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Unpacking a Lifetime of Financial Independence, with Doug Nordman

Presented by Wealthsimple

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

Have you ever wondered how some people can walk away from their careers years, even decades, before the traditional retirement age? My guest this week did just that, almost twenty years ago. Today, he and his wife remain financially independent, having survived three separate recessions.

Doug Nordman is the author of the book, “The Military Guide to Financial Independence and Retirement” and founder of He joins me on the show to share his financial independence story.

Doug and his wife began saving aggressively in the ‘80s, after getting married and starting a family. According to Doug, their high savings rate spared them when they made several investment mistakes during the next 10 or 15 years.

In 2002, their investments had grown to the point where Doug could retire from the US Military at 41. It took some faith at the time; looking back, he’s never doubted their decision to pursue early retirement. Today, Doug is confident in his outlook, having survived three recessions in the past 18 years.

Priorities have changed – Doug and his wife have simplified their investment approach and spend more time on legacy planning and philanthropy – but their appreciation for the freedom that financial independence has given them remains strong.

Do you prefer to invest in socially responsible companies? If so, our sponsor Wealthsimple will help you build a portfolio that focuses on low carbon, cleantech, human rights, and the environment. To get started with Socially Responsible Investing, head over to Wealthsimple today!

Episode Summary

  • How Doug ended up pursuing financial independence
  • Investment research in the days before the internet
  • How Doug survived his investment mistakes of the ‘80s and ‘90s
  • Making the shift from mutual funds to exchange-traded funds
  • A simplified investing strategy has made life much better.
  • Doug shares the age he retired at.
  • Why financial independence is the best place to be in a pandemic
Read transcript

Have you ever wondered how some people can walk away from the careers years and even decades before the traditional retirement age? My guest this week did just that almost 20 years ago. Today, he and his wife remain financially independent, having survived three separate recessions. Doug Nordman is the author of the book, The Military Guide to Financial Independence and Retirement and founder of He joins me on the show to share his financial independence story.

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Do you prefer to invest in socially responsible companies? If so, our sponsor, Wealthsimple, will help you build a portfolio that focuses on low carbon, clean tech, human rights and the environment. To get started with socially responsible investing head over to today. Now, let’s chat with Doug…

Tom: Hi, Doug, welcome to the Maple Money Show.

Doug: Hi, Tom, thanks. I enjoyed listening to your episode with Bob Lai talking about investing during 2020.

Tom: Yes, it’s been an interesting year. I’m glad you brought him up because one of the things we seem to talk about often on here is the whole FIRE movement and everything. You are a big part of that. But what I wanted to talk to you about was you started doing this before it was really a “thing.” Where did you find your inspiration when there weren’t all these big FIRE sites? The term financial independence still existed, I believe. But what made you twig? Was this your own decision to pursue a FIRE path? What was it?

