Author Topic: Reaching FI Kinda Freaks Me Out  (Read 9750 times)

oldtoyota

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Reaching FI Kinda Freaks Me Out
« on: February 05, 2014, 08:35:42 AM »
I know I'll get over the shock of not having to work, but the idea of being retired freaks me out a bit too.

Today, I read MMM's blog post, which was an entertaining takedown of a dumb retirement article. I used that Expenses X 25 formula to get the number I'd need. I've done cutting since I first calculated my time to FI/RE. Thanks to that cutting (and future expenses like school tuition going away), I will need less money than I thought when I first calculated it would take me 5-9 years to retire.

It could take as few as two or maybe four if I want to pad things.

Here are my fears:

1. The unknown about health insurance? What if I get cancer? That is expensive.
2. Long-term care. Expensive!

My fears center mostly around how to handle future health problems. I've seen other people talk about eating healthy food to address future health issues. I do what I can to exercise and eat well. However, none of us knows what will happen.

I would like to buy a new house. If I do NOT buy a new house, my FIRE plan is much more secure. However, it will then be harder to entertain because we have nowhere to put a table to have even two adults (let alone their kid and our kid) over for dinner. That is a first world problem, I know, and what is the solution? Well...

Maybe we move to a lower COL area?? We are open to that, but spouse wants to work a bit longer than I do. To do that, we'd have to stay put for a few more years at least.

We both have fairly awesome mission-based jobs in fields we like. If I decided to volunteer in retirement, I would most likely do similar work...just for no pay. =-)

So, I am happy and scared at the same time.

Any ideas about how I can address my concerns above? This post is a bit all over the place. Apologies in advance.
« Last Edit: February 05, 2014, 08:38:20 AM by oldtoyota »

Kaminoge

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Re: Reaching FI Kinda Freaks Me Out
« Reply #1 on: February 05, 2014, 08:58:22 AM »
I think change is scary. That's a natural, human reaction. For example I LOVE moving countries and I've done it numerous times. And you know what? Every time I'm still scared shitless. And then I do it and the exciting outweighs the scared.

1. The health care issue. That is scary and really while you can do whatever you like in the terms of preventative measures there are no guarantees. Personally I'd want a decent enough buffer built in to give me some safety (the size depends largely on where you'll live - the US is obviously a lot steeper in this sense than many other countries). I guess you have to assess your comfort with risk and budget for insurance accordingly.

2. The housing issue. I guess you have to think about what's really important to you. If having a bigger house is then you may well decide it's worth working a little longer for (especially as you like your job). If you've been reading MMM you'll know having a fairly large house is one of the things that he personally feels is worth spending the cash on for his family. I probably wouldn't do that for myself but I'd include ski trips in my ER planning so we all have to work out what our weaknesses are!

3. If you have an awesome job why not try and move into retirement gently when the time comes. See about working part time maybe? Swing something that includes health insurance. Test the waters and see how you feel.

One thing to help with the health insurance is that it appears to me that many of the people who are ER aren't entirely retired. They just have the freedom to do the type of work they want, not worry about compensation and to have the comfort of knowing if they lost their job they'd be ok financially. If you move to that kind of lifestyle you'd be keeping your working skills (of some sort) current and if ill health struck your family you could potentially ramp your working back up to cope. There's another thread on "Failures at ER" which talks about people moving in and out of ER.

jfer_rose

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Re: Reaching FI Kinda Freaks Me Out
« Reply #2 on: February 05, 2014, 09:01:59 AM »
First, items 1 and 2 are my fears too. But I'm just doing lots and lots of research now so I can make my stash big enough to accommodate. There are health problems that run in my family that probably aren't preventable by diet/exercise. Also, for worst case scenarios, I'm reminding myself that my aunt is living in a nursing home she loves, funded by Medicaid.

But what I really would love to talk about is your table issue. I don't think you need to buy a whole new house over a table! I have a couple thoughts. First, last week I hosted 16 local Mustachians to my tiny home for a potluck dinner, for 17 people total. While, I do have a table, it was not nearly large enough for a crowd that size. So we sat in the living room with our plates in our laps. A few people had to stand or sit on the floor. Not one person complained, and most stayed for hours so they must not have been that uncomfortable.

