Dealing with the psychological effects of FIRE

Many of the folks in the financial independence community get all “fired up” about being able to retire early and/or chart their own path through life. It can be thrilling to look forward to, and as you get closer, the excitement builds. Eventually you reach that date, and suddenly your whole life changes!

What many folks don’t talk about is some of the potential psychological pitfalls that might pop up when you reach that glorious date.

For many of the baby boom generation (I’m the last year of that group, born in 1964), we have identified ourselves by our work. We start conversations with folks and ask “so what do you do?” Our social circle and lives revolve around the people we work with, and even our conversations at home with our loved ones often times involve work related issues and “do you know what Sheila did today?” kind of conversations. Then suddenly, when you retire early, that is gone.

My sister-in-law is like that; she has more than enough to retire and wants to move out of her current home (too much for her to keep up). Yet she continues to work at her job and commute an hour to work each way because that is what she knows, that is where her social circle lies, and she doesn’t have much to do at home (she is working on developing hobbies and a support group, but it’s difficult). Most of her family lives away from her (we are 2+ hours away) so she doesn’t have that option either.

I think the following generations (millennials, Gen X, etc.) have a better work/life attitude, and often don’t suffer from this as much. I think they also are more open to retiring early, as their lives don’t revolve around work, and they seek other activities to fulfill them, rather than climbing the corporate ladder (much to the chagrin of managers of my generation).

So what do you do when you retire early, and find that people your age are still working, that there is nobody to “hang out with” during the day, and where the thing you have held out as your “value” all your life is suddenly not there? It can be the cause of some serious psychological distress.

I’m starting to deal with some of this now. While I am still 35 months away (getting there!) from financial independence, it is starting to hit me. What am I going to do with my free time? While I have some travel goals that will probably take up a lot of my time for the first couple of years that will eventually fade. My circle of friends (like most folks as they get older) has shrunk. When my wife and I recently helped a friend clear out her dad’s basement after his death, my wife and I noted that we were really the only ones left in our circle of friends that could be considered “mobile” and capable of helping folks move (Many of our friends have health related issues).

Recently there was an article on folks who don’t have a spouse, children or caregiver, and what they should do as they age  While my wife and I have each other, I can see the wisdom of some of the advice even for us.

  • Speak up: Talk to friends and colleagues about family concerns
  • Act early: Start planning for your future health and long-term care before an emergency happens
  • Make new friends and keep the old
  • Appoint a proxy: your most trusted friend or relative, in case you start losing any cognitive capacities
  • Consider moving: Move to a more walkable city or maybe a college town, where you can stay engaged with activities (mentoring on financial independence?)
  • Live well: Eat healthy foods, walk, keep your brain sharp

I hope everyone considers how their financial independence will affect their lives, and builds a life they can look forward to!


Mr. 39 months.


Well, my investments, like many folks, have nose-dived a bit since the start of the month. While the S&P 500, and most of my index funds have stayed even, my dividend portfolios are down about 2% so far. Remember, this is my “fun money” accounts where I tried to purchase bonds, stocks and REITs to generate maximum dividends. It seems like I have been shoveling money into these all year, only to have the market eat the money up by the time the month ends.

Now granted, 50% of these accounts are in bonds, and the rising interest rate environment has not done me a lot of favors here. In addition, the rising interest rates and the retail meltdown have punished REITs in a major way (or at least some REITs). Still, even though I have some explanation, it still makes me unhappy.

Yet I intend to keep with the plan I laid out, investing in dividend paying assets, and using my monthly funds and quarterly dividends to reinvest in the assets necessary to reach a 50% bonds/25% REITs/25% dividend stocks setup.

That is why I chose the title, stick-to-it-ism. There are always times in your push towards financial independence when your direction appears to be going nowhere (or potentially backward). Folks in 2007 and 2008 were double-paying their mortgage down on their house, only to see its value crash down and lose all the value that they had paid into it. Many home prices are only now getting back to where they were, ten years later. Some aren’t even there.

