Reader Q&A #3: Your Financial Independence Questions Answered
Max Responds to the Readers
Note: these questions are edited for clarity and brevity
What do readers want to know?
The questions keep coming, and I keep learning what's really stopping people from achieving financial independence. This week's batch reveals some fundamental misconceptions about risk and safety that I want to address head-on.
Question #1
I only invest in Treasury bonds because the first rule of investing is 'never lose money.' You can lose your savings in stocks right when you need them.
My Answer: You're already losing money. You just can't see it happening.
That "first rule of investing" quote gets misused constantly. Warren Buffett said it, but he wasn't talking about avoiding stocks. He was talking about avoiding permanent loss of capital through bad investments.
Here's what's actually happening with your Treasury bond strategy: You're guaranteed to lose purchasing power over time. A 10-year Treasury currently yields around 4.3%. Historical inflation averages about 3.3% since 1914. Your "safe" investment is giving you a real return of about 1% annually.
Meanwhile, you're taking massive opportunity cost risk. The S&P 500 has averaged about 10% annually over the past century, including all crashes, depressions, and bear markets. Someone investing in stocks over 30 years has never lost money in any historical period.
The real risk isn't market volatility. It's running out of money in retirement.
Let's do the math. If you invest $500 monthly for 30 years:
Treasury bonds at 4%: ~$347,000
S&P 500 at 10%: ~$1.13 million
That's a $783,000 difference. Your "safe" strategy just cost you nearly $800,000.
But what about timing?
You're worried about needing money right when stocks are down. Fair concern. Here's how you handle it: Don't put money in stocks that you need within 5 years. Keep 1-2 years of expenses in cash/bonds, then invest the rest for growth.
The safest long-term strategy is accepting short-term volatility to avoid long-term purchasing power risk. Your Treasury bond strategy feels safe but virtually guarantees you'll be poor in retirement.
Question #2
Early retirement is irresponsible and risky. What if your money runs out and you can't pay your bills? It’s always safer to work with a steady paycheck until Social Security.
My Answer: Your job is the risky investment, not financial independence.
You've been conditioned to believe employment equals security, but that's backwards. Let me reframe what's actually risky:
Employment risks you're ignoring:
Layoffs: 40% of Fortune 500 companies from 2000 don't exist today (some estimates say 50%+)
Ageism: Try finding a job at 55 when you've been "optimized out"
Health issues: What happens to your "steady paycheck" when you can't work?
Industry disruption: Ask taxi drivers how Uber affected their "job security"
Single point of failure: 100% of your income depends on one employer's decision
Early retirement isn't about never working again. It's about having options. When you're financially independent:
You can't be fired (you can choose to work)
You can't be age-discriminated against (you don't need the job)
Health problems don't mean financial ruin (you have your own money)
You can take career risks (failure won't destroy you)
"What if the money runs out?" This question assumes you become helpless after leaving your job. You don't. You have skills, experience, and networks. The difference is you can be selective about when and how you use them.
The 4% rule has generally worked through every historical scenario, including retiring right before the Great Depression. (It failed in the late 60s on a 30-year retirement due to high inflation, but I’ll write a post in the future explaining steps you can take to avoid that outcome.) But even if markets failed catastrophically, someone with FI skills can generate income. Someone without savings who loses their job at 55 has no options.
The real question: What's riskier: having $1 million invested and complete control over your time, or having $50,000 in savings and hoping your employer keeps you around until 65?
Employment feels safe because the risk is hidden. Financial independence feels risky because you can see the uncertainty. But visible uncertainty that you control is infinitely safer than invisible risk that someone else controls.
Question 3
I'm 45 and just started taking FI seriously. I have health issues and probably can’t make it to 65. My financial advisor said it’s too late for me to retire early and I don’t know what to do. What are my options?
My Answer: You're not too late, but you need to be more aggressive and creative than someone who started at 25.
The math still works, but the timeline is compressed. If you can achieve a 50% savings rate starting now, you could be financially independent by 60. That's still 5 years earlier than the "normal" retirement age. I know that’s a huge percentage, but as we have previously discussed, compound interest is the magic solution and you don’t have enough of it.
You have advantages that 25-year-olds don't:
Peak earning years: Your 40s and 50s are typically your highest-income decades
Fewer expenses: Kids might be becoming independent, mortgage might be paid down
Clarity: You know what you actually need to be happy (no more lifestyle experimentation)
Experience: You understand what career moves actually generate income
Your late-starter strategies:
Geographic arbitrage: Move to a lower cost area. Cutting expenses by $20,000 annually reduces your FI number by $500,000. This single decision could shave 5+ years off your timeline.