Second, there are lots of ways to be more creative about your table issue. I used to live in an apartment with a Murphy table that folded down from the wall. I currently have a great vintage table that when folded is only 17 inches wide (and I have seen others that are even narrower). When unfolded on both sides, it can seat 6-8 people. Some people use that sort of table as a console behind a sofa. I actually had a counter built over it in my kitchen so I could double my counter space-- I have two seats at the counter for every day but when I want to entertain, I pull the table out to the center of my living room and put folding chairs around it. I've also seen tables that convert from a coffee table to a dining table (kind of expensive, but oh so much cheaper than getting a bigger house!). These are only a few of your options. One of my favorite past-times is thinking about how to live large in small spaces.

 

Cheddar Stacker

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Re: Reaching FI Kinda Freaks Me Out
« Reply #3 on: February 05, 2014, 09:04:59 AM »
Build a bigger safety margin, or as you put it, pad things. You said toward the end you have a job/industry you like so keep at it until the upper end of your estimates, if not a year or two longer. This will give you the money to get the slightly bigger house, and give you "padding" to alleviate yours fears a bit. If you choose to "volunteer" in your industry, see if you can volunteer and your only compensation can be health insurance premiums on their group plan.

While I understand your health insurance and LTC fears, I think people fear this more than they should. You will still have health insurance so it will cover most of the costs related to Cancer. You will have deductibles and it will hurt when you have to shell out $10K, but if you have enough set aside it will hardly make a dent. Eventually Medicare will kick in as well so that should help.

I know long-term care is expensive, but if you're really worried about it you can buy insurance for that. I personally wouldn't, but that's me. There are social safety nets in place for this as well. I know it's not ideal, but if you run out of money at 84 years old due to a long-term care issue, they have Medicaid beds in many great facilities to take care of the people who can't financially fend for themselves.

Here are a few MMM blog posts that came to mind based on your questions/fears. I'm sure you've already read them, but it's always nice to re-read the ones you are having specific issues with. The last one, in particular, talks a lot about the "fear selling" tactics of the insurance industry and might calm you down a bit.

http://www.mrmoneymustache.com/2011/09/21/i-can-never-retire-because-of-health-insurance-waaah-waaah/
http://www.mrmoneymustache.com/2012/11/01/our-new-237-per-month-health-insurance-plan/
http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/
http://www.mrmoneymustache.com/2012/06/07/safety-is-an-expensive-illusion/

I hope this helps ease your fears a bit.

rtrnow

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Re: Reaching FI Kinda Freaks Me Out
« Reply #4 on: February 05, 2014, 09:33:30 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #5 on: February 05, 2014, 11:41:15 AM »
Second, there are lots of ways to be more creative about your table issue. I used to live in an apartment with a Murphy table that folded down from the wall. I currently have a great vintage table that when folded is only 17 inches wide (and I have seen others that are even narrower). When unfolded on both sides, it can seat 6-8 people. Some people use that sort of table as a console behind a sofa. I actually had a counter built over it in my kitchen so I could double my counter space-- I have two seats at the counter for every day but when I want to entertain, I pull the table out to the center of my living room and put folding chairs around it. I've also seen tables that convert from a coffee table to a dining table (kind of expensive, but oh so much cheaper than getting a bigger house!). These are only a few of your options. One of my favorite past-times is thinking about how to live large in small spaces.

The funny thing is that my dream is to live in a Tiny House! I am a-okay with small living. My deal with the current house is that the space is not where I want it. =-) I would like less room in the kitchen and want a dining room. Sigh...I could do without a basement and do not really need a third bedroom....But, is it worth it to me to work more to buy what I want? The answer may be no! In which case, I will have to learn to love what I have. =-)

I do the same as you. We have a lot of eating from laps going on in my house when it's more than 3-4 of us. I just think it would be fun to be able to sit at a table. One time, we let the kids go downstairs and eat while watching a movie. Then, we adults ate at the kitchen table, which I pulled into the LR to make a sort of dining area.


oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #6 on: February 05, 2014, 11:43:07 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

Where I live the HSA is use it or lose it. That is interesting that you can keep that money!!

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #7 on: February 05, 2014, 11:43:50 AM »
Here are a few MMM blog posts that came to mind based on your questions/fears. I'm sure you've already read them, but it's always nice to re-read the ones you are having specific issues with. The last one, in particular, talks a lot about the "fear selling" tactics of the insurance industry and might calm you down a bit.

http://www.mrmoneymustache.com/2011/09/21/i-can-never-retire-because-of-health-insurance-waaah-waaah/
http://www.mrmoneymustache.com/2012/11/01/our-new-237-per-month-health-insurance-plan/
http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/
http://www.mrmoneymustache.com/2012/06/07/safety-is-an-expensive-illusion/

I hope this helps ease your fears a bit.

