Daisy, I entirely understand your need for buffer! And I'm thinking that the only way around it for me is to know I can work. Problem is that it's hard to reconcile earning big buck/hour now send probably little buck/hour after I'm out of the work-force.
Any insights in how you are rationalizing your need for buffer?
I've sprinkled around comments all over the forum on my need for buffer. Let's see if I can summarize:
- I am in my mid 40s with gradually rusty skills in software, as in I have no interest in continuing in this field and don't want to work "extra hard" to keep my skills sharp. And now my role has changed where I may have to do this...yuk. Going back into the industry after prematurely quitting will be close to nil, due to my rusty skills (and at my age in technology) and wanting to stay in my geographical area with limited opportunities in this field. So might as well suck it up and milk the good salary for a year or two. My psychological state at work lately is having me question if I can make it that far.
- I haven't always been invested in index funds. I was invested a lot in a very diversified international type stocks over the past few years and they haven't fared as well as the US market due to the recent surge in the US dollar. They did do very well from 2008-2011. So I have already just hit a slump in the market. I'm going to keep those investments for now and invest new money in US index funds to be more diversified. In a way, I have hit the "sequence of returns" risk right before FIRE, so I'm secretly hoping that even if I am laid off in 2015, that my international stocks will start to surge right at that time. I'm not sure how much buffer I need because this could take off soon.
- I have estimated my expenses, but have a fair amount dedicated for travel and such. The more I think about it, I can space out the travel a little more to help with smoothing out the costs. Or just take better but less trips, combining them in a more slow travel kind of way.
- My gentrifying area could be another buffer I can tap into. If the house prices start to surge, I can cash in on them as I have more space than I need. This could help alleviate my fears about buffer as well. I have my mortgage paid off so a lot of money is tied up in this. I haven't used any home equity in my stash count (for 4% SWR calculation purposes). But realistically, I could probably assume I'd move to a place afterwards where I can still buy in cash and pocket at least $100k of home equity to add to the stash. This alone would probably be enough buffer. Maybe I go to renting afterwards? Possibly...
- My parents went through a communist revolution in their country which totally upended their economy, so the off-chance of something really strange happening in the economy is always at the back of my mind. But I figure in that case, I would have been screwed with or without buffer, so I am not too worried about it.
I guess it's mostly that I am pretty sure I am at the peak of earnings right now, so I don't want to spoil the opportunity to buffer up the stash. My stash is just at the point where it covers basic expenses (not travel or buffer) at 4% SWR.
I can always do a fun part-time job like lead kayak trips or something like that once FIRE'd. Even just making $5-10k a year while FIRE'd could alleviate any future pain.