Category Archives: Retirement Doubt

On FIRE but Afraid to Retire Early? The Unspoken Fear Erasing Asset That You Own

Financial Independence, Retire Early, Retirement Doubt,

Anxiety appears for many who are nearing or at their Financial Independence Retire Early target. Being a little afraid to retire early is normal. I certainly felt something hidden behind all of my excitement. But anyone reaching this FIRE milestone has an incredible asset.  It is an asset that grows regardless of market conditions. Once it’s recognized it should ease any sleepless nights about pulling the early retirement trigger. Yet it is an asset nobody really talks about. The best part is it’s a retirement fear-erasing asset that we already own. I only found out about it after my first early retirement. Having this knowledge gives me a lot of early retirement confidence.

Being at Least a Little Afraid to Retire Early Is Only Natural

Not afraid to retire early with this asset

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Here is what I believe based on my own early retirement experience. With all the planning, budgeting, debt elimination, saving and investing, we only really KNOW one thing. That one thing is living our life as a worker bee, living the taught and traditional career-driven, job oriented existence.  We create a frugal lifestyle focused on all the right things but it is alongside needed salary producing work.

Even after running our portfolio numbers through retirement calculators with successful funding results, we can still hesitate making the leap. For me, even though I longed for rat race escape, I still only really knew that one way of living.

I did take into account all of my many vacations from that career oriented way of living. I figured it gave me a taste of rat race freedom which certainly provided excitement about making my escape. Yet with all my positive calculations and retirement lifestyle planning there was still some hesitation to ditch worker bee life.

There are also anti-early retirement advice and articles from so-called retirement experts to feed anyone’s early retirement anxieties. Headlines like: Early retirees regret retiring or    Long Life spans means people should delay retirement are attention grabbers.

All of it is of course great advice for most people. It is certainly something to consider in our early retirement planning by having counter-strategies to avoid regrets. But for those of us on FIRE, the unspoken asset we have provides a retirement advantage over the average consumerist retiree.

People Who Are On FIRE needn’t be Afraid to Retire Early – Our Super Asset

The super asset I am talking about is the knowledge and experience that we gain on our journey to financial independence. Nobody really talks about the value of the skills and knowledge that gets us to FIRE. There isn’t a little box to check-off on retirement calculators either to improve retirement success rates. Yet these are crucial learned and practiced skills that will aid us in our early retirement. It is an advanced early retirement asset.

I didn’t recognize its value until after retiring. Had I given it respectful thought I would have had far less hesitation in pulling the early retirement trigger. It has been over 6 years since my first early retirement. I just wanted to share what I believe to be an unspoken early retirement asset.

This asset grows with experience

Something every early retiree should do is stay curious and always increase their knowledge. We keep learning and grow our early retirement knowledge-asset regardless of market conditions.

Stay actively engaged

Any early retiree who didn’t just fall into a pile of money and quit their job has been actively involved in their portfolio and budget. That doesn’t end when pitching the rat race. Skills learned will continue being used and grown. When anything looks challenged, decisions will be made and actions taken just as learned and done before retiring.

The skills of living below our means

Living below means seems to be a huge problem for a large part of the population. If we skillfully avoided lifestyle inflation while in the rat race, then we are far ahead of retirees who have later said they regret retiring when they did because they overspent. Our brains have been conditioned to change our spending or add to our income stream (see below) if we find our income becomes unable to meet our expenses.

Ability to side hustle or as I call it, retire often 

I know from experience that all of our ambition and abilities don’t just end with early retirement. That drive that gets us to FIRE doesn’t go up in smoke. It just changes its focus. Understanding that the definition of retirement isn’t the absence of work but instead is the absence of needing to work means we have no problem being open to opportunities of passion and interests.

There are no guaranties and we know it

We not only know it but accept it and are able to be successful with it. Risk has always been there on our FIRE journey. We do what we need to do. It separates us from the consumerist debt-ridden hordes. We have learned to take calculated risks to make it to early retirement and that skill continues throughout our lives. We know that things can happen beyond our control. But we won’t crawl under a rock and wither. We will take necessary action just as we did during the years before reaching full FIRE.

