Tag Archives: Calculated Risk

Embrace A Realistic Lifespan, Live A Happier Retirement

We’ve all heard it before. Your retirement plan should cover the possibility of living to a very old age. I instead embrace a realistic lifespan which has allowed for not only an earlier retirement but also a happier one. There has been both a financial and lifestyle bump to this mindset. It’s a “live life to the fullest” flavor of mortality salience without the anxiety or fear of what we all know as inevitable. It’s all about coming to terms with a lifespan based on our own unique metrics and maximizing the time we most likely have left. 

Embrace A Realistic Lifespan, Live A Happier Retirement

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When It Comes To Optimistic Planning, I Prefer To Embrace A Realistic Lifespan 

The cautions to plan on funding retirement for extreme old age just never really worked for me. I’ve always been resistant to some common financial advice of calculating retirement planning out to an age over 90 to 100. Certainly everyone’s genetic and genealogical history is unique. In my circle I’ve come across nobody in that age bracket. 

Our unknown longevity is partly what motivated me to retire early. I chose to retire at a younger age instead of holding off with retirement. It’s quite simple to understand the draw. The earlier I retire, then the sooner I can live the life I want. A sooner retirement also means having more time to live a happier retirement. 

How much time we have is the issue that plagues all of us when completing our financial planning. 

Settling on a realistic age to accomplish what we want in life and to financially plan for

Longevity Comes At A Price That Must Be Considered

Obviously when running numbers through a retirement calculator we must plug in the number of years or an end age the portfolio needs to do its thing. Nobody wants to start retirement worrying about long-term financial shortcomings. I’d hear about it being best to set the calculator with enough years to reach age 100. That’s great if you have a portfolio that can support your preferred retirement budget for that long with 100% calculated success results. If you have the bucks, go ahead and plan to live to age 100. My portfolio, not so much.

On the other side, I didn’t want to recklessly cut myself short with an estimated early demise.

My father passed at age 70, his two  brothers both at 45, and his father (my grandfather) at age 32. All had different health related causes that came and took them quickly. I have lived my adult life knowing about the possibilities of an early death. Although I never blindly considered setting myself that short. I know people who had similar family early death dynamic and planned to die young, but I still wanted to concentrate on planning for a realistic lifespan.

As someone who didn’t have a 7-figure portfolio to retire on, I chose a more realistic lifespan for us to calculate against. My 100% retirement calculator success limit was around age 88 and then the percentage of success trailed off after that. I felt reaching even that age was pretty optimistic. It played a part in making my decision to retire earlier than waiting to cover another 10 years of hopeful thinking. I also came to the conclusion that age 85 was a more realistic goal and 90 was more or less padding. It was also easier to retire young believing that this snapshot in time can change with market swings, any additional earned income, or health changes over the decades ahead of me. Now when running numbers my retirement calculator results actually do show 100% success past age 90. But that doesn’t change my actual lifespan.

How I landed on a realistic end age

Family History

There are going to be some people who feel compelled to plan for the long-game because they’ve experienced a rare family member who reached the centenarian milestone. For my wife and I it isn’t a favorable longevity consideration. My wife’s side has a couple who reached 90 and 91. But for the majority of our genealogy, time on the planet is much shorter. If we had family history saying otherwise we would be more inclined to look farther into the age 90 range. We just don’t have any genetic longevity bump in our family history to hang onto.

We can always say we live healthier as a longevity consideration, but should we? I think we’ve also had and have a lot more environmental challenges. Not to mention there are new risks that go with that to offset healthier lifestyle choices. 

Our end date odds- What the professional actuaries tell us 

There are a lot of things that come into longevity play: Environment, where you’ve lived and live, genetics, occupation, income, health habits, healthcare access, risky behaviors, social engagement, social status, etc. Overall, the actuary’s jobs are to weigh an overall mortality value so that their clients, who are insurance companies, the government, pension funds, etc., don’t lose money. Talk about motivation to get something right. Billions of dollars are involved. What else in this world other than big bucks compels as much attention to detail and tested methods? The answer, not much. 

Projected mortality factors also change as we age. When looking at actuarial mortality tables I have an older age actuarial demise than someone younger than I am today. So much for the argument that young people today will live longer than their parents and grandparents. What are these “raise the retirement age to 70” politicians looking at? Apparently living healthier and all of the medical advances isn’t actuarially a positive for longevity vs. today’s new life risks. 

Running our life through a longevity prediction calculator

A closer look at our mortality can be done using a life expectancy calculator. You can plug in your unique lifestyle and yours along with family member medical values to see what your odds are from a medical perspective. We then can weigh its results against the broader high level actuary mortality results found. 

My life expectancy calculation does come out higher than what the actuary mortality tables predict. However, they never ask all the uniquely relevant health questions. Although some of our family members’ deaths have cancer involved because they were smokers, other genetically passed health issues that caused early deaths are not included in the calculator questions. That’s why my wife and I backward pad these results. 

Practicalities of having a realistic lifespan to improve retirement

No matter how we slice it, our longevity never comes close to an age in the upper 90s to 100. Having a delusional fear of realistically contemplating our eventual death or soaking up what financial planners, influencers, or politicians try to tell us doesn’t magically add to one’s true longevity. 

Obviously some of the places that having a reality based lifespan comes into play are financial. The other is evaluating how much time we have because we all want a life with meaningful purpose. It’s clear things can’t continually be put off because our time is fleeting and unknown. 

Financial relief for less retirement stress

Plugging my gender and birthdate into the Social Security life expectancy calculator gives me age 84.

The Livingto100.com medically oriented life expectancy calculator resulted in age 92 when answering the questions that it offered. But as I mentioned before, I think it doesn’t ask all of the necessary and unique family mortality questions. An issue that killed an uncle of mine when he was age 45 almost killed me a few years ago at age 61. It wasn’t a medical question included in its calculation. Even though it’s something that I’m now being treated for, it can still come knocking again. That’s why I feel I need to pad back a bit on its results.

Once deciding on a realistic lifespan figure, which I’ve landed on my best case age being 85 to a very optimistic 90, I can feel more confident in using that in my retirement calculations for portfolio funding. 

Another big personal and mortality based decision that must be made is when to start claiming Social Security. 

We pay into the Social Security system our entire working life and can claim our earned retirement benefit as early as age 62, full retirement age which for me is 66.8, a maximized benefit payment at age 70, or any time in between. It basically comes down to this. We can get more monthly smaller checks in life by claiming early, or less overall monthly checks but with a bigger payment amount if we wait. Payment amounts are tied to the actuarial results. The bet by Social Security is we will live to the actuary calculated mortality age. Die earlier and they save money. 

If we die later, depending on how earlier in age we started collecting our benefit we will soar past the break even point and can be left receiving less Social Security payouts overall had we waited to begin payments at age 70. Delaying our benefit start date is betting that we can beat the actuarial table. 

The Social Security break even point is only one side of it. There are other considerations that need to be factored. The amount of our portfolio distribution savings by claiming Social Security earlier and the resulting compounding portfolio gains over the years, the possible later reduction in Social Security payments due to congressional inaction to the projected shortcomings by year 2033, survivor benefit considerations, or some Social Security hating political Jackholes getting their way to end it all together. 

A happier retirement can come with financial relief. 

Using a realistic lifespan may result in seeing that with adjusted reality based financial inputs there’s more room in retirement portfolio distributions to live a little more richly in our senior years. Not to blow it, but share before we pass. My wife and I got to early retirement through frugal living and it’s a lifestyle that works for our happiness. Having room to bring a little happiness to some others we care about who are still in the game is a meaningful win. Which brings us to the second part.

Living a retirement life of purpose

I think many more people are starting to value experiences, family, friends, and living a life of purpose and meaning over just simply a life of accumulating more stuff. For myself, it has been amplified as I age. I prioritize celebrating the accomplishments of my children and grandkids, trying to do things that support my values and my community, looking at issues that unfairly challenged my life and aligning myself to make it easier for others to be victorious who are still oppressed by them today. 

