A Year of Being (Mostly) Retired
One year ago today, I retired as a partner at McKinsey & Company. My colleagues’ reactions were mixed. Most were excited, but a sizable contingent asked, “WTF are you doing?” It took more than two decades to build my career, and I was walking away to do nothing in particular.
If I’m being honest, I had no idea how this year would unfold. Would I get bored? Would I struggle to keep up with AI advancements? Would people still talk to me?
Most of my concerns were overblown. I’ve been busy. I know more about AI today than I did a year ago. Not everybody wants to talk to me, and that’s fine. I know who spends time with me because they like me and who did it because I had a McKinsey logo on my business card.
I’m writing this article for anybody seeking an alternative to the traditional career trajectory. I enjoyed my work but was exhausted by the demands of working in an organization. I made decent money but had little time to enjoy it. Other people controlled my time and attention in ways that didn’t feel great for my mental health. I was successful…and restless.
I realize the path I describe isn’t open to everybody. I’m financially secure. I have a skill set that translates well to part-time work. I have access to affordable health care. My situation is unique in many ways.
That said, I’m convinced most people wait too long to retire. I’ve freed up at least ten years in the prime of my life. I’m still working through the details, but I have no regrets.
Slow Motion Retirement
When people ask what I do today, I say I’m “mostly retired.” It’s easier than explaining all the convoluted ways I spend my time. I use the “mostly” modifier because I still earn income.
I didn’t save enough money to guarantee I’d never have to work again. I’m 45 years old. If the stock market returns what it has historically, I’ll die with money in the bank even if I don’t earn another dime. If returns suck, I’ll run out of cash when everybody else is retiring. The easiest way to ensure financial security is to cover my expenses so I don’t have to dip into savings for another decade or two.
Why do I insist on saying I’m mostly retired? Isn’t what I’m describing self-employment? It’s all about how I earn my money and spend my time.
Let’s start with the money. My income this year will be 31% of what it was in my last full year as a McKinsey partner. That was enough to cover our family’s annual expenses. We didn’t add to our savings. We also didn’t dip into our retirement funds. Our nest egg was given one additional year to grow.
Unsurprisingly, most of my earnings came from consulting and advisory services. I worked on strategy, operations, and technology projects with half a dozen clients. The shortest project was an hour, and the longest was a few weeks.
I didn’t actively seek work. I spent time with people I like talking about topics that interest me. I provided a proposal if the conversations reached a point where I was asked to dedicate time. To my surprise, most people took me up on my offers.
The rest of my income came primarily from active trading. I keep most of my money in low-cost, passive index funds; occasionally, I have conviction about a specific opportunity. I was prohibited from trading individual stocks at McKinsey regardless of whether I had inside information. I’m no longer subject to those restrictions.
With a few small trades, I boosted my passive investment returns by 1.5 percentage points this year. It’s not much in the grand scheme, but it was another opportunity to diversify my income. I don’t know if I’ll make more trades in the future, but I like having the freedom to do so.
My final source of income was writing. I published a book called Artificially Human and several articles on automation and AI. The financial returns were laughably small, but I love the writing process. This is the first time in my career that I’ve had the mental space to organize my thoughts and ideas. My thinking is much clearer today than when I worked full-time.
As you might expect, earning less income took fewer hours. My working hours were down 70 percent this year, about the same as my income. That means my hourly earnings were about the same as my last full year in consulting.
However, half of my working hours were dedicated to writing. I would have done that for free (and mostly did). My consulting and advisory hours were down a whopping 84 percent. That means my hourly rate for consulting and advisory work went up!
How did I earn more per hour as an independent contractor than a partner at McKinsey? I cut out the stuff clients don’t care about. I spent zero time on development because I wasn’t looking for work. I charged a daily rate that kept negotiations simple. I wrote memos instead of churning out PowerPoint decks. I stripped consulting down to its most basic form.