Doug: It took a while. I graduated from college in 1982 and of course we had in America just broken the back of the hyperinflation decade and finally gotten some control of interest rates. But even in 1982 you still had a checking account that could pay 10 percent interest. Stocks were dead. Business Week had declared that famous magazine cover that showed nobody should invest in the stock market anymore. Raw diamonds, gold bullion—these were the things we had in our asset allocation back then. I wasn’t smart enough to do any of that. I got married in 1986 and that’s when I first began to take control over our finances. My spouse taught me a lot about investing from what she had learned growing up. I had not. And from there we were able to do more research. Now when I say research, this was back in the days before the World Wide Web, of course so you had to go to the library where you sat down and looked up things in a card catalog of index cards. Then you went and hoped that the book was there or you could find the magazine or whatever resource you needed. Sometimes you had to go up to that big desk at the front of the library and beg the librarian to give you the stuff that people kept stealing. You had to sign a book to be able to look at things. This was what we called “research” back then. We started our family in 1992 and in 1993 you might recall the book, Your Money or Your Life, came out. In that state, where you’re raising a baby and you’re sleep deprived, you have no more time in your life, you’re seeking work life balance and wondering what the rest of your life is going to be like, in that whole environment, that book really had an impact. The part I still remember today is reading about trading life energy for money. We were piling up the money in savings and investing but the life energy part and life balance was a problem. We first realized we could reach financial independence back in 1993. But, of course, by then we’d already been saving and investing, not with any real particular goal in mind. But we were saving and investing just because we knew that’s what you had to do to be a grown up, start a family and all the other things that go with being an adult. We had really gotten started back in the ‘80s. I joke about using clay tablets and wooden styluses to record your transactions and having to sit out in the marketplace and talk with other investors who wandered by. It’s been much easier since the ‘90s. The main theme of investing in the ‘80s and ‘90s is that you made tremendous mistakes back then. These are mistakes that are easily avoided today. The number one factor that led to our financial dependance was maintaining a high savings rate. That high savings rate will overcome almost every other mistake you can make. For example, chasing hot mutual funds, picking the manager of the year, or paying a sales charge of two or three percent just to be allowed to give them your money. We did that routinely in the ‘80s and ‘90s because that’s what mutual funds looked like back then. Today, of course, you can reduce those expenses. You can eliminate almost all of that friction on your returns and get the stock market’s market return for very little expenses. I joke that if we could reach financial independence in the ‘80s and ‘90s on high savings rate, today, that high savings rate works even better. By high savings rate, I don’t mean necessarily cutting your expenses. I mean raising your income too. For us, it was more about cutting out the waste. You track your expenses and find out where you’re spending your money and just gradually chip away at the things you find wasteful or don’t bring you much value in your life. I’ve read the stuff the media gives you that we’re all dumpster-diving for food, recycling toilet paper and all of the other frugal things that hypothetically will get you to financial independence faster. You eventually cross the line into deprivation if you do that. We just cut out the waste. When we were saving for financial independence, we were living a little bit of a frugal lifestyle but it felt like winning. It was challenging, fulfilling. You felt like you were making a lot of progress. And the things you had cut your spending on, you didn’t miss them. You had a bigger goal. Your goal was to stop trading life energy for money. And to do that was more important than being able to go out to a bar nights a week or to go out for dinner every day. Those things were still part of your life. They just weren’t so frequent.

Tom: I’m glad you found your money and your life in ’93. I wish I had because I found myself with the same issue. It was the late ‘90s and most of the 2000s where there wasn’t a lot of information out there. I didn’t go into the library and do research. But nowadays it’s so much easier. You get these single ETFs that can do everything or robo advisors where you could be signed up in 5 minutes. The friction is so much less. Honestly, I don’t even know how I would have invested in stocks back in the late ‘90s here in Canada. I don’t know what was available or how much you had to buy. The extra friction would have been so much greater. How did you overcome some of this? Is there a certain point where you realized (before they got a bad name) that mutual funds weren’t so great? Did you find other options? Or did it come later and it was just the savings rate at that point?

Doug: That you’re exactly right. It came later back in 1986 when we got married and started getting serious about investing and where we were going to put our money. When I graduated from college, I had been saving in a checking account. I had also called up a financial adviser and told him what I was doing and how much I was saving. He said, “Oh, we have a very good bond fund here and we’d be happy to let you invest in it for a fee.” And even in 1986, I was aware that that was not what I wanted to invest in. I wanted to do better than a bond fund. This is going to sound pretty silly by today’s standards but, there’s a magazine called, BusinessWeek. Every year they rank the mutual funds, the top 200 mutual funds. You opened up the page to the part of the article and looked for the funds that had at least up airings out of three. And that’s where you invested. It was actually very simple. You really didn’t have that many choices unless you were going to go out and pick individual stocks. But commissions were still relatively high and it was easier to go read a magazine like that. You could have it delivered to your house and not have to go to the library. You picked what you needed. You’d say, “I like this equity fund. This one’s run by Peter Lynch. This is wonderful. I like this guy,” that kind of thoughtful analysis—but this is what you do. So we had picked two or three mutual funds. Today, of course, I realized there is two to three percent sales charges and expense ratios of 0.5 to 1.5 percent. We kept on doing it through the ‘90s and up into the early 2000s. In 2002, as you mentioned, exchange traded funds started coming out and we realized that the expense ratio were much lower and we could get what we thought we wanted in our asset allocation. More dividends, more small cap value stocks, or more international investing. It worked out very well. Mutual funds in the ‘80s and ‘90s got us there. But the exchange traded funds, simplifying and reducing expense ratios are what have kept us there since we reached financial independence. We just kept chipping away at those expenses and reducing the friction.