We want to be remembered by our grandkids for what we do with them and for them while we’re still here. Not blindly spoil them, but show them we support their talents and encourage their aspirations. Applying a realistic lifespan approach to the remainder of our retirement allows us to freely do that more than if we were trying to overpreserve funds for a fictitious old age. 

It also lights a fire under our keisters because time is ever shrinking. We know to avoid holding back and not over preserve living, activities, and socially engaging with those we care about for a later or perceived better time. One that we should know is never promised. 

We now make a point to pay more attention to even smaller achievements by living in the moment instead of waiting until something grander that may not ever come. My family knows full well how it can end in an instant. Years ago we suddenly lost our son who passed away at the age of 21 from an unknown health issue. It was a time when we all believed there was all the time in the world to set aside our busy lives to celebrate what we have together. 

What if we beat all the odds and do live to 100?

Nobody wants to run dry of funds before they leave the planet. Once settled on a realistic lifespan we can’t just live on autopilot. Portfolio and budget management still needs to occur. Any shortcomings should be identified before it becomes a critical issue and then make necessary adjustments. 

I also happen to never count our home as part of our overall retirement portfolio. We do have to live somewhere. At some point it won’t meet our needs and we will then enter into that phase of late life planning. So much can and will change over the short and long-term so I am Ok with not having all the answers now. 

The older someone gets, the likelihood of requiring long-term care increases. So far that hasn’t been a big issue in our families as we seem to go earlier or any time in care is very brief. But as I tell my CFP whenever he brings it up, I have a $40 plan for that. A deep hot bathtub and a full bottle of decent bourbon. I know it’s a deflection based on how I feel about quality of life. Our family history has me less concerned about that now. Maybe my feelings will also change on the subject as I grow older and I will pin it down then. Like I mentioned, much can and will change and I’m Ok with not having all the answers about an unknown future. There’s too much to live for today.

I’m Celebrating 13 Years Of Early Retirement

I have good reason to celebrate my now 13 years of early retirement. Mostly because I beat the odds and went against traditional retirement advice. Some of my success is dismissed as luck. But I think we make our own luck and work with what we have regardless of the obstacles we encounter. This is a BFD milestone early retirement anniversary for me. It comes within months of reaching my next phase of this FIRE journey. That being the transition from early retirement to just retirement. My early retirement plan held true to get to this point. 

I’m Celebrating 13 Years Of Early Retirement

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The How And What Of 13 Years Of Early Retirement

When it started. 

I retired at the young age of 51 from a 31 year career in telecom in December 2009. It was right during the great recession. My original 10 year plan was to actually retire early at age 50 in 2008. But I delayed pulling the trigger after the recession induced portfolio and economic slaughter. I just needed time to feel it out and be comfortable with walking away from the lifetime conditioning of the employment and career focused system. Jumping out of an airplane goes against acceptable reasoning even when you’re wearing a parachute. The first time is going to be a mind-warp to deal with. Especially if unexpected bad weather, like a recession or any other economic disruption is dropped into the equation.

How I funded my early retirement. 

We applied our version of frugal living so that we could maximize savings while we were still working and to create a lower cost lifestyle that we could enjoy living with. Knowing our sustainable budget allowed us to retire young with less than a million dollar portfolio

Almost all of our portfolio was in retirement accounts. Because I was only 51 I utilized the SEPP 72t backdoor approach to fund my early retirement without worry of paying the pre-age 59 ½ early withdrawal 10% penalty. I immediately started receiving monthly distributions from my IRA that covered my budget. 

Pursued opportunities of interest.

I had always planned to live a retire early and often lifestyle once I freed myself from my career. Adopting the mindset that retirement is the absence of needing to work, not the absence of work is something we all can benefit from. It was fun navigating the world of work in retirement when I didn’t have to. I was able to free myself from chasing dollars and make decisions based on interests and passions. There was a feeling of employment liberation within a new power dynamic that was in my favor. 

I continued living off of my 72t distributions while I worked my paid adventures. Putting all my earnings from any gig toward paying off our modest mortgage and reinvesting back into the portfolio. 

It has been some years since my last paid adventure. I’ve been even more picky about what it would take to re-enter the workforce since running through my bucket list of job interests. I do look back at my retirement gigs fondly as the most enjoyable and rewarding work experiences of my life. 

The End of the 72t.

The rules for a SEPP 72t are fairly rigid. It’s something that one doesn’t want to run afoul because there’s a penalty for doing so. Once I reached the young age of 59 ½ I was happy to freely raise and even lower IRA distribution amounts as needed. 

There have been plenty of budget changes over the 13 years.

We’ve gone through several budget adjustments during these 13 early retirement years. Things like health insurance, property taxes, auto and property insurance have all risen dramatically. Other things have decreased as we’ve aged and our interests changed. The biggest budget increase was Healthcare. From health insurance policy cost to out of pocket deductibles, they have climbed over the past few years. Healthcare has been sitting at ⅓ of our yearly retirement budget.

My 13th Year Has Been One Of The Most Enjoyable

The saying, you don’t know what you’ve got until it’s gone came to realization during the Covid crisis. This past year has been closer to a normal one and with the fresh memory of the prior couple of years still fresh, even our simple living lifestyle felt amazing. At this time we are also looking forward to the next phase of our retirement journey. 

The start of our next phase, Retirement!

I’ve come to consider that early retirement’s finish line as when we’re old enough to receive our Medicare health benefits. Although we’ve benefited from never going along with traditional notions regarding retirement, we’re calling our 65th birthday the end of our early retirement and the beginning of regular retirement. 

My bride is a few months older than I am and we’ve just transitioned her to Medicare. I am already seeing $600 in monthly health insurance savings with much lower out of pocket deductibles than we’ve had. Once I make the Medicare transition later in 2023, I will see even more savings. This will provide something in retirement that I love- having options. 

I’m still holding out until FRA (full retirement age) before starting my long earned Social Security benefit. That will offer even more retirement options in how we utilize our assets and our budget. 

If I were to pinpoint what made these 13 years of early retirement successful-

Figure out and create the kind of lifestyle you want to have.

We figured this out and lived it before retiring early. Doing this before ditching the rat race works much better than waiting until you have to or having a plan’s numbers rely on some future imaginary lifestyle. We knew exactly the ‘how and where’ we wanted to live. 

See and measure real world costs for funding your desired lifestyle.

Knowing our wanted lifestyle’s cost based on real numbers allowed us to see that we didn’t need a million dollar portfolio to afford our early retirement. Having real numbers means being able to develop a budget with monthly and annual cost expectations. 

Figuring out all sources of income.

In our case we were relying solely on taxable retirement savings accounts with early withdrawal penalty issues to maneuver around. We use an IRA bucket retirement funding strategy. Our plan also includes eventual Medicare and Social Security providing portfolio distribution relief which is just now starting to occur. We saw our retirement in phases and set funding expectations the same way. We ran our numbers through a retirement calculator and verified through different scenarios that we had the income plan to cover us throughout our retired life. 

Deciding upfront feelings toward working in retirement.

I always knew there were a few opportunities of interest I wanted to learn and do. I planned upfront that any income from retirement gigs would be reinvested into our net-worth. Although I never counted on such income in our early retirement plan, I’ve always been open to the prospect of wanting to work in retirement. Knowing if choosing a retirement job the right way, it would be rewarding both through the experience and financially. My wife didn’t have any post retirement aspirations and has never worked during her retirement. Her focus was more towards our grandkids and family.

Developing a healthcare plan for the years before Medicare.

Figuring out how to cover healthcare is a critical retirement planning issue. I had a mega-corp retirement health insurance benefit that was eroded over the years through corporate mergers and changes in executive direction regarding legacy promises to workers. It’s the same old sadly allowed corporate world story. Being it was changed to a “use it or lose it” benefit, we stuck with it through massive cost increases. 