Thank you! I will go read these later. I have not read all of them yet.

Dicey

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Re: Reaching FI Kinda Freaks Me Out
« Reply #8 on: February 05, 2014, 12:12:58 PM »
As to Long-Term-Care Insurance, I think it's over-rated. Yes, long term care can be expensive. However, if you're a good saver, you can put those premiums to work in your 'stache and end up with plenty of money, should the need arise. I believe that there is a lot of fear-mongering among those who sell LTCI. Nobody wants to get old, be alone, sick and broke, so insurers prey on those fears. If you're Mustachian, you are far less likely to be without resources and as a result, can repel fear-mongerers with ease and confidence.

I have a LOT of older friends and of all the ones who have died, only one needed long-term care, because she had Alzheimer's. Not even remotely suggesting that this is a scientific study. What I am suggesting is that if you have saved enough money, you can self-insure. Why give the money to an insurance company, when you can keep it under your own control?  Yes, shit can happen and it can be expensive, but there other ways to cover it. More important, IMHO, is insuring against anything that interferes with your ability to earn a living before you've achieved FIRE. Disability insurance? YES, please. Long Term Care Insurance? No, thank you.

rubybeth

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Re: Reaching FI Kinda Freaks Me Out
« Reply #9 on: February 05, 2014, 12:18:13 PM »
My dad had cancer, so I definitely understand the fear. It's mainly a fear of the unknown, so maybe try making it more "known" for how things could play out, and see how comfortable you are with those options.

Here's a hypothetical... So you find out you have cancer sometime in the year 2030. You max out your deductible for that year getting treatment. Let's say that cost your whole $10,000 deductible, in addition to the premium cost. Now it's open enrollment for 2031. You buy a top of the line plan that covers everything, and it costs more per month, but less than your previous plan per month plus the $10,000 deductible. They can no longer ask health questions when you apply, so you now have a "Cadillac" type plan for 2031. You continue getting cancer treatment. One of three things will happen:

a) Treatment won't work and they will need to keep treating you, either with surgery, chemo, radiation, or some other fun thing they've invented to treat your form of cancer in the year 2030. You can continue to select your health insurance plan for the next year during open enrollment.
b) Treatment will work! You will go into remission. You'll need regular check-ups for the rest of your life. You may get cancer again, or you may not.
c) Treatment won't work, and you die in 2031 or a few years later, depending on the type and stage your cancer was in when it was caught.

I guess I'd think about plans for each of these situations, should it play out that way. You may want to get genetically tested for certain types of cancer; if you have a family history of it, maybe there are things you could pre-emptively.

The other thing is that, if you are younger than retirement age and you get cancer, you may qualify for social security disability benefits even if you aren't currently employed. It's not a ton of money, but it could help offset the higher cost of insurance or treatment.

ch12

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Re: Reaching FI Kinda Freaks Me Out
« Reply #10 on: February 05, 2014, 09:12:15 PM »
Maybe nobody has said this yet because it's a bit expensive, but you can always add a room onto your house. Yeah, it's a hassle to get permits and pay contractors, but if you don't have a place to put a table big enough for the kind of crowd that you want to entertain, you can make one.

Our house in Sarasota used to have 2 screen porches. One of them is now half of my bedroom and the other is now our computer room. My dad's also putting in a new lanai. I think that when we bought the house, it was 2 bed/2 bath. It's now 3 bed/3 bath and pretty spiffy.

Cheddar Stacker

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Re: Reaching FI Kinda Freaks Me Out
« Reply #11 on: February 05, 2014, 09:27:02 PM »
Maybe nobody has said this yet because it's a bit expensive, but you can always add a room onto your house. Yeah, it's a hassle to get permits and pay contractors, but if you don't have a place to put a table big enough for the kind of crowd that you want to entertain, you can make one.

Our house in Sarasota used to have 2 screen porches. One of them is now half of my bedroom and the other is now our computer room. My dad's also putting in a new lanai. I think that when we bought the house, it was 2 bed/2 bath. It's now 3 bed/3 bath and pretty spiffy.

OP also mentioned she doesn't need the 3rd bedroom, so if it's close enough to the living room/kitchen maybe they can just knock down a wall and do it on the cheap?? If you don't plan to move anytime soon, who cares what taking out a bedroom does to your home value. In fact, you might be able to reduce your property taxes while doing it. It's not for everyone, but it might fit your situation.

rtrnow

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Re: Reaching FI Kinda Freaks Me Out
« Reply #12 on: February 06, 2014, 08:22:09 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

Where I live the HSA is use it or lose it. That is interesting that you can keep that money!!

