Author Topic: HELP: Making the Leap to RE stage  (Read 4626 times)

step_away

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HELP: Making the Leap to RE stage
« on: August 03, 2013, 11:31:11 AM »
Hi Everyone,

I'm new (obviously).  I stumbled in this MMM blog while googling early retirement and finally got a vindication for my "FIRE" plan I've had in mind since working full time and that no one I know seems to understand.  I'm a single 37 year-old and has been working full time for 16 years straight and part time before that in high school and college.  I've achieved the FI phase but can't seem to make the leap into the RE stage. 

Things that are holding me back:
1.  Letting go of my cushy job:  If I do lost my job, I would retire.  However, my current job provides good pay and benefits.
2.  Concern that I would outlive my stash:  Though I can make do with $12.5K/yr ($15K including one vacation abroad), 
- I'm living with my mom and sister who I pay $600/month for room and board.  I expect my expense to be much higher living on my own particularly in San Francisco (I don't think they are going to kick me out since I handle their finance and tax but just in case). 
- I don't own a house nor a car.  I'm happy with just maintaining a room (instead of owning a house worrying about repair and taxes) but I think it also raises the uncertainty variable of my expense.  I use public transportation to work ($76 for a monthly pass traveling 7 miles for 35 minutes one way).
- Healthcare / LT care facility: My job currently subsidized my health insurance costs which I expect to be much higher especially as I grow older.  Finally, LT care facility cost could potentially wipe out my stash.

I would love to hear some ideas from MMM members in how they deal with the above concerns.
« Last Edit: August 03, 2013, 12:58:03 PM by step_away »

matchewed

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Re: HELP: Making the Leap to RE stage
« Reply #1 on: August 03, 2013, 01:36:46 PM »
Do you want to retire? If so then retire, if not then don't. If you really enjoy your job then why leave it? Then again you haven't stated whether you enjoy your job, you've just stated it's easy.

If you feel that you may outlive your stash then you're not really comfortable with the future expenses and you aren't really ready for FIRE. Run the numbers with various expense levels that could be in your future and see what that does for FIRE, how does it affect it, and think about what you could do to mitigate that risk. Will it involve some entrepreneurial activity? Side jobs?

footenote

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Re: HELP: Making the Leap to RE stage
« Reply #2 on: August 03, 2013, 01:52:52 PM »
+1 matchewed's advice

Stop thinking of this as some sort of irreversible step off a cliff. It's not. Think about working or consulting FT only "when you feel like it" with massive time-off breaks between jobs or engagements. Think about entrepreneurial. Think about paid work for a non-profit if that motivates you.

What are your skills? How in-demand are they? If they are in demand, you have nothing to worry about. You can skip back and forth, in and out of paying work at your leisure (and bulk up your stache if you don't feel super comfortable with it quite yet).

jezter6

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Re: HELP: Making the Leap to RE stage
« Reply #3 on: August 03, 2013, 01:55:58 PM »
You're financially ready, but probably not emotionally ready.

1. If you like the job, and don't have a lifestyle to replace it (other than just retiring early)...you probably should work your way through this pre-retirement phase by figuring out your plans for retirement other than the 1 vacation a year. Are you planning on learning a skill in retirement? Then start now while you're working and when it starts to conflict with work, you now have something to do in retirement.

2. If you're still worried about your stash...take this pre-retirement time to pad it up a bit while you prepare mentally. I'd suggest that your ER would not be a happy one if you weren't at least fairly confident that your stash is ready for your plan. Pad the stash a little until you get some confidence. Part of that, IMHO, is ensuring that your stash and withdrawal rate can withstand the option of not living at home. There may never be a time that you leave, but it's better to be sure you have the ability to go if you need or want to.

step_away

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Re: HELP: Making the Leap to RE stage
« Reply #4 on: August 03, 2013, 02:29:37 PM »
If you really enjoy your job then why leave it? Then again you haven't stated whether you enjoy your job, you've just stated it's easy.

What are your skills? How in-demand are they? If they are in demand, you have nothing to worry about. You can skip back and forth, in and out of paying work at your leisure (and bulk up your stache if you don't feel super comfortable with it quite yet).

Re. my job, I'm a credit portfolio manager for an international bank (i.e. underwrite and manage corporate loans).  Financial analysis skill is relatively in demand, but it's not something I could go in and out.  My certification (series 7) would expire.  Also, industry knowledge/skills could be seen as obsolete when you're outside the financial market for a stretch of time.

I'm not in love with my job but I don't hate it either.  And I've not found anything else that I'm passionate about.
« Last Edit: August 03, 2013, 02:42:07 PM by step_away »

step_away

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Re: HELP: Making the Leap to RE stage
« Reply #5 on: August 03, 2013, 02:41:32 PM »
If you feel that you may outlive your stash then you're not really comfortable with the future expenses and you aren't really ready for FIRE. Run the numbers with various expense levels that could be in your future and see what that does for FIRE, how does it affect it, and think about what you could do to mitigate that risk. Will it involve some entrepreneurial activity? Side jobs?

I've run a couple of scenario by increasing my total expense to $30K and $60K.  It would be pushing it at $60K (during downturn) but remains comfortable at $30K.  Thus, I'm considering working for three more years until I'm 40. 

One thing that really worries me is the cost of LT care facility which feels like a black hole.  When I'm healthy, I could manage the expense side or work again.  But when my health is deteriorating, what type of preparation do you do to mitigate this?
« Last Edit: August 03, 2013, 02:50:12 PM by step_away »

step_away

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Re: HELP: Making the Leap to RE stage
« Reply #6 on: August 03, 2013, 03:18:11 PM »
You're financially ready, but probably not emotionally ready.