Plan “B” was to have necessary Roth funds to make sure we could fall back on an ACA Silver Plan by making sure our taxable income could come in below ACA subsidy income thresholds. This certainly could have been our Plan “A” with the right taxable income strategy.

How long do we think we will live?

I didn’t put too much thought in this to start with. We all think we will live to be 100 and even then it seems so far off it isn’t real. But as we grow older and we start to see family members pass we are reminded that we have to deal with this bummer-how long will we live? Not only does this make us live every day with purpose, but it also helps in figuring out finances. Obviously less years on the planet means less needed to fund it. Older age also takes us down a different retirement funding path. 

Figuring out our how and when Social Security strategy.

We paid into Social Security for all of our working years so I do expect to receive my well earned retirement benefit. We have run the numbers and Social Security option scenarios through the calculator and continually test it yearly to know our best strategy. 

 

There have been a lot of surprises during 13 years of early retirement. Most of them were pleasant while others were perplexing, but nothing insurmountable. I still have to chuckle to myself when thinking about how much retirement initially messed with my head. I’m glad I did all I did to mentally prepare ahead of retiring and I’m sure it softened my landing. But there were still some identity issues. Something that hasn’t crossed my mind for over a decade now. It just takes recognition and time to work through. That’s true with everything in retirement that we unexpectedly find.

I’m very happy about my 13 years of early retirement and how it has all worked out. I can’t imagine what my life would have been like had I stayed in my soul grinding career. Something that seems like a previous life that’s no longer connected to this one now. 

Investing in NFTs: Can You Buy NFTs in your Self-Directed IRA?

This post was contributed to Leisure Freak by content creator & digital strategist Akanksha Malik.

Although traditional investment options still exist in the stock market, there are many more new types of investments being utilized. One of these new investment options is Non-Fungible Tokens (or NFTs) which are quickly emerging as an investment choice for many investors.

NFTs are a relatively new way to invest in cryptocurrencies where each token is uniquely identifiable by its owning party. While this can lead to some confusion, there is still much more information on how self-directed IRAs can go forward with investing in NFTs, such as how they can transfer tokens and how they go about buying them, selling them and even storing them. In this article, we are going to discuss the same.  

Investing in NFTs: Can You Buy NFTs in your Self-Directed IRA?

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What is an NFT?

An NFT is an asset that is supported by a blockchain and can be traded like a traditional stock. The name stands for Non-Fungible Token and describes the idea that each token is unique and has value, unlike traditional stocks.

NFTs are similar to cryptocurrencies, but they’re not decentralized, meaning no one is in charge of keeping them safe, secure or reliable. Instead, NFTs are secured by the blockchain ledger that keeps track of all transactions made with them.

Example: A digital artwork can be stored in a smart contract on the Ethereum blockchain and will be transferred to someone if they pay with Ether (the currency used for Ethereum transactions).

NFTs are different from other cryptocurrencies because they’re non-fungible — meaning each asset has its own unique characteristics and cannot be exchanged with another. An NFT can’t be sold or traded like a stock because it’s an individualized piece of art or physical object that doesn’t have monetary value outside of its rarity and uniqueness.

NFTs are becoming more popular among investors because they offer several advantages over traditional investments like stocks and bonds. One of the main advantages is security — NFTs are almost impossible to counterfeit because they rely on a decentralized blockchain ledger system for storing information about each piece of art.

If someone tries to alter or fake one of these pieces, all of the information about that piece will be changed in response — making it impossible for anyone else to duplicate this work without access to every single piece of data about it.

What is a Self-Directed IRA (SDIRA)? 

A self-directed individual retirement account (IRA) is a type of retirement account offered by most financial institutions. This type of investment account is designed to help you invest your money in the manner that best fits your personal goals and financial situation.

You can set up an IRA anytime, and it doesn’t require any details on your income to open it. You can choose how much you want to contribute, what types of investments you want to make, and when you want those investments to be made.

A self-directed IRA allows investors to make all investment decisions on their own. They are also able to direct their own investments through buying, selling and redeeming shares within the account. A self-directed IRA can even allow for a tax deduction for certain types of assets like stocks and bonds.

Can You Buy NFTs with Your SDIRA? 

The short answer is maybe. This is because there are essentially no rules in place for self-directed IRAs to invest in digital assets. You can use a Crypto IRA to invest in cryptocurrency; however, there are some important things to keep in mind before investing in NFTs.

First, NFTs are a gray area right now as the IRS hasn’t yet issued specific guidance on NFTs, nobody knows for sure if they will count as collectibles. As such, you should consult with your legal advisor before purchasing any NFTs or other digital assets, as they may not be eligible to be held within your IRA account.

Second, it’s important to note that since NFTs are considered property rather than securities or collectibles — meaning they don’t meet the criteria required for traditional IRAs. It’s difficult to determine whether or not you can hold them within an IRA account without violating the IRS rules against prohibited transactions. 

Takeaway

It isn’t recommended to hold NFTs in your self-directed individual retirement account because the risk of having NFTs in your SDIRA is the same as holding any unallowed collectable. When you put your NFTs in an IRA, the IRS considers the value of that item to be distributed to you in the tax year that you made the investment. Therefore, instead of holding an NFT in your SDIRA, you should consider buying it with your separate funds. 

Much Thanks to Akanksha Malik for sharing her knowledge of investing in NFTs with Leisure Freak readers. A subject that I’m sure many have had little exposure to, including myself. Knowledge is always important and keeping up with the latest investment developments in this world is a big part of that.

Investing in NFTsAuthor Bio:

Akanksha Malik is a content creator & digital strategist at Mesha – India’s largest investing club & online community where the world’s best investors gather to share ideas, discover fellow investors, invest in NFTs & crypto, and compete in challenges for real money. She develops content to share her knowledge and insights helping her readers stay updated with the latest in fintech & investments, as well as cryptocurrency trends and upcoming NFT opportunities. Apart from being passionate about her work, Akanksha loves exploring architectural sites and different local dishes during her travels.

Disclaimer- Leisure Freak is in no way advising readers to invest in cryptocurrencies. Invest at your own risk. Crypto is a high risk investment scheme. This article is for information purposes only. 

Is The Market Drop and Inflation Crushing Early Retirement Dreams? It doesn’t have to

I am starting to think that the recent investment market drop along with inflation are crushing early retirement dreams. That thinking is based on the questions I get and the change in certain Leisure Freak site page visits. There are certainly valid retirement fear-inducing concerns. I’m reminded of my own crushed early retirement dream in June 2008 when the great recession was doing its damage. Just as I was ready to take the leap, the world decidedly shifted against me. The world today has certainly shifted and any early retirement plan needs to shift too. Here’s what I did back then and what we’re doing today. 

Is The Market Drop and Inflation Crushing Early Retirement Dreams? It doesn’t have to

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Should The Double Whammy Of A Market Drop and Inflation Be Crushing Early Retirement Dreams? Not Necessarily

For anyone who has been working and saving for their early retirement goals, this new environment has to feel like a kick to the groin. That’s how I felt 14 years ago too. Conditions were different but just as challenging to one’s psyche. 

For those who recently pulled the retirement trigger, sleepless nights and visits to a trusted retirement calculator may become frequent. We’ve all heard the cautions of how detrimental a market correction during the first years of retirement can have on portfolio longevity survival. Inflation just adds to it.

I’m not a financial planner nor pretend to be one. I’m sure my own CFP will have plenty to say in our next meeting based on historical and technical data. What I’m sharing is what worked and works for us in hopes of adding a little calm to an otherwise difficult period in an early retirement dreamer’s timeline.

Pulling The Retirement Trigger When Things Looks Bleak

Just as when I reached my planned early retirement at age 50 in 2008, there was no real indication of a market bottom or economic certainty in sight. Yes, it was crushing early retirement dreams, but not totally. It only changed my plan. 

The new economic conditions were beyond my control. The first step was getting myself over the disappointment and setting my head right. It takes a clear mind to realize and accept that the long-time plan based on before times economics was over. Then setting into action a new plan. 