Will this model work for another 10+ years? I’m not sure, but I’ve already solved for what was arguably the most challenging year. I’m confident that I can figure out the rest as I go.
I’m technically self-employed, but it doesn’t feel that way. I freed up nearly 1,700 hours this year. How I spent those hours makes this feel more like retirement than self-employment.
Money is Time
I made a conscious decision to trade money for time. I gave up 69 percent of my income for control over my time. Let’s see where that time went.
The first thing I did was sleep longer (31 percent). I spent 22 years feeling perpetually exhausted. I worked long hours and traveled constantly. I now sleep eight hours almost every night. My sleep tracking app used to scold me for sleep quality scores below 70 percent. Now, my scores rarely dip below 90 percent.
The next largest category was more time with family and friends (21 and 17 percent, respectively). I’m available to grab lunch with my older daughter, who lives downtown. I’m free to ride with my younger daughter to school as she learns to drive. Family vacations are no longer planned around my work schedule.
It’s the same story with friends. I have time for coffee and walks with my Chicago friends. I also have time to fly to New York, San Francisco, and other places my friends live. My default answer to “Do you want to…” is almost always “yes.”
The final category is a catch-all for things I do for fun. The “Leisure” bucket (21 percent) includes walking the dogs and playing video games. The “Coding” bucket (6 percent) comprises projects like Paper-to-Podcast. The “Other” bucket (4 percent) covers everything from reading more books to watching more YouTube car reviews.
I didn’t set out with a plan. These allocations reflect hundreds of in-the-moment decisions. There were days when I’d wake up intending to write an article and study neuroscience instead. I generally know what to do each month, but my day-to-day plans are flexible. I spend time on what gives me joy in the moment.
Surprise, Surprise
I didn’t have a plan, but I did prepare. I made a “more of / less of” list to guide where I spent time. I scheduled trips to cities where I have friends. I jotted down ideas for projects and articles.
Despite my preparation, there were a few surprises along the way. Most were positive, but I’ll start with two that made me anxious.
When I was working for McKinsey, each day was carefully planned. I knew exactly what I would be doing at 10 a.m. and what needed to be done before bed. My days were predictably hectic.
After I left McKinsey, my days became unpredictably serene. I had many things to do, but nothing compelled me to do them. It was unsettling to have so much unstructured time. Fortunately, this was an easy problem to solve.
When I worked full-time, I hated to-do lists. My priorities constantly changed, and I rarely checked off anything but the urgent items. My to-do list constantly reminded me of the important (but not urgent) tasks I failed to complete each day.
Now, almost nothing in my life is urgent. That means I get to concentrate on tasks I consider important. Some of those are mundane, like picking up dog poop from the yard every few days. Others are exciting, like building an AI system to analyze corporate sustainability reports. I now add everything to my to-do lists and assign due dates. That small change added just the right amount of structure to my days.
The other unsettling surprise was how small my world became. I was no longer traveling each week. I spent every day in the same city and the same coffee shops. One reason I love Chicago and the suburb where I live is the feeling of coming home after being somewhere else.
Luckily, this was another easy fix. I now make it a point to travel at least once a month. Sometimes, the trips are short, like visiting my friend in Wisconsin for a few days. Other times, they’re longer, like the road trip I took with the family out West this summer. These trips made my world seem large again and reminded me of how much I love where I live.
The other surprises were all positive. I’m enjoying my editorial freedom more than I expected. Writing in your own voice about topics that interest you is liberating. Nothing prohibited me from writing articles like this in the past, but I constantly had to consider how my writing might be misinterpreted. The last thing I wanted was a headache at work because of something I’d published online.
Another surprise is how many new friends I’ve made. I didn’t realize how much my job shaped my social circle. I consider many of my former colleagues and clients friends and keep in touch with them. That said, I’ve made several new friends this year. It’s hard to imagine having the time to invest in those new friendships had I stayed with McKinsey.
Finally, I’ve been shocked by something that should have been obvious to somebody with an M.B.A. degree and an Economics concentration. It turns out pricing is kind of important. Let me explain.
