Winter Update and a Resolution

Happy belated New Year to everyone!  I enjoyed almost two weeks off from work over the holidays. Spent a lot of it with family on the other coast.  It was great to completely disengage from the daily grind, especially coming off of a period where I was intensely disliking my j*b.  This year has also gotten off to a good start.  It’s been Goldilocks busy at work — not too much, not too little — just the right amount.  As an INTJ, the part about litigation I like the least, or more accurately stated as abhor the most, is having to deal with difficult people.  Even the thought of it totally stresses me out.  Fortunately, there hasn’t been much of that lately.  That certainly makes the job easier to handle.  Plus, everyone has been pulling their own weight lately (and perhaps even some of mine!).

As long-time readers will note, from time to time, I seesaw from hating the job to not minding it so much.  Having gone through the ups-and-downs more than a few times, I feel like it will soon be time to get off the seesaw.  On the financial side, I feel pretty comfortable stepping aside after one more fiscal year.  That means leaving either (1) at the end of this year if I am not productive or (2) next spring if I expect a distribution above my draw (like a bonus). Thus, my resolution for 2015 is to plan as if I will leave no later than spring of 2016.

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This is not the first time I’ve drawn a line in the sand and said I will quit by a certain date.  But I was naive in 2009 and too eager to compromise the future for the present.  At that time, only the ERE and MMM folks would have encouraged me to quit with a net worth of $350K.  Now I feel like even more conservative types like the folks at early-retirement.org and Bogleheads would agree that we are ready.  Hopefully putting my resolution in writing will help me stick to it. 

Here’s a closer look at the financial and mental sides of this decision:

Even now, with a net worth of approximately $1.45M, we can withdraw $43.9K a year at 3%.  We currently spend about $50K on average.  This does not include what we spent to splurge on our European vacation this year (four-star hotels, $500 dinners, etc.).  If you were to include that, we would be at $57K.  Barring a crash, our net worth should increase to $1.7M next year, which translates to a $51.5K withdrawal at 3%.  FIRECalc suggests that at that time, we will be able to take out $60K a year for life with a 100% success rate.  All of this also assumes we’ll never work for money again, which is not realistic.  One or both of us will want to stay busy rather than lounge around, and that might include income-earning activities.  Plus, my wife should earn enough to make sure she has enough credits to qualify for social security.

Our aggregate expenses should largely stay the same, meaning any decreases in expenses should more than offset any increases in expenses.  Areas where expenses should increase include: (1) health insurance premiums, although we would likely qualify for reduced premiums, (2) recreational costs as we will have more free time, (3) travel costs as we would travel more often.  Areas where expenses should drop include: (1) housing costs, assuming we relocate to a more affordable area or even hop from place to place, (2) clothing as most of the clothing we purchase is work attire.  The only wildcard is children.  I don’t have a good sense of whether we’ll be able to squeeze additional expenses attributable to them within our safe withdrawal rate.

On the mental side, things may get a little trickier.  First, I’m not sure my wife actually understands what I want to do and by when.  I have to work on her a little.  She knows about (and is on board with) the general goal to retire early, but reality of doing it in 12 to 15 months is not sinking in for her.  Next, I want to develop my own interests that will allow me to maximize my new found freedom.  I’ve really gotten into golf this past year, but unfortunately golf is one of those hobbies that cost money.  I’ve also started reading a lot more.  Finally, I have to disassociate my work from my identity.  Over the holidays, some distant in-laws were saying how great it was that I was a lawyer, blah, blah, blah.  Being a lawyer has been a big part of my identity for years and now I have to learn how to shed that part of my identity without any regrets.  I’ve already started to lay the groundwork with my family, and so far, they seem to understand.  My friends will largely be OK with it too, but the ladder-climbing types will probably find it hard to relate to me.  In the end, I have to be comfortable with losing this part of my identity, even in the face of disapproval by others.  Not because I care about what other people think, but sometimes what other people think shines a light on a part of you that feels the same way.  That’s something I have to meditate over in the coming months to make sure giving up this career is not something I will someday regret.

To everyone out there — here’s to a happy, healthy, and prosperous 2015.

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11 thoughts on “Winter Update and a Resolution

  1. Best of luck to you in keeping this goal. It seems from this post that you’ve thought through the financial side and your (INTJ) intrapersonal side of this more than you’ve communicated your full vision to your wife. As a fellow INTJ, I would humbly encourage you to over-communicate on this one, since it’s kinda huge.