Still, by paying down the mortgage, getting rid of any remaining debt, and continuing to save, most FIRE folks find themselves in better shape now than they were before the crash nine years ago. That is because the concepts and principles we follow are timeless, and in the long run, they are bound to place us in a better position. We just have to have the “stick-to-it attitude” that lets us keep working on it, even during the times it doesn’t seem to help.

So how about you? What have you done to “stay on target” as you move towards independence?


Mr. 39 months

Mr. 39 Months “Drawdown” plan

May 2, 2018

Okay, as I get more information, I continually have to look at adjusting my draw down plan – even as I hit 26 months to go. If you remember from my previous draw down update, the desire of Mrs. 39 Months to continue working, combined with the $64K limit to income for maintaining health subsidies had put me in a bit of a quandary. How do I match my spending to the need for health care? Spend too much, and I end up needing an additional $12K a year.

Well, I got a bid of a surprise with one of my company retirement accounts a week ago, which meant that I would be paying a large lump sum when I left the company (instead of being able to draw it out over time). However, this meant that the remaining funds were “post tax” and thus could be used without endangering me going over the $64K limit. Sweet!

So, based on that, updates on my current investments and plans for deposits over next 26 months, here is what I am looking at:

  • Savings: $132K (can spend without having to pay taxes)
  • Deferred Income from work: $156K (after taxes withdrawn – don’t have to pay taxes on it)
  • Brokerage Account: $87K (can spend about $60K of it without paying taxes. The rest will be taxable.
  • Inherited IRA from my father: $137K (taxable when we take it out)
  • 401K/IRAs: $613K (taxable + penalty)
  • Roth IRAs: $298K (non-taxable)
  • Total: $1,445K liquid assets (350K with no tax)
  • House: $298K (not depending on it unless absolutely necessary, i.e. no reverse mortgage
  • Expected expenses $54K + Mrs. 39 Months spending (assuming equivalent of her take home pay). This assumes having a taxable income below $64K, and thus keeping the subsidies


As you can see, I’m actually in pretty good shape. Current plan:

  • For first 6 months, pay for medical with Cobra and take $18K from Deferred (tax free) and mandatory $9K from inherited IRA
  • For each year following, Take $12K from inherited IRA each year, and pay very little tax on it. Should last for 10+ years (till I hit 67)
  • Take $42K from Deferred/post –tax. Should last at least three years (till I’m 60)
  • Move to my investment account. Should last for at least two years with limited taxes (Gets me to 62 and Mrs. 39 Months to 64). At this point, I’m assuming Mrs. 39 Months wants to stop working, so we bump up expenses to $72K a year
  • Draw down 401K at $72K a year. This should last us for 16+ years.
  • At that point, switch to Roth IRA, which has been growing for 20+ years without getting tapped, so it should have over $800K. This should last us for the rest of our lives.
  • Never touch the savings account/emergency fund, or the home value (these are our backups).


Note: all growth, expense and investments assume a 3% inflation rate.


Overall, I’m more confident now that I was a couple of months ago (even with the market not going anywhere). I could conceivably take a few months off my count and go earlier, but I don’t want to do that just yet.


How have your plans changed?



Original Draw Down Plan: June 2017

Several FIRE-related blogs (see below) have started a blog chain on how they are/plan to draw down their savings over their retirement. There are an infinite number of ways to do this, and a lot of its based on your own particular issues/resources.

It’s a topic that isn’t covered very much, and when I stumbled onto it today, I read just about every link I could.

I thought I’d join the chain and list my plan.