Tom: The reason I’m laughing is because we’re living in different time frames. But 15 Fifteen years later than you, I was making all the same mistakes.

Doug: We call it experience.

Tom: I got out of college and got a job as a financial analyst. I thought I was extra smart. But ultimately, it was the same supposed to the research of, “Well, what did good in past years?” You mentioned Peter Lynch. But yeah, here in Canada, we had our same sort of mutual fund manager rock stars you would hear about. They had been up in all their funds over the last five years so how could it go wrong? So it was very similar. One of the mutual funds I was in was over two percent. Thinking I was smart at this (at the time) with very little information, ultimately, I understood the idea of diversification. I ended up diversifying with so many different mutual funds, I kind of defeated the point. A single ETF could have did it. But instead, I’ve got 10 different mutual funds and they’re all with these high expense ratios.

Doug: In one fund at a time you’ve built up the exact same distribution as the Toronto Stock Exchange rate.

Tom: Yeah, exactly. I started to learn all sorts of things about mutual funds like dividend funds. I invested in a lot of stuff that was not dividend stocks. They’ll do whatever they need to do despite the name to try to get a gain, but all of a sudden you’ve got all these extra trading costs in there. I was basically overlapping mutual funds trying to get this diversification. I probably would have been better off with just one big mutual fund. Or like later on with ETFs and how much simpler that could be.

Doug: I will say, when I retired and got most of my life back from the US Navy and had an extra 50 or 60 hours a week, I went through my own phase of becoming a brilliant investor. I had the time to analyze the stock market. This World Wide Web thing looked like it was going to catch on. I had all kinds of resources with my 4,800 bytes per second modem so I started following that path, picking stocks, picking styles of investment, technical analysis, momentum trading and such. I went through almost all of that in the first five years of my retirement between 2002 and 2007. I was doing great. Now, whether it was the recovery from the previous recession—that rising tide that was lifting all boats or I really was a brilliant investor, we’ll never know. I didn’t do it long enough to really distinguish skill from luck. But what I did know is that building up that individual portfolio was turning into a full-time job. By the time I got good enough to start beating the benchmarks, I was also working a 30 or 40 hour week, researching and tracking and everything else that goes into that. And I realized I didn’t want to live my life like that. There was surfing to be done, travel to be experienced and families to be raised so that’s when we really got into the index funds, into the exchange traded funds, total stock market funds and into starting to find ways to simplify. In 10 years since that phase of my life, every year I trade less. Every year our investments get simpler and I’m focused more on other things. It’s interesting because when you’re saving for financial independence, it consumes most of your bandwidth. You’re obsessed with it in some cases, but at least keenly focused on it. And once you get to that goal line and have redesigned your life over the years, financial dependance is still there. You still have habits. You still have practices and processes but you spend a lot less time and energy thinking about it and dealing with it. You find other things you really enjoy doing with your life because you have the time and assets to afford it. The financial independence is always there in the background but you’re really just living your life, enjoying your life and thinking about the future whether that future is your next trip, raising your family, your grandchildren—whatever the next step is. You find the pace at which you want to do things. Maybe that brilliant “investor phase” never would have ended if I’d invested in Google or seen this guy, Elon Musk, coming back with some other startup. But on the other hand, I’ve enjoyed all the other activities I’ve learned from them. And the fact that I can simplify investing and get rid of all those expenses has made life much better.

