We’ve all seen the articles and data on ‘sequence of return risk’ where, depending on how the markets do in the first couple of years of retirement, you can be in great shape, or you can be in a world of hurt.
Go Curry Cracker has spent the time to do the numbers on how things are going for folks that retired right around the time of our two most recent “crashes.” An excellent read!
I know there is a lot of talk about a pending recession in the US. All I can say is, its going to happen sometime, so don’t panic too much. Stick with your plan, and be flexible depending on the market.
For most folks in the FIRE community, part of what motivates us is the free
time we hope to have once we hit our “number.” Time to pursue other goals,
hobbies, time with family & friends, etc. We look at the future and imagine
all sorts of things we would be doing once the need for money is taken care of.
Often this involves extensive travel (both in the home country and throughout
the world). It can be very exciting.
Most folks have a long list of what they intend to do in their first
year – but what are your plans for year 2? Once you have checked off all the
immediate ideas and needs, and you are starting towards the long, daily “grind”
of being financially independent, what is your life going to look like. It is
this part of planning that many FIRE folks fall a little short of – yet it is
here where we will be spending the vast majority of our time. How do we plan
for year 2?
What are you passionate about?
One way is to ask yourself what are you really passionate about? What
gets you out of bed in the morning, gets your blood flowing when you get the
chance to do it. It may be volunteer work, working on your house or garden, a
specific hobby, or spending time with your family. Take the time to sit down and ponder/meditate on
what you are passionate about and use that as a basis to plan your year 2
Not a race, not one answer
One of the mistakes folks make when they think about this is to believe
that it is a one-time decision, and once they start down the road towards
activities for year 2+, they will be stuck in it. Nothing is further from the
truth. Almost everyone will have changing interests/passions over the next 10,
20, 30 years – as their life experiences change them. Look at what you want to
do now, but don’t beat yourself up that you might change your mind. In the
engineering world, its called “paralysis by analysis” where you keep analyzing
without actually acting. Feel free to make a decision with the full knowledge
that it isn’t going to commit you for the rest of your life.
Learn to enjoy the present
Typically, year 1 of FIRE is a frantic time, running around and doing
all the things you’ve always wanted to do. Year 2 and beyond is much more about
relaxing and enjoying the present in a more unstructured manner. Make sure that
while planning year 2, that you don’t “over-plan” year 2. Leave yourself plenty
of time to relax and just “enjoy the present.”
In the end, the primary benefit of hitting FIRE is you are given the “Gift
of Time.” You should make some serious considerations of how you intend to use
that time, once the initial “bloom” of retiring early is done. While you don’t
need to being too crazy about analyzing it, take the opportunity to look into
In the United States, we celebrate our independence day on July 4th,
with parades, bands, fireworks, etc. Its typically a pretty big celebration,
especially in my part of the US (I live close to Philadelphia, where the
Declaration of Independence was written and signed). Most folks have off (some
stores and food places stay open) and we have barbeques and family/friends get
This year, July 4th fell on a Thursday, so my company (and
many others) also had Friday off , for a 4-day weekend! We had friends over to
barbecue on Thursday the 4th, went to a movie on Friday the 5th,
and worked around the house and did some house maintenance on Saturday the 5th.
However, by day four (Sunday) we were starting to be at a loss for what to do. We
ended up just “bumming” around the house, and then finished up with our Sunday
evening “get ready for the workweek” tasks.
It was that evening that it hit me. This would be what retirement would
be like if we didn’t focus on what we wanted to do once we hit FI and stepped
away from regular work. I’ve written numerous times on the need to have
hobbies, and to find ways to keep yourself occupied once you decide to retire.
This just drove that point home!
So I thought through my hobbies and plans for retirement, and did some
additional brainstorming, and here is where I am at right now, as far as plans
once we retire:
Hobby: woodworking (may turn this into a minor $
Hobby: backpacking/complete the Appalachian
1-2 big trips a year, plus minor ones
Work: Temp/seasonal work, to keep my mind in use
and to have some interaction
Volunteer: Build homes with Habitat for Humanity
Volunteer: Continue to work with my professional
society and outdoor club
Volunteer: Looking for ways to take my
professional and financial skills and help people with them
Teach: Either my hobbies or my professional
It could keep me busy, but I’m still concerned. It will be something
that I will be keeping a close eye on in the years ahead.