Expected resources at time of retirement (July 2020)

  • Savings: $132K
  • Deferred Income from work: $179K**
  • Brokerage Account: $94K
  • Inherited IRA from my father: $137K
  • 401K/IRAs: $546K
  • Roth IRAs: $257K
  • Total: $1,345K liquid assets
  • House: $298K (not depending on it unless absolutely necessary, i.e. no reverse mortgage)

** My company allows you to “defer” income from work (i.e. don’t get paid it) until a later date, up to a certain percentage. Once you leave the company, you can take it as a lump sum or as regular monthly payments over a 5 year span. You pay taxes on it as you are paid it. In the meantime, you can invest it just like a 401K

The plan

Plan is to take out $72,000 a year/$6,000 a month. We will draw this back the equivalent when we start taking social security in 2024 (Mrs. 39 months) and 2031 (Mr. 39 months). I’ve used the FireCalc to determine that, even without social security, we have over a 90% chance to go till 95, so Social Security is a bonus here.

  1. Year 0: Setup savings as base of 2X annual salary. Plus that up at the beginning of each year from investment accounts.
  2. Year 1-3: Use Deferred income to pay for withdrawals till exhausted. Note that I still have to take a portion of my father’s inherited IRA ($5K a year)
  3. Year 4-5:  Draw down brokerage account to 0. It is here that we could start getting Social Security for Mrs. 39 months
  4. Year 6-8: Draw down my father’s IRA to 0 while continuing (if possible) to get SS for Mrs. 39 months
  5. Year 9 – 25: Draw down 401K/IRA to 0. It is here that we would finally start taking Mr. 39 months social security
  6. Year 26+: Still plenty of money left over in the Roth IRA to last us, plus we have the 2X money in savings and the house, so it should enable us to be OK.

Overall, we could retire right now if I had confidence that Social Security (or at least 75% of Social Security ) would be there for us. I just don’t know, so I intend to work till July 2020 (Independence day!) to make sure we will be OK no matter what.

More Withdrawal Strategies

Here are more retirement strategies from the PF blogger community. Some of these are much more detailed than mine. Check them out!

Anchor: Physician On Fire: Our Drawdown Plan in Early Retirement
Link 1: The Retirement Manifesto: Our Retirement Investment Drawdown Strategy
Link 2: OthalaFehu: Retirement Master Plan
Link 3: Plan.Invest.Escape: Drawdown vs. Wealth Preservation in Early Retirement
Link 4: Freedom Is Groovy: The Groovy Drawdown Strategy
Link 5: The Green Swan: The Nastiest, Hardest Problem In Finance: Decumulation
Link 6: My Curiosity Lab: Show Me The Money: My Retirement Drawdown Plan
Link 7: Cracking Retirement: Our Drawdown Strategy
Link 8: The Financial Journeyman: Early Retirement Portfolio & Plan

Link 9: Retire by 40: Our Unusual Early Retirement Withdrawal Strategy



Mr. 39 months

Why the painting “The March to Valley Forge” by William Trego?

I have been asked occasionally why I chose the picture at the top of the blog, William Trego’s “March to Valley Forge.” It’s a picture of a key point in America’s war for Independence, created in 1883.



The oil painting was painted by Trego in Philadelphia in 1883 and exhibited at the Pennsylvania Academy of the Fine Arts, where he studied for three years under Thomas Eakins. It is made even more impressive by the fact that Trego’s hands were nearly paralyzed – possibly from polio – at the time that he painted it, forcing him to hold a paintbrush with one hand while guiding it with the other. Trego’s inspiration for the painting was a passage from Washington Irving’s 19th century biography “Life of Washington”: “Sad and dreary was the march to Valley Forge, uncheered by the recollection of any recent triumph. . . Hungry and cold were the poor fellows who had so long been keeping the field . . . provisions were scant, clothing was worn out, and so badly were they off for shoes, that the footsteps of many might be tracked in blood.”


While I don’t place my efforts anywhere near on par with the struggles at Valley Forge, I do want to point out that getting to financial independence is a struggle.


