Am I ready to be FIREd?

[arrete]

Hard to figure out where to put this one.

Psychologically For some people, retiring early is no big deal; for others it is a shock. Moving from a situation where someone else tells you what to do for 40-60 hours a week to one where you have unlimited free time can be unnerving. Some FIREes revel in this freedom and have no trouble enjoying their new-found independence completely. Others feel some unease and might impose some structure in their lives through volunteer activities, sports activities like golf or other activities that require a specific commitment. Many people have a settling in period that may take 3 months to a year. After a while, though, most FIREes can't imagine living any other way.

Culture. Retiring early (especially very early) is not an accepted societal norm. Get ready to have people think you are 1) actually unemployed but embarrassed to say so, 2) a wasteful layabout, living off the hard work of others (they don't believe you could be FI) or 3) an ingrate not doing his/her fair share (they may believe you are FI, but RE is unacceptable). There are some people who will believe you, support you and may not even utter those very annoying words "You are too young to be retired". These people are your friends.
Under culture also comes your relationship with family. It is very important to have your spouse understand and be on your side. Other family members will hopefully learn to accept it.
Another aspect of culture is social. It isn't easy finding people who share your interest in FIRE. I believe this is one reason that the older FIRE boards have strong social aspects to them. It's hard being weirder than the rest of society. Having on-line friends helps.

Comprehension. FIRE isn't usually something you just decide to do one day. You get there through a process of understanding your desired lifestyle and your financial set-up. You are comfortable with a level of spending that will not drive your assets into the ground and you understand your investments so that you can sleep at night. If you are smart, you will start off your FIREd life with a healthy padding in your budget.
Usually your lifestyle will be similar to pre-FIRE. However, increased travel or an expensive hobby needs to be thought about before you cut the cord. Wishful thinking doesn't usually increase your asset base.
Choosing a compatible investing style is important. Knowing your tolerance for risk is important, whether high-risk investments or relatively safe ones. There are several methods of determining how much of your asset base is safe to use annually. Just remember that no matter what assets you have, they will never match the studies perfectly. Take study results with a grain of salt, and make your final determination yourself. After all, you (and family) are the only one affected.

arrete

[Spanky]

I am ready because "Psychologically" I have not determined what to do with my time. I actually enjoy working (weired?).

I am not too concerned about the cultural issue whether it is socially accepted for ER.

[retire@40]

Quote:

Hard to figure out where to put this one.Psychologically *For some people, retiring early is no big deal; for others it is a shock. *Moving from a situation where someone else tells you what to do for 40-60 hours a week to one where you have unlimited free time can be unnerving.....*Many people have a settling in period that may take 3 months to a year. *After a while, though, most FIREes can't imagine living any other way.

I have elected to do ER in phases. Semi-ER from ages 35 to 40 (working about 20 hours a week), then semi-semi-ER from 40 to 45 (working 10 hours or less per week), then after 45 work only when and if I want (zero or more hours per week).

Just going from 40+ hours a week to 20 is such a dramatic stress reducer. I feel like a new person. 10 hours a week should be even better and could be such a cakewalk that I may continue doing that for as long as I can as long as it doesn't interfere with my playtime.

[arrete]

Quote:

Just going from 40+ hours a week to 20 is such a dramatic stress reducer.

That's basically what my husband is doing. He wants to go in often enough to have a couple of breakfasts with the guys.

About stress - I was talking with my doctor the other day, and told him I had stopped all my asthma drugs because I just wasn't having the same problems as when I was working. He said that he has seen a large upswing of stress-related asthma, and that work could certinly be part of that.

So, in many ways, being FIREd is good for your health.

arrete

[Beststash]

ER'd 1.5 years ago after 33 years (54 now).....Since then health-care costs have increased 75% probably more to come in that regard. I am totally loving not getting up so early everyday, spending more time with my wife, working on projects at a pleasurable rate, and most of all the STRESS. It does take a little time to adjust but comes very natural. I will probably be a little more cautious with my money that I had expected but I would try everything possible not to have to return to the "system" - I find that phase of my life a necessary part of life but there is so much more that we lose sight of and almost always forget to "Smell the Roses".
Life is very good!

[Martha]

As a person on the step to RE, I am interested in all the comments about how retiring substantially reduced stress in your lives. Does anyone feel stress caused by the fact that you now have to live on the assets you accumulated and what those assets earn? You do have the big unknown of what expenses might be in the future, especially if you retired very young. Your health may be great now and insurance cheap, but what about when you are 55? Or do you simply take comfort by staying within a SWR? Some of you have the cushion of the working spouse, but in my case I am the working spouse. Some have the cushion of a cola pension and retiree health benefits. We do not. Even though we are FI enough that we could easily get along on a current SWR of 2.5 or 3% I still worry about the future unknowns.

[haha]

Quote:

Even though we are FI enough that we could easily get along on a current SWR of 2.5 or 3% I still worry about the future unknowns.

