The following is a guest post from my friend, Jim, at Route to Retire.
When some readers here noted they had enough money to retire but were afraid to take the leap and wanted a post on the topic, I knew Jim was the man for the job.
Why is that? Because he’s right on the edge himself. He is just about to jump into retirement. And who better to write about an issue than someone in the middle of it right now?
So with that said, let me turn it over to Jim…
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There’s a funny thing that seems to come up in the FIRE (financial independence / retire early) community. You get on the right track, learn that it really is possible to retire early, and then bust your hump to get to that point.
But then once you reach that safe number, you lose your nerve to pull the trigger.
Some folks just continue to work for years longer than they need to. It’s not that they enjoy working in their regular job – it’s just that they’re afraid they don’t have enough money even if the math says they do.
Maybe they don’t think they’ll have enough money to last until they die or they want to have enough to pass onto their heirs.
So…they just keep working.
Just One More Year
It’s become such a commonplace event in the community that it’s been dubbed as “One More Year.” It’s the calling card for a lot of people out there and it doesn’t need to be.
ESI recently wrote a post titled “When Can I Retire? When Will I Be Financially Independent? A Retirement Calculator Guide” and he got some interesting feedback from it:
Would be great to hear how others got the ‘nerve up’ to exit the workaday world. That is my biggest barrier. Math says one thing (next year) but I’m not sure I can get my head around that.
“You’re already there!” – and yet, I just don’t feel that way! I’m hardwired to worry. Getting over the mental hurdle is the next challenge.
Exactly where I am. Would be great to see a dedicated thread on this subject – how others knew they were ready (not the financial part but the mental part).
Believe me – I know it’s scary. The closer you get to reaching your goal, the more nervous you get about the unknown. Unless everything you have is in certainties like annuities, thoughts of the stock market crashing the day after you retire fill your mind.
Or possibly worse – what if the costs of healthcare rise even further!
Yeah, these are legitimate fears for sure. But at some point, if you’ve tested your parachute you just gotta quit hanging out on the airplane and jump out. That’s how you truly live!
Who are you to tell me to pull the trigger?
Good question. I’m the 43-year-old guy who recently told his boss that I’m leaving at the end of this year. On top of all those same fears that you might have, I have something else that some of you have to worry about as well – I have a wife and daughter counting on me. That means if I failed to plan right, we could really be up a creek.
But you know what – I’m not that worried (anymore). In fact, I’m exactly the opposite – I’m confident that we’ll be successful in our early retirement. So confident that I’ve continued to move my FIRE date up over the past couple of years. It was a big surprise to my wife when I told her that I felt good that I’d be able to quit at the end of this year.
It’s not that we have an excessive amount of money saved either. I look at some of the bloggers out there that have retired early who share their numbers and absolutely wish I had that much money! For a family of three, we’re planning to live pretty modestly. Don’t believe me? Check out our net worth page that I keep up-to-date on my site.
And just for a little more authority on the matter, I brought in some other blogger friends that have retired early to give their take as well.
The Realities
Each of us is in a different situation in planning out our future. For me personally though, it was important to accept some realities to help me understand why it was ok to pull the trigger on early retirement:
1) I don’t enjoy my job anymore and need to be done with it. I’ve been at this company for the past 19 years and it’s time. I’m willing to take a calculated chance in order to be able to move on.
2) Every minute longer that I’m working means I’m missing out on other things. Call it FOMO or whatever you want, but I have so many projects and hobbies that I want to be working on. In other words, I want the time to be able to chase our dreams.
3) We’re going to make money. Yes, it’s early retirement and yes, we’re planning on not needing to work. But guess what – we’re still young (no comments from the peanut gallery, please!). Even though our numbers have been run through the wringer every which way and we should be good-to-go, we’re still going to make more money. It’s almost inevitable.
It’d be nice to just sit on a beach all-day-long seven-days-a-week, but I’ll be honest – even that would get boring after a while. So remember those projects I mentioned that I want to do in #2? I’m sure that one or more of those will end up bringing in some additional income. I’m not going to rely on it for my plan, but it’s going to happen.
Moreover, it seems that the opportunities seem to creep up out of nowhere once you’re no longer stuck in the daily grind. I’ve seen that happen with almost every early retiree I know. In fact, here’s what Steve at Think Save Retire had to say:
[…] opportunities expand when you no longer have full-time work to take up so much of your day. These opportunities can (and do) include earning money.
I’ve found a slew of options after calling it quits that could almost replace what I was earning before. Of course, that’s not what I want. I don’t want to work that much, and I’m okay taking significantly less.
But, the larger point is opportunities exist. They are literally all over the place. But, our minds had a way of ignoring those options back when we held full-time jobs.
4) We’re in the ballpark with our numbers. Let’s talk about this for a second. Right now, you might be thinking, “Jim, are you insane?!! Ballpark ain’t gonna cut it with 30, 40, or 50 years of retirement!”
Yeah, well, guess what? If that black swan event happened and the #$%^ really hit the fan, is it really that big of a deal?
Honestly. Think about it. It’s not like we’re quitting with $25,000 in the bank – we’ve gotten ourselves to the point that we’re pretty sure we’d be good-to-go even if things get messy.
But let’s say I’m off by a little bit and for some reason, our hobbies aren’t bringing in any income at all (hard to believe). What’s really the worst-case scenario? I get a part-time job at Home Depot to fill in the gap? Or work part-time at Starbucks to get the healthcare benefits?
I’m actually Ok with that. I don’t think that’s ever going to happen, but if that’s really the most unpleasant or serious thing that could occur, um…ok. I can live with that. Hell, I might even enjoy it!
Jim at Wallet Hacks had similar thoughts when he decided to leave his job:
I saw my side business as buying me years of “not working” for an employer. Once I had about ten years, I was confident I could figure something out in the next 10 years so I wouldn’t have to go back to work if things imploded.
It’s All About Perspective
In other words, it’s important to put all of this into perspective. Just because you run your numbers into 11 different FIRE calculators out there and they all come back saying there’s a 7% chance of you running out of money before you die, it doesn’t mean you’re actually going to run out of money.
The odds of that happening are slim – well, technically 7% in that example. If you’re any good at math or know anything about gambling, you’ll quickly realize that this is a bet you want to take. The odds are definitely in your favor!
More importantly, these calculators have a hard time taking into consideration the “people factor.” And by that, I mean that no one in their right mind is just going to let their money run out.
