(Disclosure: Some of the links below may be affiliate links. For more information, read my disclosure.)
Today, I want to discuss one question that has been on the back of my mind for a while. Can we retire early without a successful blog? The personal finance community is full of bloggers who retired early or want to retire early. However, some of these retirees are getting a hefty income from their blogs. Their examples may not be very easy to follow without such an income in retirement.
In fact, I believe that there are three problems together in this situation. First of all, as I said, can we retire without a blog income? We are going to try to answer this question.
Second, and probably more important, you should be wary of some blogger examples. Due to the high income they get, some bloggers do not use the 4% withdrawal rule that they advertise. That means that you cannot compare your situation and their situations since they are still investing after having retired. Their net worth keeps increasing after retirement. This is not because the 4% rule is working. This is because they do not have to withdraw from their principal. And this is not a common case for most people who try to follow the path to Financial Independence (FI).
Finally, I believe that you should sometimes be careful about affiliate links. They may be here mostly because the blogger wants the affiliate money and not because it is a really good product in which the blogger believes. This is not directly related to early retirees. But this is entirely related to how bloggers are monetizing their blogs.
In this post, I want to discuss these three problems in details. I think it is really important knowing about that. I went a bit overboard with the length of this post. But I think it is an important subject that deserves more coverage.
How much do FIRE bloggers make?
The first thing we need to discuss is to see how much the big FIRE bloggers are making. Not all bloggers are very transparent about how much they make. However, you can find blogging income reports from several big bloggers. If you do not read these, you may be surprised at how much money some people make from their blogs. And FIRE bloggers are probably not even the bloggers that make the most with blogging. Let’s take a few examples.
For instance, one of my favorite bloggers, Joe Udo, from retireby40, got about 50’000 dollars from his blog in both 2017 and 2018. He has always been extremely transparent about this. He gets income from some ads and from affiliate links present in some pages. And contrary to some other bloggers, he does not have pages stuffed with only affiliate links. I really like the balance of content and monetization on his website.
Some bloggers are making a lot less money but are still getting some nice income. For instance, Lily at thefrugalgene.com, another of my favorite bloggers, is able to make something between 1000 and 2000 USD on her blog each month. This gets published in some of her monthly reports. This is a very nice income. But she is not retired yet.
Grant Sabatier from millenialmoney.com is in another category by himself. In 2017, he made more than 400’000 USD in a single year. This is from multiple income sources related to his website. It seems he stopped publishing these income reports. Indeed, I was not able to find any report for 2018.
But Mr. Money Mustache is not in rest. In 2016, he disclosed that his blog was making about 400’000 USD per year. Mr. Money Mustache is one of the initiators of the FIRE movement. At least, it was he who made the FIRE philosophy so popular these days.
The personal finance blogger that I know makes the most money is Michelle from makingsenseofcents. In 2018, she made one and a half million dollars from her blog! This is absolutely insane. In a single year, she makes enough for most people to retire. It is easy to see that there is a large discrepancy between such bloggers and their readers.
On the other hand, there are plenty of bloggers who make less than 1000 USD per year on their blogs. And there are even bloggers that do not try to monetize their blogs.
Personally, I made 85.50 CHF in 2018 on my blog. This is already slightly more than what I have spent for the blog. However, this is less than 10 cents per hour if we consider the amount of time put into the blog. Not really the best side hustle. But money is not why I blog.
Unfortunately, there are also many FIRE bloggers that are not transparent at all with their blog income. This makes it difficult to relate to them. This also makes it difficult to know if their story is possible without their blog income.
How do FIRE bloggers make money?
We have seen that FIRE bloggers can make a lot of money. We can see how as well. In fact, there are many ways for bloggers to monetize their blogs. Most bloggers use the same main three techniques:
- Ads. This is the most common form of blog monetization techniques. You simply put some ads on your websites and the advertisement company gives you back money when one of your readers click on an ad. Most bloggers use either Google Adsense or Mediavine for it. Contrary to popular belief, this is not the technique that is paying the most. However, it is a great way to start monetizing a blog.
- Affiliate Links. One company pays you if you refer a client to them. I am sure you have seen affiliate links to Personal Capital on most U.S. blogs. This can generate a lot of revenue. Especially since some companies are given you back a percentage of what the user spends on their services. For instance, I am using affiliate links to Interactive Brokers and a few other services.
- Sponsored Posts. A company will pay you to advertise their products or services on your blog. You will also find a lot of them in some blogs. They are generally advertised as being sponsored guest posts. They are often reviews of some services. But sometimes, they are more disguised as real content with links to a service inside.
