I Retired at 34 and Had to Go Back to Work: The Hidden Costs of Early Retirement

The quick scan: Thursday delivered a triumphant finish to the week with the S&P 500 surging 0.8% to a fresh record close at 6,502.08, while the Dow gained 350 points (0.8%) and the NASDAQ climbed 1% as labour market data kept rate cut expectations intact. The market's record-setting performance perfectly mirrors today's lifestyle theme about early retirement planning—just as markets reward patience and strategic timing, successful retirement requires careful planning, realistic expectations, and the wisdom to adapt when circumstances change.

• S&P 500: Soared 0.8% to record close of 6,502.08 as investors celebrated labour data that supports Fed rate cut expectations without signalling economic weakness
• Dow Jones: Surged 350 points (0.8%) to 45,621.29, coming within 0.03% of its own record close as traditional sectors joined the rally
• NASDAQ: Advanced 1% to 21,497.31 as tech stocks rebounded strongly on optimism about lower borrowing costs ahead

What's driving it: Labour market data showing continued cooling without collapse supported expectations for Federal Reserve rate cuts, while strong corporate earnings and economic resilience fuelled the broad-based rally.

Bottom line: Thursday's record-setting performance demonstrates the power of patience and strategic positioning—themes that resonate perfectly with today's early retirement story about the importance of timing, planning, and learning from mistakes in pursuit of financial independence.

The $1 Million Early Retirement Mistake: What Sam Dogen Wishes He'd Done Differently

The scoop: Sam Dogen retired at 34 in 2012, lived the FIRE dream for over a decade, then had to return to work after buying an expensive house that left him cash-poor and anxious about his family's financial security. His candid reflection reveals the hidden costs of early retirement: working just five more years during the 2012-2017 bull market could have generated an extra $1 million in savings and $40,000 more in annual passive income. For L-Plate retirees planning their timeline, Dogen's story is a masterclass in the psychology of financial security and the delicate balance between freedom and peace of mind.

The wake-up call

Picture the FIRE movement's poster child: 34 years old, financially independent, walking away from a high-stress finance career to live off passive income. For over a decade, Sam Dogen seemed to have cracked the code, building a successful blog and enjoying financial freedom.

Then reality hit. In 2023, Dogen bought an expensive San Francisco home he admits he didn't need. His passive income dropped from $380,000 to $230,000 annually. The man who preached financial independence found himself house-rich but cash-poor, experiencing "intense fear" about caring for his family.

This isn't about early retirement failure—it's about the psychological complexity of financial security and the hidden costs of major life decisions. Dogen's experience reveals uncomfortable truths: the emotional toll of reduced income, the challenge of maintaining lifestyle expectations, and the reality that even well-planned early retirement can feel precarious when circumstances change.

The million-dollar timing lesson

Dogen's biggest regret isn't retiring early—it's retiring too early. Working just five more years, from 2012 to 2017, could have fundamentally changed his trajectory. Those years coincided with one of history's strongest bull markets.

"If I had worked longer, I probably would've been able to save and invest an extra $1 million," he reflects. "That could've generated $40,000 more in passive income at a 4% return rate."

This timing insight is crucial for L-Plate retirees. The difference between retiring at 55 versus 60 isn't just five years of salary—it's five years of compound growth during potentially favourable market conditions, plus the psychological security of a larger financial cushion.

The psychology of financial security

Despite having substantial assets, the reduction from $380,000 to $230,000 annually triggered intense anxiety. "The fear was intense," Dogen admits. "It's psychological, like a loss of identity or purpose. One of the biggest risks as an early retiree is that you can never get a job again."

This psychological dimension is often overlooked in FIRE discussions. Financial independence isn't just about having enough money—it's about feeling secure enough to maintain your desired lifestyle. For many retirees, the gap between "enough" and "secure" can be surprisingly large.

Dogen returned to work part-time at a FinTech start-up, proving he could still earn income after 12 years away. After four months, he quit again—remembering why he retired: "unnecessary meetings, micromanagement, and office politics."

