What do you see as the greatest risk to pulling the ripcord during the pandemic?

[Chris@TTL]

Hello (first post)! Our decade+ long journey has finally come to an en...fork, and it's time to travel down a new path of early retirement. It's all according to plan, but that plan just happened to coincide with a pandemic and economic collapse at Great Depression levels. While I certainly hope it's temporary, I did want to shake this vine to see if any pearls pop out from the old graybeards around these parts.

What do you see as the greatest risk to pulling the ripcord during this pandemic?

Edit 6/9: We ended up continuing with our early retirement plan and Jenni is now part-time (5 days off this week!), and I'm similarly working much less.

[Mr. Green]

If you've reached FI you have presumably hit a number or threshold. I would say that if you're still there with a depressed market, or tenants who can't Pat rent, or whatever your downside might be right now, then that could work out very well for you. Those that retired right after the 2008-09 crash have already won the game. Just 10 years later their sequence of returns have been so amazing that at no time in history have those numbers come close to failing after 30 years, assuming you're following the 4% rule. When we turn the corner on this thing economically, we could see a similar kind of run, but that's pure speculation.

However, we're still in the early innings of this thing. Unless I was in a job that was putting my family's health at risk, I'd be inclined to keep working for the time being just to see how bad things get. Perhaps they get bad enough that you're no longer FI, or maybe you're just not comfortable pulling the ripcord anymore. Without knowing how damaged different sectors will become over the next 6-12 months it's hard to know how easily it would be for you to hop back into the workforce if you exited now, things got worse, and you were suddenly questioning your decision.

Now could be the perfect time to crystalize your exit strategy, coinciding with whatever economic recovery markers allow you to feel confident you aren't pulling the cord prematurely.

[Chris@TTL]

If you've reached FI you have presumably hit a number or threshold.

Yep.

I would say that if you're still there with a depressed market [...] or whatever your downside might be right now, then that could work out very well for you.

Yep, still over the threshold of the ol' 4% rule.

...When we turn the corner on this thing economically, we could see a similar kind of run, but that's pure speculation.

I didn't really think of that silver lining, good point.

However, we're still in the early innings of this thing...

This is my biggest concern. Of course, none of us have a crystal ball to know how things will finally come to a rest. But if we really do wind up with a few years of greatly depressed markets, that'll make for some expensive early withdrawals. Unfortunately we can't really put the genie back in the bottle (the ripcord is pulled, as it were - a process that began right before the pandemic and has now hit nearly full force), not that I'm necessarily doubting it. I suppose it's some mild concern about a more likely future with reduced social security (even though that's ~30 years out for us), further ACA reductions, increased taxes on investments, etc. Things that would affect most early retirees even if a lot of us don't tend to "include them in the calculation".

I'm also asking for a little of those "unknown unknowns", which, naturally I can't cite examples of :-)

[Dicey]

Since I have no beard you can't possibly be talking to me, lol. Nonetheless, I will offer my perspective.  During this pandemic, being FIRE has brought me amazing peace of mind. I can shelter in place as long as I want to. If I don't feel safe when the SIP is lifted, I can stay the fuck home. When I do venture out to grocery shop, I can buy whatever I want without worrying about the cost. DH and I went to Costco this week. We dropped $550 without an ounce of concern. We just bought what we needed and kept on moving. Charged it, of course. When the bill comes, paying it, whatever it is, will be no sweat. If we need ANYthing between Costco runs, there's always Amazon. I noticed the outermost sole of my favorite hiking shoes is starting to separate. I don't wanna buy new ones, so Amazon bought me Shoe Goo for five or six bucks. I can also afford to be more charitable with my time and my money, so I am, and I dig it.

If your plan is solid and you've hit your realistic goal, turn your eyes to the horizon and don't look back. Your future is calling.

[flyingaway]

Hope your planned activity in retirement is not international travel.

[Chris@TTL]

[...] When I do venture out to grocery shop, I can buy what ever I want without worrying about the cost. DH and I went to Costco this week. We dropped $550 without an ounce of concern. We just bought what we needed and kept on moving.

