We call this the beginning as it’s the very start of a new life. Not a new adventure as some might call it but rather a new way of going about things. Of course there will be new things to explore and new things to discover but mostly this will be about having the time and the space to do things without pressure and (some of the time at least) without being measured, monitored or performance rated. We may have a plan but it will be loose and largely flexible and if we find there are things we don’t like or don’t want to do anymore then we simply won’t do them.
It’s a big step and one not to be taken lightly but as retirement is squishy blog post points out, our definition of retirement is changing. The days when 40 years in the factory were followed by a gold watch and a career in Crown Green bowls are gone. We are the middle generation which still wrestles with the transition but not only will our children (and our children’s children) need to become more comfortable with flexible and contract working they (meaning millennials) are demanding change. Their focus is more serial gratification where periods of working are followed by extended periods of leisure.
So in retirement we will initially continue with 12 months of (very) part time work and, well, who knows after that. We remain open to opportunities. After all with half (I hope) a lifetime of skills accumulated, it would be a shame indeed if there were no way in which that experience could be shared. What’s critical though is that retirement means a reset of priorities or rather a reset as to who sets those priorities. We’re on the cusp of a new era and who knows where that will take us.
Let’s come back to early retirement. I’ve worked in an industry where early retirement is not uncommon and contractually I’ve had a retirement age of 62 beyond which I assume it’s deemed that senility will have set in and I would no longer be capable of making sensible judgements. On top of that there has been an optional early retirement age of 56, which is the corporate mandated jump off point for those assumed to be completely burned by a high pressure job. I reached that point around 7 years ago (at age 46) and wished I had thought about it earlier. We’ll come back to the psychology in my second post but for now let’s say that I have created a new retirement category called early, early retirement whereby I’m now stepping down at age 52 and two-thirds.
During those seven years I have read a lot and planned a lot. I have become good friends with the concept of FIRE and intimately familiar with the concept of safe withdrawal rates. But before you switch off, let’s not overcomplicate ER. Financially at least the concept of ER is quite straightforward as most personal finance blogs will tell you it’s about savings rate (being the amount of your earnings you can stash away) and controlling your expenses. Once you’ve understood both of those theory would say that based on historical experience you essentially need to stash away 25 times your regular expenses and you are golden. Of course it’s a gross over simplification (and one we will explore in later posts) but if life teaches you anything it’s that people crave simplicity (after all why else would they buy grated cheese or pre-peeled potatoes). But what all those finance blogs fail to focus on is the third (and mostly ignored) element of ER. Earning more money. Why is that? Who knows but maybe in the quest for simplicity because it’s telling someone that if they forgo their daily latte it will bring forward their early retirement date by three months is easier than extoling the black arts of personal development, improvement and risk taking.
We’ve done our time and done the math and for us now is the right time financially, physically and emotionally to retire. We’ve a lot to talk about on the blog. We’ll be talking about investments and investment strategies but we’ll also be talking about knowing when it’s the right time to go and getting your head in the right place. But for now let’s take a breath and enjoy the moment as we look forward to a fun-filled future.
So you’ve done the math, the sums add and so it’s right to push the button. Right? Well, maybe not. Let’s skip the topic of obligations to dependents for now and let’s talk briefly about uncertainty. Uncertainty doesn’t just cover the fact that you might get hit by a falling tree (you might but the chances are quite slim) but it considers the topic that all the early retirement simulators are based on a sequence of historical returns. But what if those sequences are not repeated? We’ll be discussing that and much more. Stay tuned.