If every bad scenario starts manifesting and it’s crushing your nest egg, my guess is that you’re going to adapt. Either you’re going to start cutting back on what you’re spending for a short time or you’re going to start making some more money one way or another.
That’s not a bad thing! This isn’t traditional retirement – you shouldn’t be just sitting in a rocking chair for 40 or 50 years. As an early retiree, you have the freedom to be a little more flexible.
Over-planning isn’t always going to be the right answer anyway. Even if you have 10 more “one more year” guilt trips and you end up working a decade longer than you supposedly need to, something’s going to throw a wrench in the works.
It always does.
You can’t plan out every detail 100%. Life happens. Things change.
However, as long as you’re flexible, you’ll be fine. Doug “Nords” Nordman from The Military Guide told me that he knew years in advance of his coming retirement:
I retired from the U.S. military in 2002 after 20 years of active duty, and I had no interest in a bridge career. We’d already reached the tripwire of the 4% Safe Withdrawal Rate, I had a small pension for our bare-bones expenses, and I was burned out.
When I asked him if he was nervous about making it happen, he said something I thought made a lot of sense:
The best you can do is have faith that your FI skills will help you succeed better than a 4% SWR robot.
Vicki from Make Smarter Decisions realized that sometimes you just need to pull the trigger because you really never know if you’ll make it long enough to enjoy every minute of happiness:
My big “aha” – a woman I hired at school who was my age died of a brain aneurysm watching one of her kids at a cross country meet. Then my neighbor (another woman my age) – had a massive stroke. They thought she was going to die – but she pulled through. She has an aide with her most of the day because of her disability now. These were happy, healthy women who both had kids in school with my kids. $hit happens.
And sometimes things happen that dictate you pulling the trigger whether you’re ready or not. Mark from The Retirement Spot shared his experience:
For me it wasn’t me who decided, it was a neurological disorder that decided for me, but I had saved enough where I did not have to worry about finances. I always had my finances in order and prepared for unforeseen circumstances.
I was a bit nervous. I think I was more nervous about losing my network of colleagues. Wasn’t sure what I was going to do. One of the first things I did was pay off the rest of my mortgage. I tend to be a worrier by nature. So, yes I was a bit nervous but in the end it worked out.
He’s making a list and checking it twice…
Now, with all that said, don’t just go quitting your job right off the rip. If you’re planning to retire early, you still need to do some due diligence first.
Remember that ballpark I was talking about? Yeah, well, make sure you’re in it.
If you’ve been in the personal finance community long enough to understand a game plan for FIRE, you likely already know some of the important concepts:
- Track your expenses. Know what you’re spending now and also what you’re anticipating to spend in retirement. Don’t forget to take into considerations like the costs of healthcare.
- Earn, Save, Invest (ESI). I swear I know that acronym from somewhere! This is the most important part of getting from A to B. Do it wisely and you’ll get to where you need to be even faster.
- The 4% rule… of thumb. If you’re not familiar with this, you’ll want to dig into this more. The research shows that you should be able to withdraw 4% of your portfolio every year (adjusted for inflation) without running out of money for at least a 30-year period. Flipped around, it basically states that you should have saved 25 times your annual expenses. There are arguments on both sides as to why this will or won’t work. Regardless of which side of the discussion you lean toward, it’s still a good start to get you in the realm of how much you want to have saved up.
- Understand the difference between taxable, non-taxable, and tax-deferred. Know which accounts will be taxed as you withdraw from them and which won’t. This can dramatically affect how much you want to have socked away.
- Don’t be afraid to get a second opinion. Some folks are able to understand every nuance of personal finance and know all the accounting rules and strategies. I’m not one of those guys and I’m not ashamed to admit it.
I understand a fair amount, but I’m not a financial planner or a CPA. Those are the people that can give you some more confidence in your plan. In fact, a fantastic financial planner is the one who helped confirm that we could retire one year earlier than planned. He gave me some strategies and ideas that really solidified the idea.
Jump In, the Water is Fine
All-in-all, if you’ve knocked those steps out and the math adds up, what’s stopping you from going for it?
Joe from Retire by40 suggested this idea if you’re still nervous about making it happen:
We did a trial run for a year so my wife can feel comfortable about my early retirement. We saved all of my income and only lived on passive income, blog income, and my wife’s income. The trial run worked beautifully. We didn’t need my income and it gave our cash saving a big boost.
However, if you’re still not sure about the whole idea of quitting early, sometimes you can make it work with some other more structured forms of income. Mrs. Groovy from Freedom Is Groovy had this to say about them quitting the 9-5:
We planned our retirement two years out, targeting October, 2016 as the time we’d both quit. That was when Mr. Groovy turned 55 and became eligible for a small pension. We knew we’d feel a bit weird when our paychecks suddenly stopped and we wanted the psychological boost of knowing we’d have a small, but reliable stream of mailbox money coming in.
Understand that pulling the trigger on FIRE isn’t the end-all-be-all. If you feel you made a mistake after a year or two, you can go back and get another job. Call it a mini-retirement if you want. I don’t anticipate ever doing that, but if I ever needed to, it’s an option.
“One More Year” syndrome is not something I will allow myself fall prey to in this life. I want to enjoy every minute of time I have and wasting it in the rat race isn’t going to do it for me!
If you’re “there” financially but you’ve still been nervous to jump ship leave your job, I hope this has helped you see a little bit of a different perspective on things.
Your turn – what are your thoughts on actually pulling the trigger for early retirement?
This is ESI again, with a few post wrap-ups of my own.
If you’re nervous about retiring, here are some suggestions:
- Do a trial run as Jim suggested. It doesn’t need to be a one or two-year full-blown retirement. Just see if your workplace will let you cut back to two or three days a week. Then if it seems a bit scary or unpleasant you can easily ramp up again.
- Build in several margins of safety. These should give you even more confidence that if something goes wrong, you have back-ups to cover you.
- Seriously consider a side hustle. It’s one of the best margins of safety you can have because it earns you money! And if you pick something you enjoy to work on (which you should) it won’t even seem like work. You have to do something in retirement, why not make it something you love that earns some extra cash?
- Remember you can always go back to work. Even if it’s Starbucks or McDonald’s, the likelihood that you’d be able to find some sort of job is very high.