In Conclusion

There all kinds of reasons to be cautious about giving our final notice and retiring early. It’s only natural when walking away from the only lifestyle we really know and have known for our adult lives. But we needn’t be afraid and suffer through sleepless nights once our FIRE target comes into full view.

Use all of your FIRE- knowledge to counter any thoughts of early retirement gloom and doom and erase any fear. Celebrate when seeing your retirement funding calculations as positive. Throw in a few worst case scenarios. Then know that YOU are one of your biggest assets in early retirement to add to your early retirement confidence.

Early Retirement is like leaving the Casino when ahead

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My Father-in-law told me, Do Not Let Greed Delay Your Retirement, Early Retirement is like leaving the Casino when ahead. My father-in-law passed away suddenly a year ago and today has me remembering his wise advice. His is a cautionary tale that stuck with me and contributed to my own early retirement story. I was still several years away from my early retirement goal and my father-in-law had only been retired for a couple of years when he offered his advice to me.

Early Retirement is like leaving the Casino when ahead – Odds Favor the House

Your Employer Can Change the Rules

My father-in-law worked for United Airlines on their Ramp Services Crew. His career was about loading bags and freight with a mind to keep the plane’s cargo evenly distributed, de-icing planes in the winter, and everything else that they were to do. 30 years into his job that provided awesome travel benefits he could retire with a full pension, his 401K, and a bunch of United Airlines stock given to employees instead of salary raises. As he explained, only after you retired could you cash out of that stock and diversify (before new rules about employee stock holdings).

At age 58 he was still healthy and although he had plans of retiring and traveling the world on the retired airline employee travel benefits he decided that by staying a few more years he could build up more savings and collect higher social security later on.

A few years pass and some freight shifts during loading a plane and injures his back. After medical treatment and some rehab he returned to work but his back was never the same. He hung in there a few more months until he hit 35 years of service and retired.

Aside from health issues associated to his back injury something else happened during those last months while he was getting ready to retire. United Airlines filed for bankruptcy. His company stock representing years of raises was all but wiped-out overnight. You don’t get a warning so you can quickly retire and sell your stock (that would be insider trading). So he counted his blessings and retired with his pension. Soon afterward United Airlines ditched their pension and handed it off to the PBGC which came with a reduced monthly benefit.

Your Health Can Change

6 months after retiring he found out he has bladder cancer. After surgery and other cancer treatments it was successfully removed but left him tethered. He needed to always be close to a rest-room which made the thought of traveling less attractive to him. Still feeling blessed for beating cancer he couldn’t help but to think what if. “What if I had retired when I was 58 with my 30 years? I would have been able to sell that stock and travel as we had always planned.” What if indeed.

As he told me, “I got greedy and should have left the casino when I was ahead”. Ahead in both retirement money and health. He knew of my early retirement goal and then warned me, “Don’t Let Greed Delay Your Retirement because your future is unknown”. He then said he didn’t believe in crying over spilled milk but knowing what he knows now he would have left as soon as he could. The old hind-sight dealio for him but great advice for me to chew on.

Cancer would have still visited him but they would have had a few healthy years to get out and do all the traveling they had long-planned to do.

Leaving the Casino When Ahead

I did take his advice to heart. We don’t know what our future holds for us. Early Retirement is like leaving the Casino when ahead. If you stay too long or linger eventually the House will win. The “House” or “Casino” is the system of life in the modern world. The system where we work doing things other than what we really want to do by trading our time for money.

We choose financial responsibility as our game of choice which is our gamble to winning a chance to have as much time as possible HAPPILY LIVING free from needing to work.

We gamble that financial responsibility will pay off and we will be able to follow our passions and our interests before our slowing through aging, decreased health and then leaving the planet with our inevitable death.

With the anniversary of my father-in-law’s passing it is something that I have thought a lot about lately.

Do Not Let Greed Delay Your Retirement – The Temptation for More Money

There are the internal factors like greed and fear at work tempting us to work longer, save more, and delay our retirement for more money. There are also the externally applied messages to feed our greed and fear.

  • Messages telling us we need huge sums to retire with the same lifestyle we have when working.
  • Messages telling us we need to delay retirement to get bigger Social Security checks.
  • Messages telling us we need to plan on funding retirement until age 100.