Count my blessings – 

As today, there was a lot to be economically ticked off about. My portfolio was heavily diminished, my job was a daily soul crushing grind, and I worked hard over many years to ditch the rat race on my terms. The new terms then weren’t great, but I was still very blessed. 

  • A life that prioritizes family.
  • I still had an income source. 
  • Portfolio to replan upon and build on.
  • Zero debt.
  • Known lifestyle budget, roof over my head, and food on the table.
  • Still able to influence my own destiny.
Keep my mouth shut – 

I decided that my best course of action was not to show any of my cards. Keep quiet and leverage income, working conditions, and departure timeline to my advantage. The goal was to retire young for more freedom and purpose on my terms regardless of the economic challenges. I did delay my early retirement by a year and a few months. 

Restructure finances – 

It was obvious that selling beaten down assets to fund retirement in the near term wasn’t going to be smart. Although I still invested in my stock and bond allocation to take advantage of cheap prices, I reduced the percentage and increased cash reserve allocations for short-term retirement funding needs. We also refinanced our modest mortgage to a slightly lower interest rate for the balance owed but re-extended out for 30 years to reduce monthly payment obligations. The thought was we could leverage lower monthly outpay obligations now to assist in increasing cash reserves. Then we would voluntarily increase mortgage payments when economic conditions improved.

Delay retirement, not cancel –

Most importantly to tame my disappointment, I was able to delay and not cancel my early retirement plans. I didn’t know when, but holding my future in my hands allowed me to mentally accept the conditions. As I became more comfortable with my new plan’s progress, I used my growing confidence to leverage concessions and pay increases from my employer during a time when they were used to brutally acting like they held all the cards.

Position For Retirement On A Fixed Income That’s Portfolio Fed

Now that we are again in a new economically challenging environment that appears to also be crushing early retirement dreams for some people, the actions taken when I retired early over a decade ago have smoothed some of the financial pain of today. However, it still needs work to fine-tune.

Get where I need to be – 

We use a portfolio bucket strategy to fund our early retirement. Because the memory of the recession burned deeply in my mind, I’ve always maintained a higher cash and near-cash bucket than most people to fund short-term retirement income needs. However, I did allow myself to reduce it in the past couple of years as we grew older and are closing in on Social Security and Medicare age. At this time we have redirected all dividends and interest to cash instead of a portion being used to reinvest. The goal is to avoid asset depletion until market conditions become more favorable or certain. That and fully bridge the gap to when we start collecting Social Security and when we can ditch my costly health insurance plan for Medicare.

Inflation – 

This has been an interesting mind warp. We were young parents during the go-go inflation of the early 80s. A lot of what we learned trying to save money and survive on a low income frugal budget then has come back easily today. Coupons, sales, discounts, purposeful essential spending, upgrading to a smart thermostat, decreased water heater temp, shorter showers, DIY repairs, frugal cell service, shopping used items at places like Goodwill, driving less-bicycle and walking more, etc. It all adds up and makes a difference. I actually enjoy saving money. 

Sell unneeded stuff –

I always find it amazing that some of what we have and don’t use is needed and valued by someone else. I have been using Craigslist to sell small things and although it isn’t a big cash influx, it does fill a gas tank now and then. 

Increase lifestyle funding – 

Our monthly IRA distributions have followed a modified version of the 4% rule. That rule allows for inflation adjustments, but in this 7% to 8% inflationary environment, does the market diminished portfolio agree? We did slightly bump up distribution amounts but less than the going inflation rate. The difference is made up in spending reductions and emergency fund cash savings when necessary. 

Earn income –

I’ve always believed that retirement is the absence of needing to work, not the absence of working. As of now, there is no job I am interested in learning or doing, unlike there was in my earlier years of retirement. I was a little too successful in working through my bucket list back then. What I do today is keep an open mind and ear. One never knows when a perfect opportunity will present itself. It takes being open to the idea so that I can see it when it comes.  

Realize we’re not alone, pay it forward and offer unwanted things for free – 

Most people are experiencing the pain of inflation and budget strain. In my search for things to sell-off I’ve also found things I just need or want gone and offer it as free. I see it as a trade. If you want or need it, come and get it at no cost. I in turn won’t have to pay for it to be hauled away or dumped. I also price my things to sell at a low cost. I’d rather sell something quickly to someone who can use it than to drag it out over a longer period of time or get into a trolling haggle. Everyone is looking for a deal to get by.  

Figuring our way through these economic headwinds isn’t easy, but nothing worthwhile ever is.

I don’t know when inflation will relax or when the market finds its bottom and stages a reality based comeback. I do know that it will happen at some point. Retirement means being in charge of our own finances and proactively doing what is necessary. 

My task is to stay calm and position myself the best I can to continue funding my early retirement freedom into and beyond our full blown old-fart retirement. This is all just another hiccup in the financial independence journey. The key for us is to maintain a lifestyle that is still enjoyable during this choppy economical episode of time.

Inflation and a dropping investment market is a challenging time. But completely crushing early retirement dreams doesn’t have to be accepted without a fight. We do have to understand our own risk tolerance and make decisions based on what we believe is the right move for us. The last thing someone should do is enter into retirement feeling they may have made a big mistake. 

The goal is to assess the current situation, make necessary adjustments, and move forward confident in our decisions. Then keeping an eye on conditions that necessitate path corrections going forward.

How I Overcame Being A Retirement Scaredy Cat

Recession, political jackassery, market insanity, pandemic, inflation, supply chain, extreme weather, war, the list goes on. It seems there’s always an outside crisis beyond our control. Turning even rational and money wise people into a retirement scaredy cat with worries about the negative impacts to retirement success. 

After decades working and performing to earn income, fearful thoughts about retirement are natural. It doesn’t only come into play when making the decision to retire. It can creep in during retirement, causing us to pull back from well planned and wanted retirement experiences. Here’s what calms my inner retirement scaredy cat.

How I Overcame Being A Retirement Scaredy Cat

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Shooing Away The Retirement Scaredy Cat  

I was all set for an early retirement at age 50, but then the great recession set in. My numbers were diminished and barely worked out through the retirement calculator, causing hesitation in my pulling the retirement trigger.

It took me another year to finally jump. It was time that I needed to figure things out and find a way to overcome my retirement fears. As the years have passed since my sacred retirement day, I’ve come to rely on what gave me the courage to retire during a recession to shoo away the retirement scaredy cat whenever it sneaks in.

Developing and then believing in my good money habits.

People who are savvy about personal finance have an advantage. Good money habits are actually skills to navigate through volatile financial times. Realizing that I wasn’t just retiring to let life and my finances run on autopilot is one of my biggest fear erasing assets. I’ve already a proven track record of having a solid relationship with money to get to this point of retirement. Something that even when there is chaos beyond my control around me, I could rely on it to guide me successfully through it.  

Understanding what I was retiring to was far better than what I was retiring from.

I didn’t give up something I valued more than my retirement. Knowing that whatever unforeseen risks were involved, it is worth it. Some early retirement scaredy cat thoughts were centered on walking away from a long held career and paychecks that took decades to develop and hard work to achieve. 

I did have to give myself this pep talk many times before ditching the rat race. I found that this mental nag quickly decreased after retiring and actually experiencing how to live without a job title. The knowledge that I value my retirement also aids in my desire to remain retired on my terms and keeps me focused on everything it takes to have a successful retirement.   

Figuring out if things went to hell financially that my scorched earth minimum retirement budget wasn’t all that bad.

Setting and living within a well planned retirement budget includes covering essential costs, but also a lot of what makes retirement the reward we hope it to be. Setting cashflow threshold triggers for budgetary counter measures delivered anti retirement scaredy cat assurance. 

Budgets require monitoring and any hints of cash flow or earnings shortfalls means cutting back BEFORE things become critical. Setting and seeing the minimum survival budget during any serious downturn along with aligning the portfolio to support it can provide fear crushing retirement confidence. I always feel that even my worst day living on a restricted survival budget would be  better than my best day wasting my precious time working in a job I’d rather not be doing.

