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Over the last couple of weeks, I had the opportunity to read Tanja Hester’s book “Work Optional – Retire Early the Non-Penny-Pinching Way.”  I’ve read a few of Tanja’s posts on her popular “Our Next Life” blog as I’ve researched FIRE topics in the past and her title “Work Optional” drew me in as I wanted to get her take on work. I’ve struggled with defining early retirement from the more traditional “never work another day in your life” approach vs. some hybrid model, so the title alone was appealing. But even better, I found a much more comprehensive book under the cover. I have to say, this is one of the best FIRE resources that I’ve come across.

Start With the Why

First, she starts off with the WHY, which I think is where we all must start. For me, personally, the idea of FIRE didn’t come alive until we had our why and what. In the first part of her book, she proposes a number of questions to home in on your own personal what and why, which I think is the perfect way to frame the topic.

When wrestling with your own definitions, I love some of the gems she shares like:

“Instead of using our money to buy us more things and treat ourselves to cope with the stress of working – as the standard script tells us we’re supposed to – we can use that money to buy our way out of the standard work system altogether.”

Tanja Hester

(Which I found to be a very Vicki Robin-esque concept, but well said.) 

Weaving her own story into the factual information she’s providing not from a “we’re going to do it someday” position but from direct experience of actually doing it was invaluable here. And lest you think it came from a windfall without hard work or sacrifice, she describes in a very humble way, how she and her husband have been able to pursue their current exceptional lifestyle having got there through non-exceptional means. Their 10-year plan turned 6-year plan has led to their current work-optional life which I found inspiring. All this while working through the clarity and inspiration (the WHY) that the cloud of a medical condition can bring hovering over your head (my case Cancer, her case genetic disease and her husband’s auto-immune disease).

Three Categories of Early Retirement

I really appreciated how Tanja outlined 3 categories for her ideas of a work-optional lifestyle:

1.  Full early retirement: (financially independent, never need to work for money again, but you’re allowed to if you want to).
2. Semiretirement: (or otherwise known as BaristaFI around here). Only needing to work part-time or in a lower stress, fun, or passion job.
3. Career Intermission(s): (or a mini-retirement or a sabbatical). Saving enough to cover an extended break from your job with the plan to re-enter your career afterwards.

When offering some guidance into sorting out which of these you might be shooting for, she has a whole chapter on trying to define your work optional life through a series of really tough questions. If you’ve not given much thought to what life might look like after work, I could see this chapter would be pretty challenging. I could see spending a full weekend retreat alone with your thoughts (or with your spouse, if appropriate) might be in order to really do it justice.

Money Mission Statement

Taking this new insight into account you generate a “money mission statement” which, even to me, sounds intimidating. Really, it’s just a process of making sure the things you are spending on are aligned with your vision for your present and future life. In addition, where are the places you most frequently stumble when trying to align those two. Incidentally, one of Tanja’s spending triggers was visiting Target (which is something our monthly budget also experiences).

The Financial Meat

Starting with the why, your mission, and where you stumble, prepares you well for the real meat of the book, which comes in when creating your financial plan to make all this happen. The “How to” of the financial plan aligns very well with what you’ll read elsewhere on this blog: easy stock market investing through simplicity and things you understand (Index Funds), the importance of low fees, rental real estate (not currently part of our plan but could be someday), and the headwind of inflation.  There is also ample and simple discussion of Roth vs. Traditional retirement accounts, HSAs, how to view Social Security, 529’s for kids’ college, and even some advanced techniques to consider like DAFs and the like. She also debunks some common confusing topics like annuities and cash value life insurance. If you read, understand, and follow this single chapter over a long period of time, you’d be well on your well to the work optional life vision you have created for yourself. Chapter-ending checklists will guide you carefully through as you work your way through traditionally difficult topics to act on.

She takes on what are likely your two biggest expenses in early retirement, health care and where you will live. The short version of the healthcare discussion is that, thanks to the affordable care act, premiums don’t have to be insanely expensive as most would have you believe, depending on your income. Although brief, this chapter hits the salient points of the early retirees: healthcare needs, which is one of the questions we are most frequently asked.

