Instead of retiring early, I opt to work doing what I love. Not that I didn't tried, the first decade of my career I was working 7 years, and off 3 years. Second decade, I worked 5 years and off 5 years. Now I am on my third decade, too much free time is not a good thing, I am glad to have something to do every day.
Early retired or self employed (some) have an entirely different timeline and lifestyle. We also become much less relatable to "normal people" and we tend to socialize much less. Having peace of mind is priceless, though (you know, not worrying if you'll have money to buy food in the future if you can't find anybody to hire you etc).
I know I have a very difficult time interacting in "the real world". I love being able to not need "regular" interaction to survive. I am ok writing etc. Being early retired is the reason I am still alive. Sorry if oversharing but I'd not spin the wheel just to have money for food. I'd just "quit life". 😬 @@OnCashFlow
I imagine pulling money out of my portfolio in a down market is really going to shake me one day in the future! Definitely a lot of mindset shifting needed when transitioning to early retirement
4 is a big one for me. Lets say I reach a FI 4% SWR of $80k and give up a $150k / year job. That means I'm transitioning from a maximum $230k/year lifestyle to $80k/year. Taxes eat up some of that but nowhere close to all of it. After tax, that's probably around $15k per month vs $6k per month or 2.5x the spending. Or we can look at it from an asset perspective. If I have a nest egg of $2M and a job of $150k that you plan to work at for another 30 years, that's like having another $3.75M in assets at a 4% SWR or lets say $3M if you factor in taxes. Investement returns can multiply that as well. If you live off your nest egg and put all of your after-tax earnings into the market (say $10k/month), after 30 years that could be $11.6M at a return rate of 7%! Even after 10 years you'd have an extra $1.7M! To put that in perspective, where I live $1.7M will buy you a mansion ($1.2M) plus two $100k sports cars ($200k) plus 10 month-long vacations at $1000/day ($300k). You can maybe tell I've thought about this too much ;)
When I retired last year I had just turned 54 and my kids had recently moved out. Money wasn't a concern but the two biggest problems I had were: #1) I lost my sense of purpose for 6 to 8 months. I talked other to many retirees and to my surprise, I found out that the transition into retirement can be a bit rocky. I'm all good now and loving retirement. #2) Most of our friends, who are right around our age, are not retired nor will they be retired for years or maybe a decade or more. Our vacationing has gone way up but allot of our friends are limited to 3 or 4 weeks of vacation and they are on a stricter budget so it's hard for our vacation schedules and destinations to line up. The upside to this is that my wife and I have been reaching out to others, who are around our age and retired, to vacation with and we've been socializing a bit more in different circles and we're getting to know new friends. All that but we've been spending pretty hard in the "go go" years. We worked hard for 40 years, raised two great kids and now it's time to play hard.
What calculator was that when you showed the difference between adding/depleting to the account? For me I think the hardest thing would be loss of structure. Im even weird on vacation at times... tidying our hotel room and such. I think I'm going to drop to 3 days of work first and semi retire for a bit once my youngest is finishing college, in about ten years. It's nice having the extra $ now to support my kids and im at a weird phase of life where im 39 and at the home stretch of parenting. When the kids leave that will be an identity shift in and of itself. Ill probably need 10 cats!
Haha I haven't even made it to kids yet so I don't yet realize how much I will change when it happens! The calculator was just a simple savings calculator, so It doesn't actually mimick what a real portfolio would look like, just an oversimplified example: www.thecalculatorsite.com/finance/calculators/savings-calculators.php
Time stolen by screens is a very good point. I had a few months free, and I didn't end up doing any of the incredible fun things I had thought I would do. I just ended up rotting in front of screens.
You should definitely watch my other video about the consequences of FI/RE:
ruclips.net/video/IOT0Tc5hZlo/видео.html
Instead of retiring early, I opt to work doing what I love. Not that I didn't tried, the first decade of my career I was working 7 years, and off 3 years. Second decade, I worked 5 years and off 5 years. Now I am on my third decade, too much free time is not a good thing, I am glad to have something to do every day.
