Don’t Wait on Happiness: How to Enjoy the Peak and the Plateaus

In This Article

This article was adapted from the BiggerPockets book Retire Early With Real Estate written by Chad Carson. 

Because you’re here on BiggerPockets, I know you have big financial and life dreams. You’re no doubt striving to achieve the good life.

I’m right there with you!

But financial achievement is a lot like climbing a mountain. It’s tempting to think that everything good will start once you reach the peak of the financial mountain. After all, you have to reach the top before you can be happy and fulfilled, right?

Well, not exactly.

In the rest of this article, I’d like to offer a different perspective.

The Peak and the Plateaus

“The good life is a process, not a state of being. It is a direction, not a destination.”

—Carl Rogers, 20th century American psychologist

I’ve realized an important lesson during my own 18 years of climbing up the financial mountain.

Life can be enjoyed and celebrated at the peak AND during the climb at many plateaus along the way. 

In fact, you may come to love plateaus so much that you see life as just a series of climbs and plateaus!

For example, during the early years of starting a real estate business, I regularly played pick-up basketball in the middle of the workday (I still do when not in a coronavirus pandemic!). And I even took extended multi-month trips (aka mini-retirements) to Spain, Peru, Chile, Argentina, and across the western USA.

Did these experiences matter to me? Absolutely! I would not trade them for any amount of money.

Had I arrived at the peak of financial independence before doing them? Absolutely not! I still had a goal of climbing higher up the mountain toward the peak.

When even a fast financial climb might take 10-15 years of your life, why not also enjoy life along the way? Financial plateaus (i.e., intermediate milestones) are a tangible way to enjoy the journey AND the destination.

You are welcome to create your own plateaus, but here are five major ones that have worked well for me and that I’ll explain more in this article:

1. Self-Sufficiency
2. Mini-Retirement
3. Semi-Retirement
4. Early Retirement
5. Traditional Retirement

I’ll start with the first plateau that we all must pass—self-sufficiency.

Plateau #1 – Self-Sufficiency

It’s easy to quickly blow past the milestone of self-sufficiency. But it’s important and worth celebrating. Basically this means your day-to-day finances are not an emergency.

Here are a few indicators that you might have reached this milestone:

• Personal debt paid off (i.e., student loans, car loans, credit cards)
• Cash emergency fund of 3 to 6 months
• In-demand skills at a stable job (or jobs) that pay you well

These are similar to the first of Dave Ramsey’s seven baby steps. It’s also similar to the concept of F-you money by JL Collins or the financial runway in Scott Trench’s great book Set For Life.

When I first visited this plateau at 25 years old, I began playing basketball and hiking for several hours in the middle of the day. Because I was self-sufficient financially, I had the courage and leverage to do more of what mattered to me. I didn’t have to wait.

And you can use this secret, too. Financial independence (and more happiness) begin in small doses as soon as you start taking back control of your financial life.

But the fun doesn’t stop there. It continues with one of my favorite plateaus called a mini-retirement.

Plateau #2 – Mini-Retirement

Mini-retirements are extended breaks from your normal routine of working hard, saving hard, and building wealth. It’s like taking off your hiking shoes to soak in some views and relaxation for a period of time before hiking again.

There is no definitive amount of time for a mini-retirement, but for me, they typically last from a month to more than a year.

I’ve typically used mini-retirements to travel, but you can also use it to do other projects like going back to school, learning something new, building or remodeling a house, spending time with kids, planting a garden, or anything else that excites you.

I took my first mini-retirement in 2009 about seven years after I began my real estate investing career (and in the middle of the Great Recession!). For four months my wife and I traveled to Spain, Peru, Chile, and Argentina.

During our 2009 travels, I learned to speak Spanish, we explored new cultures, and we hiked in some of the most beautiful scenery we’d ever seen. But perhaps more important than the specific experiences, the time away from work gave me a new center and source of energy when I returned.

Since that time, we’ve made mini-retirements a habit. In 2017, my wife and two young kids traveled to live in Cuenca, Ecuador for 17 months. Our kids learned to speak Spanish, we made many friends, and we had experiences together that we’ll never forget.

The climb up the financial mountain is long and arduous. Don’t forget to take some breaks to experience the sweetness of early retirement before you actually get there. Mini-retirements can remind you why you’re climbing in the first place.