In the end, the stories from Vicki above really resonated with me and I’d suggest you think about them.
Here are a few I’ll add to the mix:
- A college classmate of mine recently passed away from cancer.
- A wonderful neighbor of ours who was just a few years older than me had a brain tumor and died of a heart attack.
- Many friends and relatives my age have had bouts with cancer, heart problems, and the like — serious issues that could have gone either way.
People often ask me about retiring early saying, “What if something goes wrong with your health?”
They are implying it will be bad for my finances if I get sick.
But I turn it around and say, “If something does go wrong, I get ill, and I don’t recover, I’ll at least be thankful that I retired when I did. I don’t want my last good day on earth to be spent in the office.”
I’ll probably write a post on this one day but let me share part of a story as I close.
One of my bosses from several years ago passed away earlier this year. He was an awesome guy in many ways and only a few years older than me.
A few months after he passed a mutual friend and I had coffee. I noted that I didn’t even know my former boss was sick and my friend said not many did — he was a private guy and didn’t want people to know.
Then he said the words that have haunted me since, not for me personally but for those who are able to retire and yet don’t:
“He was at work on Friday and dead on Sunday.”
I don’t want that to be said of any ESI Money readers if I can help it.
“He was at work on Friday and dead on Sunday.” Wow.
I’m a serious candidate for One More Year syndrome myself. I’m a worrier and a pessimist but as many of both of your stories mention: there are worse outcomes than the financial ones we fear.
The way I’m dealing with it is literally locking myself into a date. I’m booking months of travel a year in advance so when the time comes I have to quit. I’m basically forcing my own hand so I can’t chicken out.
I like that – as long as your numbers still make sense when you get there, this could be a good way to avoid the inevitable hesitation as you get closer.
That’s cool you’re booking a lot of travel beforehand – that should actually make the transition a little easier as well since you’ll already have things lined up for yourself.
— Jim
Yes Jim I think you might be insane but wish you all the best! I worry a lot about myself and my extended family and feel an obligation to make sure that all of us are safe for the future. So I’m hoping 6-8 more years and I’ll be done. I want to stay on the West Coast in retirement so that means more expensive, that’s he choice I make.
Your net worth seems pretty light for your age and family situation to retire.
All that said I hear you on all points. I think about dying at work, that would suck. I hate my job but make a lot of money, it’s very hard. I feel so blessed to make what I make that I feel I’d be a fool not to do it. It’s lofe changing for my entire family. Including being able to help my brothers and their families as well as considerable charitable giving.
I may have missed something but was there a mention of his net worth? Or perhaps you follow his site so that’s how you know his net worth is “pretty light”?
@gtmoney it sounds like you are in a completely different station in life that Jim since you have multiple families counting on you. Since that is the case you’ll need multitudes more money than Jim will. He has his wife and daughter and that’s it so his FI number would therefore be considerably smaller than yours.
Jim thanks for reminding us all that going back to work is an option if things don’t work out – I’m looking at that angle now and trying to dissect it and at some point in the next year make the leap. Thanks for the insight and links to others with knowledge and experience in this. Lots to think about with this article! Cheers!
To be clear my insane comment was a joke in reference to his comment “at this point you might think I am insane”. I was just kidding.
As for his net worth there is a link and his net worth is $1.2M or so. For a family of three to retire that is pretty light unless you really keep expenses low. Just my opinion of course. And I’ll try not to joke without being very clear next time.
Well, I’m definitely a little insane regardless! 😉
Our net worth would be considered too low if we planned to retire to the west coast for sure. However, we’re actually planning to move to Panama next summer… so that might be considered a little crazy in itself!
https://www.routetoretire.com/tomorrow-never-comes/
Regardless, we live very moderately and we’ve worked our numbers to cover us in the event we decide to move back to the U.S. at some point. That said, we’d likely be moving to Tennessee and not a high cost of living state.
It can be scary to be pulling the trigger on early retirement, but the reward can really outweigh the fear. How does the saying go – “no one on their death bed has ever said, ‘I wished I had worked more.'”
If you hate your job, why not look at a middle ground of moving to part-time or phasing into something that you do enjoy?
— Jim
Jim, I totally get what you are saying but I also understand where gtmoney is coming from because he and I are probably closer in age and have some similar goals and objectives. For what we are looking for, 1M would not be near enough to retire comfortably and achieve other goals.
I also just have one child and she is currently a sophomore at a good, out of state, public university. That undergrad education alone will cost me over 200K and her career pursuit will also require a Masters Degree which is probably another 100K.
I also have a strong desire to make my branch of the family tree as financially solid as possible for future generations because I just don’t know how this world is going to turn out the way it is going. Projections are our children will be the first generation to actually do worse than their parents from an average net worth perspective. With this in mind, I’m socking away as much as I can not only for our retirement but to leave a strong generational wealth foundation as well.
These are just a couple of examples. I do not at all deny that someone can live a comfortable lifestyle with a million dollars in the bank but it does take planning and discipline and a little bit of luck that nothing catastrophic comes your way, particularly when you still have 40+ years of life expectancy on your side. Granted you always have the option to find work but we should also point out that for a lot of folks who make a move like this, it is doubtful they could ever resume the same career at the same level once they have taken an extended sabbatical and particularly when they are closing in on age 50. Side hustles, real estate, etc. are certainly viable options to make up any gaps.
Last, I like your site and the plan you have created for you and your family. What I don’t like are the sites out there catering to millennials that encourage saving up to a million and then taking off to see the world and just live frugally the rest of your life and you will be fine. Most people simply are not that disciplined, not that frugal and not that lucky in life to roll the dice like this. My parents didn’t have a million dollars and lived a very comfortable life with plenty of savings but they also came from a different world with different values and fewer wants and needs. The world today has many more temptations and expensive tastes to entice us and one really has to watch it to avoid overspending and lifestyle creep.
If it was all really this easy then we’d all be retired by 40 or 45 but clearly, most people never even have the option. I was able to retire from corporate life 3 years ago at 57 but I did so to start a new business with some former colleagues. My wife is 57 and still enjoying her sales career. We have plenty of net worth to achieve many of our goals and expect to work another 3-5 years before we hang it up for good.
Jim, all the best to you and your family and be safe in Panama!
