Transitioning From Employee to Investor

Recently, the topic of early retirement has been brought up on a few different occasions within my social circles. Often, the conversation is brought up in jest, but sometimes I find myself in a group that is openly discussing savings rate or investment strategies. When time comes for me to chime in, my standard approach has been to say I’m saving enough and investing in Vanguard index funds. Short and sweet.

Should people prod deeper, I find myself saying that I am “aggressively” building capital through 1% savings improvements at my current stage in life so that I can transition from being an employee to becoming an investor. Usually, this leads to a significantly more interesting follow up questions than if I were to retire early.

Regardless of whether I say I’m saving for early retirement or saving to become an investor, the end goal is essentially the same. Yet, in my experience, “early retirement,” is usually received as a negative.

I learned early on that, when it comes to most people and talking about retirement, people either don’t care or people become instantly stressed out. The less we know about the state of our own finances and the less thought we’ve put into financial security in our future, the more reluctant we can be to openly discuss it. This is why I prefer to leave my response brief when asked and move on from there.

Since I have been asked directly in recent weeks about a few of my ideas, I felt it necessary to expand on many of the same topics I discussed with some close friends and family members.

Since this blog is still relatively new (having started this year), I still find myself needing to define specific elements of my approach.

When I say “investor”, I don’t picture myself being a stock picker like Warren Buffett. I see it more as, “Where can I invest my time and energy to receive the greatest gain, financially or measured by another yardstick?”

From this perspective, I want to be the greatest investor possible. Nothing is as important to me as optimizing the short amount of time I have here. If it means having a savings rate of 50-70% for 7-10 years so that I can never have to work for money again, then, yes. Sign me up.

I first learned about the concept of early retirement after reading Ben Franklin’s story of retiring at 42. I started using the phrase “early retirement” when I would think about what it would mean to retire before I ended up on the AARP weekly mailing list. I didn’t discuss the idea with people, but I thought to myself, “I want to retire early.”

My definition of early retirement mirrored that of Ben Franklin, which, in this day and age was not relatable. It never really resonated with anyone else either. Generally speaking, when people think of retirement they think of free time, sunny beaches, and cocktails.

Eventually, I stumbled into a great blog run by Brandon over at and the language in my head matured from “early retirement,” to, “financial independence”.

I thought of it as putting my mind to use elsewhere outside of the rat race. I believe I will still want to contribute to and improve my life and the lives of others. The only difference is, I don’t want money to be the deciding factor of what and I can or cannot do.

Financial Independence is the best term to describe this state of personal security. The word independence holds a lot of meaning because it denotes the ability to stand on our own.

If you’re familiar with the writings of Stephen Covey, then you’ll have heard of the three transitional phases we can all go through.

We start off as dependents; we rely on our parents, our families, our teachers, etc. Without these support networks, we would not survive.

As we grow older, we have the capacity to become independent. We can build a lifestyle that supports ourselves. We can develop emotional intelligence and even a high level of intelligence in whatever particular field we pursue.

Lastly, once we reach independence, we can become interdependent. We can leverage our skills and expertise towards a bigger picture.

A quick analogy Stephen Covey uses to demonstrate these phases is as follows: Dependence is when we have 1+1=0. Both individuals lean on each other and nothing can be accomplished. Independence is 1+1=2; two people can live harmoniously together and be happy. Interdependence is viewed as being 1+1=11. The whole becomes bigger than the sum of its parts.

In economic terms, interdependence is reaching the production-possibility frontier, where each individual reaches efficiency with their resources and technology to contribute the greatest utility, or output, to the environment.

With this knowledge in mind, my goal is still to reach independence. After all, I’m still in the dependence stage of my life. My girlfriend and I rely on trading years of our lives so that we can build enough wealth to reach financial independence.

In the grand scheme of things, independence is only one step along a broader path that ends with interdependence.

The transition we dream of is to go from employee to investor, and then onto philanthropist.

Once we reach the point where we have what we need, then anything extra that we produce will be beneficial not for us, but for others we love and care for.

Do you have any goals or plans for once you reach financial independence? Are you still struggling through the dependence stage much like we are?

