What's your Plan "B"?

[RockMiner]

Everyone who undertakes ER thinks it will work out fine, but what if it doesn't?  I'm talking about finances here...if your assumed SWR proves way too high ten years down the road, what is your preferred way of coping?  It seems to me that having a plan "B" is just as important as all the FireCalc/Spreadsheet crunching.  I'm not sure what my reaction would be but there are several obvious alternatives:

Cut spending to the bone (Possum Living) 
Get a job   
Drop medical insurance   
Drop house, car, life insurance
Turn to crime
Move to the tropics   8)
Reverse mortgage
Welfare
Drop internet connection  

I think I'd try some combination of the first four.

 

[TromboneAl]

I'm sure possum living or reverse mortgage would do it for me.

Note: no one who's retired or close to it should have life insurance.

 

[BUM]

Can I call you Al?

My plan B is real estate. Maybe flipping houses. Our holdings (2 houses, 1 condo) are going nuts. So nuts that it is screwing up my asset allocation percentages. I don't want to be a landlord. So when/if the gravy hits the fan, I'll sell something. So far its a nice problem to have.

You can call me Betty.

 

[kz]

Get a job. (both of us)
Cut spending. (cell phones, eating out, minimize charitable gifting)
Downsize the house.
Sell the "toys".

 

[unclemick]

Duh?

Fish camp, beater vehicle, deck hand on shrimp boat/barter - no real names, no medical, homeowners insurance, liability only, shut off the electricity except when really needed, red beans and rice. If you are living on 12k a year or more - you are spending too frivolusly - or if you have kids - put them to work - picking crab meat - $14/lb to the 'class' resturantants - $ under the table if you 'want' to be a crook. Records if honest - it's up to you to pay taxes(aka SS is the big honker here).

We have/had people out this way squat in the swamp or along the bayou for thirty  years with creative housiing built from free scrap lumber.

I haven't even started the list - if want to meet strange and creative - get outta the city/burbs. BTY - it was a different crowd but same 'think outside the box principles' growing up in the State of Washington. The gypsies and Dukabor's were my favorite - the hobo camps near the Union Pacific railroad were pretty cool too.

 

[retire@40]

Asking about plan "B" may assume that plan "A" means stopping cold-turkey for retirement.  My plan "A" was semi-retiring before fully stopping.  I stopped taking new clients and gave up some of my clients to cut my workload in half.  Now I consider what I do more of a paid hobby rather than stressful work.

In case I have an unexpected expense or if I want to generate additional money for entertainment, I have everything in place to work a few more hours a week.  So I guess that is my plan "B."

When I get to the point where my SWR is 4% to 5%, I expect to take my self-employment hours down to an average of 1 to 5 hours per week.  When I can get it to 3%, I plan to be completely retired.

 

[cute fuzzy bunny]

My plan "A" looks pretty good, but I do have a plan "b", "c" and "d".

Plan B cuts spending. With no debt and no large spending needs, I simplify our diet a little, cut excess insurance, drop the cable tv and internet, and a few other cuts brings our annual rough spending down to ~12-16k. And we're living a fairly ok lifestyle at that spending level...I could do it for a couple of years easily and 5 without losing a lot of sleep over it.

Plan C has me getting a part time job doing something fluffy that I at least somewhat enjoy. If I can make 5-10k a year, we can go back to our current spending plan. I can make 5-10k a year cutting lawns and walking dogs fer chrissakes. The wife adds one day to her current 3 day work week. We're flush again.

Plan D sells the house, at todays prices we clea $400k for it after costs, no capital gains as we've lived in it for 2 years. Rents on a 2000 square foot house on 5 acres are in the 1400-2000 a month range. Do the math, the 400k invested in something really racy like Wellesley or a 5 year CD will throw off enough interest to pay the rent. Wait a while. If the economy is really bad, real estate prices probably decline, 5 years later I might be able to buy back the same house for less, pocket some money, and continue back to plan A.

That "no debt" thing really gives you a lot of options if the doody hits the air movement device...

 

[unclemick]

Plan A. Live on 12-25k/yr. Let history do it's thing(1993 - 2005).

Plan B. Try to believe FireCalc and spend 75k/yr.

Plan C. Go back to work and research how to live to 102 instead of 92 so I can be cheap longer.

 

[Martha]

What I am debating is whether to maintain my law license after I retire in case I need to go back to working. It costs a lot to keep up with the credits.

 

[Mr._johngalt]

Unclemick is still my hero. Love his "plan B" list

JG

 

[dory36]

I started to say I'd sell the house and move back on the water, but then I realized I have a golden goose sitting right here.

If worst comes to worst, I'll start charging th and JG a penny per post, and increase my standard of living.