Martha. I am in your situation, but already retired. When I first jumped years ago, I feel that retirement added to my stress rather than decreasing it, because I had young kids and I was underfunded. It also added stress to my marriage. I might have gone back to work then, but partly I felt if she refuses to work, why shouldn't I?

Now I am fairly well off and I have completed my childrearing responsibilities so things are different.

I think if you truly want to, there is no doubt you will do fine if you are able to make it comfortably on an SWR of 2.5 to 3%. I recently chose 2.75 for mine; although early on it was closer to 10%. Currently, I am way below even 2.75% and that makes me feel more secure.

One thing I have noticed is that I need more security now than I did when I was younger. Earlier, I didn't really give it much thought.

You and your husband seem to have good judgment and also have a lot of business experience which you could call on if you should ever need to.

That said, if you want you could probably find a lower stress legal job maybe with a foundation or something that would give you lower day to day stress, and also some long periods off to travel. When I was still in my 20s I was camped in Humphry's Basin in the High Sierra and met a young guy and his GF. They had been fishing and hiking in this particular paradise for 6 weeks, and he still had 2 more weeks off. He was a lawyer with some foundation in San Francisco. It sounded like a hell of a deal to me.

Mikey

[Jarhead*]

Quote:

As a person on the step to RE, I am interested in all the comments about how retiring substantially reduced stress in your lives. *Does anyone *feel stress caused by the fact that you now have to live on the assets you accumulated and what those assets earn? *You do have the big unknown of what expenses might be in the future, especially if you retired very young. *Your health may be great now and insurance cheap, but what about when you are 55? *Or do you simply take comfort by staying within a SWR? *Some of you have the cushion of the working spouse, but in my case I am the working spouse. *Some have the cushion of a cola pension and retiree health benefits.*Even though we are FI enough that we could easily get along on a current SWR of 2.5 or 3% I still worry about the future unknowns.

Martha: If you can get by with SWR of 2.5, you've already, (for all practical purposes), covered the future unknowns.
Reading your posts, I can tell you're a very bright lady.
In some cases, the work-ethic is a very hard thing to shake. This might be giving you some second thoughts.
Regarding stress and living off your assetts, INHO, there is much more financial stress involved in having to count on a job for income.
In my case, I retired just shy of 50, wife never worked, still had 2 daughters that I was financially helping, and
was funding about 20% of my mothers income. No pension, no health ins., etc. I retired to change locations from the city to the Sierras of Calif. (And my wife is not a cheap date).
I was highly motivated, and from what I can gather from your posts, you are probably in better shape financially then we were when I retired (Inflation adjusted).
In my opinion, there is probably no financial reason that should hold you back, so look in your heart of hearts and try and pin down what's causing you concern.
Good Luck, Jarhead

[farmerEd]

Quote:

Even though we are FI enough that we could easily get along on a current SWR of 2.5 or 3% I still worry about the future unknowns.

I right now live very comfortably on a 1.9% SWR, and despite this, do find it very, very stressful at times...its been three years and I am finally loosening up a bit....my wife doesn't like it at all. (Whats the point of having all that money if you are not going to buy what you want!?!)

I have always found it very, very hard to spend money...which is why I was able to accumulate enough to FIRE under 40..I thought that feeling would go away after FIRE, but it didn't...still love not working, but its not w/out its own stresses...just different.

[Jarhead*]

Quote:

I think if you truly want to, there is no doubt you will do fine if you are able to make it comfortably on an SWR of 2.5 to 3%. I recently chose 2.75 for mine; although early on it was closer to 10%Currently, I am way below even 2.75% and that makes me feel more secure. Mikey

Order that HBO, you cheapskate

[kayelem]

arrete:
I enjoy your posts very much...you really get me thinking. I have been sitting here on the cusp of RE since December. I have had trouble pulling the trigger, and it's not because I don't know what to do with my time in ER but more related to losing the pay check and the security that with money coming in and no debt and plenty saved I have nothing to worry about (except my job!). Circular reasoning.

This past weekend I decided that I was going to stay on another 9 months. I think that will allow me to have closure on my current job (probably will be reassigned to some staffly kind of position vs having my own schedule working from home and traveling) and I will be able to take advantage of some options that I did not expect to go in the money but have recently.

I don't think I gave myself enough time to really get comfortable with the leaving part. That's what I am going to do, including telling my boss to not be suprised if I retire early (right now he would be floored).

A little extra time and money should be "enough". After December 05 I have run out of excuses and options.

What's all that talk about 1.9% to 3% SWR?..I thought everybody agreed that 4% is a very conservative SWR...What am I missing here?

[cute fuzzy bunny]

Arrete -

You know the score. You're ready.

[trump] yer fyahd [/trump]

[Martha]

Arrete's post seems to capture all the issues. I think I am ok with the psychological end and the cultural end, but I am still having problems with comprehension.

I think part of my problem is that my spouse is very pessimistic about the stock market and investing in general. He tends to read too much from the doom and gloomers. You know, the market has to go down by at least 50%, there is a real estate bubble, etc.