Thanks for the great comment, Paper Tiger! Just so we’re on the same page, I have no qualms about anyone’s FI number. For some that may be less than we have and for some and may be quite a bit more. In our case, we based our numbers on our current spending (plus a little extra). We live a pretty modest lifestyle (with some great vacations sprinkled in) and we’re content with that.
For many folks though, this might not cut it. Maybe someone wants to be able to live it up more in retirement or wants to create the strongest possible foundation for their family tree (like yourself). Whatever the reason, I say go for it.
Everyone’s number is going to be completely different and I’m definitely not implying that what we’re living on is good for everyone. My point is that if you get to your number (whatever it may be) and you want to quit your job or even just scale back, it’s time to get serious.
That fear of the unknown stops too many people from doing just that. “One more year” syndrome is pretty well-known in the community and keeps a lot of people from leaving their jobs year after year because of it. Almost everyone I know that’s retired early has said they wished they hadn’t hesitated and had done it sooner.
But on the flip-side, if you’re happy doing what you’re doing, then by all means carry on. Life’s too short to live chained to a job you hate.
It sounds like you and your wife are already living the dream which is fantastic.
Cheers!
— Jim
I think this is definitely a 20 or 30-year experiment. I’m sure most early retirees don’t regret it right now but right now is not where the challenges are. Many social scientists down the road will have fun determining how it all turns out 😉
I hope we are around to reach about it!
Read, not reach!
Thank you Paper Tiger for eloquently capturing this thought
“I also have a strong desire to make my branch of the family tree as financially solid as possible for future generations because I just don’t know how this world is going to turn out the way it is going. Projections are our children will be the first generation to actually do worse than their parents from an average net worth perspective. With this in mind, I’m socking away as much as I can not only for our retirement but to leave a strong generational wealth foundation as well”
That is exactly my point. I am so lucky to have a very high income. I want to male sure my family and yes some extended family are secure. Call it altruism all me insane. I do put a lot of pressure on myself but as I said I’m incredibly blessed and really I don’t hate my job it’s challenging.
Good luck Jim, let’s hope the healthcare mess in America gets better. If they give me a good and stable option, I’m right behind you!
Healthcare’s definitely the wild card. But I’m looking forward to the company, AF! 😉
— Jim
Starting in October, my wife and I have plans to retire —— we hit our numbers (original plan) about two years ago, but we are having a hard time pulling the trigger. She’s 60 and I’m 63, so as it makes sense to retire early, I think we’re going to sit tight for about 2 more years.
While waiting a few more months, we’ve not held back in easing in to the retirement mode: lots of time together, quick travel trips to great cities, lots of grandkid time, etc. Having the extra money to fund our lifestyle without touching our investments has been a blessing—-
So, although I see the value of leaving early, we’re going to hang tight and if something happens to either of us, I think we’ll be fine —- we will continue to take it one day at a time. Living life and planning for the time when we leave our jobs for good.
Hope this works out ——
Nothing wrong with continuing to work – especially if you enjoy what you’re doing. That’s great that you’ve been able to to start easing your way in though. It’s so important to walk that line and enjoy today while still planning for the future since none of us knows if we’ll ever see that tomorrow (morbid thought!).
Good luck to you and your wife – it sounds like you guys have a good plan figured out!
— Jim
The key point here is the FI part of FIRE. If you enjoy how you are living your life and are FI, keep living it that way. But when the BS bucket starts to overflow, then because you are FI, you can RE (or just R -as the case may be) and be totally fine with it. We FIREd just about 6 years ago, at 51. No financial worries at all. We are comfortable and we do what we want. We have never felt that retirement has put a crimp in our lifestyle, although my wife did worry about it the first year (because she refuses to be involved in the financial part of the plan, she doesn’t understand how much we have, how much it produces, how it produces, or what our income in retirement is…she’s happy if I cross her palm with a Benjamin when she wants it). Now, we don’t go around blowing money on a private jet to fly us on our vacations…but we still go to Hawaii for 8-10 days at least once a year if not twice, RV trips, road trips, concerts, etc. Our cars are nice, but not over the top (I drove a Lexus leased for me by my work, don’t need one now. A nicely appointed Honda or Toyota does just fine, and we are happy with that). But back to the point, I negotiated my departure 4 years in advance. My BS bucket was filling rapidly, I was working overseas and my kids were in college in the US. I knew that once they finished college, they’d be starting families and my wife would want to be close to the grandkids. It worked out just about perfect for us, as my FI bucket had plenty by the end of the 4 years, and the BS bucket was just about to overflow. There are a few things we would have done differently, but hindsight is 20/20 and we didn’t know what we didn’t know. But life is good.
Well said, Rambler! Although my post was intent of letting folks know it’s Ok to pull the trigger on early retirement if they’re financially ready, it’s not the only option. For folks that enjoy their jobs, keep at it, but just get yourself in a position of financial independence. Then if you have to stop working – whether because you decided your ready or because you just can’t do it any more more for some other reason, you’re not worrying about the money side of the situation.
Congrats to you guys retiring early and loving life!
— Jim
I think you have the bases covered…
enough investments to run … geo arbitrage and side hustles options to pump things up …. worst case economic scenario …you go back to work for 5 years and pump up your saving reserves by another $500,000 to fatten things up …. and all before 50….!
Thanks, Michael – I’ve actually run our numbers by 3 different financial guys and feel confident we should be Ok. But like you said, if things look bleak, we just get a job for a few years… not too shabby of a worst case scenario when you think about it! 🙂
— Jim
A thought provoking and timely post for me Jim. We ran our numbers and are pretty comfortable with knowing we can pull the trigger and make the transition. I say transition because I will retire and my husband plans to work for a few more years to cover health insurance. I am 61 and he is 57 and his job has the flexibility of being able to relocate and work from home. Next month we close on our retirement home in another state and will rent it out for a year while we wrap things up here and sell our current house. We had not planned to buy this soon but the house was perfect and we will see additional rental income from it. Had to take the leap! Buying that house is helping us pull the trigger!
The health and health care issues are the scariest unknown. Both of my parents had Alzheimer’s so I feel I am at higher risk too. I want to enjoy my retirement time that I have and make the most of it. That comes with a fear of possible future cost of long term care too. I am prioritizing the “enjoy life” over the “what if” with a healthy dose of caution in there too.
I liked the reminder that there is always the option to go back to work to augment the income. When my husband tells others of our plans he likes to say as a back up plan he is practicing saying “Welcome to Walmart” just in case.