If your plan is solid and you've hit your realistic goal, turn your eyes to the horizon and don't look back. Your future is calling.

Your first point hit home, especially as we just got back from the grocery store (our rare weekly trip, on foot, to one). In the past, I'd have focussed on reducing spending (managing digital coupons plus Ibotta, for example) where reasonable. Like you said, it's been full on "this is why we have an emergency fund" for weeks -- buy whatever we want and get out of there quickly.

Thanks, sometimes it's hard to look ahead!

===

Hope your planned activity in retirement is not international travel.

My unplanned activity has been spending time on the phone canceling various pieces of multiple trips (one was set for 5/18), some abroad. Yep, been loads of fun.

[desk_jockey]

What do you see as the greatest risk to pulling the ripcord during this pandemic?

The biggest risk is healthcare continuity.   Make sure you’re completely covered during the transition.  If you’re going on COBRA make sure it’s clear to your company and there is no way it will be accidentally dropped, and plan how/when you’ll transition off COBRA at the end of 2020 or after 18 months.  If you’re going on Obamacare, be certain of the new coverage terms and start times, etc.

Financial risks aren’t the greatest risk.  4% historically has had ~95% success for 30 years.  If the market sinks to the point you are uncomfortable, generally isn’t too difficult to find some form of income to temporarily bring down your withdrawals.  Even if there is a depression and you’re worried about your chance of failure, you’ll be fine waiting several years until a recovery is underway before starting to pick up that extra income.  The numbers work.

I'm also asking for a little of those "unknown unknowns", which, naturally I can't cite examples of :-)

The unknown, unknown risks that come to my mind are related to the potential of another crisis on-top of the pandemic.  For example:   

1)  If one lives near the eastern seaboard, the impact of a major hurricane might be worse during a pandemic.  Can you find a hotel for evacuation or can you stay in a school gymnasium with 500 other evacuees?   What would rebuilding be like in a pandemic?

2)  Are their economic factors in your immediate area that could have a multiplying effect to COVID economics?   What would if there is another federal government shut down?  How would housing respond if the largest employer pulled out of your town?

Thinking about the multiplying effect can give you some planning actions, but you may find that delaying retirement doesn’t do much to mitigate these risks.
 

[Chris@TTL]

The unknown, unknown risks (...)
1)  If one lives near the eastern seaboard, the impact of a major hurricane might be worse during a pandemic.

A hurricane and a pandemic, coming this fall. Great!

Thanks, though, really desk_jockey - you've offered up some good food for thought. I also re-read Jenni's employer COBRA doc and found an error stating it'd start 8/1 instead of 7/1 buried deep in a dozen pages of details. We both assume it's a mere documenting error (the original email from the boss is more clear about the dates), but it lets us get the adjustment "on paper" as it were. Good catch.

[lhamo]

As long as you have a nice fat cash cushion to glide on for the next 2-5 years you should be fine.

We just finished sinking about 22k into a major sewer line repair.  That wasn't planned for AT ALL this year.  But we have our stimulus money, plus an unexpected tax refund pending (all tax credits -- we didn't pay any income tax), plus the 10-15k we are not spending on travel this year, plus a likely significant reduction on our property taxes because we can structure our income so that we are below the "low income senior" thresholds.  We are also in an expanded medicaid state and structure our income to take advantage of that -- and lest anybody get their knickers in a twist about that, I will note that the taxpayers would be paying FAR MORE for us to earn more/take an ACA subsidy than they do for our actual care through Medicaid.

This recent episode of the Choose FI podcast -- an interview with Michael Kitces -- is very comforting/reassuring about how SWRs work for most FIREees.  Just don't go crazy with your spending in your first few years of FI and you should be able to weather most storms.

https://www.choosefi.com/flexible-spending-rules-in-retirement/

[JoJo]

I'm in the same boat.  Working from home and enjoying the covered health insurance while it lasts.  I was planning major international travel so may be delaying retirement by months (years?, I hope not). 

