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Second attempt
Old 08-09-2019, 12:16 AM   #1
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Second attempt

This is my second attempt at early retirement. I followed this forum about ten years ago. At that time, I was on my way with a solid plan. A major move and a divorce later and I'm on a new trajectory. Don't pity me though. The divorce was for the best and the move was for a very good job so I am happy.

I make about twice what I did 10-11 years ago. I have a 3 hour commute each day (which sucks), and my retirement savings are mostly intact after the divorce. I love my job and have a plan for getting out either 5 years from nor or 8. The nature of my job is that it is unlikely they would get rid of me before 3-5 years from me so my backup plan is mostly a slight scale back. Of course the world can always blow up on us.

My main reason for coming back on here is that I see the last 10 years as fundamentally different than the last 100. I'm not sure if the old rules apply. Firecalc is based on the last 100. Things are strange now. Even central bankers are starting to say how everything is strange and they don't know how to behave.

I have no answers or even speculation. I'm just looking to educate myself and maybe gain new perspectives on retiring early but later than planned.
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Old 08-09-2019, 04:17 AM   #2
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Old 08-09-2019, 08:26 AM   #3
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Welcome back!! Things have not changed as much as advertised. A high savings rate, low cost investments, and an unemotional perspective still lead
to the best chance of being set for retirement. Try to think singles and doubles vs hitting home runs as homers lead to more strikeouts. Have you thought of moving closer to your great job?

Best to you,

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Old 08-09-2019, 08:42 AM   #4
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Who was it that said that the most expensive three words are "it's different this time"?


I was listening to Freakonomics podcasts and they had experiments indicating that monkeys (not even apes), made the same irrational financial decisions as humans, hehe! We're hard-wired to continue doing the same things, even though irrational.



Anyway, welcome back. A word of warning, though... Plenty of folks here are highly invested in things NOT being different, so, as they say, extraordinary claims need extraordinary evidence. I recall one of my old posts drifted into this territory and went all "ammo and booze" on me. Hopefully we'll manage to keep it real because nobody really knows for sure.
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Old 08-09-2019, 08:46 AM   #5
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Who was it that said that the most expensive three words are "it's different this time"?
And here I thought they were "We must talk" : )
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Old 08-09-2019, 09:58 AM   #6
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This is my second attempt at early retirement.
I'm inspired by the experiences of those of us that have seen a major setback and are recovering, albeit delayed.

What would you say was the most important thing, other than your new job, that allowed you stay positive and focus on your new goals?
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Old 08-09-2019, 10:23 AM   #7
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Good for you!!
We’ve all had changes, misfortunes, side steps and hurdles. I applaud you for continuing onwards.

I happen to agree that times are different and the path might need to be as well (but I’m also learning this forum was built specifically around the Calc...so be aware)

Good work in staying the course (whatever course it is)... I have no doubt you’ll do great!
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Old 08-09-2019, 01:30 PM   #8
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My main reason for coming back on here is that I see the last 10 years as fundamentally different than the last 100. I'm not sure if the old rules apply. Firecalc is based on the last 100. Things are strange now. Even central bankers are starting to say how everything is strange and they don't know how to behave.
Welcome back! There is a concept called uniformitarianism in geology. The concept is "that Earth's geologic processes acted in the same manner and with essentially the same intensity in the past as they do in the present and that such uniformity is sufficient to account for all geologic change." In economics, I'd flip this, and say that the past is the key to the present. While the SOR will be different, the largest lesson learned is that diversification is the key to reducing risk. You don't know which asset class will perform better each day/week/year/decade, so you need diversification for protection.

While all civilizations fall, I think we're a bit far from that. If you're overly concerned that things will get significantly worse than the past 100 years, then the only thing that will save you is absolute diversification. Money, land, food, gold, medicine, guns....all stored in different countries, and all adequately protected from theft. Not sure if I'm over-reaching about your concerns....
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Old 08-11-2019, 10:07 PM   #9
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I'm inspired by the experiences of those of us that have seen a major setback and are recovering, albeit delayed.

What would you say was the most important thing, other than your new job, that allowed you stay positive and focus on your new goals?
Maybe the most important thing is having a positive attitude.

I gave the short version. The longer version is that I had a plan starting in my late 20s to retire at 45. And I could have because we lived modestly and saved fairly aggressively early on. But at 42, I started thinking that maybe working another decade and making more money was more important than free time that I really had no plans for. Plus work provided cash flow to travel, which is one thing important to me and also provided some international travel opportunities. And my (now ex) wife had a traditional pension and needed to work 5 more years. So plan changed, rental condo bought in Hawaii...new plan created.

I never viewed missing the first mark as a disappointment but rather a lifestyle decision I/we made. Had I hated my job at the time or had some other compelling retirement activity the decision might have been different.

The decision to take the good job I have now and move to Hawaii was similar. I lead a project that was supposed to last 3 years (when I interviewed) and that lined up fairly well with my new retirement plans, only delaying by about 6 months. By the time I started the new job it was a 6 year project and we are in the home stretch. It will wrap up very close to the plan in spite of some hiccups we had to navigate.

