Jach's personal blog

(Largely containing a mind-dump to myselves: past, present, and future)
Current favorite quote: "Supposedly smart people are weirdly ignorant of Bayes' Rule." William B Vogt, 2010

Six-month early "retirement" report

Today I read The 2021 Early-Retirement Update since it showed up on HN. This prompted me to write a bit about my current situation -- admittedly not a report (I lied), mostly just a few quick and useless thoughts.

It always bemuses me when I see people figure out something like "There’s so much left of life, so much that will change, so much that will deviate from peoples’ original plans." The only constant is change! Yet here we are, someone careful enough in their thinking to pull off FIRE, who has probably read a lot, and yet this insight is new to them at the age of 41. (They're 43 now.)

So I'll write down some of my own thoughts I had well-before I hit the trigger to quit. (Last September was my final month, just in time for my 30th birthday on October 2nd.) These thoughts are what I think gave me the basis to be as "eyes open" about things as I could have. Maybe they'll be amusing for others to read too.

First, the common lean "withdraw 4% of 5% annual returns" is, I think, needlessly conservative. An S&P 500 index has had 11% average annual returns since 1976. Vanguard's VGT fund (tech industry index fund) has had 13% average annual returns since its 2004 inception. The global economy has been doubling roughly every 15 years since the industrial revolution, and US companies still seemed poised to capture a lot of that. All of this suggests to me that looking at an average of only 5% growth is too pessimistic.

The big number to focus on is: given an estimated annual spend, what % is that of your investment nest egg? If it's only 4%, great, you can probably retire. Is it 6%? 8%? 9.9%? I think all of those are also safe -- that is, I think 10% annual returns is a conservative-enough estimate.

I won't try to justify the particular value of 10%, I'm not a finance guy, but if you assume 10% growth instead of 5% growth, then for the same % withdrawal rate, you now need half as much saved up. If your max spend target is $2k/mo that's $24k/yr, and 4% of $600k. But it's also 8% of $300k. What matters isn't the absolute percent, or even the absolute dollar amounts, but whether your % take is lower than the % annual ROI. So if you believe as I do that 10% is realistic, then you can retire at $300k instead of working x more years to hit $600k.

Now, that's very simple math, assumes many things are constant, doesn't try to deal with taxes or inflation or medical emergencies. It's wise to buffer beyond. How much of a buffer? That depends on your own situation, and also how much and how often you think your average annual returns will dip below your model's number. Maybe you should work one extra year after hitting the magic number, or maybe you should be hyper-frugal so your % take is lower. In general I'd suggest working as long as you can tolerate after the magic number, and being more frugal than your usual for as long as you can tolerate initially after quitting. Knowing that you can quit any time itself removes some job stress, and not immediately celebrating with some huge expense sets a good mental precedent for making sure you don't decay your principle beyond recovery (forcing you to get a job again). At least take your first expensive vacation while you're working.

But there's another reason to think less hyper-conservatively: the sooner you retire, the sooner you can find out 1) whether you (and if you have one, your partner) are really psychologically adapted to not having a continuous job 2) whether you've made a mistake and are spending more than you planned 3) hit some sort of road block that disrupts your plans.

It's better for these things to happen sooner rather than later because you'll be younger and thus likely better able to deal with them.

And on the other side where nothing goes wrong, you can enjoy some things more when you're younger, too. The linked author mentioned taking a couple college courses with mixed results, one result being lack of success in making friends. This shouldn't be surprising: it's hard for an 18-22 year old to make friends with a late 30s/early 40s person. It's easier with an early 30s person. I myself internally relate more to the typical 17 year old than the typical 43 year old, though having not tried to make younger friends in a while I'm probably overestimating my ability to get along and not come across as way too old. (I am aware I already come across as "boomer" to a lot of early 20-somethings.)

So summing up this, I told myself to pull the plug a bit earlier than I might even be comfortable with, and I think that's generally fine advice for anyone planning such a retirement move. I had mostly made up my mind at the end of my December break in 2019 that I'd stick around for one more product cycle and be done around this time last year. With the pandemic uncertainty I decided to stick around at least one more product cycle, though, and that bought me another 4 months of buffer.

The next area of thought is on the mentality of such a plan. How did I even get this idea that work sucks ("I know") and that I don't want to do it forever?

My mom worked until she died just before turning 61, my dad has since retired with his wife a couple years ago just before hitting 60. Even as a teenager I thought such lifelong employment was not for me, it'd be unbearable.

When I was a little kid I had vague dreams of being "rich" and "living in a mansion" and "owning the biggest green truck". How to get rich I didn't really know. I recall drawing a picture once of some vague "selling tickets" job and this somehow making me a millionaire or a billionaire. A friend and I once did an MS Paint drawing together for a "K&B Sports" store that could grow into a chain and make us rich. I probably thought for a short time that I could get into the NBA if I grew tall enough and played well. For some time (initially on the influence of an old dos video game) I wanted to go into neurology, with neurosurgeons being paid the best. Eventually I discovered programming, and that led to the idea of having a job I liked doing, and ideas of "getting rich" went away. I went to college (with an expensive student loan) under the idea that even though it was expensive, if I finish I should be able to get an $80k+ salary job and pay it off quickly. A few years into college (and having a low-paying programming job I liked) the fatigue started to set in, and that's when I think I really considered the idea of not having to either be at school or work all the time as not just nice but a psychological necessity.