[Financial.Velociraptor]

Healthcare has been my major concern in 7.5 years of skinny FIRE.  Obamacare went up in all but one year.  Some pundits are predicting coronavirus has hit hospitals hard with high margin elective surgeries postponed.  Increases of 40% are possible.  I'll be working harder to manage my AGI into a range where I qualify for ACA subsidy but not so low I qualify for Medicare expansion as Tx doesn't participate. 

Second concern is how you structured your initial asset allocation.   If you have a year's worth of cash or a substantial allocation to bonds, you shouldn't break a sweat.  It's only if you went RE with 100% equity allocation that you are at high SORR.  I like to tell people who are worried about their sustainability, that is your subconcious telling you your bond allocation is too low.

[TheOldestYoungMan]

The fear that stops people from FIRE is, in retrospect, totally irrational.  You are valuable.  You are worthy.  You didn't trick anyone into your current employment situation.  There will be some way for you to earn money in the future.  It won't feel like failing, and no matter what, you got to have a nice break of (probably) not inconsiderable length.

So I did the FIRE thing for over a year, and re-entered the workforce about ten months ago.  Right now I'm super happy I did, not because I'd be hurting for myself, but I wouldn't be able to help out like I am now.  And that would make me feel like I wasn't meeting my responsibilities.

I can understand, from an academic perspective, that I don't actually have responsibility beyond my immediate self/family, but it's pretty great to be able to help.

That said, it is 100% by choice, the working.  It's a great job with crazy good situation as far as work from home, benefits, and compensation.  And I never would have found the job while I was still working, and I certainly wouldn't have gotten paid as much.  Because I knew the money was more of a marker than anything I really needed, I perversely felt more comfortable asking for a lot, fully expecting them to balk, half hoping I could just stay in my hammock.

So for me, that would have been what I missed out on.  I'd not be able to send grocery money to my tenants who can't afford rent right now.  I'd have to be cutting my own spending a bit because of tenants not paying rent, but I probably could have handled that.  I would have food from my garden I could deliver in lieu of cash, but after a year of doing it I was sort of over growing food.  It wasn't unsatisfying, but once I'd figured it out...you know...more chores.

But when I was ready to FIRE I was ready to fuckin' just go for it.  I needed the time off, and I'm way more awesome now after getting that time off.

So the second risk is that, depending on your skillset, you might not be able to re-enter the job that easily, or you might have to do something else.  It's possible we're seeing the start of a sea change in certain professions.  Teachers might see virtual classrooms with 300 kids, and 9/10 teachers laid off.  Office admin types might find that smaller offices with hotelling space for occasional in-house physical presence type stuff doesn't require as many office admins.  I'm already seeing certain middle manager types flailing around trying to justify their existence with work-from-home employees getting shit done with literally zero input from the "boss."  This is a minor risk, see opening statements.

The lessons from the last recession tell us that certain fields like architecture never recovered.  The people who lost their jobs overwhelmingly had to change careers, and those that did not move on have successfully driven wages down for the entire industry ever since.

But if you hit your number already, your money is now working like a whole separate you, so it's gangbusters from here on out.  Great place to be jumping from, either way you go.

[markbike528CBX]

Have you checked out the pre-fire checklist.   
Lotsa people had input to that and represents a good spectrum of things you may or may not have thought about. 
Even if it doesn't seem relevant to you, you should at least check it off or not.

https://forum.mrmoneymustache.com/post-fire/pre-fire-checklist/

[nippycrisp]

I'll throw out one prediction as a FIRE'd scientist who knows a little about viruses. Covid-19 isn't going to go away in the United States through social distancing, and a vaccine won't be here for another year (and that's if the FDA basically throws out most of the normal safety testing). I can't predict the economic effects of this, but given the unemployment rate is 25%ish right now it seems possible that there could be some lasting economic fallout. lhamo's comment about having a big cash cushion is what I'd emphasize. You may also be able to take advantage of the situation (buying a cheap used car from a bankrupt rental company or a cheap foreclosure once they start in earnest).