Tom: More and more, I’m becoming a fan of simplification. Ten years ago, I would take three or four ETFs, make sure I’m rebalancing them every quarter, tracking it perfectly and everything. I’m still doing that but I’m really looking at things like all-in-one ETFs that have come out in Canada just recently. Or even a robo advisor. Any of these things that make it simpler. There was a point where I did find it exciting to rebalance my portfolio. But at this stage, I’m already at the point where I kind of want to outsource as many things as possible whether it’s business or investing. I look at it thinking maybe this is something I don’t have to do so why am I doing it?

Doug: The novelty has worn off. It’s routine now. Some of these things evolve over time. And here’s an example. In 2003, 2004 we thought we were pretty hot stuff when we got rid of those funds with the 1.5 percent expense ratios and started buying exchange traded funds because exchange traded funds were really cheap, you were paying 0.25 percent or 0.4 percent. But my gosh, that was less than what you’d been paying in the ‘80s and ‘90s. It was a wonderful deal. In 2014, my daughter graduated from college and started her career and started her investing for retirement. In doing her research, she called me up and asked for my opinion and but she also checked with other people and built her own asset allocation. She knows how to do that. I looked at some of the funds she was in and the expense ratios were a third of what I was paying for my exchange traded funds. Hers were exchange traded funds. Some of them were mutual funds, but they all had much lower expense ratios. And so we went back and started doing the math on what we were invested in, our asset allocation and our expense ratios and realized there was a vacation a year. And by vacation, I mean a trip of one to two months with upgraded error and expensive airbnbs and concierge travel. We were paying one of those in expense ratios every year. And so, again, it was a big upheaval. This is 2017. We sat down and looked at all of this and took our expense ratios from those .25 to .4 percent exchange traded funds into a total stock market index fund and now her expense ratio on the entire portfolio is 0.03 percent. Just because you reach financial independence doesn’t mean that you stop examining your expenses. It doesn’t mean you stop optimizing your life or finding new ways to invest and finding new ways to do more of the things you want to do more of without having to spend money to do it.

Tom: You may have gained yourself a trip, but you took it away from some adviser somewhere down the trail of where all that money goes.

Doug: But I think they’ll be okay.

Tom: You mentioned when you retired which I believe was an early retirement. What age were you?

Doug: That was age 41 in 2002.

Tom: Even nowadays, if someone retires in their 40s, they kind of get a strange look from the usual office crew that expects to work to 65. Was it even stranger back then, the idea of retiring that early?