  1. We are constantly being bombarded on media with the consumer culture, how buying this item or that one will make us happier, sexier, more fulfilled, less stupid-looking, etc. The marketing departments in the world have had over 100 years to perfect this, and they are very good. They especially target the 18-35 year old crowd because their purchase preferences have not been set yet. As one gets into their 40s and 50s, you tend to purchase the same cars, same cereal, and same toilet tissue. That is why so many shows market to the younger generation, because that is what the marketers want.
  2. The desires of Family (especially your significant other) play a massive role in gaining (or failing to gain) financial independence. The biggest financial decision you make in life is not your career, your school, or where you live – it’s who you choose as a spouse/significant other. If you choose someone who likes to spend, run up credit card debt, and live an extravagant lifestyle, you will not easily be able to achieve financial independence.
  3. Expectations of society (neighbors, work, etc.) also play a significant part in your spending. If you are a lawyer, doctor, etc. you are expected to dress a certain way, drive a certain car, and live a certain lifestyle. It is really difficult for someone in that situation to buck the trend and concentrate on achieving financial independence. That is one of the reasons I like being an engineer – our societal expectations are much lower.


As I said in my earlier posts, I really didn’t get the FIRE “bug” until I hit 36. I lost a tremendous amount of time and wealth accumulation in the 14 years from graduating till then. When I talk with college students and emphasize starting off the bat with savings, I hit them with the chart below. It shows three options:

  • Starting at age 22, investing $5,000/yr. and then stopping at age 30 when life makes it complicated
  • Waiting till age 30, and then putting in $5,000/yr. until you retire
  • Starting at age 36 (when I did) and putting in $11,500/yr. until retirement


Graduate A Graduate B Graduate C
Age Investment Value @10%   Investment Value @10%   Investment Value @10%
22  $    5,000  $           5,000  $       –  $                 –  $          –  $                 –
23  $    5,000  $         10,500  $       –  $                 –  $          –  $                 –
24  $    5,000  $         16,550  $       –  $                 –  $          –  $                 –
25  $    5,000  $         23,205  $       –  $                 –  $          –  $                 –
26  $    5,000  $         30,526  $       –  $                 –  $          –  $                 –
27  $    5,000  $         38,578  $       –  $                 –  $          –  $                 –
28  $    5,000  $         47,436  $       –  $                 –  $          –  $                 –
29  $    5,000  $         57,179  $       –  $                 –  $          –  $                 –
30  $    5,000  $         67,897  $ 5,000  $           5,000  $          –  $                 –
31  $          –  $         74,687  $ 5,000  $         10,500  $          –  $                 –
32  $          –  $         82,156  $ 5,000  $         16,550  $          –  $                 –
33  $          –  $         90,371  $ 5,000  $         23,205  $        –  $                 –
34  $          –  $         99,409  $ 5,000  $         30,526  $          –  $                 –
35  $          –  $       109,349  $ 5,000  $         38,578  $          –  $                 –
36  $          –  $       120,284  $ 5,000  $         47,436  $  11,500  $         11,500
37  $          –  $       132,313  $ 5,000  $         57,179  $  11,500  $         24,150
38  $          –  $       145,544  $ 5,000  $         67,897  $  11,500  $         38,065
39  $          –  $       160,098  $ 5,000  $         79,687  $  11,500  $        53,372
40  $          –  $       176,108  $ 5,000  $         92,656  $  11,500  $         70,209
41  $          –  $       193,719  $ 5,000  $       106,921  $  11,500  $         88,730
42  $          –  $       213,091  $ 5,000  $       122,614  $  11,500  $       109,102
43  $          –  $       234,400  $ 5,000  $       139,875  $  11,500  $       131,513
44  $          –  $       257,840  $ 5,000  $       158,862  $  11,500  $       156,164
45  $          –  $       283,624  $ 5,000  $       179,749  $  11,500  $       183,280
46  $          –  $       311,987  $ 5,000  $       202,724  $  11,500  $       213,108
47  $          –  $       343,185  $ 5,000  $       227,996  $  11,500  $       245,919
48  $          –  $       377,504  $ 5,000  $       255,795  $  11,500  $       282,011
49  $          –  $       415,254  $ 5,000  $       286,375  $  11,500  $       321,712
50  $          –  $       456,780  $ 5,000  $      320,012  $  11,500  $       365,384
51  $          –  $       502,458  $ 5,000  $       357,014  $  11,500  $       413,422
52  $          –  $       552,703  $ 5,000  $       397,715  $  11,500  $       466,264
53  $          –  $       607,974  $ 5,000  $       442,487  $  11,500  $       524,390
54  $          –  $       668,771  $ 5,000  $       491,735  $  11,500  $      588,330
55  $          –  $       735,648  $ 5,000  $       545,909  $  11,500  $       658,662
56  $          –  $       809,213  $ 5,000  $       605,500  $  11,500  $       736,029
57  $          –  $       890,134  $ 5,000  $       671,050  $  11,500  $       821,132
58  $          –  $       979,148  $ 5,000  $       743,155  $  11,500  $       914,745
59  $          –  $    1,077,063  $ 5,000  $       822,470  $  11,500  $    1,017,719
60  $          –  $    1,184,769  $ 5,000  $       909,717  $  11,500  $    1,130,991
61  $          –  $    1,303,246  $ 5,000  $    1,005,689  $  11,500  $    1,255,590
62  $          –  $    1,433,570  $ 5,000  $    1,111,258  $  11,500  $    1,392,649
63  $          –  $    1,576,927  $ 5,000  $    1,227,383  $  11,500  $    1,543,414
64  $          –  $    1,734,620  $ 5,000  $    1,355,122  $  11,500  $    1,709,256
65  $          –  $    1,908,082  $ 5,000  $    1,495,634  $  11,500  $    1,891,681
66  $          –  $    2,098,890  $ 5,000  $    1,650,197  $  11,500  $    2,092,349
67  $          –  $    2,308,779  $ 5,000  $    1,820,217  $  11,500  $    2,313,084