- Books. More and more of the successful FIRE bloggers are writing books. These books contain mostly what their blog contains but in a much more organized way. I am not sure of how much bloggers make with their books, but I do not think it is a substantial part of their earnings.
- Courses. In the FIRE blogging world, there are very few online courses yet. And most of them are about blogging, not even personal finance. But in the general blogging community, many bloggers are earning a lot of money with these courses. I do not doubt that more and more courses will be available from FIRE blogs soon.
Of course, there are other means of monetizing a blog. But these are the main ways that I currently observe.
Be careful with affiliate links
Let’s tackle one of the three problems I want to tackle in this post. This is about affiliate links. Generally, big bloggers are making most of their income with affiliate links. This is the thing I would like to spend a bit more time on it. Again, an affiliate link is a special link to a company. If you follow this link and purchase a product, the blogger (the referrer) will get some money.
If used correctly, affiliate links are great. They allow bloggers to recommend the products they really like and get some money back. And this makes good advertisements for these great products. It is a win-win situation for both the blogger and the company. But it may not be a win situation for the reader of the blog. Indeed, there is something very pervert about affiliate links. The best affiliate programs are not the programs of the best products. Some companies are focusing on their affiliate programs more than they are focusing on the quality of their products. That means that there is more of an incentive for a blogger to recommend the product with the best affiliate program rather than the best product!
Now, some bloggers are honest and will choose the best products rather than choose the best affiliate program. But you need to be aware of this. It is not because somebody very influent is recommending a product that this product is any good. In fact, a blogger can recommend a product without even using it. He may not even really know about its quality. And when you see some pages stuffed with different services, you can often see that services with affiliate programs are often first in the first, such as this article. There is no way a single person will use all these services. And these articles are becoming legion. Some of the blogs I used to read and enjoy are quickly becoming affiliate links directories today.
Affiliate links controversy
We can take two concrete examples. The first one is not so bad, it is about Personal Capital. If you read many personal finance blogs, you have read recommendations about this service many times. Once somebody registers 100K USD of assets at Personal Capital, the referrer gets 100$. I do not have anything against Personal Capital, it is just not helpful for me since I am not in the U.S. And it is not hurting readers in most cases. As long as they do not use the money management services of Personal Capital, it is free. However, I do not believe this service will change your life. Managing your assets can be done with a single spreadsheet and you will still be fine. The reasons it is recommended everywhere is mostly because their affiliate program is great!
We can take another example, this time a really bad one. Bluehost! It is a well-known hosting company. Bluehost is advertised on most of the blogs I am reading. At first, I thought it was incredibly popular and it was the best service out there. But it is not the case. Bluehost has the best affiliate program. But Bluehost is one of the worst hosting companies out there. Their services are really bad, their servers are slow and their support is terrible. I should know, I started hosting my blog with them. Since everybody was advising it, I trusted them. I soon realized that Bluehost offers a terrible quality of service. Bloggers just want the higher affiliate income that this company is proposing. So I had to migrate to another hosting company.
You do not have to take my word for it. Out of almost 800 Bluehost reviews, they got a score of 2.38. This is a borderline scam. You can compare that to Siteground which I am using now, that gets a 4.6 grade out of 1000 Siteground reviews. If you really search, you will find that many people are discussing this situation. However, there are still many more blogs recommending Bluehost rather than Siteground (or any other). This is a very sad fact for blogs! This is definitely bad for the readers!
These kinds of affiliate links are why almost every blog has a post about how to start to a blog. Because this is the best way to monetize a blog! I am sure you have seen these blog posts blossom all over your favorite blogs. Even bloggers who make almost no income or have almost no traffic have these posts now.
Bloggers do not use the 4% rule
Alright, now we need to get back on track to early retirement. This is probably the most important point I want to talk about. Successful bloggers can live almost only, or even entirely, on their blog income. Some of them are actually still saving a lot of money even though they are retired. That means that they do not withdraw anything from their principal and they do not follow the 4% withdrawal rule. I have mostly talked about blog income here. But the same applies to real estate income. A lot of bloggers are also getting a large income from rental properties.
This is very important! Even though they advocate this 4% rule for Financial Independence and Retire Early (FIRE), they are not using it themselves. This means that they did not put their own theories to the test. This does not mean the theory does not work! It means that their examples are not good examples of the theory put to the test.
When you look at a net worth graph by some popular bloggers, you may have seen that it always go up. That is not only because the market goes up. But that is also because they are not withdrawing from and they are still able to invest more! In a retirement without income, you would see withdrawals and not more investments. So these graphs are not representative of how someone would retire early without a high income.