The second question we are frequently asked surrounds accessing your retirement funds early, and Hester does a good job of covering the two main ways (SEPP – 72(t)) or Roth Conversion Ladder as well as introducing the Trinity study and the idea of safe withdrawal rates. You could read this chapter and get a summary of essentials that can provide the “how-to” you need. The gift that this book is to you is that Tanja Hester explains it so succinctly that you can read in an afternoon what would take you weeks of searching online articles and blogs to put together yourself.

How Much Do I Need and How Long Will It Take?

If there is a place where this book bogs down it’s when it discusses how to determine how much you need to save for full retirement, semi-retirement, or career intermissions and how long it will take you to get there. The chapter tries to do it all for each of the cases which can be cumbersome, but it does as good a job as most books at the task. I would simply point folks toward the Shockingly Simple Math approach. Use your savings rate to calculate how long to hit 25X your living expenses and leave it there. One thing of particular value in this section, however, is the flow chart for your sequence of saving, which I generally agree with. It’s a nice handy reference that would get you through a stall (which we experienced a few times in our journey). With this chart, you always know where the next dollar you’ve saved should go.

Help With Your Head Game

Tanja’s strength is really getting inside your head with the how-to once you have the book knowledge that puts you on the right intellectual path. This is where she provides value beyond the typical personal finance book. Her insight into the psychology that goes on in each of our heads is one of the things I really appreciated about her approach and that comes to play in a chapter devoted to accelerating your plans. This book will help you improve your mental and emotional game on your way to accomplishing your financial goals so you don’t give up.

Dining Out

As we’re prone to overspend on dining out, I particularly enjoyed Tanja’s ideas in this area (they once spent $1000 on a dinner out in New York and so speak with some authority). We’ve not done that, but a weekly trip (or two) to the brewpub is one of our biggest budget busters. One of the realizations they made on the path to their work optional life was:

“But even with dining, one of our top priorities, we gradually figured out that what we loved about going out to eat was seeing and tasting the artfully created food, and enjoying the ambiance of beautifully designed spaces, and we finally understood that we didn’t need a three-course meal to feel like we’d had a memorable experience. We could dine out much less often and each get an appetizer and single glass of wine, or maybe share an entrée, rather than ordering multiple courses and drinks each.”

They also noted that “by doing it less, each occasion felt more special.” That’s something I look forward to trying out. Now I just need to get Mrs. onFIREfamily to agree on an entrée to split!

Anticipate Splitting Up or Divorce, Really?

The book contains a section titled “Anticipate Splitting Up or Divorce” citing that a third of marriages will end up needing it. It may come to that if we can’t agree on which entrée to split! No. I’m not sure this section was something that was particularly necessary to highlight and my own personal philosophy might have alternatively included a chapter on the importance of being on the same page with your spouse, apologizing early and often, knowing their love language, seeking professional counseling when needed, and highlighting the devastating financial impacts from divorce as a means to caution couples.

Live a Purpose-Filled Life

The books ends with some nuts and bolts down-to-earth how-to’s about when you’re ready to quit your day job and transition to your retirement (financially, relationally, and emotionally). Again, the mental and overall health aspects of this transition are highlighted. There is a final call to live a purpose-filled life which is easy to see can be enabled by following the plans outlined in this book.

Conclusion

Overall, I found this to be a great resource if you’re curious about FIRE or a “Work Optional” lifestyle. I particularly appreciated Tanja’s strengths in writing this book:

• Boiling down a myriad of tough financial topics to the very essentials and discussing them in a concise way.
• Sharing her own story throughout was inspiring.
• Coming at financial topics more from a philosophical, mental, emotional cause/effect approach than purely just the math was enlightening.

I recommend this book if you’ve not read it yet. I got heaps of value from it even though I’d been exposed to most of the financial aspects already. I think even the most seasoned FIRE enthusiast will find something in it to help you optimize your path toward early retirement. Even if you just agree with it all and it reassures you that you’re already on the right track, it’s worth the read. This makes the top 10 list of books I’d recommend!