Notice how the person who started early and then stopped, still winds up with a lot more money than the one who waited, and then kept putting in. Also notice how much I have to contribute to “catch up”
I often see FIRE blogs that talk about their wonderful, frugal lifestyle, and I get it. I can see how being content with your life is a major point to make this work, and is a key part to happiness in life. I just want to make sure that everyone realizes that it is also a struggle against the current to make it happen, and it takes hard work and perseverance to be successful.

An interesting point. Washington and his army marched out of Valley Forge in June 1778, ready to continue the struggle. Roughly 39 months later, they (with the help of the French) were able to encircle Cornwallis in Yorktown, and after a siege, force his surrender – the final major battle in the war. After a long struggle, independence was gained!

I wish you luck on your journey.


Mr. 39 Months

Early Retirement – Good or Bad?

Early in the month, Financial Samurai had a great post about the dark side of early retirement

He starts out with some of the reasons folks want to retire early, including job difficulties, realization of time slipping away, and general feelings of hopelessness in their current environment. He then moves into some of the dangers, and lays them out in convincing fashion.

  • What if you get bored and change your mind?
  • What if you run out of money?
  • What if you lose relationships due to your changed lifestyle?

He finishes with some words of warning (be careful who you listen to about early retirement, looking beyond the conventional wisdom) and discusses what he believes the real goal should be – Financial Independence, not early retirement. While keeping an age or year as a goal to motivate and to do this so that you can live a happy, productive life doing the work you love – not the job you hate.

I think it is an excellent warning, as so many of the Early Retirement community have the potential of falling into the trap. I see a lot of websites with people in hammocks and lovely beach scenes. What is funny is to read the ones of folks who have reached it, and to find out that they either continue to work (maybe at reduced hours/stress) or have found other “work” that they do which fills their day.

I belong to the baby boom generation, a generation which has defined itself (for both good and ill) by their job and function in society. While my goal is to be financially independent by July 2020, I know that I won’t be able to just sit down. While I might take some time to relax, travel and do a few things I’ve always wanted, I know that within 12 months I will be going stir crazy. That’s why I am big on hobbies, and will probably find some part-time work to stay in the game/keep my mind working.

What are your thoughts on this? When you hit financial independence, will you walk away?