Plateau #3 – Semi-Retirement

You don’t have to be completely financially independent to gain more flexibility and freedom. Even if you are part of the way to your financial independence goal, you can enter a phase called semi-retirement.

Semi-retirement means that you don’t stop working. Instead, you just work less or on a schedule that’s more attractive to you.

For example, let’s say your current job situation is not ideal. Your family expenses are $60,000 per year. Your real estate investments produce $30,000 per year in net positive cash flow. And your current job that you don’t like pays you $80,000.

Clearly, the $30,000 per year from your rentals doesn’t pay all of your expenses. But it IS enough to give you leverage with your current job.

What if you choose to:

• Ask to work 50% of the time, for less pay
• Ask to transfer to a different role that’s more fun, even if it’s a lower salary
• Quit and find a completely different job that you like, even if the pay is less
• Quit and become an entrepreneur (I recommend building the business before you quit)

The point is that even partial financial independence can lead to more options, flexibility, and enjoyment of life. There is no reason to trudge along miserably in the name of someday achieving financial independence. Life is too short.

And you just might find that semi-retirement is all the freedom you need for a long time! If so, enjoy this plateau, and continue building wealth more slowly for a full retirement over the long run.

Plateau #4 – Early Retirement

This milestone is the official topic of my book Retire Early With Real Estate. The main point is that you don’t have to wait until traditional retirement age to enjoy the freedom and flexibility normally reserved for retirement. You can do it in your 50s, 40s, or even your 30s or 20s.

In the book, I interviewed and featured the stories of 25 early retirees (of all ages) so that you can see how they actually achieved it. Stories, blogs, and podcasts from people like this have started a popular movement called FI/RE (financial independence, retire early).

One of the most famous early retirees is Pete Adeney (the blogger behind MrMoneyMustache.com). He and his then-wife retired at 30 from their engineering jobs in order to have a kid and spend more time raising him.

But there are now people from all walks of life and careers that are retiring early and doing activities that are more personally fulfilling (often other kinds of work). You can meet many of them on the BiggerPockets Money Podcast. 

Challenges to Early Retirement

There are of course challenges to retiring early. One of the biggest is the unknown pattern of future expenses. For example, U.S. health care and college education costs have been rising at rates that seem out of control.

But early retirement is more about flexibility and self-reliance than it is just living off your assets mindlessly. If hard times come for young early retirees, part-time work is often an option.

And many early retirees move to new locations – both within their home country and outside of it – in order to reduce expenses while still enjoying life. For example, my family and I lived in Cuenca, Ecuador for less than $3,000 per month (including local private schools and plenty of luxury purchases).

Early retirement simply means freeing yourself from the need to work for money at an early age so that you become rich in more than money. You gain freedom, flexibility, and the autonomy to spend your time doing what matters.

And time is the rarest, most priceless treasure of them all.

Now let’s talk about a final plateau, traditional retirement.

Plateau #5 – Traditional Retirement

This is the milestone most people think of with retirement. It has to do both with age and wealth accumulation.

In the U.S., most retirement account withdrawals begin without penalty at age 59.5. Government social security income benefits begin between the ages of 62 to 67 (for those born after 1960). And the Medicare health insurance program begins for most people at age 65. For a lucky few, there may even be a pension from a previous job at this age.

If you’re in your 20s, 30s, or 40s, you’re not counting on these benefits anytime soon. But they do provide a comforting financial floor when you reach the ages mentioned above. And particularly with health insurance, which in the U.S. is a source of anxiety and uncertainty for early retirees, these financial certainties are welcome.

But the gap between these benefits and your desired lifestyle must still be filled by your wealth accumulation.

You can do this with your regular rental properties outside of a retirement account. They can pay for your lifestyle in early retirement AND in traditional retirement.

But you can (and should) also invest in a 401(k), IRA, or other types of retirement accounts. This could be invested in traditional assets like low-cost index funds. Or you could also explore alternative investments like private notes, crowdfunding, and more. I personally do both.

Whatever your age, it’s important to think about your financial plan for later in life during a traditional retirement.

Ready to Climb?

My goal in this article was to offer a different way to think about your journey to financial independence. The actual climb up the mountain is not always easy. And some of us, depending on our life circumstances, have much bigger mountains to climb than others.

But I hope these five plateaus will give you tangible milestones that will make the journey more rewarding and worthwhile. It’s certainly worked for me!

Best of luck climbing your financial mountain!

How is your financial journey going?

Let me know in the comments below.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.