Early FI – It’s Getting More and More Difficult…

Early FI is the ultimate dream… It’s something that has universal appeal and everyone wants it…

But as the years go by, I’m learning and experiencing first-hand just how tough and arduous a task accomplishing that wonderful end goal is becoming…. Right now, I’m back in the Bay Area, and I’m astounded on a daily basis just trying to grasp how expensive everything has gotten in such a short period of time… You know, when I walked away from my job for good in early 2016, a six figure salary in the $130-150k/year range used to be pretty impressive…

These days?

I’m hearing on a regular basis from some of my former colleagues and friends that they are now pulling in north of $250k/year… In some instances, $300k/year is deemed a “low ball” offer…


That’s really, really crazy…

But I guess I’m not too surprised since the price of everything has gone up so much as well… I mean, just take housing for starters where $1 million can barely even afford you a shack in the Bay Area…

Ok, I’m exaggerating a bit… $1 million can get you something a little nicer than a “shack”…

But not by much…

$1 million for 1,021 sq. ft?

Get outta here…

Price inflation is unreal… and not just in the Bay Area… but in many, many parts of the world (HK seems worse to me than even the Bay Area!).

It’s the sign of the times, I suppose…

For a guy like me, I have to be realistic… It’s a very humbling experience, but I have realized (and accepted) awhile ago that long-term, I’ll never be able to afford to hack it in the Bay Area… No freekin way!

Although I haven’t gotten into specific details on this blog just yet, I’ve already started planning for my future… and realistically speaking, I think I will have no choice but to move to a much cheaper location…

I guess it’s not altogether a bad thing, since I actually really enjoy being in Asia and wouldn’t mind living there long-term, anyway…

Geographic Arbitrage.

It’s becoming increasingly important in this day and age, and I think it’s a strategy that more and more early FI enthusiasts will find themselves utilizing in the future. Granted, it’s definitely not for everyone and it’s probably even more a contrarian action contained within what is already very much a contrarian lifestyle in the first place…

You know, I’ll be the very first person to admit to you all that I was fortunate beyond belief to be able to start my career during the Depths of Despair, being able to snatch up many high quality investments at bargain basement prices (from let’s say 2009-2014)… Really, you don’t have to tell me twice, I know full well that I’m lucky as opposed to being skilled as an investor.

For me, it was all about being in the right place at the right time.

I made $1 million in real estate due to market timing.

Next, I made another $1 million in mining stocks due to market timing, yet again…

Buying during the Depths of Despair can do absolute wonders in helping someone turbocharge their early FI progress.

It’s the ultimate of shortcuts…

Well, a lot of people don’t believe in shortcuts… They think it’s all bs… They think I’m all bs…

When I look in the mirror though, I mean, I don’t really know what else to say?

I was only able to accomplish what I did by taking shortcuts (opportunities) that presented themselves to me… That’s the honest truth… That’s why I focus so much of this blog’s content on trying to at least pay attention, identify, and monitor these type of “shortcut” opportunities.

These opportunities (speculations) don’t always pan out, obviously… and it for sure is a high-risk game…

People want it all, but that’s just not being realistic… How can you expect to make astronomical returns if you’re not willing to take on an iota of risk?!?

That’s Fantasyland… not reality…

Further, if I’ve learned anything along the way, it’s that when you’re making the “right” decisions to help your early FI journey the most, it will often feel like the loneliest and darkest of times…

You can feel like you’re essentially going at it by your lonesome… on a barren road…

But then, finally…

When the turn happens, it’s almost like with a blink of an eye, you can wake up one morning and not be able to believe all the progress you were able to make in such a short period of time…

Why am I bringing all this up?

Because when I look around me and I see just how insanely expensive everything is getting, I have to be objective about things…

Early FI is an aberration… An anomaly… It’s not easy at all, and there’s a very good reason why so few people ever achieve it…

As lucky as I’ve gotten, I still feel the need to have to get creative and perhaps locate myself to a place like the Philippines to reduce my cost of living (COL) enough to make early FI work long-term…

That’s how difficult early FI is!

And I was blessed to be able to catch lightning in a bottle twice!

I really hate to be the bearer of bad news, but over the years, things have only gotten significantly more difficult… If the odds were stacked against us before, it’s even more of an uphill battle today.

It’s not all doom and gloom though…

I mean, we just have to adapt to the times, and think more outside the box…

Conventional approaches and ways of doing things, I just really don’t think they will be all that effective moving forward… I mean, barring a severe market crash, where are the “buying opportunities of a lifetime” going to come from, exactly?

Don’t get me wrong, conventional methods will still work wonders for helping someone achieve FI… but early FI? Retiring before the age of 40? That takes a lot of luck, new ways of thinking to get there…

From what I’m hearing from some peers, they feel you need at a minimum $3 million just to live “ok” in the Bay Area these days…

Even if you make a killing at your day job, saving up $3 million “brick by brick” is no small task for most people…

Does anyone really believe that by investing in a boatload of AT&T (T) shares on a regular basis (e.g. every paycheck), you’ll be able to generate robust enough returns to be able to retire early?

Wait a minute… You’re telling me…

You want to achieve rockstar status by following the status quo and doing EXACTLY the same thing that millions upon millions of people are already doing?

It makes for a great story, sure, but I’m sorry, I just don’t see it happening…

Expecting to obtain extraordinary results by doing ordinary things is delusional thinking… It makes no sense.