Master Distiller

33 comments… add one
  • Amanda @ centsiblyrich Jun 1, 2016, 9:01 am

    We stumbled into the FI world a little later than some (mid 30s) and decided to pursue this avenue, even with a late start. We are on track to be FI by age 50. We both like to be productive and enjoy working on projects – our plan is to buy a couple of fixer uppers in retirement and use them as rentals, as we both enjoy DIY and home improvement. Our idea of retirement is probably not what most people would have in mind.

    • Distilled Dollar Jun 2, 2016, 1:58 pm

      That sounds like a great retirement dream! My girlfriend and I have talked about something similar, buying a place with an extra bedroom or two that could use some renovation or even expansion work.

      In the end, at least you have a picture of what retirement looks like and it gives you added motivation to stick with your budget, goals, etc.

  • FinanceSuperhero Jun 1, 2016, 9:24 am

    Your approach to difficult conversations about retirement really resonated with me, Matt. When I find myself in similar situations, I view it as a great opportunity, but as you said, others are so put off by discussing such deeply personal matters. I am going to try your approach next time to see if I can keep the conversation going.

    I would say that the journey toward FI is certainly a struggle for me and Mrs. Superhero. We have a unified view of our goals for retirement, generally-speaking, but our specific goals differ slightly. Fortunately, we have plenty of time to sort this out, but progressing toward 1+1=0 with regard to retirement will likely continue to be a significant undertaking.

    • Distilled Dollar Jun 2, 2016, 2:18 pm

      I’m glad to hear it resonated with you. I think one of the earliest examples I found myself learning a similar concept was when I took my first spin class. I was worried everyone was going to be laughing at my terrible form, but I found everyone was staring at themselves in the mirrors. Similarly, people are so wrapped up in their financial situation that they often don’t have time to care about what others are doing.

      Best of luck on the journey and I’m looking forward to seeing you two progress over time!

  • Jon Jun 1, 2016, 9:27 am

    Matt, I really enjoyed your post and have thought about the same issues of language around early retirement and financial independence for many years. As a former corporate brand manager, I spent a lot of professional life thinking about how word choice affects people and their perceptions. As a classic example, in the U.S., when you die, you may have to pay tax on the net worth that you leave behind. Democrats call this the “estate tax” and Republicans call this the “death tax” – you can see how each party feels about the tax based on the words they choose to use.

    To me, early retirement conjures up images of lounging on the beach, straw hats, hawaiian shirts and an extra twenty pounds around the belly. It may be perceived as lazy and slovenly for a young person. Financial independence on the other hand brings to mind images of shrewd planning, active investing and the sharing of advice – at least to me.

    I’m striving to achieve financial independence, but am not looking forward to retiring in the traditional sense. I will continue to work, but on projects that I enjoy, and will have more freedom to spend my time how I choose. Wake up early and go to the gym, spend the morning writing and then consult with local small businesses or non-profits in the afternoon – sounds like a good day to me!

    • Distilled Dollar Jun 2, 2016, 2:32 pm

      That sounds like a perfect day! Especially with the extra 20 lbs around the belly like you mentioned. Haha

  • Graham - Reverse the Crush Jun 1, 2016, 9:40 am

    Great post Matt!
    You hit on so many key things in this article, but one of the lines that stood out to me was:

    “The less we know about the state of our own finances and the less thought we’ve put into financial security in our future.”

    This is so true and most people would rather put their finances to the back of their mind so it’s easier to keep spending. I’m finding even with myself, I have to stay on top of my finances on a daily basis. Otherwise the spending can get out of control.

    Sounds like an awesome plan you have though, aggressively saving 50-70% for 7-10 years. Thanks for sharing!

    • Distilled Dollar Jun 2, 2016, 2:36 pm

      Yep, we’ve found that the more we can set on autopilot in terms of our finances, then the less room we have to make mistakes. The more mistakes we make, the more we stress about our finances and the less inclined we are to resolve some of the issues. It is a nasty spiral my girlfriend and I find ourselves in sometimes.

      I also have found I have a more successful time tackling one big budget item each month vs tackling them all. This is what has helped me move from saving 15-20% towards saving nearly 50% now. My progress is slower, but at least it sticks after the month is over with, which is helping me push higher in the savings rates. Now I’m confident I can keep this up for another year or two to reach into the high 60s or low 70s.

  • The Green Swan Jun 1, 2016, 10:27 am

    I’m definitely in the dependence stage and would definitely love to spend more of my time helping others as a philanthropist. The day will come eventually.

