cash flow or you won’t have enough depending on how long you live. So, better to work out how you’ll live a life doing what you really want to do and being able to test drive it before going whole hog. The city mouse may suffer from poverty in spades, but it will have the security of access to opportunities.