I didn’t feel relief the morning I realized I had enough money to leave my corporate job. I felt terrified. My spreadsheet said I was ready. Every number I had been tracking confirmed it. I didn’t know what to do.
I started the spreadsheet in 2016. Net worth in one column. Expenses in another. Portfolio income in the third. I was in my late 20s and had decided my goal was to become financially independent before 40 by having my portfolio generate enough income to eliminate my need for a salary.
I achieved that goal at 38 when I resigned from my C-level corporate career to start a more intentional second act.
Here’s what helped me get there.
Ignoring traditional retirement calculators
Most retirement calculators I’ve come across focus on how long it will take for your portfolio to match your current income in retirement. I disagree with this framing. The goal isn’t to match the income you’re making, it’s to cover your costs.
Relying on retirement calculators that focus on meeting your salary artificially extends the amount of time you need to work before you’re able to retire. This is especially true for high achievers where income rapidly outpaces your underlying living expenses. Trying to match that income becomes a moving target.
Financial independence became a simple calculation for me.
When the income I could generate from my portfolio reliably exceeded my underlying expenses, I knew I was ready to go.
Closely tracking expenses against portfolio income every month
I’ve sat down every month for the past decade to calculate our net worth, the income we generate from our assets, and our expenses. For expenses, I manually go line by line in my spreadsheet through our credit card and checking statements, categorizing everything against the budgets laid out at the beginning of the year.
I am well aware I can use technology to do this but the act of going line by line makes our spending much more tangible. I also think more clearly about whether certain expenses were worth it. Like that ongoing subscription to YouTube Premium (the answer has been yes for 70+ months).
Regularly examining our costs prevented unnecessary lifestyle inflation that would have delayed the timeline to leaving my corporate career.
Plus the act of watching portfolio income gradually meet and then exceed expenses was highly motivating. It was like steadily leveling up in a video game month after month.
Viewing costs in terms of portfolio income
As I wrote about recently, the more I went through my monthly planning process, the more I started thinking about everything in terms of portfolio income rather than salary.
The first question I asked about any major purchase wasn’t whether we could afford it based on my corporate salary. It was whether we could afford it based on income generated by our portfolio. The difference between those two calculations is significant when you’re trying to leave the corporate world.
In 2020 our realtor tried to convince us to look at homes $300,000 above the price we’d decided on. His logic was that mortgage rates were so low the extra $1,000 a month was barely noticeable on a C-level salary. He was right about the salary math.
But I wasn’t thinking about the salary. Here’s how that extra $1,000 a month actually looked to me.
$12,000 a year in additional mortgage payments. Another $300,000 I’d need to build in my portfolio to cover it at a 4% income yield. Potentially another year of working to get there.
We bought the house we originally planned to buy.
It’s a home Ryan Serhant isn’t about to come knocking on to film a video tour. I’d call it reasonable luxury rather than egregious ostentation. We love it.
The same logic applied to the school district we chose. Picking a strong public school meant we wouldn’t need to pay for private school. The difference between $8,000 a year in school taxes and $60,000 a year in private school tuition for two kids represents roughly $1.25 million in additional portfolio value I would have needed to build. That meant potentially three to four more years of corporate work.
You don’t have to be Spartan about everything. The small stuff barely moves the needle. But the large fixed costs like housing, cars, and schools are the decisions that significantly impact your timeline to financial independence. Getting those right is worth more than a decade of optimizing everything else.
Finding a good accountant early on
My taxes were straight forward for the first decade or so of my career. Up through my late 20s, I was renting in NY, had a single W2 income, a 401k, and a modest taxable brokerage account. Standard tax software was good enough for handling this.
It was 2018 when things got more complicated. This was the year we sold our company and I had a liquidity event I had to manage. My investments started producing meaningful income and I was suddenly in higher tax brackets where finding ways offset income became significantly more valuable.
I started working with an accountant who more than justified their ongoing yearly fee based on just the estimated tax penalties they helped me avoid in 2018.