Realizing that the worst that can happen is unretiring and chasing dollars again with a job.

I had always planned on being open to taking on paid retirement opportunities if they checked off my want to learn and do boxes. So it wasn’t a big stretch to accept that the worst that could happen is my having to temporarily accept working again based on salary. 

What I didn’t know before I retired was that when you are in a retirement mindset, working can be enjoyable. My retirement gigs that focused on interests and passions have shown me that. Even taking on a part-time gig that brings in a small cash flow increase could plug any budget holes to likely solve a crisis caused retirement funding shortfall.

Having a phased financial plan for retirement: All on my own, Medicare, and later Social Security.

I used to write technical requirements as an engineer. It was easier to comprehend and understand when details were displayed in organized chunks. It made sense to do the same with my retirement funding plan. Breaking down the necessary financial requirements for the years being 100% on my own before I could receive my long earned Medicare and Social Security benefits. This chunking helped to easier visualize retirement funding success and tame retirement fears. 

The plan also included all of the likely activities and possible paid opportunities that I would be more likely to have in the earlier years than the later years. It recognizes that aging plays a role in retirement spending and activities of interest. This approach makes it easier to track funding success and make adjustments as time passes in retirement. 

 

There are many ways to calm the inner retirement scaredy cat. The one thing that always enters my mind when it silently creeps in is the reality of time. Spending our valuable time is unavoidable and we are only given so much of it. It’s of unknown quantity other than knowing that it decreases daily. Sometimes that is all we might need to tell the retirement scaredy cat to scat, this isn’t your home.

Pandemic, Inflation, Busted Supply Chain, Still A Great Time To Be On FIRE

It’s no wonder that I run into people delaying their early retirement. But for anyone with personal financial discipline, this is still a great time to be on FIRE and pulling the retirement trigger. There is a lot of gloom and doom to go around. At least that’s what some people focus on and it sure makes for headlines. In these times we certainly have much to be concerned about with a pandemic, rising inflation, and the occasional shortages of things we want or need. There’s a lot that is and can go wrong. But for those striving for financial independence and early retirement who are stuck sitting on the fence because of everything going on, there’s no better place than FIRE to be in or making the moves necessary for being there.

Pandemic, Inflation, Busted Supply Chain, Still A Great Time To Be On FIRE

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Why This Is A Great Time To Be On FIRE

First off, I do think a lot of things are getting too expensive. However when I look around, for all the boo-hooing about gas prices and the high cost of goods, there has been no shortage of road traffic or store checkout lines. Apparently people are still willing to spend the money. The environment is so unlike the days of the great recession when I retired at the age 51. People then changed their spending and driving behavior. As long as there remains unbridled spending, it looks like things aren’t really as dire as some fear mongers hope to exploit or the fearful to allow to hold them back. Once consumers get to changing behavior, supply issues will change too. Here’s why it’s a great time to be on FIRE while things work out. 

Safety during a time of pandemic

In this strange new world, safety to the loudest among us seems to be defined only by a gaggle or person’s own perception. Whether it’s a workplace manager, co-worker, or some random person who shows up to express and inject themselves into everyone else’s life. 

When it comes to personal safety, people can believe what they want to believe. Smoking or riding a motorcycle without a helmet for instance. I happen to believe based on medical advice and something called scientific evidence that handling rattlesnakes is dangerous. I quietly live my life, keeping it to myself while avoiding contact with rattlesnakes. But in this new world if questioned or cornered and I mention that to a card carrying member of the religious serpent handlers, they just might loudly call me a godless heathen and angrily condemn me as sheep while trying to toss me a snake. 

During this pandemic, aside from those who we commend for choosing to because of their heightened sense of duty, many other folks were and are forced to endure unsafe conditions. Whether of their own desperate financial situation or bullied into it. 

  • Being on FIRE means being able to decide for yourself: When and where we go, what we do, and who we do it with. 
  • Being on FIRE means never having a need to yell and scream about our own safety decisions and viewpoints nor put up with anyone else’s efforts to force us to their “beliefs”. 
  • When on FIRE we’re able to tell someone demanding that we unsafely bend to their beliefs to piss off when necessary. We have the resources to live our lives without crying, pathetic whining, claiming victimhood, or blaming others for the consequences of our own decisions. We have what has been referred to as “F you money” and just don’t have to put up with unsafe conditions or other people’s BS.

Others can go ahead and feel free to handle all the rattlesnakes they desire. I’m on FIRE, so that’s a hard NO for me.

Spending relief in these inflationary times 

All the hand wringing about inflation has been more meh than a problem to our frugal lifestyle early retirement budget. Why? Because we have flexibility and time to manage it. FIRE takes having disciplined spending. It also requires patience and planning. All are great skills to have and use in these inflationary times. Taking the time to search out deals, alternatives, and of course just making due when things are tough to find or are too expensive. In retirement there’s time and usually no need to hurry. 

We refuse to blow money needlessly driving around. 

My wife and I enjoyed plenty of bicycling this summer that benefited both our wallets and health. We limited our driving and although fuel prices bite the big one, we just refused to buy a lot of it.

We set limits to what we are willing to pay for things. 

Nine years ago I paid $2,300 to have the exterior of my 2 story 15XX square foot house painted. When bids to repaint came in at $7,400 and $10,200 this past summer I just asked them to please leave. Their rebuttal, this the pandemic inflationary price reality that it now cost. Well here’s my reality, I’m not paying that. I just started painting it myself and staying the same colors. I painted a few hours a week in the final couple of warm months and will pick it up again in the spring to finish. This way I budget for both the cost of paint and not making it a giant PITA

If inflation is keeping anyone on the retirement fence, consider the possibility that these inflated prices are here to stay. 

Even when supply chain relief comes, nobody should assume business will lower prices. People have shown what they are willing to pay and continue to keep buying. When it comes to pricing, capitalism is sticky that way and instead of lowering prices they will likely pocket profits. Fence sitting hoping to wait out inflation means spending far more in time of a finite period called YOUR LIFE. 

There are lots of ways to save money on groceries and other necessities. Cutting the cord and moving to low cost wireless has never been easier and done without sacrifice. You also will have the time to learn and tackle DIY projects. 

FIRE portfolios are fat!

Even my less risk-averse investment portfolio is splitting the skinny jeans it was wearing. Prices are up and so are our long-term investment returns. We all know that a portfolio valuation today isn’t guaranteed to remain that way. That’s always a retiree’s focus when number crunching their long-term lifestyle funding needs. Having a fatter portfolio makes this a great time to be on FIRE because it provides options. 

If today’s economic challenges cause anyone retirement pause, maybe consider rebalancing or restructuring the portfolio. High inflation environments make holding too much cash a money loser as far as purchasing power over time. But cash still has its role. Consider establishing a portfolio bucket strategy to smooth concerns. Although cash earns very little in interest, you are locking into portfolio profits already earned. Look at cash as retirement funding insurance.

Plenty of paid work opportunities for a perfect retirement gig

I know that I am always preaching this, but retirement is the absence of needing to work, not the absence of work. When I ditched my career at the age of 51 in 2009, I fully intended to embrace that definition of retirement. I called it a retire early and often lifestyle. Even during the recession I was able to work in areas of interest and passion. Those retirement gigs were far more rewarding than my long career had ever been. 

There are many opportunities for those of FIRE to entertain and leverage to their advantage with today’s Great Resignation environment and an active Antiwork movement. It’s not just me seeing this. A trend has been seen of people unretiring. The perfect camouflage to cloak your retire early and often intentions while business is eager to hire. 

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There’s always going to be craziness and uncertainty when it comes to early retirement.

What makes this a great time to be on FIRE is that it prepares us to handle it all. Personal finance patience and discipline that are learned on our FIRE journey are the necessary habits and skills to be successful. 

