27 October 2016
Winnie Tseng and Jeremy Jacobson have been traveling around the world after taking early retirement at the end of 2012. They had an addition to their family last year. Photos: HKEJ
Winnie Tseng and Jeremy Jacobson have been traveling around the world after taking early retirement at the end of 2012. They had an addition to their family last year. Photos: HKEJ

How a couple managed to retire in their 30s

Winnie Tseng and Jeremy Jacobson have been enjoying themselves thoroughly after taking early retirement at the end of 2012, when they were both still in their thirties. 

The couple has been traveling around the world, using the income derived from their investment portfolio.

Tseng, who hails from Taiwan, first met Jacobson — an American — during a business assignment in Beijing in 2005. They fell in love with each other, got married and settled down in Seattle in 2010.

Tseng and Jacobson had been planning to achieve financial freedom long before their marriage.

“We didn’t want to give our brightest moments of life away to working. Besides, it will be too late to go traveling at the age of 70 or 80,” Tseng said.

Their first step to early retirement was to set a savings target. They worked out how much they would need a month to arrive at the sum they would have to save. Then the two kept working hard and saving hard for a decade.

Tseng had been a project manager at the Taiwan branch of Dell Inc, while Jacobson was an engineer with Microsoft in the US. They minimized all their expenses so as to save up to 70 percent of their salary. Their combined annual salary at the beginning was US$85,000, and by the end of 2012, it was US$170,000 excluding bonuses.

By cutting down all unnecessary expenses, they were able to control monthly expenses within US$ 2,000. For instance, they prepare their own meals rather than eating out. Instead of renting a house, they rented a small apartment in the university area. To get around, they do bicycling or take public transport.

Asked if they had sacrificed their living standards with a series of cutbacks in daily life, Tseng said she doesn’t agree with the notion. The couple has all that they need, and live comfortably, she said, adding that they never feel bad or constrained.

Having a good life does not mean being materialistic, Tseng adds.

“The most valuable stuff in life is all things that money cannot buy — the quality time we get along with our family and friends, or the eye-opening traveling experiences my husband and I share together.”

“We had some ‘bitter’ moments at the beginning but then we can enjoy our financial freedom in early retirement, which also means we can truly enjoy what we want at a much early time.”

It is hard not to draw comments from colleagues, but the rewards are worth it.

“Though Jacobson’s colleagues didn’t look down upon us, they couldn’t help feeling weird towards what we were doing, and advising us that it was really absolutely unnecessarily to work like that. However, when we retired three years ago, they were all so envious of us and amazed that early retirement is really something possible.”

To generate income from their savings, Tseng and Jacobson invest heavily in index funds. Vanguard Total Stock Market Index Fund and Vanguard Total International Stock Index Fund are two of their favorites.

During 2008 global financial crisis, they suffered book losses but Jeremy didn’t lose faith. He kept working hard and invested more. Two years later their equity portfolio grew to US$1 million. Dividends from the portfolio now cover most of their expenses.

But unlike most people, Tseng and Jacobson never buy property.

Jacobson notes that most Americans get into housing mortgages and other debt. If they use the available money as investment capital, rather than for housing purchases and the mortgage loan payment, they could be financially free when they are in their fifties, or even forties, he says.

Tseng also says people should not follow blindly and chase properties.

“Everyone around says an apartment is necessary, as a house means security. However, to me, spending 20-30 years of your life to pay for your home is not worth it.”

Tseng believes that the value of a home comes from the actual family. It is absurd to see people working like slaves for the houses rather than focus on spending more time with their families, she says.

Couples can enjoy mobility if they don’t own a property, Tseng says.

Tseng and her husband take their time visiting various countries on South and Central America by staying at each place for three to four months to experience life there and get to know the local people and make friends.

They are continuing this lifestyle despite having a newborn son.

“We pay only 10 percent of regular fare for our son’s tickets before he turns three.”

Initially Tseng and Jacobson’s plan did not cover the expenses of having a child. Now, their monthly expenses have doubled due to the addition in their family.

Nevertheless, the dividends from their investments and income generated from advertisements posted on their blogs can still cover their daily expenses, so they need not give up their retirement.

“Generally speaking people think bringing up a child is expensive. It is not so bad when you babysit your child fulltime,” says Tseng. If you avoid taking your child to daycare or hiring a domestic helper at home, you can save a lot, she explains.

Tseng and her husband are planning homeschooling for their son. But even if they decide later to send him to regular school, their savings would still be more than sufficient for the tuition fee for school, they say.

To prepare for the future, the couple has been putting away US$10,000 a year for the son’s college education fund. 

Like their early retirement plan, the key is to start saving early.

This article appeared in the July issue of Hong Kong Economic Journal Monthly.
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Translation by Darlie Yiu

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