 

[MJ]

If worst comes to worst, I'll start charging th and JG a penny per post, and increase my standard of living.

With that increased flow of income, there will be more than enough to help the "young dreamers" forum members with their plan B.

MJ

 

[REWahoo]

If worst comes to worst, I'll start charging th and JG a penny per post, and increase my standard of living.

You can call your plan B "JG Pennies"

REW

 

[gayl]

• do a few more hours as a trainer for the county ....
• cut travel time or 'reinvent' as a guide
• do more home remodeling myself and hire out less

#2 & 3 should cut my expenses in half

 

[cute fuzzy bunny]

You can call your plan B "JG Pennies"

Groaaaannnn...

Sorry Dory, I'm too cheap to pay by the penny...I like the 'unlimited fixed cost options'. Besides, if I figure in my annual donations the last two years, I think I'm paying a little more than a penny a post already!

 

[uncledrz]

Plan A is the LBYM in retirement, so if things crash, I expect to have a cushion to fall back on -- much like Unclemick although I don't think I could be as frugal as he. That's my Plan B

Martha, I'm going to keep my license, but that's plan D.

Uncledrz

 

[preben]

As a fairly young Firee I have been thinking a lot about plan "b" (and c).
Back to work is always an option but leaving that out of the equation I, like BUM, have the option of selling or renting out some RE. RE was supposed to be 1/3 of my net but is racing towards being 1/2....

My(single) rock-bottom budget (incl. intl health insurance) is $1k/mth in Thailand. Even in a weak rental market I should be able to get that from rental income while my other investments recover.
A small part time hobby business could also help - but the key is that I am able to reduce my spending to the $12k/year mark.

Cheers!

 

[Janie]

If we need a cushion to preserve/ grow our principal for future years, we will both pick up seasonal jobs- if we each make an extra few thousand per year, that will give us a substantial cushion and might be kinda fun.

 

[unclemick]

Hmmm

After 11 yrs - hindsight being what is - I think plan A could use some rework in my case - less overkill on frugal.

I've read somewhere- the first ten years are the hardest.

Heh, heh, heh.

Prudent caution going forward - but lighten up a little - take the other end of the no. 2 pencil and erase plan B - for now.

 

[MJ]

I think plan A could use some rework in my case - less overkill on frugal.

Please say it isn't so. You're my extreme frugal mentor.

MJ

 

[unclemick]

Alas - it's true - perhaps JG or someone else can pick up the mantle and carry on. It's been downhill for a while now - but when the women took away my webtv and gave me a real computer last Christmas - I finally saw the handwriting on the wall - really miss tapping the keyboard on the floor to free up sticky keys.

 

[charlie]

If push came to shove I could always sell the house and put a
double wide on my son's horse farm.

Cheers,

Charlie

 

[playaman]

I have given a lot of thought to "what is my Plan B" since this was first posted a few days ago, and I've enjoyed reading the thread (most of which has been fairly light-hearted).

In truth, this is not a light-hearted issue, and I've concluded I don't really know what I'd do if Plan A (set to go in a year-and-a-half) doesn't work. I've played by the rules, LBYM'd it, and plan to downsize to a paid-off, comfortable home in a Texas "active adult" community. But, what if the stock market/ economy crashes? Or, if health insurrance becomes truly unavailable before Medicare kicks in? What is Plan B?

Given age discrimination (which is very real), poor market conditions, and my own lack of passion for a full-time job after I officially call it quits, I don't think going back to work in a significant way could be a real answer. That leaves, as someone else noted, "tighten the belt" and really LBYM -- and maybe help with odd jobs here and there. Or, dust off the law license I never used ...?

I don't like my answer, but realistically I see no other. There simply is no real Plan B.

 

[cute fuzzy bunny]

As I mentioned, without a debt load, a 'plan b' can be mowing lawns and walking dogs or 15 hours a week working the register at the quick-e mart to make enough cash to buy food and pay the electric bill. The value of my investments could drop to 1/2 cent on the dollar for 5+ years and it wouldnt faze me a bit.

It is well within our power as financially independent people to assure that independence indefinitely. Some people choose to gamble on various aspects of it instead.

This is right in line with my "some people make things happen, some people wait to see what will happen to them" mantra.

 

[Mountain_Mike]

I am not ERed quite yet, but part of my "plan B" is to have a healthy cushion of cash (at least $100,000) in a guaranteed savings account. That should enable me to ride through all but the wildest gyrations in the stock market.

In addition to this, I believe in a wide diversification in types of investments and assets, including but not limited to the ownership of physical precious metals.

A hobby or "ebay" type business might be a possibility as well. I consider garage sailing kinda fun.