I’m glad you found that house – what a great way to push yourself to make this happen!
Sorry to hear about your parents – Alzheimer’s is so tough on everyone. I’m with you on finding a balance between planning for the future and enjoying the here and now. At one point, I got so focused on trying to reach FIRE sooner than later that I was ignoring enjoying life today. Paula Pant from Afford Anything gave me a good wake-up call when she said “don’t trade today’s happiness for tomorrow’s.” I’ve since changed my ways, but truly a good lesson.
I like that you’re going to retire one-at-a-time as well. That should definitely help with the transition.
“Welcome to Walmart” – I used to work at Walmart around 23 years ago. Worked my way up to Asst. Store Mgr. I wouldn’t want the stress of going back to that position, but I would have no problem with stocking shelves. Maybe your husband and I will get jobs at the same one if the #$%^ hits the fan! 😉
— Jim
We took the leap a little over a year ago at ages 57 and 55 and as they say, never looked back and don’t have one regret… except perhaps not doing it sooner!
All the reasons above applied to us in some way. I can’t remember a time in my life that I’ve been more happy, healthy, or less stressed. We’ve found being more socially active is a benefit that we both enjoy greatly and one we simply had no time to accomodate when working. One word of caution. We’re spending a little more than we thought or budgeted but that’s been by choice and because we had plenty to spend at and since retirement. However, we’re completely prepared to pare back if or when necessary. So to all those who are ready to go, take one more quick check, maybe get a second opinion, but by all means DO IT! There’s a great new life out there just waiting to be experienced. And it doesn’t involve spending 40+ hours a week selling your limited time for a few more dollars.
There you go folks – another good testimonial! Thanks, DEC1
— Jim
HI DEC1,
We are in your camp! Laid off in late-2014 with the oil industry decline and we haven’t looked back. We trekked in the Himalaya’s for 75 days last year and I rode my mtn bike for at least another 200 days. I was 58 and my wife 57 when I was laid off and I haven’t missed work…ok, a little, but my health has improved greatly; I ride mtn bikes 200+ km/week. Karpe diem!!!!
Great post, Jim, and a transparent take on the reality that most of us get cold feet in the final countdown. Have a plan, execute, and modify as life happens. I wouldn’t have it any other way. Enjoy Panama with your wife and daughter, my friend.
Thanks, Fritz – I expect you and Jackie to come down and visit us at some point if you can ever find time in your busy retirement schedule! 😉
— Jim
I think the largest obstacle to early retirement is the cost of health care. You can change or at least control other costs of daily living. As you become older, the chronic illness will occur. The cost of insurance and co-pays can be astronomical . Worse case scenario you can always go back to work for the insurance. Because of Obamacare, insurance companies can not refuse insurance because of pre-existing illnesses. Obamacare however maybe eliminated. I have excellent insurance through my employer. I now have enough retirement money to pay for expenses of daily living. To retire now, I would have to calculate thousand of additional dollars to pay for health insurance.
I have three young adult children who have completed college. My children were in college 11 years. During that time two were in college at the same time. I can not imagine retirement if you have children who will be attending college. The cost is also tremendous even for a state school.
There is only two solutions 1) don’t retire or 2) have a side hustle that can generate some serious income. That being said, I plan to retire in one year. I however will not have an early retirement.
No doubt about it – health care is the biggest hurdle for almost anyone wanting to retire early. And with the uncertainty of the future of what’s going to change in the system, that makes it even worse.
Although we’re sort of skirting that somewhat since we’re planning on moving to another country next year, we’ve had to keep that in mind if we decide to move back here later on down the line. As of right now, we’d plan on using a health care sharing ministry, but you never know what the future holds for those either. The best you can do is plan your best and be flexible.
College is another rough one. Congrats to you to be able to help put your kids through school. We only have one daughter (she’s 8), but I’m still not too concerned. We’ve built up a little bit in a 529 plan for her, but it’s probably only going to carry her through a year of school… and I’m Ok with that. If she needs to get school loans, so be it. Everyone’s a little different, but I like that she’ll have some skin in the game.
I’m also still banking on some changes happening in higher education. I just don’t think the cost of college is sustainable for too much longer. We’re back to a point of folks needing to decide if it’s even worth the cost. How long will it take to recoup those costs down the line? For many, it’s a crap-shoot on if they would have been better off without it. I still want her to get a degree, but maybe an online institution might make more sense by that time.
We’re not rich by any means, but I feel comfortable we’ll be able to make it work. Even if things don’t work out, I’m Ok getting a less stressful job in retail or something just to help top things off.
— Jim
Canadian universities run about maybe around maybe $15…17,000 plus or around 12 …13,000 USD PER year for tuition, housing, food, transport…
Fantastic article!
I think the psychology of quitting is far bigger than most people realize. The fear of going against the crowd causes a chain reaction of ‘what ifs’ which can be paralyzing.
I pulled the trigger last year and dropped to three days a week. For me this felt like a nice stepping stone before full early retirement in a couple of years.
In my four day weekends I have each week I’m now building up my social networks outside of work, and figuring out what activities I enjoy the most (top of the list is still hiking, camping and mountain bike riding).
I think transitioning into early retirement is less of a shock to the system than working full time one day and early retired the next day.
That’s fantastic, Pete! I love the idea of transitioning into early retirement in that way. I would have done something similar except that my position wouldn’t work part-time.
Having the ability to figure out your interests without just quitting work cold turkey will make for a great way to move toward your next adventure. Congrats on this!
— Jim
To all who have figured figured out FIRE, don’t lamenting over the price of healthcare, hedge against the mindset that you’re going to be sick as you grow older! A great read, Younger Next Year by Chris Crowley & Henry Lodge lays out a plan for being healthy and happy as we age. Of course, even the healthiest people can get cancer or other ailments but a few life style changes increase the odds of being active and fit right up until the end. Enjoy the early retirement you’ve worked so hard to achieve by taking time each day for a little exercise and making good dietary choices…here’s to the good life!
Great point, Karen and another great reason to pull the trigger if contemplating pulling the trigger or not! Healthy mind and body = happy life
— Jim
The accumulation phase they say is the easiest part of your financial life. It is the stresses that come in the decumulation phase because of the “great unknown” that make anyone nervous to “pull the plug.”