    On the hobby front, maybe try Frisbee golf. $30 for a driver and a putter disc (less if you buy used) and you get the same opportunity to be outside, explore new holes, strategize, test your skills against yourself and others, and drink a beer while you play. All with no green fees. You may also find the players more relatable to your new lifestyle compared to those at the country club.

    .02

    • You’re right about focusing on communication. Both of us have to be committed to making the most of it, otherwise there’s a good chance it won’t feel right and we’ll both go scurrying back to what is comfortable (i.e., employment). I’ll check out disc golf. Maybe it will be enough to quench the thirst. But I gotta say there’s nothing like crushing a 250 yard drive!

    • I agree on the emotional toll, although I’d say that it’s less a toll than it is a series of bad habits. The worst habit is the feeling that you have to do something, or be getting something done at all times. If you can get past that, then recovery is a lot easier. This bad habit may be what keeps you afloat in the corporate world, but it will break you in early retirement.

      Also, disc golf is awesome, way better than real golf in my humble opinion.

      @Anonlawyer – My recommendation (besides increased communication) is to ensure that you are focused on what you want to do, not what you want to get away from. This took me a few months to figure out, but ever since I did life has been great in retirement. Figuring out how you might spend your time (e.g. golf, etc) is the habit of the working class – always filling free time with “activities.” Instead, I’d recommend you focus on things you really want to do once you have abundant free time and greatly reduced stress. For me, it’s permaculture. I literally wake up dreaming about it every morning. I hope you can find something you can be similarly passionate about.

  2. Hi there, I found your blog through ERE, which I started reading the last week. I wanted to get your thoughts since were are in a somewhat similar position, except I am already ‘retired’ (more accurately a mom to a toddler) and my DH is still working. I want to sit down with him soon to discuss an ER 5-year? plan, but thing is I’m pretty sure he’ll just shoot me down, even though I know he’d be much happier doing his own thing (whether for a little, some money, or none at all).

    We’re both v play it safe types, but I feel that he in particular just doesn’t have a threshold for financial security at all. Our current NW is 1.1m, yearly expenses 40k. I plan to experiment with decreasing that amount in the coming months.

    Thus a 5-year plan to ER should be doable, right, but I feel like there are two big wildcards. 1) Serious health problems. Ex: A friend of mine recently got cancer and paid 30k out of pocket for an experimental drug. She has the benefit of living in UK so everything else was NHS. I submit that in the US the same treatments would have cost a whole lot more. 2) College costs! I went to private school more than a decade ago and the total bill was 150k. How much is it going to be when my child is ready more than a decade from now?? Half a million? Isn’t it already 250k today? This is something I feel we *should* provide if the chosen one is indeed chosen by the likes of Harvard etc. I gather you don’t have kids but plan to? How does one crunch the math for that? And children’s activities are really not expensive for us now, but the future may call for private music lessons and other pricier pursuits.

    Would appreciate any thoughts from you on these matters~ Anonymom

    • Hi thanks for reaching out and commenting! It’s been five years since I wrote that guest post on ERE. For others who may not be familiar with that post, here it is. I am walking proof that it is really tough to project what will happen in five years, much less twenty or thirty years. For example, when I wrote that post, I was certain that I would be out of the rat race by now, but here I am still trudging away. On the plus side, I’ve saved twice what I thought I needed for FI at the time. But I was not anticipating getting married and needing to cover expenses for two people in a HCOL area. And you’re right, maybe $1.5M won’t be enough to account for college, increased health expenses, etc., but we’re at a crossroads in life where we should be having kids soon, but still want to travel the world. So we’re just going to call it a break and leave our options open. If we need to keep earning money, we’ll preserve our ability to do so (maybe not at the current levels).

      It’s not going to be easy convincing your husband to retire if that’s not what he wants, especially if absolute security is something that is fundamentally important to him. Hopefully as your NW grows, he will start feeling secure enough to start winding down.

      Anyways, good luck on your journey and hope to see you back here soon!

  3. Getting involved with a great charity might be of interest to you as we’ll… My passion is for clean water I think the impact is great it saves lives and creates a better world you might check out http://www.water.cc to get you thinking about a great charity that you would like to help others

    • Getting involved in charity work is definitely something I’d like to explore with more time on my hands. Would be good to feel passionate about working towards a greater good, instead of churning away for no apparent reason.

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