There’s a fork in the road – It’s decision time.
I am a serious candidate for One More Year Syndrome. I know this. Major life changes are scary and my dislike of unknowns and my discomfort with change just adds to that. When I moved across the country to a city I’d only visited once without an apartment, job or friends (except 1 who lived relatively far away) I was terrified. The night before I told my boss, who at the time had given me the best job I’d ever had, I actually (TMI WARNING) threw up I was so scared. But I did it – I told her and I knew I had to because we had a locked-in end date: The end of our lease. NYC apartments don’t usually allow month-to-month leases so we were either renewing and staying another year or leaving before August 1. I had a set end date.
I’m doing the same thing for my retirement. Fear of the unknown is a potent thing so I’m going to cut it off at the knees. To celebrate my retirement my Mom and I are going to travel around New Zealand and Australia for a month. Our flights will be booked with travel hacking miles and that requires (to get good availability) that we book the flights as soon as possible, which is usually 11 months before. So in November 2019 I will be locked in to an September 30, 2020 retirement date. Another type of guardrail is that our lease will expire September 30, 2020 as well (if they accept my 14 month lease suggestion), but if needed we can negotiate a 6 or 1 year additional lease. The only real deadline driver is this trip.
So to book this trip I’ll be guessing 11 months in advance if I’ll reach my $500,000 goal by September 30th. Ideally I would be able to see that my future annual savings + current net worth would get me there. But obviously that doesn’t take into account a market drop in my last year. HOWEVER that might not matter a whole lot for a few reasons:
- When I retire I’ll already have my Year 1 spending in cash so I have 1 year to see if my portfolio recovers before pulling my Year 2 income
- Not that the past can predict the future, but it is comforting to know that in 7 of the 11 drops from all time stock highs they recovered in 1 year. Check out the awesome charts at one of my new favorite blogs Four Pillar Freedom.
In addition to the above I’m prepared to decrease my spending (as I already planned in a market downturn) and if needed, find some part time work. With all of these layers and possibilities I currently feel comfortable locking myself in almost a year in advance. My partner and I will also be nomads so if necessary we can start my retirement life in a lower cost of living country, such as Mexico. My partner is lucky enough to be a location independent programmer who can work from anywhere so we can take advantage of that.
So that’s the plan. I’m going to lock myself into the roller coaster seat 11 months in advance. Let’s see what the next 16 months brings!
I’m enjoying reading a bunch of your posts. I’m in awe of your decision to pull the plug and go do something different at a $500,000 Net Worth Target. I recently backtracked all of our net worth and my only regret was not pulling the trigger at 31 after we ballooned past that number. Its really amazing how that’s the tipping point where your money starts working for you and you can bring in some cash here and there to supplement. I recently helped a co-worker make that life decision when she realized she passed that number and wanted to make a career change into a much lower paying and potentially part time field.
Oh wow – thank you so much! I’m so glad you’re enjoying them. It’s great that you’re reflecting on your journey and awesome (for me to know 🙂 ) that you wish you’d pulled the trigger sooner. I seem to hear that a lot in hindsight in our community. It’s also great to hear that $500K is a tipping point: so far I’ve just been thinking of it as a target, but hearing that it’s the point where your money really starts working for you is comforting.
That’s amazing that you helped your coworker! How was bringing that stuff up at work? I still struggle with it. Two different colleagues actually asked me for finance advice today – one on their budget and another with investing. My only thought was “They’re onto me!” I’d love some tips on how to discuss finance stuff in the workplace.
Nice post and nice blog. I’m just curious, what is your strategy to retire with 500k? Do you plan to use the 4% rule? Dividends? Roth Ladder?
Hi there! And thank you! I’m a little sleepy (I awakened at 4am PST and haven’t been able to sleep since. Luckily I made it through the work day) so please forgive me (and let me know) if any of this doesn’t make sense. I am using the 4% SWR as a baseline. I currently spend $18-20K/year so I’m aiming for $500K to retire. When I retire I will let my taxable dividends be transferred to my savings account, which will be be about $5K/year. The remaining $15K/yr I will sell in capital gains for my living expenses. I am also using a Roth Ladder to slowly move the money I’ve accumulated in my trad IRA/401K into a Roth so I don’t hit RMDs later in life. This will also help me access tax-advantaged accounts before 59.5, if necessary (it might not be with my current calculations). So that’s my plan! Should I write a post about this? Let me know if that would be helpful.
Sounds like an interesting plan. Yes, it would make a nice post. Maybe I could learn from it. 🙂
It’s been added to the queue!
Have you been to Australia or NZ? If not, you are gonna LOVE them! I went to NZ in 2012 and my wife and I went to Australia in 2017. Both haunt me in the best possible way. A piece of totally unsolicited advice for both: get way off the beaten path. I literally close my eyes and imagine the hundreds of miles of beach stretching out ahead of me as we roamed the remote southern coast of Australia. I am not much for meditation, but the tranquility of these places makes me feel calm just thinking about them. As it gets closer, get in touch and we’ll talk as people instead of as internet strangers.
Also, hooray for a location-independent partner! I feel like I’m living FIRE even though I’m just half time and remote. I hope your partner finds it just as satisfying.
I haven’t! And I would love to get off the beaten path. My Mom and I have…different…travel styles 🙂 to put it lightly. She loves luxury villas and I prefer to camp, backpack and wander. I’ve already gotten her to agree to staying in AirBnBs during this trip, which was a big hurtle! So if I can do that I’m confident I can sneak “off the beaten path” places in as well. That level of tranquility sounds wonderful.
And ooh yes I’d love to pick your brain! I’ll put a reminder on my calendar to reach out next summer 🙂 (if not a little earlier – we are seriously advance planners. We already have a 7 page Google Doc mapping out what we think we want).
Yes it’s really convenient to have a location-independent partner. It’s awesome you feel FIRE while working a half time! My partner seems to enjoy the work from home aspect, but he doesn’t really take advantage of the location-independent part. Technically I’m in a similar boat, but I take advantage of it way more. Instead of staying in Seattle outside of vacations I’m spending 7 weeks this year in other cities working around family. I’m planning to slowly up that next year and see if they notice 🙂 . Work is a lot more bearable in that situation for me.
Looking forward to following along and living vicariously through you! 🙂
Happy to have you here! Also knowing your eyes are on me will help me not succumb to “One More Year” syndrome like the chicken I am 🙂
Wow this sounds amazing! Looking forward to the next year-plus seeing you approach that hard deadline!
Thank you!! Also thank you for joining the party…and keeping me accountable 🙂 .
How exciting!!! Let me know if you need any NZ travel tips 🙂
Thank you! And I definitely do need NZ travel tips! Do you have any must-see spots?
Enjoying the blog, saw you post on twitter that you were going public with it so came to check it out.
Welcome! So glad you’re enjoying it. Thanks for coming along on the journey with me!
Very happy for your trip and success! It sounds like you have spent time thinking about how to handle unexpected situations. At least for me, that 1-year of cash savings to cover expenses would probably make me pretty comfortable with your plan.
Thank you! And yeah that little cushion paired with my complete flexibility makes me feel pretty secure. And yeah I might have overthought it a little bit 😉 .