Readers need to remember that successful bloggers are setting a different example of retirement. They are examples of retirement with some income. This is much easier to achieve. A person that wants to retire without an income is unlikely to invest more money into the market in retirement!
Some bloggers retired before getting income
Now, it is also important to note that some bloggers retired before getting a large income from their blogs. In fact, they mostly got famous by retiring early and their blog got a lot more traction after early retirement. We will discuss this paradox later on. This means that their early examples are still setting an example of the 4% rule. However, you need to distinguish the time at which they started getting a large income.
For instance, Mr. Money Mustache retired in 2005. This is long before his blog started making any consistent amount of money. Joe Udo made about 10’000 USD from the blog on the year he retired. This helped him of course, but it did not cover its entire expenses.
Before they retired, most of the bloggers were not counting on the blog income for retirement.
Are they really retired?
Another question that is really interesting to ask is whether early retiree bloggers are really retired. Some of them spend a very considerable amount of time working on their blog.
They may not be employees anymore, but I believe that they are not really retired either. Some of them may even not be able to stay retired if they stopped working on their blogs. Is not that the definition of work?
Joe Udo is still spending between 20 and 30 hours a week on his blog these days. And he said that at the beginning he was spending even more time on it. It may well be a hobby. But for me, it still feels like work. From what I could gather, Michelle Schroeder-Gardner is working about 10 hours per week. But she has a virtual assistant helping her.
Most high-income bloggers seem to be spending between 10 and 40 hours per week on their blogs. And I am pretty sure some of them spend even more time on it. This is not negligible at all! I get that for some of them, it is really their hobbies. As for me, I am having a blast blogging and I do not even make an income from it. But remember that successful bloggers have to spend a lot of time on it if they want the income to continue. And some of them may depend more on this income than we know.
Non-bloggers early retirees
If you look on the internet, it seems that there all early retirees are also bloggers. The fact that we could believe that only successful bloggers are retired is highly biased. The problem is that we only know about bloggers because they are highly visible on the internet. If your neighbor was early retired but never told you, you would not know. If he had a blog, you would probably know about its early retirement.
It is much easier to find early retirees with a blog than early retirees without one. This does not prove that there are none. It just proves that people with a blog are more visible than people without one! Duh!
Very recently, ESI started a new series on esimoney with interviews of early retirees! I think this is a great thing. And I really hope he does not only interview bloggers like most series are doing these days. The first retiree interview got released last month. I really hope this series goes on for a long while.
If you are aware of others interviews or stories about early retirees without blog income, I would love to hear about it!
The Paradox of Success
Now, there is a nice paradox here. Over time, the FIRE philosophy that bloggers are selling changes from the FIRE they are living due to their blog income increasing.
When FIRE bloggers start their blogs before retirement, they do not yet get income from their blog. They are advocating for Financial Independence without work. That means that they have to accumulate a net worth of about 25 times their yearly expenses. At least that is what they aim to if they follow the 4% withdrawal rule. When they are starting their journey, they are trying to show a journey that people can achieve as well. They basically say that everybody can do it as they are doing it and they should follow that they do. That is what I am trying to achieve and that is what I am trying to blog about as well.
However, once they start getting income from their blog, this will accelerate the way to Financial Independence. This is not a big deal since increasing your income is a very good way to reach FI faster. However, once they are financially independent and retire, some of their expenses, or all of them, are sustained by their blog income. And this is a problem because they are writing (and selling somehow) the way of Financially Independence without having to work ever again. However, they are living their Financial Independence will still getting an income. This means there is a huge gap between the FIRE they are selling on their blog and the FIRE they are living.
This makes a huge difference since they do not need to withdraw from their capital. It means they can handle much higher corrections in the stock market than people who are totally retired.
Can you retire without a blog income?
Let’s get back to the question in the title of this article. I think it is still entirely possible to retire without a blog income. The theory behind Financial Independence, namely the 4% rule, is sound. You can also use a different withdrawal rate to be safer or more aggressive. There are many parameters you can take into account in order to validate your retirement plan.
However, there is no doubt that having an income after retirement will help you a lot. First, it will protect you from sequences of returns risk. Since you will not need to withdraw too much from your portfolio, you will not have to withdraw at the worst possible time. Moreover, it will also help you retire earlier if you wish to. It is just a different kind of retirement, one where you are still making money instead of one where you never have to work again.
If you will not have an income in retirement, like most people, you need to be prepared for the hard times. For instance, if you are able to have a plan to cut your retirement spending by about 25% during a recession, that could help a lot. Having a large cash cushion could also help by not having to sell your investments at all when the stock market is down. All these things are necessary if you want to ensure your retirement. However, if you have a large blog income, you do not need it. So once again, be careful of examples set by very successful bloggers. You need to make your own path to Financial Independence!
