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Personal Finance FAQ

I Don’t Know If This is Going to Work

There is no such uncertainty as a sure thing.
–Robert Burns

This is going to be published a couple of months after I write this. I have no idea who will read this.

My wife and I sat up all evening nearly a month after we retired talking about what we’d done, this retiring thing, and if it would work. I had several clients who, I’m sure, went through the same wine-filled talk that we just did. It’s one thing to tell people what to do when you’re sitting in front of a spreadsheet, having run a Monte Carlo simulation, full of academic vim and vigor (passed the CFP exam with no other background first time, thankyouverymuch).

It’s entirely another to be living it.

I imagine that people, on their deathbeds, ask their doctors what it’s like.

The doctors don’t really know.

They just think they do.

They’ve seen many other people go through the same process: the slow decline, the moments before the passing, and then the passing, followed by the rigor mortis. My grandfather called out for a distant uncle, even though his daughter was right there. Priests tell you what’s supposed to be on the other side.

However, the reality is that doctors have never died. Priests have never experienced heaven. They don’t really know what happens. They just try to assuage those going through the passage the best they can.

The first few…weeks? Months? Who knows? of retirement are similar. For most of us, who will have to rely on what our wits have provided us until the point that we stop relying on our wits to provide us an income, we’re left with some amount of uncertainty. I even wrote about our retirement plan over six years ago. In the intervening years, I started a company and a private equity fund, and, then, suddenly, when I was 46 and my wife was 45 (pretty darn close if you read the article), we were on the analogous cusp of what I wrote about, and we pulled the trigger to FIRE (financial independence retire early).

Yet, a month into it, with only the income from our rental properties and from my board work, I wonder…

Is this going to work?

I feel like Tim Ferriss (an author who truly inspires me, by the way), blogging in a wine-fuelled moment, but, while all of the models, numbers, rules of thumb, and the like say that we’ll probably be OK, the true answer, once we’re on the other side is

I don’t know.

That’s the trick of most financial planners. They’re supposed to give you the confidence to make the leap. They’re the priests and the doctors who tell you that, when you’re dying, everything is going to be OK. The simple matter is that they don’t know. It’s a guess. For most people, the answer is that, yes, it’s going to be OK.

This is supposed to be a time of joy and excitement. We did it. We made it to the other side. Heck, the fact that I have to keep hitting backspace because of the wine that I drank with my wife on a Thursday evening is testament to that.

But, for those of you who get here and have a little bit of doubt about whether or not it’s the right decision, know this…

It’s OK to think that way.

My wife is was (do you know how hard that trick is to pull after a bottle of wine?) a financial analyst.

I still am a CFP.

Of all couples who should have our plan locked down and modeled to the nth degree of uncertainty, it’s us.

And we have uncertainty.

So, if you have uncertainty, that’s OK.

What we did to deal with the uncertainty was to do something similar to what I did in the Army.

It’s a contingency plan.

In the Army, it was telling your soldiers what to do if certain events happened and you, as a leader, were not there to lead them. I’d try to come up with at least 3 contingencies in case something happened.

For us, we came up with several:

  • Decrease the lifestyle. We are currently living in a reasonably high rent area in Dallas. If we need to, we can dial back our lifestyles. Hello, Costco! Goodbye, Sunday brunches!
  • Move somewhere cheaper. As I mentioned, we’re living in a reasonably high rent area in Dallas. As I outlined in my previous research, how much you have to save to retire depends on where you live, so we could always move to a cheaper place to live.
  • Become expat nomads. While living somewhere cheaper in the U.S. is always an option, it’s possible to take advantage of geographic arbitrage internationally. We like to travel. I’ve lived overseas. Two backpacks, and we’re off…
  • Sell the rental properties. We based our retirement off of rental property income. Who knows what the economy brings. We could always sell the golden goose and look to invest in a golden…turkey(?).
  • Get jobby jobs. If worse comes to worst, I can always ask you if you’d like fries with that. In reality, I can probably pick up consulting work, and so can my wife. I’ve said that we’re semi-retired. We can consider it a sabbatical.

The early stages of retirement are this schizophrenic gyration between “we’re fine” and “we’re going to go broke!” While this post might have been fueled by the fires (and typos) of a wine-filled night with my wife, the reality is that, barring a fixed income that exceeds the cost of living, most people who pull the plug without an overabundance of caution go through this type of angst. My mother-in-law said that she and her husband, even on a pension, had two months of “anal budgeting” (perhaps a topic for another article). The reality is that, no matter how much you plan, there’s a settling in period before you get comfortable that you didn’t pull the plug too early.

Even if you did, having contingency plans will make sure that your retirement plans don’t involve dumpster diving and living under a bridge.

Has anyone else had the “oh crap moment” when they FIREd? Let’s talk about it in the comments below! I’m going to go get a good night’s sleep until the dog demands an early walk!

By

Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

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