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.
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.