Working with an accountant also changed my mindset regarding taxes from something I passively calculate at the end of each year to something that I can actively manage. Which led me to…
Studying tax optimization
I believe in paying the taxes I owe. But I don’t think it’s necessary to leave the IRS a tip.
The accountants have been good at helping me understand how to avoid mistakes in the future based on mistakes I made in the past. They are not as helpful with proactive tax mitigation within the year or minimizing taxes years from now.
So I started learning more about how I could actively manage my taxes throughout the year. I know most people like to avoid thinking about taxes as much as possible but the 10-15 hours a year I spent reading about and modeling different tax strategies has likely saved tens of thousands in taxes over the years (and possibly hundreds of thousands compounded).
The optimizations I made to my approach ranged from taking advantage of credits for things we were going to do anyway like replacing the rusting water heaters that came with our home to implementing portfolio strategies like tax location and gain / loss harvesting.
The ROI from understanding and proactively managing tax strategies has been significant and immediate. The savings funneled directly back into reducing the timeline to reach financial independence.
Transitioning to an income-centric investing strategy
One of my biggest fears about leaving my corporate job was timing.
What if the market collapsed in the first couple years after I left? The traditional retirement playbook of accumulating a large portfolio and then withdrawing 4% annually sounds reasonable until you think through what can actually happen in that scenario.
You need to sell assets to fund your life. Those assets have just dropped 30%-40% in value. You’re selling significantly more shares than you planned to cover the same expenses. And this can go on for years. The markets recover eventually but you’ve permanently impaired your portfolio in the process.
This is known as sequence of returns risk and it’s one of the main reasons people who retire into a bear market never fully recover financially even if the market eventually does.
I wanted to solve for this.
So I built a portfolio designed to generate income from multiple sources rather than rely on selling shares to cover my expenses. The S&P 500 index was the right tool for growing wealth while I was accumulating. But I needed a different set of tools for a different job. Blue chip companies with long track records of paying steadily increasing dividends. Apartments around the country generating rental income. Power plants with contracted cash flows tied to inflation.
The insight that changed everything for me was simple.
I could live off income. I can’t live off a price.
Price is what the market says my assets are worth today. Income is what my assets actually pay me.
The markets can drop 40% but, as 2008 and 2022 demonstrated, the rent from a well-located property with high quality tenants still gets collected. The power plant still gets paid to put electricity into the grid. The dividends from a company with 25 consecutive years of steady dividend growth still arrive.
The income keeps coming regardless of what the price of the underlying asset is doing on any given Tuesday.
This isn’t the same as being immune to economic stress. A severe enough recession can affect anything. But the income-centric portfolio is designed to keep funding my life through the conditions that would devastate a withdrawal-based approach.
The result has been exactly what I was hoping for. The payments from my income assets have come in steadily and grown each year regardless of what has been happening in the markets. We pay our bills, go out to nice family dinners, and there’s something left over to reinvest. The anxiety of watching a portfolio value fluctuate while wondering if it will last has been replaced by watching an income line that keeps growing.
The market can do whatever it wants. The income arrives anyway.
Focusing on a career I enjoyed
I want to be careful about how I frame this one because it can easily sound like the kind of thing people say when they’ve been lucky.
But here’s what I actually observed over nearly two decades in the corporate world.
I genuinely liked what I did. Analyzing the problems facing large companies and then solving them through data, creativity, and technology. There was a lot of intellectual variety. Every client was in a different industry, every problem had a different shape. I also liked the people I worked with. I liked getting better at my job.
That enjoyment had a specific and compounding effect on my timeline to financial independence that went beyond just earning a higher salary.
When you enjoy your work you do more of it voluntarily. You read about it, think about it, get curious about adjacent problems. You develop genuine expertise rather than adequate competence.
That expertise compounds into career opportunities that going through the motions doesn’t produce. This difference may be small at first but grows dramatically over a decade in terms of compensation and fond memories.
I think if I had been doing work I didn’t enjoy the entire time I would have burned out or plateaued in middle management. Either outcome would have added years to my timelines.
Work you enjoy is one of the most underrated variables in how quickly you can reach financial independence. Not because of the salary but because of what sustained engagement does to your trajectory over time.