[Linea_Norway]

I'll throw out one prediction as a FIRE'd scientist who knows a little about viruses. Covid-19 isn't going to go away in the United States through social distancing, and a vaccine won't be here for another year (and that's if the FDA basically throws out most of the normal safety testing). I can't predict the economic effects of this, but given the unemployment rate is 25%ish right now it seems possible that there could be some lasting economic fallout. lhamo's comment about having a big cash cushion is what I'd emphasize. You may also be able to take advantage of the situation (buying a cheap used car from a bankrupt rental company or a cheap foreclosure once they start in earnest).

@nippycrisp I agree with your prediction. Maybe you would like to give some input on an investment. In July, we will receive a shitload of cash (900K $) from our home sale. I am reluctant to invest it in the international stock market, as I expect a much bigger crash. But current interest on bank account is 0%. We think of keeping 50% at least on bank accounts to buy another house in 1-2 years. But what to do with the other half? What would you do?

[Retire-Canada]

What do you see as the greatest risk to pulling the ripcord during this pandemic?

I FIREd last Thursday. My only concern is that markets do something unexpected for such an extended period of time I burn through all my safety/mechanisms in my FIRE plan. That seems highly unlikely, but COVID-19 is a big enough shock to the system I can't discount it. That said I have no plans to do anything different for now. I'll keep checking in with my portfolio during quarterly dividends if there is a problem that persists long-term I'll adjust my plans to deal with it.

[bmjohnson35]

Assuming you have saved enough and have a sound plan in place.......boredom.  We are finally working through our overdue painting project on the interior of our townhouse, but once that's done, we will be looking to get out more.  We had planned to take a road trip out west, but we are not comfortable with that, given the present situation.  I enjoy paddling and other outdoor water sports, but all of the "working people" are screwing up the normally open weekdays.  It's terrible to say, but I'm looking forward to everyone getting back to work, so Florida springs and beaches are much less populated between the weekends.

BJ

[FIstateofmind]

Hi! Here's my 2 cents as a coast fire part timer working from home online :)... if you are still ok with working I would continue until the world is a bit back to normal because there isn't much to do! I coast fired in March right when this all hit, and was disappointed to finally have the time to do what I wanted but having everything shut down. It was a bit anti climactic. Might as well work until you can enjoy the fruits of your labor fully (but if you are ready to go, get out of there!)

[nippycrisp]

@Linea_Norway I can't think of any good place to profitably park a windfall these days. Near zero interest rates globally, a stock market (in the US, at least) that doesn't seem to quite have absorbed that 25% unemployment figure. Were I in your shoes, I'd be glad there's another month or two until your cash hits, so we can see the trajectory of the situation resolve a bit more. Not sure if home prices will decrease, especially where you are, but I can't see a way they'll go up, given the current situation. So you might get the lucky sell high/buy low scenario. For the bulk of the funds, I'd think normal dollar cost averaging is the safest play, maybe over an entire year.   

[RetireAbroadAt35]

As a diagnosed sufferer of OMY syndrome this is a question I'm asking myself right now.  It's handy fodder for justifying putting the decision off. While I'm generally ready to roll, I haven't pulled the trigger yet due to Pandemic Inspired One More Month Syndrome (PIOMMS).

From a risk perspective, I'm looking at it like this:

Risk	Likelihood	Mitigation
Collapse in markets significantly lowering returns, a la Great Depression, at the start of RE.	High	>2 years expenses in cash
Other forms of pandemic-magnified sequence of returns risk.	High	Over the last year I've shifted my asset allocation in anticipation of using a rising equity glide path to move from 50/40/10 equities/bonds/cash to a 70-80% equities over the first five or so years of RE.
Skyrocketing cost of housing.	High	The cost of housing has increased significantly since before the GFC. It is unclear how this economic implosion will impact housing prices so for now we're hoping for a continued stable rental situation and staying flexible in case that changes. The cost of a house may dip into the realm of reason or go further out of grasp so we're just riding the wave.
Skyrocketing cost of health insurance	High	Much will depend on the political situation.  My first mitigation is a working SO.  If I keep her happy I can get on her insurance. I have a generous amount budgeted for ACA should it be necessary but it digs deep into the monthly budget.

edit: fixed links

[JoJo]

If those things happen, I would consider moving abroad.