Doug: It was strange. I was in the US military and I’m sure it’s like this in many corporations where you’re relatively younger than a significant part of the office. You’re in your 30s or 40s and you’ve got this epiphany where you’ve got enough money and don’t need to work there anymore. You have a certain subset in the office of people who are in their 50s or 60s. Now, today, we know that those people are probably going to be working until they die or they’re dealing with significant consumer debt or maybe they have other issues in their family where they know it’s best for them to keep working. But they also feel that, because you’re younger, you might not really understand what you’re doing with your finances. You might be willing to save all this money and sacrifice your lifestyle, but on the other hand, you’re also about to quit a very lucrative job. If you don’t keep working, then you’ll get bored, run out of money or you’ll be living under a highway overpass. They all sit there and say, “Listen, you’re making a horrible mistake. We really need you to stay and continue working and to pursue your goals for your team and so forth.” And in the military, we actually had one coworker of my spouse who was very concerned about me but he didn’t feel like he knew enough about me to come and confront me on this upfront. What he did was go to her and say, “ Listen, I understand he wants to quit. I don’t know how to keep him from doing that. But he really needs to take up golf. If he would start golfing, then he build a contact network and be able to find somebody to give him a job when he runs out of money, gets bored or admits his life is over.” And this guy really had not understood the network we had built up among other likeminded friends for financial independence. We were going to FINCON back in 2001 or 2002. But we also knew other people on the Internet who were pushing for this. There were Internet forums, bulletin boards and other things building up and you could go talk with these people and read the research. You had the network but you just couldn’t see it because it wasn’t out in public like everything else is with corporate life. So there’s a big bunch of pushback. I took a few months to spend time with family 18 years ago and we’re still spending extra time with family today. They are still members of the family, mostly elder members of the family, who are convinced that we made a horrible mistake and it’s all going to fall apart. But you can do the numbers and the math just as well as I can. And after 18 years, because we’ve survived all the bad things that can happen to a financial portfolio, the good, upside parts have been far more lucrative than the bad things that happened from volatility or during recessions. Back then, in 2002, we knew we had enough. By 2007, 2008, we knew we had more than enough. We got through the great recession, came out the other side and still had enough. The finances have kept going up from there. Now, today, we know that even if there is a cataclysmic event like a complete cessation of the nation’s economy from some virus, we know we still have enough assets to be able to live a lifestyle we enjoy and to do the things we want to do within reason. We have more than enough to the point where we’re now thinking about legacy, philanthropy and all those other life plans you start looking at when you have all the money you need to last the rest of your life. This is our third recession in 18 years and I’m far happier being financially independent and watching the incredible volatility of a portfolio. I’m much happier with that in my lifestyle than I would have been if I were going through these recessions while I was employed, if I were worried about getting laid off, if I were worried about trying to save money for retirement. Again, the best place to be during a pandemic is financial independence because you’ve got that resilience, financial stability and support, and you can figure out how to live your life without living in the fear of financial problems.

Tom: You mentioned going through all these recessions. What was that like for you? Did you have an urge to try to get out before it got bad or did you just ride it out? Where were you mentally during all of these?

Doug: I’ll start with this latest recession. In March, the stock market in America dropped 30 percent in one week. If that had happened to me in 2002, I would have been panicked. And the fact that it happened in 2020 where if dropped 30 percent like that, my reaction was more like, “Wow, look at that. That’s amazing.” My biggest regret was that I actually didn’t have any money left over. If you’ve done an asset allocation, you don’t have money left over. You’ve got an asset allocation and you’re invested in it. We did have a conversation about rebalancing, but that didn’t make much sense so we just watched the volatility ride it out. We did make one move. We donated a gift to our daughter’s college savings fund. And that got invested in the stock market right after that 30 percent dip. At the time, my daughter and my son-in-law said, “Oh, this is going to be a lesson. You could start out with buying the dip at 30 percent and then watch it go down another 30 percent,” but I kept my mouth shut. I’ve learned to do that later in life. Today, that fund has completely recovered and gone on to build up. That small donation is probably going to pay for the first two or three semesters of college just because she was born and in the beginning of a pandemic. And she’s got 17 years of compounding left before she has to worry about cashing out to pay for college. Back in 2002 when I retired, we’re in the middle of the Internet recession. I retired in June and the economy bottomed out in October. But by October of 2002, we were pretty sure the entire stock market was going to go to zero and the dollar was going to implode. And we were all going to be penniless in the streets. It felt like the 1970s and 1980s all over again. It felt like that significant life event you had when you were growing up that scarred you and everybody your neighborhood—you still remember it 20 or 30 years later. We did have an intense discussion, my spouse and I, about asset allocation and what we were going to invest in. We didn’t make too many changes and we got through it. That started the cycle of where you go through the recession, feel all the emotions and still get through it. By 2007, as the economy started to go up and up and up, I can remember thinking, “This is nuts! This is great, but this is nuts. Valuations are out of whack. We’ve never seen this much money in our investment accounts before. What’s going on?” But we didn’t change anything. And then, of course, when the great recession started, I had the exact same reaction, emotional disbelief at what was happening. I remember opening a screen in early 2009 and looking at our brokerage account and having the exact same reaction I had in 2007, “This is nuts. This can’t be this low. It can’t go all the way to zero.” But again, we did some rebalancing. We did some tax-loss harvesting. We were able to sell some things and not have to pay as much tax on it when we could buy it back when it was cheaper. Those were tinkering at the edges. Financially, it probably didn’t have much of an impact. But emotionally, the behavioral psychology made you feel like you were taking action, protecting yourself and doing things to minimize the damage so it made me feel better. And of course, in 2009, we looked at that and said, “This is ridiculous. I’ve never seen such a small number before in my life since I reached financial independence and retired.” We did the math and realized it was still enough. We had seen that in 2002 at the bottom of the recession and again in 2009 at the bottom of the recession. It was still enough. It never gets easier to go through a recession. You never see it coming. If you saw it coming, you would have done something about it and been ready for it. That’s the definition of a recession, you never saw it coming. You still feel that same emotional cycle. I will say though, as I get older and more experienced, when recessions come out of nowhere and hit hard like that, the psychological and emotional impact is not as bad. You’ve seen it before, you know it’s not going to be pleasant. It’s just like watching the snow fall outside realizing that you’ve got 18 inches of snow and the power goes out. You know it’s not going to be pleasant but you’ve been through it before and know how to deal with it. It’s not enjoyable but you can cope. You’re resilient and have the experience, temperament and time to get through it all. Again, you reflect on if you’d rather be financially independent going through this situation or be employed in a corporate job, worrying about paying off your consumer debts, dealing with the threat of layoffs and wondering where the money’s going to come from to save for retirement. Even though you’re stressed out by the recession and by the volatility, you’re still in a better place.