As a FIRE aficionado, I am always reading articles about the worst case scenarios, the catastrophic insults that can happen to a portfolio such as sequence of return risk (SORR) and unknowns about healthcare costs, college tuition costs, etc. It definitely makes me nervous about retiring at any stage of my life.
I will more than likely have worked too long rather than too little when I pull the plug just to get that extra buffer in my nest egg to give me peace of mind. Not the worst case scenario as I can always pass on the extra to my heirs when I pass.
But yes, it is easy to be nervous when you are approaching your target number and target date as you will always second guess this decision.
Excellent point. I think those who work hard to acieve the goal of financial independence feel particularly strongly that we don’t want to to be caught on the tail end failing in some way after all the hard work and sacrifice.
Nothing wrong with working longer if it makes sense to you. Like you said – more in the nest egg is more that can be passed on.
— Jim
Tuition is only 4 years and you can control the cost by picking a college that isn’t going to set you back $250K. 98% of universities are just fine for 98% of the kids out there. Very few will need a very specific private university for their studies and future job.
I haven’t researched it but I’d imagine that top universities still have a big impact on earning potential. I went to a top public school. And no doubt it helped mybearly career and I kept that trajectory moving. I am a big believer in the E side of ESI so I say it does matter.
Your work ethic and desire to learn are the biggest factors. To be fair, my wife’s company doesn’t recruit the Ivy League, but even 4.0 students don’t always make partner. She went to University of Houston and is making $500K a year. She is also one of the top tax professionals in her field. Would she have the same skills going to Princeton? Would she have learned the same? Maybe Maybe not, since her field changes every year and whatever she learned 30 years doesn’t apply anymore. She still had to keep learning. She is also horrible at “networking”, so the whole, “havard alumni” networking thing wouldn’t have worked for her. It probabably works for those on CFO/CEO paths at public companies. Again, not every kid is going to make it that high in the world.
Your book skills vs your people skills and analysis skills are different paths. Yes, the MIT grad going into rocket science is a better candidate than a liberal arts major good at math. Georgia Tech puts out great Engineers, but so do many other good engineering schools.
I love reading all these perspectives. Karen Polkinghorne makes an excellent point – diet and lifestyle change associated with FIRE will likely extend your life and reduce the risk of catastrophic illness. My recommendation for all those on the fence is take retirement for a six month test drive and put your employer to the test. I am 55 and have been with my company 12 years in an SVP role. I told the CEO in Jan. 2018 I needed a reset for 2018, and intended to take 3-6 months off commencing in March. If the company did not want to accommodate me then I was prepared to resign. It was a calculated risk (I have a wife + 4 kids, two in college) , but based on the 4% rule, our net worth and frugal lifestyle I rolled the dice. The CEO was taken aback but grateful I was not going to a competitor, and grateful I was giving him 6 weeks notice. He granted me a 3-6 month leave of absence – unpaid, but they covered our healthcare. I handed off all of my responsibilities and pulled the plug completely….200 emails a day GONE. My wife gave me a 60 day pass to explore so I went to Europe, started a travel blog, tracked the path of Herodotus across Greece and Crete, and then walked 799 KMs on the Camino de Santiago across Spain. I changed to mostly vegetarian diet, lost 15 lbs and my blood pressure dropped to 104/80.
And a funny thing happened……the longer I was gone from work the more badly my company wanted me back. I sat down with the CEO in late August, renegotiated my role, salary, vacation time (got another week!), benefit package and went back to work after a clean six month break. We lived on my wife’s modest paycheck for six months + savings and investment income. Once you know you can do it, then whether you are working or not working, your attitude completely changes because nobody owns you anymore.
I guess my point is that if you are unhappy in the corporate grind, but fear the uncertainty of FIRE then declare free agency, force change and I can assure you your life will get much more interesting!
A lot of folks have said the same thing about pulling the trigger and then opportunities seem to come out of nowhere.
It’s funny how the position of power changes once you don’t need the money as bad as they need you. Congrats to you on the renegotiation – that’s fantastic!
— Jim
I keep trying to get my wife to ‘force’ her firm to give sabbaticals to the Directors. They do in Europe and now for the senior management, but not current Directors. Her office and others are going to have a bunch of early retirements from burnout.
I did just find out that my wife can retire, become a consulant, set up an LLC and her company will hire her for one off clients that need her expertise. She could probably make $25K from like two consults a year depending on the length. She can also work for any other company that would need her talents.
Another great post Jim. I hope that I can get to the confidence level you are at.
We are in our trial run period. I was reorganized out of a job and could make the choice to retire fully or move into a new career at a much smaller salary (but a hell of a lot less stress). While the timing was unexpected, it did actually fit into plans we set up a while back.
Unforeseen healthcare challenges with Mrs. r2e have kept me working to maintain good healthcare insurance. If not for that I would have just retired all together. A post for another time.
Pulling the psychological trigger on a major event like retirement can be hard. It clicked for us when our financial advisor told us to relax and enjoy life a little more. I had him rerun analysis so many times he finally told me that the difference between 90% probability and something higher was worrying too much about unlikely scenarios.
That’s great you’re in a position that you can move to a less stressful job if desired. Even though there’s a twist in your plans, having your finances in order seems to be putting you in a good position.
Haha, I hear you on the analysis – I’m an over-achiever and want that 100% probability even though that can be a reach.
— Jim
I really enjoyed reading this post.
I’ve not quite reached my ‘number’, so I’ll still be working for another 3 or 4 years. What I AM doing is getting things done around the house – landscaping, fixing the guttering, getting a new front fence, painting etc, in order to be Retirement Ready when the time comes. It helps the time pass more easily if I have little projects to focus on as that compounding takes place n the background.
The One More Year syndrome would be especially tempting in the States with your Healthcare issues. I like the idea of the trial retirement – we have Long Service Leave in Australia, where I could take 3 – 6 months off and still have my job to go back to. Hmmmm… food for thought…
Ah, the joys of living almost anywhere else in the world except the U.S. when it comes to healthcare! 😉 We’re actually moving to Panama next summer, so we’ll be able to say goodbye to most of that train-wreck of a system we have here (though we will pick up expat insurance).
Man, you can also do trial runs in Australia and come back to your job if you want?! If I didn’t hate long flights, I might be joining you there! 🙂
— Jim
Good Luck Jim!
I’m turning 49 early next year and plan to put in my resignation around the beginning of the year. My boss knows my intentions and he has asked me to provide 3-4 month notice. This will provide him time to find someone and I can help them transition into my position.