[RetireAbroadAt35]

Whaddya mean "if"?  For me at least they are all happening right now!  I am basically living my worst-case scenario.  The only higher-severity impact on my list that hasn't already struck is sudden health disaster/disability.

The good news is, I put mitigations in place for all of these things, so my plan is holding.

Despite my handle, moving abroad isn't really an option for me anymore. Still, I can't help but eye New Zealand's lack of covid with more than a little envy.

[WalkaboutStache]

I took a sabbatical test-run to see if it would be possible to FIRE this year.  Even before the pandemic, I realized that it is not, but I can coast.  I am taking a relaxed approach to the whole thing.  My consulting job may need me this year, or they may not.  I am not going to stress too much about it.  My part time gig will cover some of my expenses, and my emergency fund will cover the other part.  I may need to dip into less than 4% of my savings, but I am optimistic about not having to.  My side gig may grow a bit this year, and I invested some money to develop it.  No matter what, I am focussed on pulling the plug and will do so ASAP.  Here is why:

First, I think I am likely to stay healthy, but it is possible that I won't.  I may have a mild case of this thing, or I may end up as one of the unfortunate ones who end up dead or chronically ill. I am not deferring the things that I know bring me joy, and I do not want to eat any more shit sandwiches. This is the life I have, and I intend to live it.

Second, I happen to live in a resilient place, and have access to one or two more.  The world is burning, but it is not burning around me.  My focus is to ensure I can stick around and to map out other resilient places. If I was not where I am, I would be looking at how to spend at least part of the year in New Zealand, Australia, or places in the US or other countries that have done a good job containing infection.

Finally, I have seen that having a financial glidepath to retirement works.  This crisis has been a stress test to my financial planning and it is holding up.  Things may get worse, but like most people who are thinking about pulling the plug, I have no crushing debt and have my housing situation sorted out.

Sure, staying the course and delaying the dream is the sensible thing to do. Be that as it may, I am more concerned about becoming an Alanis Morisette song than about FIRE failure.

The greatest risk may well be NOT pulling the cord.

[TheOldestYoungMan]

Whaddya mean "if"?  For me at least they are all happening right now!  I am basically living my worst-case scenario.  The only higher-severity impact on my list that hasn't already struck is sudden health disaster/disability.

The good news is, I put mitigations in place for all of these things, so my plan is holding.

Despite my handle, moving abroad isn't really an option for me anymore. Still, I can't help but eye New Zealand's lack of covid with more than a little envy.

Posting just as a general FYI not necessarily directed at you:

It probably isn't practical, but if you are a U.S. citizen (probably something similar exists in other countries) and want to move abroad, I do know of one way.  Right now foreign ports are closed to the U.S., but that doesn't apply if you are assigned to an overseas post sponsored by the U.S. government.  You'll have to go through a quarantine process and you'll be working a job, but you can GET into the country that way, and then once you are there figure out a way to switch to a different visa.

So some places I know of still hiring:  DoD civilian contractor, US State Department, or if you were interested and meet the eligibility requirements, US military.

In the past, figuring out a different visa was probably a little harder than it is now in terms of availability, but Nobody can go Anywhere so countries/companies that relied on importing certain types of labor simply can't anymore.

So for example, if you applied for any kind of Visa for New Zealand, it's a firm No.  But if you got a job at the U.S. embassy in New Zealand, you can get there.  Get set up, meet some people, establish a community, and then figure something else out.

To my mind that beats waiting on a vaccine to get on with your life...

[Omy]

We pulled the ripcord last August. If we had known about the pandemic, we would probably still be working out of fear.
In fact, our costs have been significantly lower than we had anticipated (no dining out, no travel, very little gas/entertainment) - and our net worth is slightly higher than when we FIREd a year ago. I thought I had planned for every possible contingency, but pandemic wasn't even on my radar.

