Early Retirement Extreme

By Michael J. Wiener

Special to the Financial Independence Hub

When I first picked up Jacob Lund Fisker’s book Early Retirement Extreme, I expected it to be similar to other early retirement books I’ve read, but it isn’t.  This is a thoughtful philosophy book that lives up to its subtitle A philosophical and practical guide to financial independence.  If I had read it decades ago, I likely would have retired even sooner.

The book begins with the claim that modern life is like the movie The Matrix.  We can’t see the crazy way we live our lives as wage slaves.  We give up our most productive hours to a job that leaves us with too little energy to do much other than waste money on stuff we don’t have the time to enjoy.  If your instinct is to disagree, consider reading the book; Fisker makes an excellent case.

“Ignore most of the personal finance books out there.  They only explain how to play the game by the rules.  Instead, use the rules to play a different game” outside the Matrix.

It’s easy to pick out parts of the book that are extreme enough to seem crazy:  “it’s possible to live on a third or even a quarter of the median [U.S.] income,” central heating is “an uneconomical product,” “to adapt to cold, try switching to cold showers,” and “you can make clothes hangers out of cardboard boxes.”  However, it isn’t necessary to agree with Fisker on all points.  If you accept only part of his philosophy, you could end up with a more fulfilling life and fewer years on the job.


Here are examples of points the book makes on the way to building a philosophy for a different way of living.

“If you have debt, you’re not a free person.”

Our measures of success make little sense: “spending half an hour in a traffic jam getting from A to B in an expensive car is considered more successful than spending half an hour in a traffic jam getting from A to B in a cheap car.”  “Similarly, it’s considered more successful to sit on a couch in your home, if there is an additional unused couch in an additional unused room, compared to a house with no unused couches or no unused rooms.”

To have work-life balance, “one solution is to moderate one’s career ambitions.”  It’s best to realize “at an early point that going all the way [to the top of a career path] not only depends on skills, but also requires 100% dedication, reading time, and possibly some ethical compromises.”  I was fortunate to figure out early in my career that I wasn’t interested in management and the dedication of time it requires, even though that would have been a path to higher pay.

“People don’t seem to realize that the quest to bring more possessions in through the front door is a chronic disease, and that the shortage of space is a symptom rather than the underlying problem.”

“The kind of retirement most people are familiar with and dream about … revolves around spending money.”  This applies to my lifelong dreams of financial independence.  Now that I’ve achieved it, I’m unlikely to stop spending money faster than Fisker advocates.

People “spend their most productive hours and years in a job which they don’t really care about, after which they go home exhausted to deal with spouse, kids, dinner, bills, trying to keep up with the neighbors, and languishing in front of the TV because they have little energy left.”

We should “reverse the outsourcing of ordinary life skills and gradually insource skills” such as meal preparation and mending clothes.

“Happiness does not stem from being surrounded by possessions.”  “Being surrounded by them is the result of an addictive habit.”  If you analyze how often you use all your possessions, “Don’t be surprised if you use fewer than three percent of your possessions daily and 90%+ of all possessions less than annually.”  However, the author isn’t an extreme declutterer; he just seeks to own the things that serve him best.

Many houses have “restaurant-sized kitchens which seem proportional in size to the time the owners spend away from them, eating out.”  “Either buying or renting a home that is priced at several times your annual income is a huge financial mistake.”

More Specific Advice

“The best way to think about cost is not the sticker price,” but rather the annual cost.  If an item lasts 10 years, the annual cost is one-tenth of the sticker price.  Or even better, if you can buy something used and later sell it, your annual cost could be extremely low or even negative.

“Including home value in one’s net worth is an academic exercise, as this part of net worth is irrelevant to financial independence.”  This makes sense to a point, but I think it becomes less true in old age.  If you plan to use a reverse mortgage or sell a home before moving to a retirement home, the value of your home matters to your financial independence.

“I’d consider it normal to … be able to run five miles, walk 25 miles, or bike 50 miles.”  People would do well to drive less and exercise more.  I work hard to stay in decent shape, and I’ve maintained decent fitness standards.  However, when you’re young, injuries are rare, and you can often just work around them to run, walk, or bike.  As I’ve aged, the number of days I can’t do these things well due to one injury or another has been climbing, and I can’t control the timing of when I won’t be able to travel distances without motorized transportation.

When it comes to college or university, “pursue something you’re good at rather than something you’re passionate about” and “consider typical [job] placement rates.”  Further, “calculate the internal rate of return” on the cost of the degree and the increased income you expect.

Working intermittently with frequent time off works for some occupations, such as tax accountants, contractors and handymen, but “doesn’t work well for salaried career professionals.”  I’ve always been skeptical of advice to take many extended work breaks or plan to work part-time during retirement, but maybe that’s because I was a salaried career professional.

“I would use [3%] as a safe withdrawal rate” in retirement.  For a very early retiree, I agree.  Trying to make your money last for 60 years or longer calls for less than the usual 4% advice.

Index Investing

When it comes to investing, Fisker invests in the stock market but is derisive about indexing.  “People are told to buy index funds” because of “a lack of knowledge.”  He discusses an example where assets yield 4% “without effort,” but this rises to 6% using “asset management,” whatever that means.

“At the highest level there are people who create new rules, that is, they find some aspect of the market and the economy that allows them to predict more correctly what the future price of an asset will be.”  However, Fisker later says that “preservation of principal, keeping up with inflation, minimizing taxes, and providing a stipend [are] more important than outperforming the market.”

I can’t comment on the author’s own investing skill, but the vast majority of people are incapable of beating low-cost index ETF investing over the long term.  Working on your investing skill pays off handsomely up to the point where you know how to minimize costs.  Working further toward beating the market is likely to deliver a negative wage.

About the Author

“Upon graduating with a PhD in theoretical physics, I worked for five years as a research associate while saving around 75% of my net income and then retired with enough money to last me the rest of my life.”  Fisker now lives off his income and controls his spending by being his own “personal cook, trainer, carpenter, electrician, mechanic, accountant, financial advisor, tailor, engineer, etc.”


This book is unlike any other early retirement book I’ve read.  The author is very thoughtful and offers a philosophy rather than a template to follow.  Whether you agree with 10% or 90% of what he has to say, you are likely to see your life differently after reading this book.  When I examine my life in his terms, I realize that I have followed his philosophy to a modest degree.  I might have been better off if I had followed it more.

Michael J. Wiener runs the web site Michael James on Money, where he looks for the right answers to personal finance and investing questions. He’s retired from work as a “math guy in high tech” and has been running his website since 2007.  He’s a former mutual fund investor, former stock picker, now index investor. This blog originally appeared on his site on Feb. 1, 2021 and is republished on the Hub with his permission. 

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