I have seen too many examples like you mention of friends and co-workers who passed too early over the past few years.
I am right where you are and although I can’t deny that I’m nervous, I’m also excited for a change.
I may work as a part-time online travel agent to both cut our travel costs and make some additional side income.
I like your plan, Bernie! I was just talking with a friend at work the other day and he told me of a big time investment firm partner. He was older (probably around 70) and out of nowhere, decided he was done and wanted to retire. He left the firm and was helping a friend a day after his retirement. He fell, hit his head, and died.
It’s a sad story, but I’ll bet if he could have looked back, he would have preferred to have retired earlier to enjoy his time instead of waiting so long.
— Jim
My wife and I have a goal to RE at 52 and 54, which is about 5 years from now. We will have a pension that will be just over 6 figures. We have additional 401K, IRA, and private investments. Coworkers and friends look at us and say that is too young to RE. I think we are “old” for RE compared to what a lot of RE bloggers. Ha ha. This is just a cushion since we are on the west coast too as gtmoney.
We are ready for the next chapter of our lives. It not quitting work, but just stopping what we have to do and start doing what we want to do. Even if I get a part time job, it is something I want to to, not have to do.
A year ago, I was planning on 55 to retire, but looking at the numbers, I realized I could do it at 54. In fact, I have commented on this website as RE@55, but changed it to RE@54. Who knows, it could go down to 53…
I love it – 54 (or maybe 53) is fantastic and definitely not too “old” to be called early retirement. And making a change and doing something different because you can and not because you need the money to do it is what the name of the game is all about. Congrats to you and your wife!!
— Jim
Thanks for the insights in your article, Jim. As for myself, I seem to continually come up with insecurities for not calling it quits at my job despite some pretty good analysis stating we’ll be OK. Some reasons:
1) What if Obamacare goes away and I need to pay full fare for health insurance for the whole family for more than a decade?
2) What if my kids get admitted to an elite private school in a major that’s worth their while and I want to fully fund their undergrad education?
3) What if I grossly underestimated my desire to splurge on multiple international family vacations a year and regret I should have worked a couple more years to fund those trips?
And then there’s the question as to whether I am really ready to retire as if I did, the kids are still in school and have rich activities during the summer so even if I did retire, I’d still want to sponsor/enjoy my kids local activities. Hence, I might as well work since one could say I’m not quite ready family wise to do the things I want to do as a retired person anyways.
I admit none of these reasons are great or insurmountable and I’m more inclined to believe I’m just scared to pull the trigger. I only hope I don’t regret the decision to keep working later. Maybe I will or maybe I’ll be thankful I stayed employed longer.
You’re dead on that any of those could happen, but the reason ESI asked me to right this post was to help others like you to realize that there will always be “what ifs.” But some of those what ifs could fall the other way as well…
1) What if you get hit by a bus in a couple of years and miss out on all that time you could have been really living?
2) What if you go to quit your job and the tables turn and you’re offered the same amount of money to work part-time?
3) What if something happens at work and a lawsuit causes you to lose everything you’ve saved so long for?
Unfortunately, no matter how prepared you are, there will always be a feeling of uncertainty. I firmly believe in the “you only live once” mentality, but only if you’re smart about it. If the numbers add up, only you can make that decision, but it’s definitely something to consider.
— Jim
Good reply !
You can always just go on 2 international trips instead of 3 and lets face it, you can travel cheap if you really want to. If you are retired, take a repositioning cruise to Europe or somewhere else. You are retired, you can take the long, cheap routes or drive to other cites with cheaper routes. We are doing a two week cruise from Spain to Florida for $1,200. Flights and hotels are all on points/miles. It can be done.
Thanks for allowing me to participate!
What I love about your situation is that you’re pulling the plug on the 9 to 5 while your daughter is still growing up. Aside from the gift you’re giving her of having more time together, you’re teaching her by example that life is an adventure, to not live in fear, and that with a flexible attitude you always have options.
Very true life isn’t just the accumulation of wealth and the 9-5. Good perspective.
Thanks, Mrs. Groovy – funny enough, she was the reason for my push for FIRE in the first place. I just wish I could have done it when she was even younger, but I’ll take what I can get!
— Jim
Excellent Post. One other way that might help others in making the decision is changing the baseline comparison.
As per a recent Fidelity article, it showed an average 401K balance of $170K for 60-70 year-old’s (traditional retirement). Said another way, for someone like you in your 40’s, if you can get to your 60’s with about $270K (inflation adjusted) in your retirement accounts, you would be entering retirement as an “average retiree” .
Of course, no one wants to just be average. However, if a worst case scenario is Jim’s retirement account balance potentially drops from $1.5mil to $270K over the next 20 years, low probability, he would still be entering traditional retirement years as an average American. At least to me, this feels a little less scary to FIRE.
Ha – I never thought of it that way, dap, but you’re absolutely right! What does that say about the importance America places on saving? Ouch!
— Jim
Jim- well done, great post and great discussion- you are proving 3 key points:
1) Retirement is not about how much you have- it is about how much you spend- managing that is the key to the kingdom
2) if you are in a job you do not like- get the hell out ASAP- otherwise don’t worry so much
3) whatever you are gonna do- have a plan an execute it- your Panama plan is genius and I want to come visit.
I do want to shout out to Camino man for walking 799km- bloody brilliant.
Thanks, Paul – looking forward to your visit when we get to Panama! 😉
And yeah, 799km is insanely impressive!
— Jim
Now if you didn’t hit the nail in this one. That is us to a T. Wife retires next year. Finally pulled the plug at the 18 month cobra window. I had to retire because of disability but next August that is it. Actually her company is slowing down and transferring work to Southern CA. Maybe they lay her off. Wouldn’t that be nice
If you haven’t checked out Financial Samurai’s book on engineering your layoff, I highly recommend you do. It’s pricey, but it has the potential to make back that cost thousands of times over in case like your wife’s. Might as well get paid to get laid off!
https://www.routetoretire.com/how-to-engineer-your-layoff/
— Jim
I have 653 days until I retire. I vest in my pension in 652 days. I am not going to throw away $35K a year just to quit early. I don’t need the pension, but it’s only two more years. My wife might squeeze out one more year if the parents are having health issues or we don’t think we can start traveling as extensively as we want. We have already hit our FIRE number and two more years will put another $500K in the bank.