Hopefully I’ve provided some inspiration here for anyone struggling to decide on their next FIRE related steps. I don’t know what will happen in the future and I’m not a financial planner. Just someone who retired young during the great recession and shares my observations and tips based on my 12 years of early retirement experience. I do recommend that before you make any big financial or retirement decision, especially if unsure and still on the fence, check your numbers, and consult with a certified finance professional for advice. 

A Closing In On Retirement Dilemma: Stay Put Or Chase New Opportunity

It’s something that many future retirees may encounter when within a couple of years of freedom. The closing in on retirement dilemma of whether to stay put in the job or move on to what might be a better opportunity. Something that may even shorten the remaining retirement time frame if the earnings are better. I had this quandary when I was a year or so away from my targeted retirement goals. In my case the decision was made for me. Just in time before I might have regretted what I was about to do.

A Closing In On Retirement Dilemma: Stay Put Or Chase New Opportunity

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The Common Closing In On Retirement Dilemma – Move On or Ride It Out

We’ve all heard the saying, the grass is always greener on the other side. If there was ever a time to pay attention to that idiom, it’s when we’re closing in on retirement. The trick is to spend a little time examining the other side with a clean pair of glasses. We need to see if it’s really better. Sometimes we are looking through an emotionally smudged lense. In my case it was a close call and I ended up staying put until hitting my retirement target. 

During my final year I was tempted by a lucrative offer to jump ship and I was about to accept it. Luckily for me they decided that their business was going to downsize days before things were finalized and fortunately the cat was still bagged. Both the project and the offered position were cancelled. Days later word got out about all of their coming layoffs. How different my retirement timeline would have played out had I made the move and that company’s decision was made after it was too late for me to reverse course. 

It was a quick eye opener and I instead stuck it out where I was until my early retirement time. Months after I retired I started on some rewarding paid retirement job adventures. I can see how different those experiences would have been had I started them before I was retirement ready. 

Here’s how it went with me. Something to provide a few thoughts to go through before making a decision to either make or avoid a pre-retirement job move.

What’s exactly motivating the urge to jump ship when almost home?

How do we really feel about the job?

It’s easy to become impatient when getting close to our retirement date. Things at work that have always irritated us will only amplify. I had plenty of them over the decades in my first career. My “closing in on retirement dilemma” of whether to stick it out of skate off was primarily motivated by the constant post company merger executive’s insults. Insults that were both financially and policy driven against those of us who actually did their jobs. 

Since we are close to the finish, we should focus on the light at the end of the tunnel. We have to assess and ask ourselves whether we like the company, people, immediate management, work, environment, conditions, pay, etc. If the answer is yes for the majority, maybe sticking it out might be the logical decision. If not, nobody should have to stay in an intolerable situation if a better opportunity presents itself. 

The power of seeing prospects of more money

A sprinkle of impatience and a pinch of greed may be all it takes to believe we’re seeing retirement sooner than planned or going with a bigger sendoff. Who wouldn’t want that? There’s always the temptation to chase after more money. If the runway to retirement is long enough, then this is a powerful motivation and maybe a good move because pitfalls would be most likely-short-term in the entire time-frame scheme of things. If it’s a short retirement runway with a higher impact of error, maybe not so much. 

To temper my enthusiasm and emotions so that I could logically think my way through, I reminded myself that my current salary, although less than what was being dangled in a new opportunity, still provided a near retirement date. It helped, but I was still swayed by dollar signs.

Applicable Lessons Learned Comparing My First Career With My Retirement Jobs

Nothing is guaranteed

I admit I was shook when everything collapsed as it did while trying to solve my closing in on retirement dilemma. Timing of the new company’s coming reductions was in my favor. But it would have been devastating had it come a week or two later. I would have been left desperate to find another position and most likely adding delay to my retirement plans. 

As good as a new offer looks, there’s no guarantee that it will be fulfilled or last. Sure, the same goes for our existing positions. But at least with time on the job there is usually a severance benefit if let go. If in the final stretch to retirement that may be enough to get us there. We must always remember that all of it is a delicate dance. Business has its priorities, and we should have and guard our own priorities.

All the workplace annoyances

When we’re in a long-time career we can think annoyances are isolated to only where we’re working. Surely there isn’t the same propensity for shenanigans and insult as there is here? The reality is that this happens everywhere. 

How I got through the last stretch to retirement was to figure out how to better avoid the irritating people and policies. With no motivation or ambition for advancement in my soon to retire mentality, I just focused on doing the parts of my job that I did best. I then leveraged their game using their annoying new rules to my advantage while holding my nose to get to my primary goal: Leaving on my terms when I was ready.

After I retired I started some great retirement gigs. I saw the same irritating nonsense going on that I saw before, but what wasn’t the same was me. I didn’t need to be there, I wanted to be there. Having the power to walk away anytime and having zero financial threat for failing to please a company idiot changed everything. It’s easy to tolerate the side stuff when the employment power dynamic is flipped in your favor. 

Money isn’t everything

I was tempted in my final stretch to retirement by what looked like an exciting project with what was a different growing company along with a big raise. The near miss made me think hard about what might have happened. 

I tried to stay objective by reminding myself that money wasn’t my primary motivation in the overall scheme of things. Early retirement on my terms was. That’s what’s at risk if things go wrong. If money was all I cared about, I certainly wouldn’t be on track for an early retirement just down the road, I’d instead just stay working to pad my net worth. No thanks!

Even so, I still fell for money’s lure in my last stretch before retirement. My near miss experience did teach me how to better prioritize and prepare myself for my enjoyable retirement jobs that came later. I had won the game by reaching my financial goals and could truly only accept work that I had interest in doing. Best of all, without having to meet any financial obligations or goals, I only had to do it for as long as I wanted to. There’s truly a huge difference between needing to work, and wanting to work. Taking on a new opportunity while closing in retirement would certainly fall into needing to work.

I found my retirement gigs much more enjoyable and the money earned was just the cherry on top. I also realized that money wasn’t proportional to job enjoyment. My first gig was lower paying than my career. My second retirement gig paid more than my long career. Another paid way less than than all of them. I enjoyed them equally and way more than my long-time career. 

How hard are we really willing to work during our last leg of employment servitude?

When we have been in a position for a long time we may be working hard but it is known, understood, learned, and productive work. Our work and reputation has already been earned. A new position means we will most likely have to reprove ourselves. There’s the stress of learning new job duties. But also learning the new company culture, processes, determining people to align with and those to avoid, etc. All with the pressure to succeed because we still have retirement date goals that are within reach if we pull it off.

Some may find it appealing to just coast on their long-time job through their final stretch to retirement. That wasn’t me, although I often wished it was. There probably wouldn’t have been any closing in on retirement dilemma to work through. While in my long-time career I was ambitious, taking on new responsibilities, and attempting to increase my knowledge and skills. What I found later during my retirement gigs is it was a lot easier to do in a company and position I had been in for years. 

Once I entered into new retirement opportunities within similar technical fields, I experienced just how challenging and stressful it is to feel that I was performing sufficiently. That feeling of inadequacy would have been excruciating if done worrying about survival to make my retirement date goal. In my post-retirement experience that specific new job pressure wasn’t an issue. I just needed to satisfy my own feelings of adequacy. It takes a while to retrain our brain to overcome all of the stress that can come with a new job. I will say that all got easier to menatlly get through with each new paid retirement opportunity I took on.

Risk is always there

In some cases it doesn’t matter how well we perform or how solid our plan is. There’s always the risk of outside forces overturning everything we have worked towards. Just as in my close call when business and economic conditions abruptly changed. It can happen whether we stay put or chase a new opportunity.

That near miss and my retirement work experience showed me that the biggest hedge against expendability by these outside forces is reaching our personal finance goals. Something to focus on when experiencing a closing in on retirement dilemma of whether a late career move is the way to go. If the odds look great to make a move or the risk reward is worth it then do it. If not or not sure, then stick it out until the odds are more in your favor or when you can freely chase opportunities post FIRE.