What can readers do?
What is important for the readers is to take everything from bloggers with a pinch of salt.
Even though I do not doubt that most personal finance bloggers are honest, it would be naive to believe that everything published on blogs is entirely true. Even though they may not mean it, they may forget to include something important that would change the way their situation is perceived. It is better to bring some skepticism when reading things on the internet. Do not forget that people are not accountable for anything they say.
Another thing that readers need to be careful about is affiliate links. Many bloggers will only recommend services they are using and that they actually trust. However, some bloggers will sometimes write blog posts only for the sake of affiliate links. I believe that these kinds of posts have no value for the readers and are actually harmful. Therefore, you need to be extra careful about trusting affiliate links. You never really know if it was because they really like the service or because they make a hefty commission on people they refer.
Finally, and more on topic, readers should be aware that big bloggers may have large or very large revenue after their early retirement. This means that even if you follow their example to the letter, you will not have such a good result after retirement than they have. Unless of course, you start a blog as well and get a big income from it. This does not mean you cannot follow their lessons. You just need to be aware of the fact that their kind of FIRE is retirement with work rather than a retirement where you never have to work again.
What can bloggers do?
There are a few things that bloggers can do to improve this state of things. Of course, they should not stop monetizing their blogs! Some bloggers are making an excellent job with monetizing their blogs and I highly regard their efforts and their success. Everybody would like his hobby to be turned in a side hustle. We just need more transparency from many bloggers on some things.
First, every blogger should disclose if they monetize their blogs or not. This is something that is already working quite well I think. Most bloggers using affiliate links are honest about them and have a disclaimer regarding them. Readers should know if a link is an affiliate or not. Of course, you can look at the target of the link and recognize affiliate links by their parameters. But not all readers are tech-savvy and some may simply be too gullible.
Also, I believe that all personal finance bloggers and especially Financial Independence (FI) bloggers should disclose how much they make from their blogs. There is no need for full details, it would already be great is every blogger disclosed the range of income like more than 50K, more than 100K or one million per year. This is a form of honesty and that will help the readers understand the context much better. Without that, the reader has no way of knowing that the blogger may be retired only because of the blog. Some bloggers are already doing that and it is great!
Moreover, when an early retiree blogger publishes his net worth evolution, he should fully disclose if he gets an income. This should be present on each page where this is important. Such as disclaimer would help the reader knowing that the blogger would not have that much money left if he did not get a nice income from its blog. Such bloggers should not have a single disclaimer but should insist on it when they present their finances after retirement. This is simply being honest.
Finally, a blogger should never recommend a service only because of their affiliate program. I understand the need for money. I may be naive, but I believe that honesty will take a long way in convincing your readership. It is a long-term work. But bad affiliate links can hurt the people who are actually trusting the bloggers. And they can hurt the community as a whole. If a blogger advertises a product because the affiliate program, it does not serve any purpose for the reader. It has no value. The value of a blog should be in its content and its recommendations. Recommending something purely for money issues is harmful. I even believe that affiliate links should only be used for services that the blogger actually uses! No blogger use ten different services that do the same thing, so there is no point in recommending all of them!
This turned out to be much longer than I expected. The main issue is that when FIRE bloggers are starting, they are preaching an early retirement where you will never have to work again. However, as their blog become more successful, they are living an early retirement where they still get a substantial income from their blog. This means that there is a large difference between the FIRE they are writing about and the FIRE they are living. The reader is not always aware of that and should be extra careful when looking at their early retirement numbers.
Do not take me wrong, I do not advise against monetizing blogs! For instance, I have some affiliate links on my blog. It does not generate any revenue but I hope that in due time it will. However, not all affiliate links are good. There are plenty of affiliate links that can be hurtful to readers if they are only recommended for their affiliate programs and not for their real usefulness. I would never recommend a service I do not trust or like just for the sake of adding one more affiliate links to my website.
After I started writing this post, I found out that I am not the only one thinking like this. Tanja Hester from Our Next Life wrote a very nice post about the fact that blogs do not tell the full story. I really recommend this post, it is a nice read! She even published a full manifesto for FIRE bloggers. I really wish that all bloggers would follow this manifesto.
If you are interested in reading more about that, there is a very interesting Reddit that just started that is all about that: Is anyone here actually FIRE using only stock market investments, and not “faux-FIRE”? It is really interesting to read through.
What do you think about? Were you aware of these problems? What do you think bloggers should do about that situation? I would really like to hear all your comments about that subject. If you think I am doing a bad job at being transparent on my blog, I would really like to know as well!