It still appears that the 4% rule works out, based on a recent review of Kiplingers
The article provides a lot of “qualifiers” and notes that
this is a backwards looking analysis (i.e. its looking at past performance, and
you can’t guarantee it will work). Still, the original 4% analysis done by William
Bengen, covering a wide range of 30-year periods, including the great
From Investopia: “The 4%
rule was created using historical data on stock and bond
returns over the
50-year period from 1926 to 1976. Before the early 1990s, experts generally
considered 5% to be a safe amount for retirees to withdraw each year. Skeptical
of whether this amount was sufficient, financial advisor William Bengen
conducted an exhaustive study of historical returns in 1994, focusing
heavily on the severe market downturns of the 1930s and early 1970s. Bengen
concluded that, even during untenable markets, no historical case existed in
which a four percent annual withdrawal exhausted a retirement portfolio in less
than 33 years.”
My personal opinion is that the 4% rule is
still valid, and you can probably go 4.5% or even 5% if you are sure to invest
What does your first day of retirement look like? Your first week? Your
For many folks in the FIRE community, the journey to FI is what
occupies their time. Many folks dream about life once they retire, and write
about it extensively. Yet the writing and thoughts don’t seem to zero in on a
lot of the details that will occupy you on day 2, or a month into retirement.
There is a lot of talking of sleeping in, sipping coffee/tea, taking it easy,
traveling, etc. Yet what is your life really going to look like as you move
into retirement for the first year? How much time have you spend answering this
I’m very grateful to many of the FIRE bloggers who, having spent years
writing about their work heading towards FI, have continued to write about
their lives post-FI. A partial list includes:
What early morning rituals do you intend to
engage in? Yoga/stretching, meditation, reading, writing, etc.
What sort of end-of-day rituals do you intend to
When will you eat? What will you eat?
How will you engage with your spouse? Your
family? The local community?
What work/hobbies will you start doing on day 1
or 2? What later on?
After you have finished with your initial “splurge”
of travel (often all of year 1) what additional travel are you planning on
doing? What sort of schedule per year (4X a year? 2X a year?)
How will you interact with family & friends
who continue to work?
How will you seek out new friends and
There are obviously a host of other questions and things to consider.
You should work on how you plan to live, at least for the first year. Assume
you can “dial in” 50% – 75% of your initial life, but also assume that life
will throw you curve balls (both in terms of issues and opportunities) that
will end up taking a significant portion of your time.
You’ll often hear folks when they talk about retirement – “Don’t
volunteer for too much when you first retire. You will be surprised how much of
your time gets taken up.” Take some time to think about the details of your
FIRE life, and you will end up having a great one.
In my work life, I have to attend major team meetings 2-3 times a year. This are typically 2 day events where we go over our key objectives for the year, and look at our existing staffing (their professional goals, current level of work, and potential for growth/promotion). It’s actually a very good experience, and I have to give my boss credit for caring to develop and promote those under him. In addition, the key objectives for each team member are not job-based, but are additional goals to help “drive” the team forward and change the organization for the better.
Unfortunately for me, I am looking to reduce my responsibilities and/or early retire in less than 21 months. So when we discuss my own professional development, and potential promotions/opportunities to improve the organization, I have to hedge my conversations and downplay future contributions. Part of my FI plan includes some bonuses that would be due to me, especially in March 2019. While it wouldn’t be a back breaker to not receive the full bonus, I do believe if my contributions were good in 2018, I deserve to get the bonus.
I’ve talked before about the feeling that in some cases technology has passed me by. This was also evident in the meeting, as I was surrounded by many folks somewhat younger than me, with more technical prowess, and burning to move up the career ladder. I did not have that “burning desire” and questioned whether learning new technology and new skills (some of which I questioned if they were truly valuable) was really something I wanted to do.
It was during this event that it hit me again why I wanted to achieve FI. I wanted the freedom to be able to choose how I contribute to the organization, not to be forced into a career path or job that was ill suited for my skills or interests. Since I am pretty much there (yep, I still have “1 more year syndrome”) I have decided that in April of next year – right after bonus – I am going to approach my boss with the request to downshift pay & responsibility.
We will see how that goes over. I think I have a pretty good skill that is in short supply in my organization, so I might be able to step back from a management role and continue to be paid. I guess we will see in 6 months.
Wish me luck, just like I wish all of you luck on your journey to FI!