    And similar to you I’ve always tended to avoid the discussion of early retirement with friends, or at least not get into any specifics of my situation etc. Partly because it is just an evolution for me and everyone’s life goals are different.

    • Distilled Dollar Jun 2, 2016, 2:39 pm

      Yep! Exactly. I have a few friends who prize travel over anything else and so their budget goes to that. We have different priorities and there’s nothing wrong with that. That’s why I can talk about saving money in one sense and we’ll have a great conversation about it…but we know we’re both aiming to take those savings and spend it in different areas (travel for them and FI for me).

  • Apathy Ends Jun 1, 2016, 10:35 am

    I like the evolution of your thoughts finally landing on financial independence instead of “early retirement” – at this stage all I really want is the choice to do what I want – the goal I have worked out to date – not have a traditional job in 10 years, instead be earning through something I have built myself (that goal is subject to a shorter timeline but not a longer one)

    • Distilled Dollar Jun 2, 2016, 3:43 pm

      Early retirement has too much baggage since most people already have a definition of retirement in their head.

      Sounds like we have the same goal! 🙂 We’re aiming at leaving the rat race within about 7-10 years, depending on kids.

  • Alexander @ Cash Flow Diaries Jun 1, 2016, 11:16 am

    Completely agree with you. The word early retirement just doesnt jive well with others. When I try and tell others what I am doing its always either trying to be financially independent or just financially free. They seem to take that in a better way even though its really the same thing as early retirement. LOL.

    Good luck with reaching FIRE!

  • Stefan - The Millennial Budget Jun 1, 2016, 11:42 am

    Now about to graduate college early retirement and financial independence is the last words my friends want to hear come out my mouth. We are going into the working world, earn money and enjoy life after 20 years of studying and living off our parents. That is the mindset I find at least. I keep my plans to myself as they are personal and will be different than everybody else. I like how you go one step beyond independence to interdependent. Never heard of that analogy before so it was great to learn. Good luck on your journey, I will be monitoring it closely and chatting with you about it.

    • Distilled Dollar Jun 2, 2016, 5:42 pm

      I’m in the same boat since we’re still in our 20s. Most of my friends think, “early retirement,” is a form of giving up early on a long career, whereas I see it as the first step to opening a lot of other doors.

  • ZJ Thorne Jun 1, 2016, 1:22 pm

    I have a post in my drafts about interdependence! Which is my end goal AND manner of achieving it. I like Franklin’s idea of deciding how you contribute to the world once you have enough.

    • Distilled Dollar Jun 2, 2016, 5:43 pm

      Ben Franklin’s my role model in many ways, haha! He lived multiple different lives and it was largely thanks to working hard and having a high degree of frugality early in his life. It helps to have enough when you don’t want much to begin with.

  • Latoya @ Life and a Budget Jun 3, 2016, 5:59 am

    I’m going to have to read this book by Ben Franklin. I’ve never heard of it, but it sounds exactly like what I need to read at this point. I have a ways to go before I reach financial independence, but my goal is to help more of my family get there as well so collectively we can do more for other people.

    • Distilled Dollar Jun 3, 2016, 6:44 am

      If you click over to my page, “Book Reviews,” you’ll see my short description of Ben Franklin’s, “The Way to Wealth,” which includes a free pdf.

      It probably takes about 20-25 minutes to read, and is by far my favorite thing on creating wealth that I’ve ever come across (having read 100+ books now on personal finance and investing).

      If you’re looking for more on Ben, then you can check out my first article about the lessons I took away from him here.

  • Kyle Jun 3, 2016, 11:16 am

    I like the idea of telling people I’m transitioning to become an investor instead of saying “early retirement” or “financial independence”. I’ll have to use that in the future.
    I don’t have clear plans for when I reach independence. It actually keeps me up at night. I want to make a positive difference, I just don’t know where to start and I’d like to start before I’m fully financially independent.

  • Vicki@MSDLifeCoaching Jun 3, 2016, 6:29 pm

    Great post Matt! I have reached FI in my late 40’s (although I was probably there a few years ago). Love the connection to Covey in your post and the idea of interdependence. We hope to be able to provide for some future needs of our children and (future) grandchildren and also support some charities that are important to us. The Mad Fientist just was a fact checker for a new book by Jim (JL) Collins that I just previewed called The Simple Path to Wealth (he is looking for more reviewers too). Your writing and investing strategy is very closely aligned with this book too. Check it out at

    • Distilled Dollar Jun 6, 2016, 5:47 am

      I’ve seen Jim mentioning the upcoming book a few times, but totally forgot about it. Thanks for the reminder, as I’m now going to see if there are any new updates and when it’ll be released.