I remember at some point before I had graduated thinking I might take the path of working for a couple years, taking a year or two break, work some more, break again, etc... I was aware of the 4%-on-5% retire early stuff but I don't think I thought much about executing it. Though when I got hired at my first job after college, I asked for $110k and they gave it to me, and after around a year and a half of that I did some math and realized I could just speed-run the early retirement idea if I kept at my current role and get some expected raises/bonuses. And so I did.

So that's how I got to the point. But there are other facets of my mentality to things that are worth bring up too. When I was leaving work, I told most people that it was an indefinite sabbatical, not retirement. I told closer coworkers / friends / family that it's more of a pseudo-retirement, a "retirement", and/or that I'm fully aware of the possibility that I'll work again in the future. This is truthful and non-committal, but more importantly it reveals that yes, I'm not really fully expecting that I'll never have a W2 or 1099 in another e.g. 40 years.

Such a future where I'm working again is unlikely (i.e. not expected) any time in the next several, perhaps even the next 15+, years. It's only a bit less unlikely after that because it's hard to predict so far, so the uncertainty bounds increase. But within that time frame, any time from now until say 2035, there are a few realistic ways I see working again happening that include 1) something akin to boredom 2) by accident through some side project or 3) some change forces me back in. I'll look at these in reverse order.

The author's medical circumstance is one such change I've thought about. Not his exact problem, but generally some sort of sudden emergency (best case) or development of a chronic issue (worst case). I'm going without health insurance right now (and yes there is occasionally a bit of back-of-the-mind worry but I just try to be a bit more careful, I'm not very accident-prone anyway like some people) -- mostly because I don't want to deal with going anywhere (like for a mandatory physical, which I've never had, before getting coverage) until I've been vaccinated, and because my former job's insurance was more expensive than I wanted to pay on my own to continue it under COBRA. But yes, eventually I'll have individual coverage again, and I think this is sensible and something that needs to be budgeted in. Plans have a max out of pocket for things they cover, so you want a plan that has broad coverage for expensive things, whether short or long term (breaking an arm vs MS).

Since getting a new plan if you already have a preexisting condition is going to be (rationally, from the insurance provider's perspective) difficult/too expensive, being diagnosed with such a thing is one valid reason to once again seek employment, get covered under the group health policy (which doesn't require invasive details like a physical or whatever that would reveal your preexisting condition), and then continue that plan under COBRA when you leave. This is probably going to be my strategy if e.g. I ever develop MS as my dad has and his dad had, at least if the plans I can get on my own don't cover what I need. I'd also have to review the plans of any prospective employer to see that they actually cover what I need too. My last job's offered plans were available online for the public to see, so this shouldn't be a high research barrier.

Of course by the time this could be relevant, the US health system might no longer be as insane. But I try to model realistically. Medical tourism should also be a consideration.

A medical issue is the likeliest change that would force me back in, but other changes could be acquiring a partner, having children with such a partner, the US economy tanking, or changes in my desires.

The option where a side project kicks off and demands a job-like amount of my time, and that I'm happy to give it, seems like something to consider. I enjoy programming (though to be honest I'm still in many ways "finding my joy" again and have barely programmed at all these last 6 months) and this pattern happens to a lot of programmers. It wouldn't be an unwelcome one, but it would technically mean that I'd be working again.

The last one is boredom. My days aren't exciting, yet I am not bored. I've been quite happy these last 6 months. And very amused with myself when I felt some of the same stresses immediately come back when I agreed to do a casual presentation for my former team on the Mikado Method in exchange for a free delivered lunch. (It's nice to know that one's teammates at a previous job weren't secretly thinking "Oh man I'm glad he's gone! Good riddance!")

Boredom is a choice. Fill your time, and you won't face it. Some days I don't feel like doing anything, and don't, yet boredom is not a feeling I get on those days either. Anyway, I don't think boredom is likely to attack me, at least the concept of "crushing boredom" that some people complain about.

However, I do admit that I sometimes want to do something new and different than my day-in-day-out activities, and one might describe this as being bored with the old things. Whatever, semantics, but in such a state I wouldn't be bored because I'll still have something to do.

Sometimes interest in an activity can be sated by watching others do it, or reading about it, or taking a class, or playing a video game simulation. Other times though the interest is best satisfied (and sometimes only satisfied) from within a job context. I blew a similarly recently-quit/maybe-retired friend's mind pointing this out. If either of us wants to, we can just apply for any job we feel like doing, and if we get it we'd not really care about the pay or any abusive management practices or job politics because we can also leave any time we want. I know he'd like to step up his cupcake baking game and one way to do that is to take on work at a bakery. Similarly I might want to try and tutor teenagers, or learn some construction, or random handy-man tasks, and temporary jobs are a nice way to acquire such experiences/skills. "Recreationally employed" is a phrase I came across recently, I think this describes the behavior pretty well, and others can fight if they want over the semantics about whether or not taking on such work means you're no longer "retired". By stating clearly from the start that I'm pseudo-retired, I don't have to fight such semantic battles. (I should probably use the phrase quasi-retired to be more correct, but we programmers love to use "pseudo" even when we mean "quasi" or sometimes even "crypto".)

