Here’s How This Millennial Retiree Went Nearly 5 Years Without Paying For Housing
For nearly five years, Hung didn’t have to cut a rent check.
He worked as an IT consultant, based in the Bay area, and his boss asked him if he could take on a client in New York City. While half the office would have turned down the posting, the other half would fly back each weekend.
Hung went a different route, utilizing corporate apartments to live in the city for the entire length of the assignment, allowing him to “explore New York” on the company dime, he said. After the term ended, he took on various other clients with similar setups in other parts of the country. Outside of paying a friend to crash at his place when back at home, Hung lived “intentionally homeless,” as he refers to it, for nearly five years.
“I travelled a lot during those years,” said Hung, “and saved the rent.”
Maybe that’s why, as a 36-year old retiree, his ambitions don’t lie in traveling all over the world, visiting exotic locations. Instead, Hung, who has asked to remain anonymous for privacy purposes, has embraced his lifestyle back in the Bay area, reconnecting with friends, family and experiences that he missed while living in company dorms.
Hung officially stepped away from the job over a year ago, with more than $1.4 million in his portfolio. But as those in the financial independence, retire early (FIRE) movement shift from the day job to no job, it can serve as an eye-opening experience for extreme early retirees. Some embrace it, free to live their day as they like. Others find it repressing, as they lose any sort of release valve for their ambitions or purpose. The isolation also wears some thin. And there’s no better gauge of a successful retirement – whether retiring early or at a more traditional age – than the number of entertainment outlets and connections you have.
Hung hasn’t had trouble adjusting to his new life. Instead, he has welcomed the opportunity, enjoying the chance to see a movie with friends on a Monday then playing Dungeons and Dragons on Tuesday. They’re two perks he went without during the week for over a decade.
Here’s how he reached his level of independence, and why he’s felt so comfortable without the nine-to-five.
A Slow Start To Investing
When Hung started his career in 2007, he invested in his 401k. But by 2008, he had grown terrified of the financial crisis. Fearing the market’s doom, he decided to invest $25,000 in a derivative fund that sought to track two-times the inverse of the S&P 500.
At the time of purchase, Hung bought the shares between $80 and $115. By the time he sold the shares in 2012, they had plummeted to $12.
This kept him from investing further – other than the 401k – for the next five years. During that time, he continued to save, racking up over $200,000 into his savings account, which didn’t provide but a 0.5% interest rate, according to Hung who outlined this time in his life within a Reddit post last year.
He finally decided to move the savings into low cost index funds in 2013. By then, he lost some of the gains from the recessionary depths. But the market has moved forward 8% annually over the past five years, giving him the chance to capture a good portion of the bull market.
Keeping Costs Low In A High Cost City
Despite living in the Bay area and earning, at his peak, $180,000 a year, Hung spends about $33,000 a year in expenses. He was able to keep costs low in various ways.
He doesn’t spend an exorbitant amount of money on rent, since he has a roommate. Friends wonder how he can still live with a roommate, despite his success, but Hung says living alone “isn’t important to me.” This allows him to cut anywhere between $8,000 and $10,000 a year in expenses.
Hung also believes that when people hear about the high cost of living, they often think about the expense of owning a home. “They don’t recognize the other amenities,” said Hung. “It’s always important to look at the total cost of living.”
As an example, he doesn’t own a car. Instead, he primarily rides his bike. If it’s a walkable distance, then he will do so. There’s also the train. In some cases, if he needs to get around town, then he will take a Lyft. But it saves him on the cost of parking, insurance, maintenance and buying a car. In 2019, he spent a grand total of about $1,000 on transportation.
By keeping expenses low, he’s also protecting his retirement. With his portfolio near $1.4 million, he only needs to currently take out a little over 2% a year to cover his cost of living. With such a long retirement time horizon, the further he can keep expenses below 4% of the portfolio, the better chance he has to make the money last, even in his later years.
This gives him the freedom to pursue things that interest him.
Finding His Purpose
Besides reconnecting with friends and family, Hung has become a dedicated mountain climber. He has a goal of climbing three days a week this year, with trips planned to visit Brazil and Cambodia, where he will do some climbing, along with seeing family and other sites.
But, surprising to him, he’s also realized that he enjoys working with campers at LGBTQ summer camps. He plans to work multiple camps this year, which is an activity he “had no idea” he would enjoy, but now has become “a must in my life,” he said.
If you want to step away from the job early, Hung doesn’t believe you need to know everything that you plan to do with the time. But you need to have a plan to get started. “Think about it before you leave work,” he said.
So often people seek early retirement because they simply hate their job and want to quit. But for a successful, enjoyable time in the post work life, you need to know “what you are retiring too,” he added.
Once you’re in retirement, though, then you can adjust your plans based on what you enjoy.
“I’m allowing my freedom and flexibility guide me to whatever I find to be most fun, rewarding and meaningful,” Hung said.