When I was at McKinsey, the price of my time was fixed. It didn’t matter which clients I served or which projects I did. The fees were the same. That created a disconnect between how much I valued my time and the price others paid for it.
Now, I set the price of my time. There are things that I’ll do for free. There are other things I’ll do for a discounted fee. Then, there are things that I’ll only do if I’m paid handsomely. The result is that I spend more time on work I enjoy (e.g., supporting The Peoples Music School) and am paid well when doing stressful work (e.g., operations consulting).
In hindsight, these things seem obvious. I’m sure there’s more I could have done to prepare, but the surprises along the way were part of what made this year so exciting.
Disembarking Gracefully
I’m not exactly in a position to advise others on retirement planning. Plenty of thoughtful books, podcasts, and articles on the topic exist.
With that disclaimer, I wanted to end this post by sharing a few tips based on my experience. These may not all apply to your situation, but I hope a few people find them helpful.
First, it helps to have a margin of safety between your current earnings and your annual burn rate. My gross salary was about five times what it cost my family to live. I’ve been in the same house for 16 years. I fly economy and stay at cheap hotels. I buy clothes on clearance. I never adjusted my lifestyle to my salary.
That’s not to say I skimp on everything. I did a gut rehab of my house a few years ago. I have a nice weekend car. I own a few luxury watches. However, the money required to sustain my lifestyle is substantially below my earning potential.
Several friends earn more than me but cannot abandon their full-time jobs. They save substantial sums each year, but their margin of safety is closer to 2:1 instead of 5:1. If they stopped working, they’d run out of cash in a hurry.
I’m not sure what the right margin of safety is for financial independence, but I suspect it’s around 4:1. Most people could easily replace 25 percent of their income by working a fraction of the hours. That cushion gave me peace of mind to make the leap.
My second piece of advice is to ensure you’re running toward something rather than away from something. I love playing with AI technologies and diving into topics like neuroscience. I couldn’t wait to walk my dogs every morning and watch the sunrise. I was eager to spend more time with my family.
There were things I disliked about my job. There were days when I wanted to escape my responsibilities and certain petulant colleagues. I don’t think that’s a reason to retire.
Yes, the bliss you feel after leaving is sublime. However, that bliss can quickly give way to anxiousness. Did I make the right decision? What do I do now?
I’ve seen this play out with a couple of friends. I’m confident they’ll find something to energize them, but it’s easier to know what you want to do before pulling the rip cord. Running toward something implies you have a destination. Running away from something suggests you might be lost once you stop running.
That brings me to my final advice, given to me by a friend. Do nothing related to your full-time career for at least a year. I was forced into this situation by the McKinsey transition process. I had nine months where I wasn’t doing work for the firm but was prohibited from earning outside income. I used that time to write a book.
I’ve heard similar advice from others who found happiness after leaving their full-time jobs. I suspect there are two factors at play. First, stepping away makes you appreciate what you like about your job. After not doing it for a year, I missed consulting. Second, it breaks unhealthy habits. That’s an essential part of enjoying your newfound freedom.
Final Thoughts
My father passed away when I was 15 years old. He gave lots of advice that turned out to be terrible. However, one of his mantras was, “Don’t work for anybody.” He worked for a few companies before leaving to start his own business. It never grew into anything substantial, but it generated enough income for him to pay the bills and lead a comfortable life.
It took me 22 years to make the leap. I did so in a better financial position and for different reasons than my father. However, after a year, I see why he insisted on me working for myself. You don’t realize how much of your life is dictated by your employer until you leave. I maintained a better work-life balance than most people, and I still feel massively better today than I did a year ago.
It’s not the extra time that matters. It’s the agency. This was the first year of my life where I completely controlled my time and attention. It was glorious. If you can chart a path to being mostly retired sooner than fully retired, I highly recommend it. You probably don’t have to wait as long as you think.