Perhaps you are looking at an FSA?  There are HSAs and FSAs.  FSAs are use it or lose it, but I think there were some changes last year that allow part of the amount to roll into the next year.

Was going to say this. HSA's are never use or lose it. They are also great bc some portion can be invested. It varies a bit by provider but (almost) all allow for at least some money to be invested in the market. HSA's are the most tax advantaged savings tool out there bc you not only avoid income tax but medicare and ss too. I max it out before anything else.

Cheddar Stacker

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Re: Reaching FI Kinda Freaks Me Out
« Reply #13 on: February 06, 2014, 09:07:27 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

OP, sorry to hijack but I have a question for rtrnow. Genuine question here, not meant to be critical, I'm just curious about your safety margin.

Since the recent market increase is what got you just above FI, and you're only planning to work another 5 months, what is your plan if/when the market declines? You say it's unlikely that you'll never work for money again, but do you have a side gig or a passion you were going to pursue that will provide a little income?

On a recent thread someone linked to analysis (I think from Wade Pfau, but I can't find it) showing the stock market returns during the first year of retirement being the most critical to success or failure of the 4% rule. Are you using the 4% rule, or have you gone more conservative? With the recent gains over the last 2 1/2 years, the 2014 declines, overall worry from investors/media, and high P/E ratios, I would think it would be a risky time to retire  if you just reached FI based on 2013 market gains.

I'm not trying to scare you or pry, just genuinely curios.

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #14 on: February 06, 2014, 09:19:34 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

Where I live the HSA is use it or lose it. That is interesting that you can keep that money!!

Perhaps you are looking at an FSA?  There are HSAs and FSAs.  FSAs are use it or lose it, but I think there were some changes last year that allow part of the amount to roll into the next year.

Was going to say this. HSA's are never use or lose it. They are also great bc some portion can be invested. It varies a bit by provider but (almost) all allow for at least some money to be invested in the market. HSA's are the most tax advantaged savings tool out there bc you not only avoid income tax but medicare and ss too. I max it out before anything else.

Our HSA is use it or lose it. I just checked, and it says anything not spent in the calendar year will be forfeited. Wish I had your kind of HSA!


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Re: Reaching FI Kinda Freaks Me Out
« Reply #15 on: February 06, 2014, 09:26:53 AM »
Our HSA is use it or lose it. I just checked, and it says anything not spent in the calendar year will be forfeited. Wish I had your kind of HSA!

I was under the impression that all HSA accounts could carry over funds from year to year and that FSA accounts were the ones that were use or lose. 

Wanderer

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Re: Reaching FI Kinda Freaks Me Out
« Reply #16 on: February 06, 2014, 09:31:22 AM »
HSA:  Health Savings Account.  You set up one through your insurer (usually it's held at a major bank, and can be moved around once established), it is only available for people on a high-deductible plan, and the funds are withdrawn for eligible expenses at your leisure (barring account fees). 

FSA:  Flex-spending account.  You set this up through your employer, funds are deducted from your paycheck, and in most plans if you don't spend the money on eligible expenses yearly it reverts to the employer.  You can't build up a balance for retirement in a FSA, you potentially can in a HSA.
« Last Edit: February 06, 2014, 09:36:48 AM by Wanderer »

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #17 on: February 06, 2014, 09:55:57 AM »
HSA:  Health Savings Account.  You set up one through your insurer (usually it's held at a major bank, and can be moved around once established), it is only available for people on a high-deductible plan, and the funds are withdrawn for eligible expenses at your leisure (barring account fees). 

FSA:  Flex-spending account.  You set this up through your employer, funds are deducted from your paycheck, and in most plans if you don't spend the money on eligible expenses yearly it reverts to the employer.  You can't build up a balance for retirement in a FSA, you potentially can in a HSA.

Thanks! This clarifies it all. My employer calls it an HSA when really they should be calling it a FSA.

bugbaby

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Re: Reaching FI Kinda Freaks Me Out
« Reply #18 on: February 06, 2014, 11:32:26 PM »
I'd say what makes 'FI' a freaking out point is:

- When you make all-or-none proclamations such as 'never work for money again' or have to live within a certain income etc.
- as someone said in a recent thread 'walking from' rather than 'walking toward' something.