I’m not sure how anyone can convince me that you can get to early FI in record time without adopting at least SOME unconventional strategies like Geographic Arbitrage… or becoming a YouTube sensation, a dropshipping expert, etc… Or by making outsized returns through more speculative investments…

Just my opinion, and I know that I’m a black sheep (pariah) in the early FI community with my outlandish viewpoints…

But this is just straight up what my gut instincts are telling me…

I really wish I could just say “buy dividend stocks, index funds, real estate, and you’ll be able to retire in no time!

Easy as pie!

This blog would get way, way, way more traffic, if I did!

But I just can’t…

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georgehpuckJohnJoeWMFI Fighter Recent comment authors
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Hi, the SF Bay Area is one of the hardest places to retire in, so it’s hard to extrapolate finances here to some other place.

I’ve been early retired in the Bay Area for 11 years and see first hand every day how fast price increases are taking place. Movie tickets $16+… restaurant meal for two at a Chinese restaurant $80+, not to mention the crazy increases in health ins premiums every year! All these costs have more than doubled. My home value has increased 200% in 11 years, and my rental properties have increased 250% in just 6 years.

My salary was $190k when I left 11 years ago with ESPP worth another $30k a year. If I were to rejoin the same company, salary would be $300k+ with ESPP worth an additonal $300k a year now (great terms on the ESPP). Not even counting stock options which would be another multiple of the salary…

Don’t know how long I can afford it here either as a retiree, but at least I have a paid off house. Hard to see how to keep up with cost of living increases, don’t think index investing returns enough.


We were lucky and smart to go all in when we did. I could not replicate in the next 20 years what I have in the past 5. Well, I will because of compounding interest, but as you mentioned, the deals are not as plentiful and the up and coming areas are expensive. This is where people start getting mixed up in negative cash flow properties and pray their salary doesn’t disappear.


I’m always intrigued by that 3 million number you pose, in the phillipinies Id think a 1 million nest egg even on a modest 5 percent a year (or less) of returns would have you living well. As long as your willing to leave the USA or very high cost areas, 3 mil would be just icing on the cake :0.

Midwestern Landlord
Midwestern Landlord


You could easily relocate to other parts of the US and be just fine long term. The Bay Area is one of the most expensive places in the country so not exactly a great barometer of how things really are. But as with everything, it comes down to what one wants in life.

Regarding the turnkey real estate investing you talked about in previous posts, I agree that relatively low quality real estate investments that are located in low growth areas are not the greatest investments. One major factor is third party management that will never manage the property as well as an owner would (and management fees reduce the profits as well). I focus on Class A properties that I manage myself (albeit in a relatively low growth area).


Long time lurker of your blog and a fellow SF bay area retiree here, retired at 38 in 2013 after a couple of fortunate startup exits and real estate investments. I am curious about the 3 mil dollar figure you quoted, since most of my friends recently mentioned that they need 10 mil to retire comfortably, or a minimum of 5 mil to live okay in the bay area. Most of these folks work in the FANG companies, so perhaps their expectations are just as inflated as their compensations. *shrug* That being said, the chase for wealth and financial success is so prevalent in the bay area, reaching early FI and then calling it quits is definitely not the norm.

I agree with Joe though, once you have a family, it becomes a lot harder to live a nomadic lifestyle and some of the cheaper locales in Asia might not be as preferable for raising a family.


Hi WM, looks like we are in similar boats. I agree that most deca- and centi- millionaires around here have no interest in retiring. They just want to build more products or more companies. And the billionaires love running the companies they already have.

I can see why your friends would feel they need a minimum of 5 million to live ok in the Bay Area, it’s all relative to housing prices. If you are set to early retire, you probably want your home to be less than 20% to 25% of net worth at most, to leave enough in liquid assets to support the cost of living.

What do you do for health insurance? ACA? My ACA health insurance runs about $20k a year for a family of 3.


I am living in the Bay area and on the path to FI (in a year hopefully) and always assumed that ACA premiums were subsidized if your “income” was below $40k. I got an annual quote of $5K in premiums for 3. Do you mind sharing what is your level of income in retirement and how much is passive v/s active


ACA premiums are subsidized, and your family size is a factor in determining subsidies. I have a family of 3, so the “income” level is around $80k (I only checked the 1st year I signed up for it). The $40k limit is probably for a single person? The subsidy is a step function, one dollar over the income level and you get $0 in subsidy.

My income in retirement is 100% passive and is mostly up to me. I decide how much capital gains to take each year. However, I have built up a rental property portfolio, real estate loan portfolio, fixed income, and dividend paying stocks, that throw off a base passive income of at least $150k a year. So even if I don’t sell any stock (which I have to for asset allocation purposes), I’m already way above the subsidy requirement. I still have a tax rate close to 40% due to Obamacare tax, CA income taxes, and AMT.

Are you able to live on income less than $40k in the Bay Area? How, especially with a kid?


$40K/year is my projected FI number for myself and parents with a paid off house. No kids so maybe that is why expenses are lower I guess. Yes, ACA subsidies are a function of family size and income. And when pricing I got $5K annual premiums for a decent Silver plan.


Hi Joe,

We are getting insurance through my wife’s job. Although ACA would be the go to choice if she decides to quit and join me for early retirement. Similar to your situation, our passive income easily exceeds the maximum level allowed for subsidy, I think the annual insurance cost is close to 18k for a family of 2 when I last priced it.


The Bay area is an outlier, its an extreme fed on the high tech Google, Apple and other tech giants.

You can find a lot lower cost of living in the Midwest as an example.

Here is a 1,200 sqft house for $42K near Bradley University.