      Congrats on reaching FI!! I noticed you made a comment elsewhere about transitioning from full time to part time work. Best of luck on the transition and let us know how it goes!

      • Vicki@MSDLifeCoaching Jun 6, 2016, 5:50 am

        Thanks Matt! I think you will love the book. After reading all of your posts, it seems that it is “right up your alley”! It is also just a darn funny read. Get a “distilled” drink and enjoy! Jim mentioned it should be out in the very near future when he emailed me this week.

        • Distilled Dollar Jun 6, 2016, 5:52 am

          Cool! I’m familiar with index investing and I use that as my approach, but I know Jim will have a lot more to add given his extensive knowledge on the subject AND his top notch stock series on his site. Thanks Vicki!

  • Thias @It Pays Dividends Jun 5, 2016, 9:13 pm

    The word retirement has such a bad meaning in society. It seems that anyone that “retires” before 65 is looked at as lazy. That is why I think financial independence is such a great concept it means more than just golfing everyday or sitting on a beach. It means having the freedom to spend time on the things that bring you joy instead of spending hourmafter hour in an office for 40 years!

  • Rudy SMT Jun 10, 2016, 5:31 am

    Hi Matt,

    I share your personal experience whenever I mention earlier retirement to others.

    I explain that is possible to retire in the 30s and 40s, but most people get defensive. What I think is a natural human behavior to reject own situations.

    I do the same when I meet people in their 50s and 60s still working for others. I personally reject the possibility to work for so long for other people.

    Some sort of defensive mechanism.

    I’m reading “How to Win Friends & Influnce people (I know you like books) and Dale Carnegie explain that 99% of times people don’t criticize themself for anything but instead blame others.

    I think his point match this conversation.

    What do you think?

    • Distilled Dollar Jun 12, 2016, 8:36 am

      I’m also a fan of Dale Carnegie after reading Warren Buffett’s experience taking their seminar back in the day. I agree that most people will stick with what they know.

      It can be very hard to shift gears later in life unless some big event happens, such as a divorce, a close death or a job loss. It is even harder to admit we were doing something wrong for years, especially when it is the same money habits we receive from parents and grandparents.

      You bring up a great point when you mentioned how you do the same when you hear from others in their 50s and 60s. I think the best course of action there is to identify areas in our own lives where we can improve. It is like the quote Dale Carnegie uses in his book, “Don’t complain about the snow on your neighbors roof when your own doorstep is unclean.”

  • Manhar Jun 15, 2016, 11:58 am

    When I talk to coworker or family about FI they think it’s alien concept and not possible , you are right people dotn want to know there finances

    • Distilled Dollar Jun 19, 2016, 10:25 am

      Agreed. If someone is drowning in credit card debt, then showing example after example of people pulling themselves out might only anger them or upset them, instead of inspire or encourage them. Each case is different, so that’s why I wait for someone to seriously ask me about a financial topic before giving any type of answer.

  • Financial Samurai Jun 17, 2016, 2:25 pm

    I wanted out at the age of 22! The 5:30am start times until 7:30pm – 9pm every day was a killer. I think it was due to tremendous pain that wanted me to reach FI ASAP while obviously trying to earn as much as possible.

    If I had a regular ol job, I’d probably still be working!

    Freedom is worth all the pain and hard work. I guarantee it! Just got back from playing two hours of tennis midday. Now it’s bath time and a nap! 🙂



    • Distilled Dollar Jun 19, 2016, 11:58 am

      Your life does sound amazing Sam. It definitely is an inspiration for something to aim at, but like you put it, sometimes it is easier to reach FI if you’re trying to eliminate pain.

      The chief reason I dove into dozens of personal finance books at an early age was because I witnessed the financial pain put on my family through the Great Recession. I basically vowed to never put my future family through such a stressful situation.

      If it wasn’t for that pain, along with the growing burden of student loan debt, I would definitely not be on this path to reach FI at an early age.

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