In reality, FI is simply a state of financial freedom that I can only associate with shouts of joy and jubilation - you've attained a place of having options. Includes the option to work on anything that interests you, to stick in a job you don't love for more money or social outlet or just because, to quit for a while and travel or whatever knowing you can come back later, but never be stressed about starving, etc.

Healthcare issues are more 'FIRE' i.e. early retirement concerns when you actually make the final jump, but since you're FI, you have multiple options, which you've already discussed.

Why stress yourself with *forever* decisions now when you're that nervous about it? why not say, I'll leave my job and explore life option B for *now*, ok if it's awesome and turns to forever, you can afford it, and ok if not.

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #19 on: February 07, 2014, 05:28:36 PM »

Why stress yourself with *forever* decisions now when you're that nervous about it? why not say, I'll leave my job and explore life option B for *now*, ok if it's awesome and turns to forever, you can afford it, and ok if not.

Great question and advice. Thank you.

ShortInSeattle

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Re: Reaching FI Kinda Freaks Me Out
« Reply #20 on: February 07, 2014, 05:38:04 PM »
I think it's important to have a plan for the things that worry you.  Here are examples.

1. What if one or both of us gets very sick?

Plan: Build enough buffer into our FIRE budget that we could pay the out of pocket max every single year. In years when we are not ill, those dollars go to fun stuff like vacations.

2. What about LTC?

Plan: If LTC is required, selling our primary residence will cover several years of care. The non-ill spouse can downsize to a rental. Few people need more than a few years of LTC.  Even of we did buy the expensive LTC imsurance, the coverage amounts are unimpressive.


oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #21 on: February 08, 2014, 06:25:03 AM »
I think it's important to have a plan for the things that worry you.  Here are examples.

1. What if one or both of us gets very sick?

Plan: Build enough buffer into our FIRE budget that we could pay the out of pocket max every single year. In years when we are not ill, those dollars go to fun stuff like vacations.

2. What about LTC?

Plan: If LTC is required, selling our primary residence will cover several years of care. The non-ill spouse can downsize to a rental. Few people need more than a few years of LTC.  Even of we did buy the expensive LTC imsurance, the coverage amounts are unimpressive.

Agreed. If I stick with my less aggressive plan for retirement (5 or 6 years), then I will have that buffer since I'll have way more than I need to cover yearly expenses. Also, I keep forgetting that my spouse wants to continue working and that income will cover our expenses in the early years...

So, what I am taking a bit to say is that it seems like we'd be self insured.

This is helping. Thank you!!


oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #22 on: February 08, 2014, 06:31:06 AM »
Thank you all for being so helpful--and compassionate!

In my OP, I was so focused on my fears that I did not mention the steps I am taking to get ready. Technically, this post and soliciting the advice above is one small step.

I am taking trainings I need to do the volunteer work I want to do in retirement. I'll likely start the volunteer work in addition to my job now and then add on more hours after I leave the work world.

I am also deciding whether to sell my home to get one with a better layout and schools or stick with the home I have (very inexpensive for a high COLA area like DC) and make this home my dream Tiny House. It's been my dream to live in a Tiny House--and I was looking at those Tiny Home plans and wondering where I'd find land to put one--and then I thought..."What if I am ALREADY living in the Tiny House??" What can I do to THIS house to make it dreamier??

So, I put together a plan and submitted it to the spouse. We'll see what happens! I think there's a lot we can do to make this cozier and more pleasing if we put some thought to design and the arrangement of things. I did some minor things to get the home ready to sell and then it started making me like the home better. LOL. My thinking on this home question is in process and a little all over the place as I try to figure out what I/we want to do and take desires, retirement, and schools into consideration. Phew!






rtrnow

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Re: Reaching FI Kinda Freaks Me Out
« Reply #23 on: February 08, 2014, 08:32:33 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

OP, sorry to hijack but I have a question for rtrnow. Genuine question here, not meant to be critical, I'm just curious about your safety margin.

Since the recent market increase is what got you just above FI, and you're only planning to work another 5 months, what is your plan if/when the market declines? You say it's unlikely that you'll never work for money again, but do you have a side gig or a passion you were going to pursue that will provide a little income?

On a recent thread someone linked to analysis (I think from Wade Pfau, but I can't find it) showing the stock market returns during the first year of retirement being the most critical to success or failure of the 4% rule. Are you using the 4% rule, or have you gone more conservative? With the recent gains over the last 2 1/2 years, the 2014 declines, overall worry from investors/media, and high P/E ratios, I would think it would be a risky time to retire  if you just reached FI based on 2013 market gains.

