Retiring Very Early (FIRVE?) - special considerations?

[Maurice]

I'm 39 and am at FI by most people's standards. Its long been my plan to retire in the next five years. Lately I've been giving serious consideration to leaving in the next year or two. So my planning, which has always been pretty thorough, has taken on a new level of seriousness.

Maybe this is just cold feet, but it seems to me there's something particularly scary about jumping so early. Its easy enough to put '50 years' into firecalc, but is it really that simple? What about the geopolitical risks involved in planning for half a century? I know fire-calc takes that into consideration indirectly, but still - I'm imagining my equivalent in 1910 with his slide rule and paper saying "yeah, I should be good", without having a clue what kind of havoc would be brought on in the next 4 decades.

Has anyone here pulled the trigger very early? If so, can you share your thoughts and experiences?

 

[rogersteciak]

I didn't FIRVE, but William Bernstein has some excellent thoughts on the subject: The Retirement Calculator from Hell, Part III

My conclusion after reading this and other material is that it doesn't really matter whether you jump early or late. Whatever you envision the future will be at the time you jump will likely change dramatically as it unfolds and in ways you could have never foreseen.

 

[W2R]

First, congratulations on being FI at such an early age! And no, unfortunately I am not a FIRVE. I will be FIRNSE (Retiring Not So Early). But I am still happy for you!

I would probably have cold feet too, were I in your shoes. If you continue to feel that way, could you possibly work part time for a few years? That might be a good transition and would allow your nest egg to grow.

 

[donheff]

Yeah, it would be a stressful choice for any number of reasons. I would make sure I was well beyond where I needed to be and would continue to LBYM for quite some time to make sure I had some flex room. But how much difference is 45 from 40 anyway? If you are ready - go for it.

 

[Midpack]

Wasn't he the QB for the Packers? Brat Firve?

Sorry, that was a bad one...

 

[maddythebeagle]

Wasn't he the QB for the Packers? Brat Firve?

Sorry, that was a bad one...

I think he beat OP, too...he was 38...

 

[dinodino]

I would like to hear more about your plans...I am 38 and want to do the same thing.

 

[OAG]

I "retired" in 79 at age 38. But if I would have known then what I know now I doubt I would have (sometimes too much knowledge is not good). Talk about blindly walking off. The again it has worked out fine; moved around the country since then with DW of 48 years and three of four kid off to college and married. Currently I am glad I did it; I have outlived Father and Grandfather in years. We plan at least one more move to someplace we have not decided on but will pretty soon.

 

[Maurice]

I would like to hear more about your plans...I am 38 and want to do the same thing.

Originally my plan was to keep working for another 5 years, and then stay in NYC part of the year and live somewhere in Latin America the rest of the year (probably Mexico).

I'm considering leaving NY, which would make it much easier to leave my j*b anytime (realistically I'd probably wait until early next year).

I'm 39, DW is 41. No kids, but we might (just might) have one. Net worth is ~2.6MM not including home. Home is worth probably 1.2-1.4, and will be paid off by this summer.

If we retired in the next 12 months, we'd sell here and buy somewhere in the US where we could get a decent place for 500k or even less. That would give us 3.2-3.5MM to play with. Our expenses are obscene here in NY but they wouldn't be if we moved elsewhere and gave up these j*bs.

 

[Maurice]

I "retired" in 79 at age 38. But if I would have known then what I know now I doubt I would have (sometimes too much knowledge is not good). Talk about blindly walking off. The again it has worked out fine; moved around the country since then with DW of 48 years and three of four kid off to college and married. Currently I am glad I did it; I have outlived Father and Grandfather in years. We plan at least one more move to someplace we have not decided on but will pretty soon.

RWood - I'd love to hear more about your retirement. Did you set out to retire, or did you figure you'd take time off and then just never ended up going back to w*rk? How old were your kids when you retired? Did you have a military pension or do it off savings? or was there another source of income?

 

[Midpack]

I didn't FIRVE, but William Bernstein has some excellent thoughts on the subject: The Retirement Calculator from Hell, Part III

My conclusion after reading this and other material is that it doesn't really matter whether you jump early or late. Whatever you envision the future will be at the time you jump will likely change dramatically as it unfolds and in ways you could have never foreseen.

