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One More Year for Very Young Dreamers
Old 06-25-2013, 12:22 PM   #1
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One More Year for Very Young Dreamers

I was doing some back of the envelope calculations to see what One More Year (OMY) would get me. It surprised me how much OMY means to a very early retiree (someone under 40 at FIRE) which is how I would classify my plan.

Take a 35 year old wannabe retiree with $1.5 million in their portfolio and a savings rate of $90,000 per year (probably not that rare for those very early retirees aiming for an under-40 retirement age).

One more year at a 5% real return rate equals $165,000 larger portfolio in real terms, or $5400 in additional annual spending during ER (using a 3.25% withdrawal rate). An 11% boost to annual spending or a large margin of extra safety.

This is roughly the situation I may experience in another few years. Even if I have enough it may be worthwhile to put in another year or two simply to have more safety or the option of a higher withdrawal rate.
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Old 06-25-2013, 12:51 PM   #2
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Yep, OMY can make a big difference. OMY for us = almost $10K in additional annual spending for the rest of our lives! That's a lot of money to leave on the table if you don't despise your job. So it goes back to the concept of "enough", which is valid at any age.
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Old 06-25-2013, 02:17 PM   #3
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Another option is The Millionaire Next Door method and find a job or business you actually like and still makes money. If you don't have to work for a living you have time to explore different careers. I think I am on my fourth career try right now since leaving the corporate world.

You don't have to be 100% retired or working at your current job for additional years. There are lots of other options.
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Old 06-26-2013, 10:16 AM   #4
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This is a significant contributor to my own personal OMY syndrome. I am hoping to turn over a new leaf this year or very early next year; and, I am no longer as set on calling it permanent ER; maybe it will be; but, maybe it will just be a sabbatical; or, maybe a career change.

A few years of not drawing down the portfolio could make a much larger difference than continuing to contribute.
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Old 06-26-2013, 10:11 PM   #5
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OMY also means 1 less year to cover with your portfolio, 1 less year to SS, and your SS earnings should be an extra $1300/year (waiting to 70).
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Old 06-28-2013, 09:48 AM   #6
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I have gotten cured of OMY or potential backsliding this week. The most horrendous, pointless, and soul-killing business trip I think I have ever been on. If I waver between now and early next year, all I have to do is think back to this miserable experience.
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Old 06-28-2013, 10:41 AM   #7
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Quote:
Originally Posted by brewer12345 View Post
I have gotten cured of OMY or potential backsliding this week. The most horrendous, pointless, and soul-killing business trip I think I have ever been on. If I waver between now and early next year, all I have to do is think back to this miserable experience.
You should bookmark this post and save it to look at should you waver at all.
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Old 06-28-2013, 11:09 AM   #8
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Originally Posted by pb4uski View Post
You should bookmark this post and save it to look at should you waver at all.
All I really have to do is look at the scars.
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