Definately know I will enjoy the leisure time. It has been three and a half weeks since I've been at work and I've enjoyed every moment.

[cute fuzzy bunny]

Martha...yer fyahd also.

[haha]

Quote:

Arrete's post seems to capture all the issues. *I think I am ok with the psychological end and the cultural end, but I am still having problems with comprehension. I think part of my problem is that my spouse is very pessimistic about the stock market and investing in general. *He tends to read too much from the doom and gloomers. *You know, the market has to go down by at least 50%, there is a real estate bubble, etc. * * Definately know I will enjoy the leisure time. *It has been three and a half weeks since I've been at work and I've enjoyed every moment. *

He has made a lot of money investing, from what you have said. So he may have a "good gut". Still, I've relied on investing for everything, for years. If you are concerned, stay largely in cash. Something will come along. It always does. People are way too emotional and stupid to always price everything correctly.

Mikey

[haha]

Quote:

What's all that talk about 1.9% to 3% SWR?..I thought everybody agreed that 4% is a very conservative SWR...What am I missing here?

Some people will try a circumnavigation in a 26' boat. To others, a destroyer might seem a bit small. It's the same with SWR.

Mikey

[Martha]

Quote:

That said, if you want you could probably find a lower stress legal job maybe with a foundation or something that would give you lower day to day stress, and also some long periods off to travel. When I was still in my 20s I was camped in Humphry's Basin in the High Sierra and met a young guy and his GF. They had been fishing and hiking in this particular paradise for 6 weeks, and he still had 2 more weeks off. He was a lawyer with some foundation in San Francisco. It sounded like a hell of a deal to me. Mikey

Hey Mikey, you and Jarhead are among my heroes. You both retired and are still here years later and doing just fine.

I will try the part time thing for at least this year. After all, I am able to take 4 weeks off in a row, only checking in at work once a day or two. I've spent less time on work matters than I have on the Internet.


And I am probably making more money working part time than I would working full time for a foundation. Plus, I wouldn't have a clue what a lawyer does for a foundation anyway. The price of specialization. My sister in law is a pediatrician. She always said she would hardly know what to do if she saw someone had a heart attack.

[Nords]

Quote:

I've spent less time on work matters than I have on the Internet.

Keep it up. One small step at a time, Martha, and you'll completely corrupt yourself!

Quote:

And I am probably making more money working part time than I would working full time for a foundation. Plus, I wouldn't have a clue what a lawyer does for a foundation anyway.

Foundation lawyers spend most of their time educating the clueless foundation board, making fundraising presentations to corporations that might donate to the foundation, and networking with CPAs willing to do the foundation's tax returns. And occasionally you throw a big fundraising party. I'm pretty sure L.A. Law has that on DVD by now.

The point is, whether you do part-time at your office or sleazy consulting elsewhere, you're teaching yourself how to ER. One day you'll be too busy with other things to feel like going to work!

COLA pension, cheap healthcare, working spouses-- they're all buffers that compensate for the engineer's (lawyer's?) margin of safety. (Navy nuclear engineers routinely use a 2x safety margin but the first model of the class is designed & operated at 3x.) Your taking 2.5-3% is another way of accomplishing the same buffer while helping you sleep at night. Regardless of what type/how much buffer there is, we all ER as soon as we feel we're adequately capitalized. I'd speculate that we all have some degree if "Is this really enough?!" discomfort.

As for your SWR, try this self-deception. Fence off 4% of your portfolio this year. Cash in & spend what you need to, but put the rest of it in a mental "lockbox" where you can still get at it if you need it. (In Quicken, you can retitle some of your stock or bond shares "Retirement Reserve" or some other name, and then you can hide them from the retirement portfolio.) In the meantime you'll be able to see how you feel about your portfolio drawing down at 4% without actually losing any of the money.

We've been loosening the home-improvement purse strings in a big way. We just bought a like-new used recliner ($200), finished the new Corian kitchen counters ($1700), started up a solar photovoltaic array ($6K), and picked up a couple solar water-heating panels ($150). Even a few years ago we would have regarded these projects as a flagrantly hedonistic waste of valuable retirement resources. Now we feel that we have the time to track down & earn those bargains.

[unclemick]

Nords touched on the deal.

At age 61/62 - I'm sitting here trying to work up courage to tap our IRA's.

Going into ER in 1993 via a layoff with 300k in finanacial assets and being naturally cheap - I still want to put some money away for my old age.

The webtv went to a real computer - now the women have Direct TV and rumors of a cell phone. I'm up to two used trucks. Our income was exceding expenses - via pensions, Mom's SS, she took her SS, mine this year, dividends, etc.

Time cannot be returned as it is pointed out to me - and you can select a margin of safety - but there is such a thing as overkill.

We have no big list of things to do - but I may remodel something just for the heck of it.

Cheap was my comfort zone - leaving it(like the first leap in 1993) takes some adjustment.