From the link, for OP (this has been widely referenced):
"A wildly optimistic historian might give us another few centuries of economic, political, and military continuity. Back-of-the-envelope, that’s about an 80% survival rate over the next 40 years. Thus, any estimate of long-term financial success greater than about 80% is meaningless.

Now, let’s return to the above table. The historically naïve investor (or academic) might consider reducing his monthly withdrawals to a very low level to maximize his chances of success. But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning."

So the bottom line is you'd better plan on making adjustments to your plan if you're going to jump with 50 years to go. There is no calculator or expert that can answer your question definitively. Everyone has to be prepared for their "plan" to not work out, you'll just have a greater (time) exposure than most of us.

 

[OAG]

RWood - I'd love to hear more about your retirement. Did you set out to retire, or did you figure you'd take time off and then just never ended up going back to w*rk? How old were your kids when you retired? Did you have a military pension or do it off savings? or was there another source of income?

Yes there was military retirement @ $875 a month before taxes and deductions, like a CHAMPUS Supplement from USAA - No Tricare at the time. It was a voluntary retirement (tired of all the 18 hours days) and a possible move to Europe with 2 teenage daughters or a 12-16 month unaccompanied tour to ?). All 4 kids graduated from the same High School which was something they really wanted to do. One Son was 18 and headed to USNA, (a big help; he is now a Navy Captain still on AD) daughters 16 and 15 and a son 13. I did some wo*k but just stuff I wanted to do and did take advantage of the GI bill to get a couple more college degrees for things I was interested in. No inheritances and no savings to speak of in fact my net worth was probably negative at that time (8% Mortgage for about $50K). Like I said, and looking back I wonder how it really happened to go as well as it did, just lucky I guess. DW did work a few years at virtually minimum wage while we were in the DC area - just to feed the kids (teenagers eat a lot!).

 

[audreyh1]

I retired at 39, and yes it is scary considering a long future of relinquishing a salary and living off one's investments only and having them survive a long time.

BUT - you really don't know how long you will live, so the decision to RE is really more about getting the most out of life NOW. You know how much money you have, but none of us know how much time we have left on this earth, or how long our good health will last. I guess I was more worried about those what-ifs rather than what kind of natural disasters or economic/political upheaval might come our way. In fact I attitude was if the future does contain some bleak period, all the more reason to retired now.

I mainly handled the long planned retirement period by making sure my retirement portfolio was well padded, yet somewhat conservatively invested (taking into account the long term effects of inflation, of course). And, of course, planning on a rather conservative withdrawal strategy.

Not much more you can do as far as I can figure.

Audrey

 

[Nords]

Maybe this is just cold feet, but it seems to me there's something particularly scary about jumping so early. Its easy enough to put '50 years' into firecalc, but is it really that simple?

Yup. Or else read the FAQ archives on "Just one more year" syndrome.

Has anyone here pulled the trigger very early? If so, can you share your thoughts and experiences?

Greaney, the Terhorsts, and the Kaderlis would all say that they beat you to the finish line. Their examples are good enough for me...

 

[FIREd]

I think that retiring at any age without some "secure" source of income (like a decent SS benefit or a juicy government pension) takes a leap of faith. You can't predict the future and you can't insure against every conceivable threat to your retirement. So I think the best thing to do is to retire with plenty of padding built into your financial plan and a willingness to adapt to changes along the way.

My grandparents lived through tough times in their lives (economic depression, wars, currency devaluation, oil shocks...) on a very small income. Their thriftiness and flexibility always allowed them to make the best of it and pull through. You must be prepared to do the same. The ones who will not make it, are the "spoiled children" of the world, who are unwilling to compromise. Take for example my MIL. Her husband has suddenly stopped making alimony payments (her only source of income) last month. She refuses to go back to work and she refuses to reduce her lifestyle because "it's not fair". In the mean time she is going through her meager savings like it's going out of style. She is doomed and she doesn't even know it.