Tom: Like I’ve said on this show before, I’m really good at riding through these things because I’m a very math minded. I understand just to push through. One thing I’m struggling with more and more is looking back. Air Canada’s our biggest airline. And in In 2009, the numbers (off the top of my head) were, if you invested $20,000 at the lowest, you’d have a $1 million 10 years later. To look at it now you’d say, “Gee, I wish I did that.” How would you know? Because you would be buying at such a level of fear for that stock to get that cheap. It just went through a massive drop and it looked like they’d probably be bankrupt. So it’s easy to look back wishing you had done that. But it kind of sounds like the Back To The Future movie where you could go back and get the lottery number. But you just can’t.

Doug: Only with that knowledge in retrospect. If you look at any of today’s major corporations—we’ll just use Microsoft or Apple or Amazon. If you looked at their charts, their stock prices and matched that up to the headlines that were going on at the time, you can pick out 30 or 40 times over a 10 year period, almost every quarter practically, where you would have said, “Oh, this is going bad. This is going to end in bankruptcy,” and you would have run away screaming. Today, you look back and say, “Oh, I should have bought at that 40 percent discount. I should have bought when the CEO had to resign. I should have bought when their sales imploded.” I don’t know if you have heard this story before, but did you know that there was a third co-founder, a third investor in Apple Computer? This person was a business relationship, somebody that Steve and Steve had been buying computer parts from. At the time, they were building the Apple One and were trying to figure out how to build what became the Apple Two. They bought something like $800 which, back in 1980 was a significant sum of money. They were essentially (in today’s dollars) about $3,000 in to this guy for the parts. They paid him (in equity) what became Apple Computer. He realized that if this company imploded and went bankrupt… He knew Steve and Steve didn’t look very much like what you would expect two tycoons of the future to look like so he became concerned about the liability. The downside for him was far worse than any potential upside of sticking with these guys and leaving his money invested them. So he sold out. He gave back his equity shares for a very small amount of money. He gave them back to Steve and Steve and got out of that whole thing. He made sure he protected his assets, protected his business and avoided his personal liability for any of their debts when they clearly went bankrupt. Of course, today that $800 would be worth some incredible eight digit number. But the point was, at the time you were dealing with the information you had and doing the best you could to project it or figure out how to survive. It comes down to can you pick that one company out of the 20 or so in its sector that will survive? Or are you just buying a lottery ticket and hoping that it pays off? You really don’t know unless you buy the other 19 which means you’re going to buy total stock market index fund, right?