I'm not trying to scare you or pry, just genuinely curios.

I have always loved cooking and recently finished culinary school in my spare time. I already do some catering jobs and have made connections in the industry. I'm also lucky in that my current corporate gig will probably make me an hourly employee and not really terminate me. Between the two, I know I can find work paying enough to cover my expenses or better with very little effort. So if worse comes to worse I work a lower paying ft job for a couple more years. I also have a year's worth of living expenses in cash that I do not count when looking at my investments and FI.

Cheddar Stacker

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Re: Reaching FI Kinda Freaks Me Out
« Reply #24 on: February 08, 2014, 09:20:24 AM »
Thanks to nice stock market returns last year, I hit FI a couple of months ago based on covering all my regular living expenses without any padding. I plan to work another 5 months to finish the fiscal year and save a little cushion. One way I pad for health is to max my HSA and not actually use it. I also leave it out when counting my net worth. So while not huge it would cover my max OOP for 3 years with a very high deductible plan.

I struggle with the same fears about leaving my job, but also know that much like MMM it is very unlikely that I'll never work for money again. I think that is a viable safety net as well.

OP, sorry to hijack but I have a question for rtrnow. Genuine question here, not meant to be critical, I'm just curious about your safety margin.

Since the recent market increase is what got you just above FI, and you're only planning to work another 5 months, what is your plan if/when the market declines? You say it's unlikely that you'll never work for money again, but do you have a side gig or a passion you were going to pursue that will provide a little income?

On a recent thread someone linked to analysis (I think from Wade Pfau, but I can't find it) showing the stock market returns during the first year of retirement being the most critical to success or failure of the 4% rule. Are you using the 4% rule, or have you gone more conservative? With the recent gains over the last 2 1/2 years, the 2014 declines, overall worry from investors/media, and high P/E ratios, I would think it would be a risky time to retire  if you just reached FI based on 2013 market gains.

I'm not trying to scare you or pry, just genuinely curios.

I have always loved cooking and recently finished culinary school in my spare time. I already do some catering jobs and have made connections in the industry. I'm also lucky in that my current corporate gig will probably make me an hourly employee and not really terminate me. Between the two, I know I can find work paying enough to cover my expenses or better with very little effort. So if worse comes to worse I work a lower paying ft job for a couple more years. I also have a year's worth of living expenses in cash that I do not count when looking at my investments and FI.

Cool, good plan. Good luck.

golfer44

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Re: Reaching FI Kinda Freaks Me Out
« Reply #25 on: February 08, 2014, 09:23:24 AM »
Hey OT, I don't know if this has been addressed yet, but would a few extra years of fueling your retirement accounts add much peace of mind?

If two or three extra working years buys you a big enough buffer to where you're not worried, would this be worth it for you?

Just a small thought, good luck!

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #26 on: February 08, 2014, 04:38:26 PM »
Hey OT, I don't know if this has been addressed yet, but would a few extra years of fueling your retirement accounts add much peace of mind?

If two or three extra working years buys you a big enough buffer to where you're not worried, would this be worth it for you?

Just a small thought, good luck!

It would! I am beginning to realize that...=-)

Dicey

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Re: Reaching FI Kinda Freaks Me Out
« Reply #27 on: February 08, 2014, 05:00:48 PM »
Hey OT, Thanks for the update! It sounds like you are in a much better place now.

When I was working on building my 'stache and RE, I was obsessed with health insurance costs. I am a cancer survivor and know first hand how they can torpedo even the best-laid plans. Without going in to detail, when it finally fell into place, I knew to the bottom of my soul that the time was right and I easily pulled the trigger. Working out the last three weeks of my notice, I felt like a preschooler waiting for Santa Claus or a trip to Disneyland. I had no doubt and no fear. Fourteen months into RE, I know I was right to wait until I had the details figured out.

I've posted this elsewhere, but it bears repeating: "Retiring too early is a mistake that can be recovered from, too late and there is no recovery." Don't know who said it, but they got it right.

oldtoyota

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Re: Reaching FI Kinda Freaks Me Out
« Reply #28 on: February 11, 2014, 07:11:11 AM »

I've posted this elsewhere, but it bears repeating: "Retiring too early is a mistake that can be recovered from, too late and there is no recovery." Don't know who said it, but they got it right.

That is really smart. Thank you for sharing that. I'm going to hold that one close. Sharing my fears here has helped me. It took the wind from their scary sails so to speak. I'm not 100% over my fears, but I am mostly over them. I feel much more peaceful now. =-)

=-)