 

[Comenius]

I retired at 39 in August of 2007. The eight months since have been without question the most peaceful and happy of my adult life.

I've been able to spend more time with my aging parents, my friends, and my wife. I've read books I've wanted to read for years, and have renewed my interest in hiking and mountain biking. My wife and I also have been able to travel in an unhurried, low cost manner that was never possible when I had a fixed amount of vacation and was always due back in the office at a fixed date.

While the market has obviously retreated quite a bit since I pulled the plug, my wife and I are still only withdrawing just over 3% of our liquid assets on an annualized basis. From time to time I have small twinges of anxiety due to the (hopefully) long time horizon of my retirement, but I figure if things truly go upside down financially, I'm creative enough to figure out a way to drum up some additional cash flow.

I wouldn't trade my current life for anything, and have no regrets about pulling the plug comparatively (very) early.

 

[Moemg]

She probably knows it .She just doesn't want to accept it .

 

[Meadbh]

50 years is a long time to be doing anything, whatever it is. If you were in the workforce for 50 years you would not be doing the same thing for all that time. In fact most people make changes at least every 7 years. So if you are going to RE at 40 you must envisage a series of changes over time. What does that look like? Hopefully something clearer than a blank canvas.

 

[FIREd]

She probably knows it .She just doesn't want to accept it .

True, she knows there is a wall at the end of the road, I told her about it. But she doesn't "know" or rather she would prefer not knowing how close it is... Every time I point at the wall, it's like she fakes dumb. She thinks that, somehow, things will get better. Except that she doesn't want to be the one making it better for herself. It seems like she is waiting for some white night to park his horse in front of the house and say, "hey babe, will you marry me?"... Any single white knight on this board?

 

[pedorrero]

I'd tell OP to go ahead and retire, assuming he's made reasonable preparations for what the future might hold. By "reasonable" I assume he's made provisions for screwy things the future holds, certainties such as paying for his (and family's?) health insurance, proper investment diversification, etc.

If the net worth is in the low millions, surely he can RE? I would advise him to read some other founts of information; the Terhorst book and web site is good. I like the REHP web site, especially the need to analyze and consider the need of health coverage.

Disaster hedging: a future foul economy (e.g., inflation, depression, war, etc) calls for some contingency planning. Got gold? Foreign bank account? Consider: our future may hold benefit cuts, yes even for SS, and certainly higher taxes. If our nation finally cuts back the welfare state, this will probably mean that stocks and bonds have taken a beating too. I recommend Harry Browne's old books (there're all old now, he's dead) -- "Why the best laid investment plans go wrong" is my favorite. Just a pile of gold in a Swiss Bank might look silly now, but might look real good in ten years if the U.S. dollar has finally plummeted, our government has imposed exchange controls, and the stock market is at 6000...

 

[fisherman]

You should do it. It is a wonderful life change.

I ESR in Dec of 07 at 43. DW and I planned for this from day one of our marriage 21 years ago. We plan to reach FI by 34 and met that goal by each working two jobs and a business on the side. We had our kids then and cut back to one job each and a business on the side. We still have a business and a few rental properties to give us some income and that allows us to keep our withdrawal rate at 1.4%. This includes doing all the traveling we can when the kids are not in school. We will probably cut back more in a year or two and bump up the SWR to maybe 3% if the business quits being fun but for now it is a blast and also a good teaching tool along with the rental property for our kids.

We probably work about 15 hours a week each but the time is for the most part when we decide to get the work done. After four months I am just starting to realize how good ESR is and I really like still having a small business on the side for several reasons. It also helps mentally in economic down turns like this.

Go for it and look for something on the side and you will love it. Of course make sure you have the health insurance covered.

 

[DroopyDog]

Maurice,

I am in a similar boat as you, having left my job in January at age 42. I remember feeling a bit overwhelmed at the idea of living maybe 50-60 years more and wondering if my money would hold out.

I realized that part of the problem is that the insecure part of me wanted the assurance that I was "set" for life. But realistically, who knows? The market could crash, I could get a horrible expensive disease, I could suffer through a painful divorce, etc...