Tom: Yes. And then this still comes down to the fact that you cannot predict the markets. Sometimes it seems so obvious looking back, like you mentioned, at Apple. For 10 or 15 years, I kept thinking Apple couldn’t keep rising like it does. I will not invest in individual tech stocks because I cannot follow the changes. You think of the big brands from 15, 20 years ago, they don’t exist now. It would be too much. But I always thought Apple can’t just keep going up. It can’t keep going up. And it certainly has so this is why I don’t get into it.

Doug: Here’s the other side of why investing is not just logic and math and analysis. I have a friend who is doing very well. They’re not financially independent, but they’re well on their way. It’s only a matter of time and feeling comfortable with their margin. They inherited a number of shares of Apple stock and the advice they got at that point in their lives, that very vulnerable, emotional time of their lives was, don’t sell this. Hold onto this. It’s going to the moon. Don’t sell any of this Apple stock. Hold onto it. Today, when you go through their asset allocation, 60 percent of their asset allocation of their net worth, 60 percent is in Apple stock. I have explained several times the concept of uncompensated risk, the concept of single stock risk. I’ve gone through the logic question of what happens if all of this evaporates and you’re left with the other 40 percent of your portfolio. What was your life going to look like with that? We’ve done all of those discussions but the emotional component is far more powerful than that math and logic. I keep coming back to that same bit of advice they got 15 years ago which is to never sell Apple. After you study this information for a while, after you look at the stuff for a while, you realize that every corporation we have today in the next 15 or 20 years is going to go through a near-death experience. The idea of putting all your assets into one corporation, even if it’s Berkshire Hathaway, or Amazon, it is still a tremendous amount of risk. You don’t know if you’re getting paid the right amount of money and you don’t understand necessarily when it’s going to go bad. You can’t predict it. It’s far better, I think, to spend one percent of the effort you’re putting into gaining that stock position and getting back to the benchmark from the market. You’ve got 99.95 percent of the stock market returns for one percent of the personal effort and you can go live your life.

Tom: One thing that that might be applicable to you is that you were in the military. I don’t know if the US military and the Canadian military are the same, but did you hit the magic number of years work to get a pension? And, if you got it, how did that help you make the early retirement and everything happen?