Choosing career paths with asymmetric upside
I mentioned a liquidity event earlier. Here’s more detail on how I got there and how it impacted my journey to financial independence.
It was 2012. I had spent the past four years in consulting and I was ready for something different. I was being recruited for a couple different Director level jobs.
One was a role with a Fortune 500 company. Great name, slightly higher compensation, perfect resume builder, but no significant upside potential. The work would be routine and bureaucratic. This was the safe option on paper and the one that would pay $10-20k a year more in salary.
The other was where I went. An advertising agency that just started going two months earlier that no one had heard of where I would have less pay and less “prestige”. But, I would have a very interesting role. I would be part of the management team and have a more direct impact on the direction of the firm. And I’d get a modest amount of equity that could be worth something one day.
I remember thinking the worst case was if the agency didn’t work then I would have spent a few years doing something I enjoyed doing anyway. My bank account might have $40-50k less in savings than if I had chosen the big name company. But the best case was we would knock it out of the park and the equity would be worth something one day. The downside was capped, the upside was significant.
We sold the company six years after I joined.
Now, luck undoubtedly played a role in all this. Most small businesses fail. When I made my decision to join the advertising company, there was no way to tell how successful we would be.
But the important thing was that the potential was there, along with the equity that would mean more direct participation in that success. There was no potential for that kind of asymmetric payoff in the Fortune 500 company.
This liquidity event impacted my financial independence journey in two unexpected ways.
The first is that it pulled up my original timeline to financial independence by about five years. The spreadsheet and targets I had been tracking against didn’t assume a liquidity event. I don’t like to include positive outlier events in my baseline forecasting. If they happen, great. If not, my original strategies that are more firmly in my control are still on track.
Second, I was still enjoying my role with the company when this happened and felt I hadn’t accomplished the things I wanted to yet within my first career. So instead of leaving my job years ahead of schedule, the impact of the acquisition was more an unexpected improvement to the quality of life I had been modeling. The portfolio we were building would now be able to support a slightly nicer home and a couple more family vacations each year.
The point isn’t to bet on startups. It’s to make sure that when you’re choosing between two paths, at least one of them has genuine upside worth reaching for.
Building a shared life
This last piece is the most important one.
When I first started working towards financial independence it was just me. I hadn’t met Sheila yet. I didn’t have kids. My spreadsheet hadn’t accounted for how life would (positively) evolve over the years.
As we started planning for kids, Sheila wanted to prioritize raising our children over continuing her career in advertising. That meant I would need to work a couple more years than I was planning to so the portfolio could cover her lost income.
We both knew what we were trading. I would spend a bit more time in a corporate job in exchange for something we both wanted more, the ability to show up for each other and our kids during all of life’s key moments.
We agreed early on to work towards financial independence first and improve our lifestyle after. So we kept our spending in check through those final years. We’re not miserly — we like nice things. But the Porsche in my garage right now looks a lot more like a 2015 Jeep Wrangler. We AirBnB our beach vacations rather than owning a beach house.
The steadily growing income from the way our portfolios are designed will cover these things in the years to come. In exchange, the joy and closeness we’ve had as a family fortunate enough to spend so much intentional time together were more than worth it.
So, was it worth it?
As I reflect on the years spent working towards and then achieving financial independence, I’ve come to realize something that surprised me.
Financial independence is not a destination. It’s a transition point.
I had spent years focused on what I didn’t want anymore. The compromises that come with a corporate career. The clients you work with because you have to rather than because you want to. The slow accumulation of days that no longer feel like yours.
What I hadn’t fully anticipated was what the transition would open up.
The best way I can put it is that financial independence allows me to think about the world the way I did when I was a senior in high school. Suddenly the possibilities seem endless again.
In a follow-up post I’ll share the things that kept me from getting here faster and what I wish someone had told me earlier about working towards financial independence.
If any of this resonated with your own situation, I’d genuinely love to hear about it.
Nathan
Founder, Kangpan & Co.
Kangpan & Co. is a fee-only, registered investment advisor specializing in helping people live off diversified portfolio income.
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