But maybe a better way to look at it is that, rather than thinking of retirement as an irrevocable decision, you now have the means to make your own choices. You can try retiring for a few years, and if that's driving you nuts (or if you decide you need more money), you can go back to work. One advantage of FIREing early is that it's probably easier to return to work than if you were twenty years older.

The other thing to ask yourself is, "why do I want to retire?" What things do you want to do that work is keeping you from doing, and are these things worth the uncertainty of leaving your job?

 

[clifp]

I retired at 39 in 1999, I believe CFB was the same age (and from the same company).

Maurice, IIRC your financial assets (and financial accuity) are considerable. I am estimating in the top 10% of the board members which is turn in the top 10% of the
population. Roughly speaking you are in better shape to retire than 99 out of 100 people in the US.

Like R Woods, my financial decision was rather simplistic. I had $2 million plus a good size IRA/401K I figured 2 Mil @5% with tax free munis is 100K/year. That was more than I needed to live, and my IRA would be my inflation hedge... Intrcst (aka Greeny) work was published shortly after I retired and convinced me to maintain a high equity AA, instead of Munis.

The world is a vastly different today that it was in the 1960s, and I have little reason to think that won't be a lot different in 40 more years.
So I think that anybody who retires before 60 good health is likely to find different world in their latter years. Yes, it is even more likely for those retiring at 40, but I am not convinced that extra 15-20 years substainially increases our risk. You are a smart guy and if S* happens, you just have to be confident that you have the ability to be adapted intelligently. Will an extra 5 years of working and $500K or $1 million in assets be that big a deal if we have a hyper inflation, a 50% wealth tax is enacted, or the Chinese announce that the US is being Annexed??


IMO the non financially factors are more important in deciding to retire very early. I didn't intend to stop working entirely and who knows I may still go back to w*rk, but it will be based on desire not need. I think there should be a strong non financial reason to retire early. Anything from a passion for a new hobby, to spending more time with the kids, or a volunteer activity. If I have one regret in my early retirement is that I haven't found an act 2, some real passion which motivates me to get up and go off and do something wonderful.

That being said, my non financial reasons weren't particularly complicated.
My job had gone from being one that was generally fullfilling to being boring. I had stayed on the straight and narrow for my whole life, good grades in high school, good college tough major (EE), 18 years in Silicon Valley, LYBM and other than two sabbaticals no down time. Hawaii looked pretty compelling by comparision.

 

[Nords]

5What does that look like? Hopefully something clearer than a blank canvas.

Well, we can tell you when spouse permanently retires from the Reserves or when our kid leaves the nest, and perhaps we'll do some traveling, but we haven't felt any need to overplan things. I'm not sure that I'm ever going to take on Joe Perry or Billy Joel and I'm probably not going to resume programming in assembly language, either, but maybe I could achieve proficiency in a foreign language.

I've decided to hold off the Netflix subscription until I'm unable to handle taekwondo or surfing. Hopefully by then Netflix will no longer require its customers to actually be able to "see" the "screen"... I'm hoping for full-bandwidth virtual reality.

I retired at 39 in 1999, I believe CFB was the same age (and from the same company).

I thought that the timing of you two was the result of a corporate housecleaning...

I didn't intend to stop working entirely and who knows I may still go back to w*rk, but it will be based on desire not need. I think there should be a strong non financial reason to retire early. Anything from a passion for a new hobby, to spending more time with the kids, or a volunteer activity. If I have one regret in my early retirement is that I haven't found an act 2, some real passion which motivates me to get up and go off and do something wonderful.

I keep up with all the "do what you love" and "find your bliss" books, and not a single one of them has made me go "Aha!" Most of my ER decision was based on the dissatisfiers, and most paid (or even unpaid) activities seem to involve more of the same.

 

[Khan]

I keep up with all the "do what you love" and "find your bliss" books, and not a single one of them has made me go "Aha!" Most of my ER decision was based on the dissatisfiers, and most paid (or even unpaid) activities seem to involve more of the same.

Exactly.

(In my case) being around large amounts of people and having to try to remember names/faces/hierarchy/business relationship/duties/responsibilities... was/is just too stressful.