Hi JoJo, I've seen you post around here a lot and am happy to hear you're able to consider retirement!
I retired 4 months ago with doubts and no income, although I have a pension in 5 years and SS in 12 years at the earliest opportunities.
I'll tell ya there are a LOT of perspective changes—for me, anyway—in the last months leading into retirement and the first few months of it. I'll try to bullet point some of my insights for me I think could apply to you:
- It never makes more financial sense to retire than to keep working! So unless we want to work until we're physically or mentally incapable of doing so, it's going to look like a bad idea on paper (and to most others).
- If you run portfolio survivability / monte carlo / FIRECalc calculations/projections and have doubts, try looking up your life expectancy and overlaying that info on the projections. For me, seeing portfolio failure vs the increasing odds of being dead spurred me into earlier retirement.
- You can always go back to work later. Let's say our worst fears are realized and we can only make 1/2 or less of our preretirement income when returning to work later. You can still make that work, right? I can. So the question is whether to definitely work more now or *maybe* work more later if things go poorly.
- One or two years of stupidity isn't going to sink your life plans. Retiring is not an irreversible commitment to never making income again or sticking to a spending plan no matter what happens in your world going forward. (This is a *very* recent insight for myself for the next 12 months of my retirement and some major changes upcoming. I have 2 years' expenses in cash; you have 50% of your port in fixed income. We have some wiggle room for bad decisions!)
- Expanding more on the last point, I found myself being too rigid and worried about concepts like lean FIRE vs fat FIRE vs downshifting vs semiretirement. These aren't fixed tracks we're following but assets, tools and strategies to be deployed, and as situations, experience, and perception changes, so will our plans to spend, save, find income, etc.. Retirement isn't a separate thing from work, just a different life strategy. All the calculations and forecasting I did before retirement was just to convince myself I can do it. They are guides on how to proceed, not ironclad laws on how to live my life when not working. New ideas, strategies, and opportunities present themselves once your mind is freed from the constructs of a working life prescribed by others.
Ok, those "bullet points" fail the PowerPoint test. Oh well.
As far as passive income...I get the appeal. But I'm convinced—by studies and others' experiences—you can retire "safely" on much less by spending down your principal, presuming you don't prioritize leaving a large inheritance after death.
Also: Dividends: Sure, again, the appeal: "Don't eat your seed corn." Makes sense. But for 20 years I've seen people argue this, and their favorite examples do not last: GE stock, TIPS and iBonds at 4%. They act like they are eternal, but they are most certainly NOT. Sure, maybe the U.S. stock market growth isn't eternal, either, but it has a much better reliable aggregate history than dividend producers.
Also: real estate: I've never understood why this is considered "passive", but I seem to be in the minority. (To me it seems like a job with unpredictable hours and being on call 24/7, or else hiring all that out which is managing contractors, vendors, or employees.) And it has its ups and downs, too. And it is not near as liquid as stocks or fixed income. It also requires a skill set that I don't have, and I don't gather you have.
Edit: Does your close friend manage money in a way that you admire/want to replicate? Most people (probably including me) have trouble offering advice from outside their own point of view. Someone who has saved up enough to live 30+ years on 2% of their portfolio annually has different money skills and habits than someone who hasn't.