Doug: That’s a very good question because a lot of people in both militaries, Canadian and US feel like you should stick around for that pension because it’s a government pension. They can raise taxes anytime they want and make sure you still get that deposit at the end of the month. I stayed on active duty for longer than I should have. I went through a career air pocket at the 12 years point. I should have left active duty and gone into the reserves. The finances, in retrospect, would have worked out about the same. Instead, out of fear, ignorance, fatigue and all the things that go through everybody’s minds when you’re working a corporate job and you’re not having fun, I stuck with it. I knew I only had eight years to go to get that pension and life would be magically better. I now have enough experience at retirement that I can go back and do all the math. As it turns out, if I had left active duty at that point I would have had about the same assets as we do today. If I had never had a pension, left the military and not even stuck around long enough for the pension, our high savings rate would have still given us enough. Today, when I talk about having more than enough, I mean, way more than enough. The 4-percent safe withdrawal rate has overcome three recessions, has overcome hundreds of thousands of dollars of philanthropy and other things that we’ve done in our lives that we never thought we’d have the assets or the resources to do. And it’s all worked out. Now, at some point you begin to wonder when the fun is going to stop? When’s this roller coaster going to go off the rails? But the reality has been that over the last 18 years, our portfolio has risen faster than our spending. Our withdrawal rate—you start out right at 4-percent. And, you know, that’s probably pushing it as much as you can but our actual annual withdrawals have declined over that 18 years. They’ve gotten lower to the point where even the biggest, pessimistic, skeptics about the future of investing are about the 4-percent rule—even those people admit three to three and a half percent is probably going to have your assets last longer than you will. And we’ve been there for quite a while. So, I regretted sticking out for that pension. And now I have the numbers to prove it, that I should have regretted. I should have broken out of that cycle of fear and ignorance and figured out what I wanted to do. But again, it’s very difficult to come up with the self-confidence to say, “I’m going to quit this job that has a highly reliable paycheck and go do something that I haven’t even figured out yet that might work out better.” And that’s my advice today for people, when the fun stops in the military—and I don’t care which side of the line you’re on, whether you’re in the US military or the Canadian military, when that fun goes away and it’s no longer challenging and fulfilling, leave active duty. Find an alternate career like in the reserves, part time military, if you can. There’s a lot of good things about that camaraderie; a shared mission, a sense of purpose. Also, seek out other alternatives for your career, your life, and build a better life. As you’re saving for financial independence, design the life where you’re going to spend the rest of your years living. Getting out of that job and cutting out that pension, it’s not worth the benefits of the pension just to give up all that quality of life. Essentially, you cross the line from frugality to deprivation. I don’t know the numbers for Canadian military, but in the US military, only 15 percent get that pension. That’s one out of six. And when you show up at recruit training and there’s 100 people there, this means that everybody in your squad is going to get out of the military before 20. And you probably will, too. It also means that even if you’ve got 10 years of service, when you look around the office and there’s four people in the office, only one of them is going to stick around for that pension. And so in the US military, we’ve now gone to a pension system that has some essentially matching contributions to your RRSP. And the whole idea is that when you do get out of military (because you are probably not going to get that pension) at least you’ll have more money saved for retirement from those matching contributions from the military than you would have if you had felt like you needed to gut it out for that pension. I think we’ve given people the freedom to make those life choices that they should make when it stops being challenging and fulfilling.

Tom: And that’s a good point. I didn’t realize so few people stay for the pension. I just assumed this was such an amazing opportunity that everyone would make it work.

Doug: We might not emphasize the statistics at the very first day of recruit training. We don’t want to talk about the 85 people that get out before they’ve gotten to 20 years. We want you all to think about becoming the future chief of staff or chief of Naval Operations or Joint Chiefs. We want you to think about a lifetime in the military.

Tom: Well, this has been great. Thanks for running us through your whole life FIRE journey. Can you tell people where they can find you online?

Doug: Yeah, the easiest way is to look me up, Doug Nordman. Or look up, The Military Guide. That’s the website. We’ve been doing this for over a decade so the search engines have recognized us with the first page of search results. And most of the time I get ranked on search engines for the question, “How do I retire,” or, “How do I reach financial independence?” People are finding me by asking those questions. That’s where you can find me. I’m also on Facebook, Doug Nordman. My Facebook profile is totally public. I’m not hiding anything there. I want people to understand what life looks like with that 18 years of experience at retirement, raising a family and now watching your grandchildren grow up as well as the benefits to what you’re saving for.

Tom: Well, great. Thanks for being on the show.

Doug: Oh, appreciate it. Thanks for the chance.

Thank you, Doug, for sharing your story and getting us inspired about financial independence. You can find the show notes for this episode at Are you a member of the Maple Money Show Facebook community? If not, I’d love to connect with you there. It’s a great place to ask a question or share recent money win to encourage others. To join, head over to to share with the group. Thanks as always for listening and I look forward to seeing you back here next week.

The #1 factor that led to our financial independence was maintaining a high savings rate. That high savings rate will overcome almost every other mistake you could make, for example, chasing hot mutual funds, or picking the manager of the year...- Doug Nordman Click to Tweet