Sometimes the rewards are worth staying. If you don’t hate your job too much, that amount of time seems well worth it (especially being that close to a pension!). Congrats to your upcoming retirement, Jeff!
— Jim
I am so bored, it isn’t funny anymore. I try and give it 75% each day, with 70% of that just getting out of bed. It’s gonna be a long 22 months.
Thank you ESI and Jim for sharing this with our community.
I had an email from ESI regarding this new blog entry. I was soon drawn to it on Saturday morning. However, the scheduled duties soon took over and reading the blog was postponed.
I have been pondering this same dilemma as detailed here. My thinking goes from the golden scenario to the worst scenario, to the most likely scenario … And with a few adjustments, all scenarios work out but i find myself almost at the cusp of where I feel I can call it quits, so I continue to do what I need to do…
What a delight to read all the views on FIRE, concerns, and the ways on how to deal with all the things that keep us from taking the next logical step …after a period of accumulation of wealth.
I find comfort in knowing we all have concerns and ways to mitigate those concerns; It also gives affirmation that hope is not lost at all, and we shall all find our way to a retirement plan with which we are comfortable.
Well said, Carlos! Good luck on your journey!
— Jim
Jim – Thank you for posting it. I agree, 19 years is way too long. I’m in year 16 and often wonder if I should have gone ahead and retired. We have the net worth, but some irregular payouts in my comp have me working for another six months. You know what: Working one more year is really hard. Its hard a heck for me, and I like my job and what I do, but I don’t love it like something that gives me purpose and I’m excited to wake up for.
Two different people I know come to mind that resonate with your story:
A long time boss/mentor of mine had to go through the same thing before leaving at 51. He knew he was done in August, but had to work through February for some payouts. He describes that six months as one of the most excruciating things he had to go through. I feel it too, having to stay engaged when you know “you’re done”
There will be other income opportunities. A lady who works for me decided to quit work for a career change. She’s saved really well, is at basically “barista FI”, she’s surprised at how much her stash will grow as long as she “just” earns enough money to cover basic living expenses. Her notice went public including “going back to school part time”. She has been having money making opportunities thrown at her from all directions. She’s having to avoid the temptation to do any of them immediately because she’s been programmed to work since twelve.
Good news (note sarcasm) – it gets harder the closer you get to leaving. I think I’m at the point your boss/mentor spoke of… I’m trying to stay on target, but boy, I’m starting to check out mentally and it’s dragging for sure!
I like the story of the lady who works for you – to me, that’s not such a bad “worst-case scenario” to have to deal with if it ever comes to it. It’s funny how much more flexible life becomes when you have a decent nest egg stashed away.
— Jim
I am looking at a 2-5 year (age 57-62) window to exit what has been a stressful but meaningful career. the 2 year option is least likely, but living and planning for the earlier timeframe has kept me aggressively saving and living simply. Putting our kid through public university is another reason for the longer time frame. I too would like to have a legacy for her, (she doesn’t know that).
My retired colleagues have various reactions to the “next chapter”, some are adrift socially and second guess themselves, others have embraced new endeavors. In short, retirement has to be engaging, not necessarily work, but self driven attention to fitness, making an effort socially, giving back (like caring for loved ones, young and old or volunteering) or diving into travel and hobbies/passions.
The stress of a grueling career has worn me down and I haven’t given attention to what I’m truly interested in doing next–just focussing on “can I retire now?” is not enough. So I’m taking the time to focus on that and I’ve got 2-5 years to think on it!!!
What a smart plan, Karen! Numbers are only half the battle – learning what you’re going to retire to is just as important or the plan is likely destined to fail.
Best of luck to you over the next few years!!
— Jim
Great post Jim. And interesting that you mention a few people you knew who had serious illnesses. I was all set on retiring at 50 when at 48 I became seriously ill with pneumonia. Not as bad as cancer or heart attacks I know but I was in hospital for 3 weeks and came close to never seeing my wine cellar again a couple of times! They say what doesn’t kill you makes you stronger, and it was probably the best thing that ever happened to me. I’d been a worrier all my life, especially about money, but now I don’t worry at all. I retired at 49 and have never looked back – I have more than enough money and could happily pare back and live a much simpler and frugal life if necessary. What matters is health, happiness, family, freedom…and a great glass of wine!
That’s a fantastic story, Ben – glad to hear everything turned out well health-wise and became your catalyst to retire earlier! More importantly, now I’m ready for a drink! 😉
— Jim
I’m thinking the term “retired” is used too loosely, which creates confusion. If you retire to only work a “side gig” then you are only semi retired. If you retire from Corp America to work for yourself you are not retired at all. To me truly retired means not trading any of my time for dollars…..Simply passive endeavors…..
I had a co-worker who died at work – happened after I’d already left that job. Very sad.
We had a retirement party for one of my current co-workers today – a former co-worker came back for the party, to “welcome” her to retirement!
I’m not ready for retirement yet, as I’m still working on building up my savings, but I’m very aware that tomorrow isn’t promised. So I’m taking advantage of my vacation time and taking some epic trips each year while I’m still working.
I think you were blogging about my wife. I am on disability but my wife is in the same place. We have been in the one year syndrome for ten years and decided next year August will be the day or month. Maybe her office building will get struck by lightening and she can leave earlier. We have plenty of money to pull the plug.
In the UK the normal retiring age for what is known as the State Pension is 65. One of my ex co workers died the day after his 65th Birthday. Thanfully he had had approximately 10 years of retirement due to a very good redundancy package an being allowed to take a full pension early. However he never saw a penny of the State Pension. My own Dad died at 72 and never retired. The lesson people can learn from my Dad is that it is never too late to start a Pension. He never really believed in them for years and for most of his last 20+ years he taught people to drive. There was a lot of turnover of cash but no profit. He took a part time job working for our National Health Service driving ‘Emergency Doctors’ to patients homes from 10pm to 6am. This meant he could join the NHS Pension Scheme unfortunately he died from Lung Cancer but was still an employee and as an active member of the scheme my Mum received a lump sum of 3 x his annual salary as well as a small pension.
I’m jealous bc Joe’s trial run is almost 7 years now that his wife is working! :p
I think it’s great that you finally retired. I’d love to know more about how the first year goes. My first year was filled with uncertainty on whether I did the right thing or not.
Sam