It will always be a tough dilemma

I know that I underestimated how competitive and ruthless the working world can be. After dealing with and managing levels of it in my long-time career, I failed to think it could be even tougher starting somewhere new. I wasn’t a starry eyed fool. It’s more about being lulled into complacency after decades at the same company and then receiving a good opportunity pitch. 

Everyone will have to decide for themselves whether to stay put or chase a new opportunity in the final stretch to retirement. Sometimes the stars will align and an opportunity is too good to pass up. For others the prudent move might be avoiding any rocking of the boat that got them there. Regardless of how impatient and annoyed we are during the last stretch along the lines of the saying, better the devil you know

FIRE Choke? How I Accounted For The Risks Of Early Retirement

FIRE is hard to accomplish, not impossible. For many the dream of financial independence and retiring early is extremely alluring. Enough to motivate us to accomplish the necessary personal finance goals and overcome the hurdles of a system that wasn’t intended to allow escape from. It is something to be proud of and celebrated. Then just as it’s right in front of us we can find ourselves unable to pull the trigger, we FIRE choke. Fear of taking that last step is common. 

I wasn’t blind to the many risks of early retirement and covered it in my plan. Yet I still experienced anxiety from the enormity of my retirement move. It’s all too easy to focus on the celebrated sunny day images of early retirement and overlook or underestimate the probability of storms. That is until it’s all on the line at crunch time.

FIRE Choke? How I Accounted For The Risks Of Early Retirement

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Avoid FIRE Choke: Dealing With The Risks Of Early Retirement 

The risks of early retirement are real. They must be recognized and accounted for in any early retirement plan. Even if we’re fortunate enough to never actually experience them, without understanding how we would counter them can cause expending too much energy and time worrying about “what if”. 

I had delayed my early retirement by a year because the recession came right as I hit my goals. It ruthlessly moved my target further away from me and set me back. But later when all signs pointed to being good to go, my recent memory of the recession’s last minute target devastation caused me a little battle with FIRE choke. It would have been much more paralyzing had I not accounted for all the risks we’re warned about. 

Market Risk

Investing over the long-term usually favors the investor. Retiring early means relying on our portfolio over a much longer period of time. But using a retirement calculator that accounts for multiple historical return cycles isn’t a guarantee that we won’t enter a risky run at the wrong time or for a devastating prolonged period of time. It was something I had to mentally deal with.

My counter to relieve some of the market risks of early retirement was with diversification and rebalancing allocations as necessary. I had the stock to bond ratios to support my investment risk tolerance. Along with enough cash to get through any bumpy markets. After my recession experience I wanted a recession hardened portfolio. Now 11 years into my early retirement I have to say it has worked flawlessly. The portfolio also proved less worrisome when I saw during the pandemic market drop that my portfolio allocations did their job. 

My tip- To reduce the market risk worries of early retirement pick a portfolio allocation, diversification, and cash holding strategy within your risk tolerance that relies on data. Don’t bounce around based on emotions. Especially those driven by fear or greed. I’ve heard too many stories of folks jumping in and out of their strategy and causing damage to both their portfolio and retirement.

Health Insurance- Medical Costs

Medical cost is something that causes many to FIRE Choke. Retiring early before Medicare eligibility can make retirement healthcare pricey. I had earned a retirement health insurance benefit. My short-term healthcare was covered. But my company had been merged with those that had an adversarial attitude toward earlier earned benefit promises. Although benefit cuts made before I retired were worrisome enough, I had to counter concerns about how much worse it could get over time. I retired 14 years before I would be Medicare age. When I retired the ACA was being worked on, nowhere near passing into law. 

With my early retirement at the end of 2009 I had a monthly health insurance premium for my wife and I of $475 with $25 copays. Now in 2021 I pay $1472 with a midrange deductible before an 80/20 payout begins. If it becomes too unaffordable my “plan B” is to structure my income to use the ACA.

My tip- What I did to calm the risks of early retirement medical cost concerns was to double my medical budget of insurance premiums plus out of pocket costs when running my numbers through the retirement calculator. In hindsight my doubleling was not enough to cover my full pre-medicare 14 year period. I recommend using a projected budget that uses double current healthcare costs for the 1rst 7 years of early retirement. Then trippel it for any remaining years before Medicare. See how your retirement calculation works out for the years before Medicare and after.

Remember, it’s just long-term projections in a calculator

I had to plug in a higher withdrawal amount into the FIRECalc calculator than I was planning on using. What I was looking for was my retirement funding success rate. I ended up initially with a higher portfolio withdrawal rate than the recommended 4% but post Medicare it will be lower. 

No More Paychecks Syndrome

The one joy of employment is getting a paycheck. Then doing our thing of managing the budget plus putting some aside to pay ourselves. Knowing that paychecks end when we walk off the job can mess with our head. I planned to get around this by having my IRA account holder directly deposit a monthly check into my bank account. 

My tip- Create your own paycheck scheme. I went from bi-weekly work paychecks to once a month distributions for my bucket strategized IRA. I had the retirement distribution deposited into a savings account and I then make bi-monthly paycheck transfers from that. 

Thoughts Of Needing More Money

One of the risks of early retirement is not having enough money. Even when the numbers check out it’s easy to succumb to thinking to maybe playing it safe and accumulate even more. This is a common FIRE Choke. Putting retirement off for another year or longer of portfolio padding. Both the fear of running out of money or being greedy and thinking more is always better than anything else can cause us to choke and derail retirement plans at the last moment. 

My tip – Retiring on our terms means picking the day we toss the job for the adventure of retirement freedom and owning our own time. When the thoughts of needing more creeped into my mind, I reminded myself that time is finite and not guaranteed. My father in-law shared through his own experience that retiring early is like leaving the casino when ahead. I used that metaphor to quiet the more money seduction.

Be Mentally Ready

Most importantly is planning to be mentally ready to retire and walk away from the only life you have known. It might not be the life you enjoy, but it’s the devil you know. Even if all the other bases are covered, not being mentally ready means none of it will matter. FIRE Choke is then inevitable. Even if we were to power past that, there would be no mental peace about the decision to retire early if our head isn’t right. There are plenty of nonfinancial aspects that we need to account for to avoid mentally regretting our early retirement decision.

My tip- Plan to deal with separating your identity from what you did for a job, expanding your social life, defining an ever changing purpose, and transitioning from saver to spender of your portfolio. Much of this requires being aware of it before retirement. But most will have to be fine tuned on the fly after entering retirement. So finally, give yourself time to work through it. 

 

There are many reasons why we may question our decision to retire early once the goals have been met and our plan looks solid. Dealing with issues that range from fear to greed are common. We just need to be aware of them and address them logically. If we can’t account for them in a reasonable way and there’s still mental reluctance then maybe it really isn’t our time to take the leap. There’s no shame in that. Afterall, we’re the ones that have to live with ourselves and the outcome of our decisions. 

How I Knew I Had Enough To Retire Early

Many people want to retire early to live a life free from the rat race. It takes having a certain mentality and the financial means to pull it off. Even with meeting those requirements on paper, it can be difficult to really know when we have enough to retire early and make it work over the long-term. 

I was mentally ready and willing to ditch the career at age 40. But it wasn’t hard to figure out then that I didn’t have the means to do it. At that time in 1998 I only had around $100,000 in my 401K ($160K converted into today’s dollars), some debt, and no idea how to fund our lives without my demanding career. So began an early retirement plan and the 10 year journey to get there. Then came questioning my readiness until the moment I knew I did have just enough to retire early. Enough in more ways than one. 

How I Knew I Had Enough To Retire EarlyImage Source

Once I Knew I Had Just Enough To Retire Early It Was Easier To Jump

Knowing that you have enough to retire early is a lot tougher than knowing you don’t. It was obvious when I first started my early retirement journey to see there was no way to pull it off. But as financial goals are met and numbers vastly improve, the real math and mind warp begins. 