Partly because of my success I have been given other professional responsibilities/challenges and am well-regarded/qualified for some significant leadership opportunities in my field, some of which would involve living overseas which has always been a dream.

So while I have a plan right now and will probably stick with it this time, I am not afraid to change the plan if something major happens, good or bad. I'm in my mid-50s. I've had too many friends and coworkers die the last few years to think that i'm immune to bad things happening to me out of the blue. If/when it does I'll deal with it and replan. If a new dream job pops up I may be talking about a third attempt in a few years.

I have never seen change as a negative. I've always looked for opportunities in change.
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Old 08-11-2019, 10:24 PM   #10
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There is a concept called uniformitarianism in geology.
Yes, I understand the concept. But catastrophism has a place too! And even in uniformitarianism, glacial erosion was different during ice ages.

I don't think the underlying laws of economics have changed. I never said "this time it's different." But I grew up with some basic rules-of-thumb - 6% unemployment is normal (structural), stocks return 6% over inflation (risk premium), 10 year US Treasuries keep pace with inflation, etc. While there are always variations, these were roughly correct over at least a century and there is some evidence going back many centuries that the rough equivalents held worldwide.

We have some major trends happening in the US - the population is aging and the growth rate is 0, maybe even negative. The productivity growth that fueled economic growth for most of the last 100 years has disappeared. My point is not that things are different this time. My point is that the population of returns FC is drawing from may not be representative of the current economic ice age.

What does that mean to me? I still need to diversify, save, and control spending, but I might also temper my expectations of future returns and future inflation.

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While all civilizations fall, I think we're a bit far from that.
I think this civilization has a few more centuries to go.
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Old 08-12-2019, 04:23 AM   #11
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Originally Posted by SecondAttempt View Post

My main reason for coming back on here is that I see the last 10 years as fundamentally different than the last 100. I'm not sure if the old rules apply. Firecalc is based on the last 100. Things are strange now. Even central bankers are starting to say how everything is strange and they don't know how to behave.
You might try this thread Long-Term Market Returns.

I believe there are sound economic reasons why future rates of return on investments will be smaller going forward than the last 100 years. It is covered some in the above thread.
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Old 08-12-2019, 06:16 AM   #12
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We have some major trends happening in the US - the population is aging and the growth rate is 0, maybe even negative. The productivity growth that fueled economic growth for most of the last 100 years has disappeared. My point is not that things are different this time. My point is that the population of returns FC is drawing from may not be representative of the current economic ice age.
The U.S. population growth rate is slowing down, but is not zero or negative.
https://www.multpl.com/us-population-growth-rate

What statistic shall we look at for productivity growh over last 100 years? Seems to be a bunch to pick from...
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Old 08-12-2019, 07:04 AM   #13
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The U.S. population growth rate is slowing down, but is not zero or negative.
https://www.multpl.com/us-population-growth-rate

What statistic shall we look at for productivity growh over last 100 years? Seems to be a bunch to pick from...
What is the population growth of workers and taxpayers?
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Old 08-12-2019, 08:07 AM   #14
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Old 08-12-2019, 02:05 PM   #15
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But I grew up with some basic rules-of-thumb - 6% unemployment is normal (structural), stocks return 6% over inflation (risk premium), 10 year US Treasuries keep pace with inflation, etc. While there are always variations, these were roughly correct over at least a century and there is some evidence going back many centuries that the rough equivalents held worldwide.

We have some major trends happening in the US - the population is aging and the growth rate is 0, maybe even negative. The productivity growth that fueled economic growth for most of the last 100 years has disappeared. My point is not that things are different this time. My point is that the population of returns FC is drawing from may not be representative of the current economic ice age.

What does that mean to me? I still need to diversify, save, and control spending, but I might also temper my expectations of future returns and future inflation.
I agree that things are different now. FIRECALC, and the Monte Carlo simulators use all historic bond yields. I've argued here, and with VG, that doing so is not valid, as with our current system of regulating currency, I have a hard time we'll ever see a return to 8%+ on bonds (other than possibly, junk bonds). Productivity growth is a real concern, especially with automation, and a transition from manufacturing and construction to service jobs, which pay less. Of course, the returns FC is drawing from won't be representative of the current or future economic age. But is there any better model than this for ER planning purposes?

If you plan for 100% success rate, lean more toward equities than fixed income, and have a large buffer in your plan, then short of WW III, I dont' think you have much to worry about.