Another aspect I'll say about my mentality is that I'm very fine with being socially isolated. This is my ideal aesthetic: chilling in a space ship far away from anyone else, playing some games, occasionally keep in touch with what's going on elsewhere. It's hard to make new friends as an adult, especially outside a work environment, and it makes plenty of sense to me that some can't handle the situation (especially when work friends grow distant after quitting). But I have no such concerns.

(I also like the aesthetic of Little House on the Prairie. Since I probably won't be living in a spaceship any time soon, living a bit more rural either alone or just with my family where my closest neighbors' dwellings might not even be visible would be a nice compromise.)

The last thing I'll say about my mentality is that I do think I have a good chance at effective immortality, either biologically or as some sort of Em. (Yes, I could always have an accident that kills me later today, death can come at any time, but I think the idea of the inevitability of death because of old age is going to go away prior to when it ought to have applied to me if I make it that long.) I've had this mentality for a long time, and it also puts a flavor on my views about boredom. Some people reject the idea of immortality at all because they think they'd get bored! Well, that's on them, and if they want to end their lives because of it, that's fine. Meanwhile I'm certain I could make it to 200 years old without such crushing boredom that suicide is better. Could I make it 10,000 years? I think so, and I'm going to try if I can, and if at some point I decide enough is enough, fine. But that time should not correlate to my 20th-century-estimated-life-span terminal date.

If you're considering early retirement, you really need to be able to look many years into your future and paint a picture of what you'll get up to. Your uncertainty bounds can be wide, you can envision multiple paths, you don't have to be super specific, but you should still make the effort to do the exercise looking at the next say 20 years. Regular retirees are having to do at least that much these days, and often plan their finances to actually run out just before they expect to die! If you don't expect to die, you can even look much further. If you can see yourself making it to even 1000 years before you decide living is too dull that you might as well end it all, you'll at least be mentally prepared to occupy your time for the next several years and not fall into the trap/failure the linked author points out of "what have I done" and rushing back to your job to avoid confronting existence.

Anyway, I just think life has enough variety to let me noodle around truly indefinitely, and occasionally take on things with more seriousness and commitment than noodling. Like, just consider I got it into my head to have a kid or kids soon, that's a 20+ year chunk of time easily filled, which is a huge chunk of time under a normal lifespan. Say I enjoyed it, why not do it again? And if I'm biologically immortal, yet again? And take care of/play with/interact with grandchildren? And great-grandchildren? And have another kid who grows up friends with my great-great-grandchild? Maybe have new spouses if the love does not in fact last forever?

Such a narrow occupation of time offers such rich variety, how could it not alone be sufficient for many modern-lifetimes worth of time? Even if you're skeptical of the idea if children, then especially once you have eternity to look forward to, it's probably worth trying at least once. Now consider how much more to life there is than child rearing. I really don't think I'd "run out" of things to do or experience or just contentedly fill the time with.

The final area of thought is on having a spouse. Obviously I'm single now, and I've been on precious few dates. This situation isn't likely to change soon, nor am I really trying to make it change. Honestly reading the linked author's report has made me just that little bit more pessimistic about the whole thing. Imagine being married to someone for 20 years and after a few years of being able to be with each other all the time and enjoy all sorts of things they cheat on you and it's over. Nuts! That's supposed to be the stuff of bad character development in fiction.

I wouldn't mind a relationship where my gf works and I don't. Some people truly are fulfilled by work, and I wouldn't want to insist on taking that away from someone I love. Similarly I wouldn't mind if I could support her not working, or even better if she had saved up to support herself independently and we can either join or just keep split resources.

Sometime this year I'll probably move away from the big city. If in the future I needed to move back to better match a partner's job, or preferred lifestyle, that's a possibility, but once I get the property I've "dreamed for" I'm probably going to want to keep it and that might mean a bit of conflict. A simple resolution is I just get a job again to support paying rent in the big city while also paying for/maintaining my dream property and figuring out how to spend most of my time on it.

I hope to have conversations around this and have many details worked out well in advance of any relationship becoming super serious and long term. Author should be grateful the divorce didn't leave him back at square one. (Something to consider happening in your model, too. Sometimes you have to start over, you should be prepared for that.) A nice librarian gf who doesn't outright reject the idea of a child sounds like an upgrade, too.

I'll close this by just reiterating that if you aren't considering a partner in your future that you'll be expected to financially support 100%, as I think isn't unnatural for a man, you might want to adjust your modeling to be able to account for it, or explicitly don't account for it while noting how many x years you'd have to go back to work to make "retirement" work again. As consolation, having to work in service of some higher goal like providing for your spouse or children, and not just yourself, should make the work significantly more tolerable whatever it is.

Posted on 2021-03-23 by Jach

Tags: personal


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