House hacking: Consider renting out rooms in your house. Converting housing from expense to income source accelerates everything.
Aggressive career moves: This isn't the time for safe 3% annual raises. Switch companies, negotiate hard, or start consulting. Every $10,000 income increase dramatically shortens your timeline.
Lean FIRE first: Target $600,000-800,000 for a lean version of FI, then build from there. You can always increase your target later. If your health forces you out of the workforce, it’s much better to have something saved than nothing.
The truth: Most people discover FI principles in their 40s. You're not that far behind. You're right on time. The people who "started at 25" often read a blog, but didn't get serious until their 30s anyway.
Don't let perfect be the enemy of good. Even if you only achieve partial FI by 60, that's infinitely better than working until 67 with no savings.
Question 4
I want to help my kids avoid student loans, but I also want to retire early. How do I balance saving for FI versus saving for their college?
My Answer: Your oxygen mask first, then your children's.
The brutal truth: You can't borrow for retirement, but your kids can borrow for college.
This feels heartless, but it's actually the most responsible approach. A parent who sacrifices their FI to pay for college often becomes a financial burden on their adult children later. You're not helping them by creating future dependency.
The math behind priorities: Your FI investments compound for your entire timeline. College savings only compound until your child turns 18.
The psychology flip: Instead of "I'm being selfish by prioritizing retirement," reframe it as "I'm being responsible by ensuring I never become a financial burden on my children."
Your kids benefit more from having financially independent parents than from graduating college debt-free with financially dependent parents.
Question 5
According to you, I've reached my FI number, but there is no way I could quit my job. The thought absolutely terrifies me. Will this go away?
My Answer: You're never "ready" in the sense that all fear disappears, but you can be prepared.
This fear is completely normal. You've spent decades conditioning yourself to equate employment with security. Undoing that psychological programming takes time, even when the math clearly shows you're safe.
The fear isn't really about money running out. It's about identity, purpose, and social acceptance. "What will I do with my time?" "What will people think?" "Who am I if I'm not my job title?"
Strategies to build confidence:
Trial runs: Take extended unpaid leave if possible. Live on your FI budget for 3-6 months while still employed. This proves the money works and gives you practice with unstructured time.
One more year syndrome: This is real, but set a firm deadline. "I will work exactly one more year, then I'm done regardless of market conditions." Otherwise, you'll find excuses forever.
Gradual transition: Consider reducing to part-time or consulting. This provides psychological comfort while proving you don't need full-time income.
Stress test your numbers: Model scenarios where markets drop 30% immediately after you retire. If you're still okay (and with proper FI planning, you should be), the fear is emotional, not mathematical.
Build your post-work identity: Start volunteering, pursuing hobbies, or building projects while still employed. This gives you purpose beyond your paycheck.
The biggest risk isn't running out of money. It's wasting years of your life because you're afraid to use the financial freedom you've already earned.
Signs you're actually ready:
You've maintained your FI number for 12+ months through market volatility
You have 1-2 years of expenses in cash beyond your invested FI number
You have a realistic budget based on actual spending, not estimates
You have activities/interests that excite you beyond work
You can articulate what you'll do with your time
Remember: You can always go back to work if needed. Financial independence gives you the luxury of being extremely selective about that work. The worst case scenario isn't destitution. It's having to take a job you actually want.
The people who achieve FI and never pull the trigger often realize later that they wasted their healthiest, most energetic years afraid to live the life they'd already earned.
The Common Thread
Notice the pattern in these questions? They're all about fear disguised as logic. (Apologies if I’m wrong about this!)
Fear of market volatility disguised as "prudent investing"
Fear of uncertainty disguised as "responsible employment"
Fear of starting late disguised as "realistic expectations"
Fear of prioritization disguised as "good parenting"
Fear of change disguised as "financial caution"
The people who achieve FI aren't fearless. They're people who act despite their fears because they understand the bigger risks of inaction.
Every day you delay starting, every dollar you don't invest, every year you work past FI…those are all risks too. Perhaps even bigger risks than the ones you're trying to avoid.
Here's to facing your fears with math and action,
Max
Remember: Perfect safety doesn't exist. But you can choose which risks to take: the visible ones you control, or the hidden ones controlled by others.