1. If you like the job, and don't have a lifestyle to replace it (other than just retiring early)...you probably should work your way through this pre-retirement phase by figuring out your plans for retirement other than the 1 vacation a year. Are you planning on learning a skill in retirement? Then start now while you're working and when it starts to conflict with work, you now have something to do in retirement.

2. If you're still worried about your stash...take this pre-retirement time to pad it up a bit while you prepare mentally. I'd suggest that your ER would not be a happy one if you weren't at least fairly confident that your stash is ready for your plan. Pad the stash a little until you get some confidence. Part of that, IMHO, is ensuring that your stash and withdrawal rate can withstand the option of not living at home. There may never be a time that you leave, but it's better to be sure you have the ability to go if you need or want to.

You're probably right that I'm still emotionally not prepared.  None of my friends and family seems to be even considering it and they don't understand why I would want to quit a well-paying job.  I admit that I haven't really considered what to do next after retiring early.  My goal pretty much ends with just not needing to work when I don't want to. 

My mom is reaching her retirement age within a few years.  Maybe I won't feel so odd about retiring then and hope that I could come up with something I like to occupy my time. 

footenote

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Re: HELP: Making the Leap to RE stage
« Reply #7 on: August 03, 2013, 03:25:33 PM »
If you really enjoy your job then why leave it? Then again you haven't stated whether you enjoy your job, you've just stated it's easy.

What are your skills? How in-demand are they? If they are in demand, you have nothing to worry about. You can skip back and forth, in and out of paying work at your leisure (and bulk up your stache if you don't feel super comfortable with it quite yet).

Re. my job, I'm a credit portfolio manager for an international bank (i.e. underwrite and manage corporate loans).  Financial analysis skill is relatively in demand, but it's not something I could go in and out.  My certification (series 7) would expire.  Also, industry knowledge/skills could be seen as obsolete when you're outside the financial market for a stretch of time.

I'm not in love with my job but I don't hate it either.  And I've not found anything else that I'm passionate about.
My experience shows you are incorrect about being able to leverage your underwriting skills. I, too, have had my series 6 and 7, and know they expire.

But you don't need those credentials to consult in every environment. There are scads of other companies that need your skills. You are simply not seeing your skills as portable as they really are. I have worked periodically for the last eight years of FI and have leveraged both my IT and financial services backgrounds in a variety of environments.

step_away

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Re: HELP: Making the Leap to RE stage
« Reply #8 on: August 03, 2013, 03:44:00 PM »
But you don't need those credentials to consult in every environment. There are scads of other companies that need your skills. You are simply not seeing your skills as portable as they really are. I have worked periodically for the last eight years of FI and have leveraged both my IT and financial services backgrounds in a variety of environments.

Could you provide more specifics on the side jobs that you've been doing?  Is it through a temp agency or your own business?

footenote

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Re: HELP: Making the Leap to RE stage
« Reply #9 on: August 03, 2013, 04:38:05 PM »
Both temp agencies and my own businesses. Consulting rate has been as high as $90 / hour.

It's a big, beautiful buffet, baby. Once you're independent (assuming you have good credentials - which you do!), you become catnip. Imagine taking 10 weeks off / year instead of two or three. Imagine turning down jobs because ... you just feel like it.

You are (understandably) underestimating the power of your background and financial position. But you have FU money! Once you have some experience at consulting (or whatever), you will look back on the strictures and control of Big Financial Co and laugh. I wish you the best!

savingtofreedom

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Re: HELP: Making the Leap to RE stage
« Reply #10 on: August 03, 2013, 08:25:36 PM »
Hi Everyone,

I'm new (obviously).  I stumbled in this MMM blog while googling early retirement and finally got a vindication for my "FIRE" plan I've had in mind since working full time and that no one I know seems to understand.  I'm a single 37 year-old and has been working full time for 16 years straight and part time before that in high school and college.  I've achieved the FI phase but can't seem to make the leap into the RE stage. 

Things that are holding me back:
1.  Letting go of my cushy job:  If I do lost my job, I would retire.  However, my current job provides good pay and benefits.
2.  Concern that I would outlive my stash:  Though I can make do with $12.5K/yr ($15K including one vacation abroad), 
- I'm living with my mom and sister who I pay $600/month for room and board.  I expect my expense to be much higher living on my own particularly in San Francisco (I don't think they are going to kick me out since I handle their finance and tax but just in case). 
- I don't own a house nor a car.  I'm happy with just maintaining a room (instead of owning a house worrying about repair and taxes) but I think it also raises the uncertainty variable of my expense.  I use public transportation to work ($76 for a monthly pass traveling 7 miles for 35 minutes one way).
- Healthcare / LT care facility: My job currently subsidized my health insurance costs which I expect to be much higher especially as I grow older.  Finally, LT care facility cost could potentially wipe out my stash.

I would love to hear some ideas from MMM members in how they deal with the above concerns.

Congrats on being FI.

Do you want/plan to marry or have kids in the future or move out of your mom's home and still remain in San Francisco?  I could see that impacting FI - it could keep you under 30K but unlikely if you need housing for multiple people additional transportation etc.

step_away

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Re: HELP: Making the Leap to RE stage
« Reply #11 on: August 04, 2013, 05:17:46 PM »
Do you want/plan to marry or have kids in the future or move out of your mom's home and still remain in San Francisco?  I could see that impacting FI - it could keep you under 30K but unlikely if you need housing for multiple people additional transportation etc.

I'm content being single and I haven't yet met anyone who changed my mind.  Moving out is pretty much a given if I do marry and have kids.  My preference is to stay in San Francisco or at least within the SF Bay Area to stay close to my friends and family.