Early Retirement is like leaving the Casino when aheadThese generic messages can cause us to look at what we have and decide to risk doubling down to have even more. Gambling our decreasing time for more money. Some folks pull it off but many lose. The odds favor the house. Life is finite. We burn through our time no matter how much is left, great or small. Most people have to burn through their time because they don’t play the game well (spending foolishly instead of saving/investing, heavy debt, making bad financial decisions) or have a long run of bad luck (poor work opportunities or underemployed) where the cards never came up for them. However if we do play well and have luck fall our way then we should resist greed or fear and know when to leave the casino when ahead.

Early Retirement is like leaving the Casino when ahead – Know When Enough Is Enough

This article isn’t about being financially reckless and pitching a career without first having done all that needs to be done to fund our retirement. Beating the House and winning with early retirement means we had just enough good luck and have played the game well through practice, commitment, and learned skills. We gambled with our earnings by saving and investing instead of seeking instant consumerist gratification. Gambling that we are going to hit the jackpot of retirement and have a greater tomorrow. If we are fortunate we will have retirement earlier than most who are spending time in the casino.

With the constant generic messages of needing more and more to retire comfortably we should take that in stride and run our own numbers.

Everyone’s retirement lifestyle and lifespan is different.

We can’t exactly pinpoint our lifespan but we do have clues.

  • Our relative’s health and lifespans
  • Our current health
  • The actuarial lifespan estimates

We can account for the chances of longevity and hedge that bet either with our investment bucket strategy or by throwing in a QLAC if we want a longevity annuity.

Knowing how much we need to live our retirement lifestyle and how much we have wisely invested tells us whether we should exit the casino. It allows us to put our winnings to the test and know when enough is enough. I like to use the free Monte-Carlo type Retirement Calculator by FIRECalc. We can’t know when enough is enough until we finish running our own unique and specific numbers.

Having the right focus isn’t greed

Some believe that people who become frugal and super savers are money focused and greedy. I think they miss the point. If there is greed to be found in financial independence and retiring early it is in our wanting to cherish our time and not waste any more than we have to stuck in the rat race. We are time focused not money focused. Time is what we all gamble with. Greed comes into play when we lose sight of that and stay in the Casino far longer than we need to.

Final Thoughts

I miss my father-in–law. My father who I also greatly miss had passed away years earlier at an age below actuary lifespan estimates. Both of them succumbed to a form of cancer. Another piece of the casino’s bad luck that many of us may have a run of.

I have got a few calls lately from recruiters wanting to pitch opportunities that are aligned with the encore career I retired from not long ago. I admit the temptation of earning some extra cash and its high paying salary. I am all about retiring early and often.

It stokes some interest but only until I think about this game of chance I would again be playing. Re-entering the Casino and gambling my time for extra cash. Doing something that I am not passionate about and the entire time hoping I will still have time tomorrow to follow what my passions and interests are, living life again on my terms. I retired from that work for a reason because it no longer interests me. Why gamble with my time?

Once we know when enough is enough and have the smarts to leave the Casino while we are ahead we get the other prize brought by our won financial independence: Removing money from our life’s decisions. We can make decisions made at our spirit, our heart, our soul’s level.

Do you have any thoughts about Early Retirement is like leaving the Casino when ahead?

Down Market Crushing Early Retirement Dreams

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Is the start of 2016’s down market crushing early retirement dreams? I am seeing a shortage of upbeat early retirement posts lately. In fact I can even see from the hits on the Leisure Freak site that the number of people searching for early retirement information has trailed off since Friday January 15th’s big market selloff and resulting 2.39% drop in the DOW.

Obviously it is a total bummer seeing portfolios hit so hard in the historically damaging start to a new year. But investing is for the long haul and if we had a plan it should have been one to get through market bumps.

Oh no. Not Again

This certainly reminds us of what it felt like at the start of the 2007 market fall. A lot of us held on to the hope that the real estate bubble couldn’t really destroy the world’s investment markets. Many financial professionals were saying just that, telling us that there is nothing to worry about at that time. Saying that the mortgage and real estate market represented only a small percentage of the economy. Little did they know. If my memory serves me right the markets did continue to drop into the toilet through Feb 2009. This is different this time. At least the job numbers look good and other than the oil sector corporate profits have been mostly up.