That's great that you got to try out both, many people don't have the option to try early retirement at all!
Early retired or self employed (some) have an entirely different timeline and lifestyle.
We also become much less relatable to "normal people" and we tend to socialize much less.
Having peace of mind is priceless, though (you know, not worrying if you'll have money to buy food in the future if you can't find anybody to hire you etc).
Yes, I can see that..I am an introvert by nature, are we just drawn to this lifestyle!?
I know I have a very difficult time interacting in "the real world". I love being able to not need "regular" interaction to survive. I am ok writing etc. Being early retired is the reason I am still alive. Sorry if oversharing but I'd not spin the wheel just to have money for food. I'd just "quit life". 😬 @@OnCashFlow
I imagine pulling money out of my portfolio in a down market is really going to shake me one day in the future! Definitely a lot of mindset shifting needed when transitioning to early retirement
Got that right! I had to do it and it was psychologically taxing!
4 is a big one for me. Lets say I reach a FI 4% SWR of $80k and give up a $150k / year job. That means I'm transitioning from a maximum $230k/year lifestyle to $80k/year. Taxes eat up some of that but nowhere close to all of it. After tax, that's probably around $15k per month vs $6k per month or 2.5x the spending.
Or we can look at it from an asset perspective. If I have a nest egg of $2M and a job of $150k that you plan to work at for another 30 years, that's like having another $3.75M in assets at a 4% SWR or lets say $3M if you factor in taxes.
Investement returns can multiply that as well. If you live off your nest egg and put all of your after-tax earnings into the market (say $10k/month), after 30 years that could be $11.6M at a return rate of 7%! Even after 10 years you'd have an extra $1.7M!
To put that in perspective, where I live $1.7M will buy you a mansion ($1.2M) plus two $100k sports cars ($200k) plus 10 month-long vacations at $1000/day ($300k).
You can maybe tell I've thought about this too much ;)
When I retired last year I had just turned 54 and my kids had recently moved out. Money wasn't a concern but the two biggest problems I had were:
#1) I lost my sense of purpose for 6 to 8 months. I talked other to many retirees and to my surprise, I found out that the transition into retirement can be a bit rocky. I'm all good now and loving retirement.
#2) Most of our friends, who are right around our age, are not retired nor will they be retired for years or maybe a decade or more. Our vacationing has gone way up but allot of our friends are limited to 3 or 4 weeks of vacation and they are on a stricter budget so it's hard for our vacation schedules and destinations to line up. The upside to this is that my wife and I have been reaching out to others, who are around our age and retired, to vacation with and we've been socializing a bit more in different circles and we're getting to know new friends.
All that but we've been spending pretty hard in the "go go" years. We worked hard for 40 years, raised two great kids and now it's time to play hard.
It's good that you are putting a lot of thought into your future, I hope that it eventually leads to more clarity on what is most important to you.
Help help this guy is trying to steal my time.
Haha You Got That Right ;)
What calculator was that when you showed the difference between adding/depleting to the account? For me I think the hardest thing would be loss of structure. Im even weird on vacation at times... tidying our hotel room and such. I think I'm going to drop to 3 days of work first and semi retire for a bit once my youngest is finishing college, in about ten years. It's nice having the extra $ now to support my kids and im at a weird phase of life where im 39 and at the home stretch of parenting. When the kids leave that will be an identity shift in and of itself. Ill probably need 10 cats!
Haha I haven't even made it to kids yet so I don't yet realize how much I will change when it happens!
The calculator was just a simple savings calculator, so It doesn't actually mimick what a real portfolio would look like, just an oversimplified example:
www.thecalculatorsite.com/finance/calculators/savings-calculators.php
Time stolen by screens is a very good point. I had a few months free, and I didn't end up doing any of the incredible fun things I had thought I would do. I just ended up rotting in front of screens.
This plagues me right now, especially since I make YT videos, I am on my computer or phone a lot...