The Mechanics Of Knowing I Was Good To Retire When I Did

I Became A Budget Master

I wouldn’t have been able to call it time to retire without first knowing exactly what our preferred lifestyle would cost. We had years to dial it in. I knew how much I not only needed to fund our lives but how much I wanted. 

I Cleared Date Milestones

When I started my FIRE quest I knew when I would qualify for some retirement benefits at my job. My 10 year plan revolved around hitting those milestones for a pension and retirement healthcare. Even though during my 10 year plan the company was taken over through a merger and the company promised retirement benefits were heavily diminished, I still cleared the date milestones to get what was left that I’d earned. Other milestones to consider are bonuses, meeting 401K thresholds or company match payment dates, stock option vesting, or other beneficial age based milestones. 

I Tracked My Portfolio And Retirement Calculator Results

I tracked my early retirement portfolio chances through the FIRECalc retirement calculator during my 10 year plan. Talk to 100 people about what kind of a calculated success percentage they need to feel comfortable pulling the retirement trigger and you’ll get 100 different answers from 85% to 200%. Everyone has to make that decision. I was satisfied with 90% and up. 

Settling The Mental Conflict Of Taking The Retirement Leap 

Reversing Decades Of Conditioning 

We are preconditioned to always want more. Better grades, bigger degree, more pay, higher career position, newest doohickey, the list goes on. Our dreams can even become inflated. I knew I was mentally ready to retire after years of reversing that conditioning through frugal living and distancing my identity from what I did for money. It was easy to walk away and made it easier to get through my retirement transition

Trusting The Numbers And Accepting Calculated Risk

It’s easy to submit to doubt when breaking norms. There’s a feeling of safety in conformity and portfolio overkill. For anyone who doesn’t equate retirement to a traditional or particular age, or having a million dollar plus portfolio, actually knowing you have enough to retire goes far beyond running numbers. It requires trusting the plan, your calculated results, and believing in your own ability to adapt and be flexible as things change going forward. There is always risk for those who don’t have the benefit of an extremely fat portfolio. I was mentally ready and willing to accept that risk for the reward it offered.  

Acknowledging The Work And Lifespan Tipping Points

I was there, I knew I mentally had enough to retire early. I was at the working tipping point when the job became less attractive than the income and portfolio padding it provided. The little voice became louder that there must be something better than this. Then the lifespan tipping point of years slipping away. Years that can’t be bought back. 

I Still Had A Hiccup

I had done everything right and still had to make an adjustment until I could confidently know both financially and mentally that I could retire early. 

The recession set in just as I approached my planned early retirement date of October 2008. It sent many of my financial goals into retreat. Numbers can look good one day and bad the next with market volatility. But the recession’s subsequent and prolonged market drop was off the charts. I delayed retirement a year until I felt the market drop had bottomed out and my calculated success rate returned within an acceptable range. That and a little mental push, courtesy of new asinine executive directed policy and work changes coming. I had enough!

 

Seeing what we need to see to know we have enough to retire early is going to look different for everyone. It’s like beauty. It’s always difficult to explain but we know it when we see it. The same applies to knowing it’s the perfect time to retire on our terms when we’re truly ready both financially and mentally to take the leap. 

The Pros & Cons of Investing in Physical Gold

It is no secret that gold has been historically valued from ancient times until today. Just by describing why people appreciate it, you will already see the pros of this precious metal.

People used gold in trading for a long time, and today, people are storing metal as a valuable investment.

A lot of us agree with experts and investors that it is an excellent store of value. We can buy gold and save it like typical savings but in a more secure and higher-rising-value form.

The Pros & Cons of Investing in Physical Gold

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What can I use Gold for?

You can buy gold now and slowly add more of the metal until you grow your collection. Then, when you retire, you can sell it for cash and live a beautiful vacay life. Or, you can pass it on to your heir. Your recipient can keep the collection and add more to it or exchange it for money to use for education or business.

However, there is a reason why experts say that not only your Portfolio but also your precious metals inventory should be diversified. While gold is well-rounded and can even protect you from inflation, there are things that it cannot do for you.

There are situations that this metal cannot help you. While they are minimal, it’s still valuable and useful knowledge for you to learn the disadvantages.

Here are the PROs and CONs of your gold investment.

On Value.

PRO: Everyone values gold organically.

Gold is treated by society like it treats religion, and because of this, governments and institutions put value in it. For millennia, humanity’s attraction to this precious metal is evidently significant. We have been using it as a symbol of wealth, power, and status.

There are gold items that you can collect that are valued more by their sentiment and historical merit like commemorative coins. Some gold items indeed have raised values because of their added novelty.

CON: It can lose its novelty.

Nobody knows when this will happen, but when it does, gold owners will suffer loss. Humanity’s millennia-spanning crush on gold is emotion-based. Once we have a leap in knowledge, we might see it for its practicality. However, experts believe this will not happen just yet. We can still trade gold for centuries to come. Good for us, this con’s possibility is almost impossible to happen.

On Utility

PRO: Aurum has many uses.

Aside from being jewelry, medals, and statues, which are more novel uses, gold is used in dentistry, electronics, and computers.

It is the best filling for cavities because it doesn’t corrode and doesn’t react when mixed with other metals. Its ductility makes it very easy to shape, and nobody is allergic to it.

Gold is one of the best conductors. It can be used in small portions for smartphones, TVs, and GPS devices. It also helps in the speeding up of data transfer in computers.

CON: It’s too expensive to use practically.

It is impractical to use Aurum in technological industries simply because it is too expensive for its working value. Companies have no reason to use gold substantially when there are cheaper alternatives like silver and copper.

Just take, for example, the use of gold in food. It isn’t added to the fancy dish because it makes it taste better or more nutritious. The gold flake topping is just there to make the food look “fancier,” and so it can sell at a higher price.

For now, the use of gold for investment is mostly based on people’s “placed” value in it. It is expensive because we think so and not because we know it is useful.

Gold Exchange Traded Funds (ETF)

PRO: You can own gold digitally.

You can sign up and exchange your money for digital gold. There are online companies with physical reserves of Aurum, and you can own a part of that stock. When the market situation is perfect, you can buy more shares for lower values or sell your stocks for an excellent profit.

CON: You don’t actually own that gold.

When you sign-up for an ETF, you have shallow control. You have no access to the physical reserve, and all you have in your hands is a sheet of paper.

If the company you are partnering with fails in its system, you can say goodbye to your stocks.

Physical gold

PRO: You have full control of your gold.

When you collect gold physically, you have your investment in your hands, and you have full control of it.

You can add to it, sell part of it, and do anything that you find will bring your financial advantage at once. 

This is the classic no-frills proven way of owning gold, and many experts endorse this way of investing more than any method.

CON: Security costs.

Owning high-value items in your house is a risk for crime. You will have to fortify your storage with all the security technology that you need to mitigate theft.

Security devices can be costly, but you have to buy them, or else you risk your investment and the lives of your family and you.

Should I invest in Gold?

Yes. Yes, you should. Most of the cons of gold are just threats to the security of value, control, and storage, and they can all be mitigated by investing the right way.

Experts highly recommend that you own physical gold. And the good news is that there are sites that make it easy and safe for you.

You can own gold with a touch of a finger and, even more than that, you can have other items like silver, platinum, and copper in all forms. You can get precious metals in the form of Bullion, coins, numismatic, commemorative, bars, rounds, fractional coins, and others.

Find the right subscription for you. There are sites offering Bullion boxes or monthly mystery crates that are pre-curated by experts. With this service, you will be able to grow a collection that will give you many opportunities to profit.

This informative post was contributed to Leisure Freak by Charles Stevens of Bullion Box. 

Author bio- Charles Stevens, Chief Operating Officer of Bullion Box Subscriptions.Charles oversees operations at Bullion Box Subscription, an industry-leading precious metal retailer, curating gold, platinum and silver bullion and coins.

Leisure Freak received no payment for this contributed article nor any commissions if readers decide to use Bullion Box services.