In my case, I'm at 100% success rate, and that includes a budget with 50% discretionary spending. So, if the SHTF in a really dramatic way, I can cut 50% or more of my spending. I certainly hope that FC is right, at least for the next decade, so I can buy a nicer house than I can currently afford. Meanwhile, I'm going walkabout, and will just have to wait and see!
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Old 08-14-2019, 12:46 AM   #16
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The U.S. population growth rate is slowing down, but is not zero or negative.
https://www.multpl.com/us-population-growth-rate

What statistic shall we look at for productivity growh over last 100 years? Seems to be a bunch to pick from...
I was too loose with terms. Population replacement rate (in the US) is below zero and will likely decline further as we all age out. Any population growth is achieved through immigration. I won't get political here but I think it is a simple fact that the current "powers that be" are working hard to decrease population growth from immigration. (I'll point out that that is a stated goal, not a judgment on my part, so hopefully I don't get censored!)

With minimal population growth we have to rely on productivity growth for economic growth and that has been elusive. There just are not many new markets opening up. Technology has helped but in a declining way.

So I think we are stuck with 2%-ish economic growth for a long time. That means we get lackluster returns for a long time.

I also have this theory that 9/11 introduced a "security drag" on our economy that I rarely see discussed. Increased airport and border security has a cost. There is some benefit in terms of increased government spending on high tech scanners and TSA salaries so I'm not sure how to do the math, and so much is secret anyway that I don't know I'd believe anyone's calculations without a lot of support. I'm still working on my thoughts on this but it boils down to trust and security costs being a drag on free markets.
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Old 08-14-2019, 04:39 AM   #17
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I was too loose with terms. Population replacement rate (in the US) is below zero and will likely decline further as we all age out. Any population growth is achieved through immigration. I won't get political here but I think it is a simple fact that the current "powers that be" are working hard to decrease population growth from immigration. (I'll point out that that is a stated goal, not a judgment on my part, so hopefully I don't get censored!)
Immigration has its place in our capitalist society. I'm not sure the case you lay out is true. But I don't care to discuss that one.

The replacement fertility rate (2.1) is discussed pretty well here:
https://www.vox.com/science-and-heal...s-births-women
Some of the drop could be desirable, as the drop in teen pregnancy rate, as noted in the article. When looking at historical trends, it isn't obvious to me that this decline in replacement rate continues. It has gone up and down in the past.

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With minimal population growth we have to rely on productivity growth for economic growth and that has been elusive. There just are not many new markets opening up. Technology has helped but in a declining way.

So I think we are stuck with 2%-ish economic growth for a long time. That means we get lackluster returns for a long time.
I know where the growth rate has been, but I'm not sure where it's going. Nice graph here:
https://www.thebalance.com/what-is-t...h-rate-3306016

Short term, it does seem likely US GDP heads back to 2.0 and maybe lower. After all, it is an economic cycle, and we head for the recession phase. But I don't know enough to make a projection that GDP will stay there for a long time.

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I also have this theory that 9/11 introduced a "security drag" on our economy that I rarely see discussed. Increased airport and border security has a cost. There is some benefit in terms of increased government spending on high tech scanners and TSA salaries so I'm not sure how to do the math, and so much is secret anyway that I don't know I'd believe anyone's calculations without a lot of support. I'm still working on my thoughts on this but it boils down to trust and security costs being a drag on free markets.
No doubt about it, 9/11 was a huge event, one of many along the way. Inadequate physical and system security is now discussed and addressed everywhere. It's not necessarily a drag, just a cost of doing business now. Hardware and software has been created, and the use of security becomes ingrained in our businesses. It creates jobs, and the population becomes more security-focused, as it should. I see it as a plus, you see it as a negative.
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Old 08-14-2019, 05:58 AM   #18
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" I am not afraid to change the plan if something major happens, good or bad."

I will personally guarantee that something Major will in fact, happen.

It's a good thing your planning on it with an optimistic attitude.

I don't know who said it, but I have to confirm: " If you want to make God chuckle...Go ahead and make some definite plans."

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Old 08-18-2019, 02:41 PM   #19
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my retirement savings are mostly intact after the divorce.
Well, well, well .. congrats on the 'mostly intact savings'. Then, you're still in the right trajectory.

Yes, many banks globally are going into negative rates, which could still boost US stocks. It may not be so different as investors find stocks more appealing.
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Old 08-18-2019, 03:41 PM   #20
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Imagine a guy with no money sense at all giving advice.... that said...

Life has limits... today or 50 years from today. Looks like you're a smart guy... and that counts for a lot. So imagine this...

You make out a spreadsheet, and find that if you retire today, and come back two years from now, you'll still be solvent. Just sayin'.

My bride and I faced the future back in 1989, not knowing whether she or I would live even another year... cancer and stroke. by today's standards, not enough to retire for more than a year or two... 30 years later.... still around, and happily unemployed.

Always with the idea we could go back if we had to.

Really depends on what you want and need to be happy. We didn't need lots of money, new cars, international travel, or life in upscale society. We had no problem living "frugal" as here:
Sharing 23 years of Frugal Retirement

For sure... not everybody's idea of retirement... I think I'm alone here on ER... but it was great for us.

If I were 40 years younger, and single, I would be gone in a minute to parts unknown... to come back in 5 years and go back to whatever life offered on my own terms.

As it turned out, our decision was made 30 years ago, with no regrets

Best of luck... enjoy today!
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