Sometimes when a long and happy rapid recovery takes us back to record market highs like we experienced in the past few years we forget that what goes up eventually has to come down.

The New Fear – Oil and China. Its always Something

Just as now where it is the fear of oil’s drop and China’s slow-down causing concern, those who are on the edge of portfolio panic have forgotten just the opposite. Forgetting that this recent drop will eventually find a floor and begin to rise again. As long as you have planned your portfolio and investment strategy to be aligned with your risk tolerance and your early retirement goals there is a way to reverse this down market crushing early retirement dreams funk-feeling.

Fighting the Feeling of the Down Market Crushing Early Retirement Dreams

I do get it. My portfolio has taken a beating. I just spent a few hours analyzing all the various funds my financial planner has me in and some were real stinkers. One in particular was aligned with the oil and gas industry for diversity reasons a couple of years ago. That one is down 52% from the first of 2015. Because my portfolio was set up to provide income there were a number of funds paying a decent dividend or interest rate but they seem to have had some big downside in this recent market drop. Sadly my Overall portfolio is down 9.3% after considering my 72t payments and wrap fee from the first of Jan 2015 to Jan 15, 2016.

I should be feeling the down market crushing early retirement dreams funk but I know there is more to this than looking at the portfolio balance numbers from a year ago and comparing to now after the ugly market conditions.

Still Getting Dividends and Interest.

If anything, getting income from my investments is a psychological boost and buffer against feeling the sting of the down market and portfolio decrease. Some of these fund dividends and the interest is harvested to replenish the cash bucket of which pays my 72t payment each month. Other fund’s dividends are reinvested. Those reinvested dividends are buying in at a lower cost now and will generate even more dividend income.

Cash Bucket Cushion.

My early retirement lifestyle is funded from my portfolio. I have enough cash along with the dividend and interest earned to continue sending me my 72t monthly check for all of 2016 without having to sell any assets. That is another important buffer against feeling the down market sting. I also keep additional cash in my credit union savings account to use for any additional needs if they arise. Cash isn’t making much income but it isn’t at risk of taking a 10% to 40% hit either during spooked market conditions.

Don’t Let the Down Market Crush Your Early Retirement Dreams

I was set to retire early in 2008 and the down market at that time delayed my early retirement dreams by another year. When I retired early in December 2009 the market wasn’t much better and jobs were still being eliminated. The unemployment numbers were very high. Eventually I decided that it was time to begin the retirement dream. If you are feeling like your dream is being crushed then by all means delay things until you feel the time is right. Whether you delay or not here are a few things you can do to get over the down market crushing early retirement dreams funk.

Run the Numbers:

I don’t know if the market has found its bottom and we can rebuild from here. It could just as well be a false bottom and we are in for more downside. Take your portfolio numbers and run them against a good retirement calculator. I like to use FireCalc with its Monte Carlo approach. Run the numbers again with a reduced portfolio amount. You can play with this and see what would happen if the market did drop another 10% right after you retired. Get comfortable with your situation. If all looks good then relax. No crushed retirement dreams. If they don’t look good then consider a slight delay as I did. Just don’t panic and do anything harmful to your portfolio. It may be a good time to seek financial advice from a CFP.      

Look at Your Portfolio as Buckets:

In preparation of your early retirement you should have a strategy for funding your new retirement lifestyle. Look at the different phases of your retirement and how you will fund them as buckets. The first years are bucket one. Then there is the intermediate years and finally the many years out bucket. If you have no idea what I am talking about I have a page with a very simple bucket strategy example.

If you have the first years funding figured out and have cash set aside then stop worrying. You can retire and let the other buckets ride until you need them and hopefully the markets have returned to sanity by them. If you haven’t done this then start setting a funding strategy now and once you feel it is safe move forward. Again, if you have concerns It may be a good time to seek financial advice from a CFP.

Reassess your Investment Risk Tolerance:

If you can’t sleep at night or have thoughts of financial dread you may be too aggressively invested for your risk tolerance. Everyone is different. There is always risk in investing but there are ways to dial it back a little. Less risk of loss means less gains but don’t let your fear of missing out on big gains overshadow your risk tolerance. Make necessary adjustments and if you have any questions seek the advice of a trusted CFP.