The children factor

Having children fundamentally changed Dogen's relationship with money and security. "Maybe I'm technically poorer than before because I retired early, but soul-wise, I'm richer," he explains. "When I worked 60 hours a week and was so stressed, it was hard to even think about having children."

However, parenthood intensified his desire for financial security: "Since I decided to have children, the desire for money, status, and power for my children became huge." This creates what he calls a "really tough combination"—wanting to be present while providing maximum financial security.

The 50% income test

Dogen's most practical advice: anyone considering retirement should try living on 50% to 80% less income for six months to a year while still working.

"The security of active income, retirement benefits, and health benefits will remain, but this will show whether retirement is possible," he explains. "If the desired lifestyle can't be sustained, it's probably necessary to save, invest, and work more."

This test reveals whether retirement budget expectations are realistic, helps identify expense reduction areas, and provides psychological preparation for income reduction.

The lifestyle inflation trap

Dogen's expensive house purchase illustrates a common trap: lifestyle inflation that outpaces passive income growth. Despite substantial assets, the desire for a nicer home created cash flow problems that threatened his security.

This highlights the crucial distinction between net worth and cash flow in retirement. You can be "wealthy" on paper while feeling financially stressed if passive income doesn't support your desired lifestyle. The lesson: carefully consider ongoing cash flow implications of major purchases, even when technically affordable.

Strategic exit planning

Rather than simply quitting, Dogen recommends negotiating good severance packages to provide financial cushions during retirement transitions. "If you can do these two things, you will have a financial cushion to help during your transition and won't rush back into the job market."

Lessons for all retirees

While focused on early retirement, Dogen's insights apply to traditional retirement planning: the psychology of financial security, importance of testing retirement budgets, and planning for lifestyle changes are relevant regardless of retirement age.

His story illustrates that retirement planning requires ongoing adaptation as circumstances change. The "perfect" plan doesn't exist, but learning from others' experiences helps make better decisions and avoid common pitfalls.

Actionable Takeaways for L-Plate Retirees:

• Test your retirement budget before retiring: Live on 50-80% less income for 6-12 months while still working to see if your retirement lifestyle expectations match your financial reality.

• Consider working 3-5 more years during bull markets: If you're retirement-eligible during strong market performance, the additional savings and compound growth could significantly improve your long-term financial security.

• Plan for the psychological aspects of retirement: Beyond financial planning, consider how you'll replace the identity, community, and purpose that work provides through volunteer activities, consulting, or creative projects.

• Negotiate a strategic exit from your career: Instead of simply quitting, explore severance packages or early retirement offers that provide financial cushions and smoother transitions to retirement life.

• Maintain cash flow focus over net worth: Ensure your passive income can support your desired lifestyle, not just your asset accumulation goals, to avoid becoming "house-rich but cash-poor."

• Build larger financial cushions than you think you need: The psychological security of having "more than enough" money can be as important as having "enough" for maintaining peace of mind in retirement.

• Factor in major life changes: Consider how children, health issues, or family responsibilities might change your financial needs and plan accordingly with flexible retirement strategies.

• Keep skills marketable even in retirement: Maintain professional networks and skills that could allow you to return to work if needed, providing both income potential and psychological security.

Your Turn:
Sam Dogen's early retirement journey offers sobering insights about the gap between FIRE dreams and retirement reality:
Have you ever considered early retirement, or does the idea of leaving work before traditional retirement age appeal to you? What aspects of Dogen's experience resonate most with your own retirement planning concerns?
What role does the psychological aspect of financial security play in your retirement planning? Is there a difference between having "enough" money and feeling "secure" enough to retire comfortably?
How important is maintaining the option to return to work in your retirement planning? Would knowing you could earn income again if needed change how much you feel you need to save for retirement?
If you had to live on 50-80% less income for a year, what changes would you need to make to your current lifestyle? How might this exercise change your retirement timeline or savings goals?

The L-Plate Retiree community includes people at various stages of retirement planning—share your thoughts on the balance between financial security and retirement timing. Your perspective could help fellow retirees navigate the complex decisions around when and how to transition from working life to retirement.