Note: This post was first published in October 2020 and updated in April 2022
Ahh, the sweet promise of early retirement.
The date is January 31, 2020. The news outlets are slowly picking up coverage of the strange pandemic that’s shutting down Chinese cities and seems to be spreading beyond the country’s borders.
I have zero time to pay attention – because it’s 9 pm on a Friday night and I am just now leaving the office. To say the week has been brutal would be an understatement.
On Monday morning, I unexpectedly had to jump on an 11-hour flight and fly halfway around the world (remember those days when people used to travel?) to get a deal back on track.
Sadly, I already had a full calendar and despite my PA’s valiant efforts to clear it, I regularly find myself up at four in the morning, walking yet another client through the strategic merits of a potential deal.
I’ve come back to London late on Thursday, jetlagged and exhausted.
Friday was spent in a futile attempt to make a dent in a mountain of work that piled up while I was away.
I need to be back on the road in less than 36 hours, which means a big chunk of my Saturday will also be spent in front of my iPad, reviewing and commenting on documents.
At this point in time, I basically resent anyone who has time to sleep 7 hours a day and doesn’t have to work over the weekend.
And if you also happen to hit the gym for more than 5 minutes a week then I don’t even want to know your name – because I am beyond jealous.
I secretly long to join that exclusive club of people with a life. Unsurprisingly, the thought of packing it all in crosses my mind… and instantly leaves me terrified.
The Early Retirement Rabbit Hole
According to the financial independence gospel, including the one I preach here, it shouldn’t be that way.
You work hard, make sacrifices, reset your lifestyle – and get to reap the rewards when you finally leave the corporate world behind. Say hello to lie-ins, a healthy way of living, and all the free time in the world!
Sure, you may keep working in some shape or form. Perhaps it’s a part-time job – or a volunteer position, helping advance a charitable cause.
Looking after your children – or parents. Learning a new language or picking up a hobby.
All highly engaging and worthwhile endeavours, no doubt. But as I close my eyes and visualize life after work, I simply can’t shake the nagging question:
Once the office door shuts behind me on the way out, once I catch up on my sleep and give my family and health the attention they deserve, will I be happier? Or will I miss the days gone by?
The reality is that cashing in the chips in the form of early retirement isn’t a free option. It comes at a price – and the loss of many things we may not be ready to part with just yet.
And as the boisterous (and maskless) crowd around me gets ready to kick off the weekend, I reflect on the things I will miss once I pull the trigger.
Might as well start with the elephant in the room.
Being brutally honest with myself, the loss of status after retirement will be the biggest mental challenge to overcome.
Despite taking a significant image beating post-crisis, being a senior investment banker still carries a certain cachet – and I will sure miss it once it’s gone. And no, it has nothing to do with money (more on that later).
Rather, it’s the social capital I’m worried about.
Put simply, social capital is a critical enabler of trust, reciprocity, and collaboration with the people around you.
Whether you are a university professor, a doctor, a police officer – or a CEO – the job that you do likely means people relate to you in a different way than they would otherwise.
It’s their willingness to take your phone calls – and the amount of time they give you if they do answer. The desire to plug you into their network.
To extend a favour – because they know that you’d be willing and able to reciprocate.
And yes, that also applies to investment bankers.
There is no 4% rule for social capital. It doesn’t compound and you will struggle to top it up once you’ve run out.
Is it a deal-breaker? Depends on the person.
But regardless of how you feel about it, you better be prepared to be treated differently once you retire – and no degree of financial independence can change that.
Less Money, More Problems?
Walking away from a well-paid career is always a challenge.
There’s the natural desire to get our two children off to a great start in life. The 16 or so years before they are ready to live independently will likely present unforeseen expenditures.
We can either account for these things by increasing our FIRE number – or by staying in employment for longer. At the end of the day, the two things are equivalent.
We’ve also got two sets of aging parents. Given everything they’ve done for us, we would like to be able to step up and take care of them if need be. Top up the FIRE number yet again…
And while everyone talks about spending less in retirement, what if I actually end up spending more?
Over the years, I have found that being an investment banker actually helps me live well below my means.
I don’t feel the pressure to own a car. I rocked an iPhone 6 for so long that it literally died on me one day. You won’t find any monogrammed shirts in my closet.
Partially, it might be because I am a pretty low-key person.
But what if it also has something to do with the fact that people know that I can easily afford all of these things. I just choose not to.
We often underestimate how much we change throughout our lives. For all I know, I may well be pressured to spend more money once I’m out of the game – just to continue fitting into my current social circle.
My grandfather left his little village behind and used sheer willpower and hard work to build a new life for himself in a big city. He enjoyed life, but he also worked well into his 60s and passed on not long thereafter.
My parents, who led a relatively comfortable lifestyle (partially thanks to my grandfather), took massive risks and left everything behind to emigrate to a new country.
Despite long being able to retire, they keep working to this day.
How will my decision to retire around the age of 40 fit into the family narrative? How will I feel being the person who stopped early, trading our our family’s progress for early retirement?
The beauty of not coming from a wealthy family is the ability to live your own life. Unlike some people I know, I don’t have to worry about being cut out of the inheritance if I don’t toe the party line.
And yet, as many first-generation immigrants will attest, I am not a free man. The immigrant ethos of hard work, sacrifice, and parental approval hangs above my head to this day.
Given it’s not gone away in four decades, I doubt it’s going away anytime soon.
Despite what some media articles would like you to believe, investment bankers aren’t a bunch of scammers walking around looking for their next victim.
On the contrary, the fundamental premise of the job is connecting capital with the most productive investment opportunities – whether in the form of debt/equity financing or strategic M&A.
Over the years, I’ve built up great relationships helping clients work through some of the most fundamental challenges facing their business.
It may take some round-the-clock effort, but it sure feels rewarding. More importantly, it also keeps me mentally sharp.
Not Easy Street by a stretch, but as Pete Barton says in one of my favourite books:
Staying on a track can kill, one easy day at a time.
There’s no earth-shattering revelation at the end of this post. I got off the tube, walked home, had dinner with my wife, spent the weekend mixing up work and play.
Come Sunday, I was back on the road. As it turned out, it was my last business trip for a long time.
It’s now been more than two years since that introspective tube ride of mine. We live in a totally different world, and I’m happy to say I no longer do nearly as much travel as I used to.
As far as the other questions?
Money is slowly being solved, though I do have a pretty ambitious “number”. I’m also confident of my ability to find intellectual stimulation once I leave banking behind.
Shaking off the chains of social status and breaking the family narrative may take a bit more work still.
In other words, the journey continues – but at least I’m being honest with myself. And that just might be the most important thing of all.
About Banker On Fire
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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.
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