The Last Word

Don’t allow the down market to crush your early retirement dreams. Think at worst there is a slight delay to retiring early. It’s best to get your investments and comfort level aligned before you retire.

Are you feeling the down market crushing early retirement dreams funk?

Early Retirement Doubts

Retire Early, Retire Often, Retirement Doubt,

A question that I have had to answer a few times now and then is, do I have any early retirement doubts? My answer is no, as I have planned and saved, and planned and tracked and planned and… you get the point. I will ask them to be more specific and sometimes they then explain their own thoughts, fears, and doubts.

  • Running out of money.
  • Getting Bored
  • Reduced Social Security
  • Over restrictive budget

Those are the main ones. I explain how you can plan for all of those things and if anything can’t be solved before you retire, then maybe your doubts are justified. You see, I think that for some people, early retirement is not ever going to be a good fit. You have to be somewhat of a risk-taker to contemplate taking this retire early journey.

If I was someone who absolutely had to have a guaranteed written process and step by step guide to do anything outside of mainstream, waiting until I was 62, 67, or 70 years old to retire, then I would have doubts too because no matter how hard and thorough we plan, there is always going to be unknowns that come up in early retirement. I have touched on all of these above “”doubts” on this site. However, when I get asked the same things a few times, I can’t help but to ask myself, why do people keep asking me about this?

Freak Thinking:

I take great pride in the “Freak” part of my being a Leisure Freak. I enthusiastically go after what I want and believe in disregarding the norms that are being constantly fed to the populace. A message always fed to world with a spoonful of fear to help it go down easier. If that doesn’t work, then maybe some divisiveness and guilt. I tend to question authority and to look outside the box. My belief in the system and models being pushed must be earned, not dictated by fear.

So do I have early retirement doubts? I have doubts about a lot of things and certainly some creep in about my early retirement strategy, investments, taking on another opportunity, etc. However, I would say that because of all the planning, tracking and everything else, I think my obsession with early retirement and all of the preparation to retire early makes it so there is far less instances of doubt in that respect than anything else that crosses through my life.

So here are the answers to the main early retirement doubts:

 

Running out of money –

Before you retire you must know your lifestyle-cost and whether you have enough to fund your retirement. So that should be well known. The unknowns are unexpected expenses like a medical issue or some other catastrophe that hits. Maybe another stock market meltdown. Even a meltdown can be mitigated with the right bucket investment strategy.

But that is also why I believe in the “retire early and often” lifestyle. At any time I feel an opportunity is what I am passionate about, I have no problem taking it. I foresee many times during my retirement where new money will be coming in. I have no doubts in this area because there should be ways to overcome them. At the same time I also keep in mind to never delay pulling the trigger on needed spending or lifestyle action to save my portfolio. I don’t want to jeopardize my old age retirement when I can no longer participate in the retire early and often lifestyle.

Getting Bored –

I set a schedule for the week that includes everything I want to do. Exercise, education, chores, projects, leisure, and socialization. I hold weekends sacred for family and friends. How can anyone get bored if you plan it all out? Sure it’s all a lose timeline, just the stuff I plan on getting to with room for spontaneity.

Reduced Social Security –

That is a long ways off and trading a couple of hundred dollars a month for being able to retire many years early and escaping cubical hell is an easy trade for me to accept. Nobody knows what Social Security is going to do in the future anyway. It seems to be always under political attack.

Over restrictive budget –

To get to early retirement I was already living a frugal lifestyle. I know what my lifestyle is without it feeling deprived so I see no big change in it. My life is leisure and happiness focused, not stuff focused. If I see a trend in my finances and decide to cut back on something for a while rather than seeking a new paying opportunity, then I wouldn’t think twice about that. I wouldn’t consider it an over restrictive budget or a deprived lifestyle budget. I am making that decision to fix what I perceive needs fixed in order to remain free. It is all definitely worth it and it is hard to explain to someone what this freedom is like. Never again being chained to a company or job that I do not want to be in.

How about you, do you have early retirement doubts or comments about how you overcome them?