My biggest challenge has been boredom and a lack of social interaction. I'm fortunate that DH is a good quarantine partner. Restructuring my vision of what retirement looks like during a pandemic is an ongoing process.

[Chris@TTL]

We pulled the ripcord last August. If we had known about the pandemic, we would probably still be working out of fear.
In fact, our costs have been significantly lower than we had anticipated (no dining out, no travel, very little gas/entertainment) - and our net worth is slightly higher than when we FIREd a year ago. I thought I had planned for every possible contingency, but pandemic wasn't even on my radar.

My biggest challenge has been boredom and a lack of social interaction. I'm fortunate that DH is a good quarantine partner. Restructuring my vision of what retirement looks like during a pandemic is an ongoing process.

That all sounds terribly familiar :) Since I wrote this OP, we did proceed with the plans we hatched and structured a long time ago. Jenni had already said she would be switching to a new position that was part-time in the same company early in the year (scheduled to happen around my OP date in May). It would have been a little difficult to turn course on that since the company had already made changes to accomodate.

It's been great to see our net worth recover, though we've had a pretty big cushion "just in case", though we weren't planning for a pandemic either! Glad we did. Wanted to avoid those sequence of returns risks. We actually reached FI back in 2018, so we've had a few extra years of income to pad things with. Mine has been part-time income, though.

So far, it's working out well. We've both enjoyed writing about the FIRE jump mid-pandemic and interacting with the community since we started a blog. Fortunately, we've been able to handle the loss of our planned travels OK and found plenty to keep entertained, new hobbies and activities. Even a staycation.

[bmjohnson35]

We pulled the ripcord last August. If we had known about the pandemic, we would probably still be working out of fear.
In fact, our costs have been significantly lower than we had anticipated (no dining out, no travel, very little gas/entertainment) - and our net worth is slightly higher than when we FIREd a year ago. I thought I had planned for every possible contingency, but pandemic wasn't even on my radar.

My biggest challenge has been boredom and a lack of social interaction. I'm fortunate that DH is a good quarantine partner. Restructuring my vision of what retirement looks like during a pandemic is an ongoing process.

Retired in February and I can certainly relate to your situation.  Considering how good we have it, we really don't have a right to complain, but it's still frustrating. 

[BigMoneyJim]

Replying late to the original question, a non-financial unforeseen-for-me complication of pandemic+retiring is the way it interrupted my transition-to-retired-life plan.

Some people know exactly what they want to do in retirement. Me, I know I want absolute freedom, but I know I have a lot to learn about how BigMoneyJim wants to live his retired life from day to day. I *want* the ability to do what I want on a whim and do it for as long as I please, but it's a new skill set as opposed to the 30 years of scheduled employment and the 12-18 years of scheduled education I was both used to and tired of.

So my plan was to sell my house, move to where I want to be, and figure out how to be retired me. Instead I decided for my own health and safety to stay in the house where I can pretty much shut myself off from the world.

But I don't want to be here. I bought this house because prices and rates were at historic lows, I had no plans to move for years, and it was convenient to commute to the job centers in the DFW area. I bought it for the next owner, not for myself. (So I could easily sell it to them when the time comes.)

But now I'm retired and have all the time in the world, but I'm 'stuck' here (by my own choice and judgement), and it's really hard to figure out how to be retired BigMoneyJim while stuck here where I don't want to be.

So instead I've been trying to figure out how to occupy myself while still in the house but not go out much, and none of that relates to my post-pandemic retired life.

It's surprisingly rough. I mean, don't start taking up a collection for me or anything, I retired at 49.5 so I'm good, but pandemic+retirement has me in a holding pattern that kind of drives me crazy.

The good news is with my current judgement of the state of the pandemic and my ability to stay isolated while traveling, I'm finally ready to move forward. I've adjusted my plans and expect to get out of here in the next month or two and move to CO instead of my originally planned WA for reasons that make sense to me.

Even before I decided to move I felt I had finally reached some mental place where I felt like my pandemic life activities were complementary to my post-pandemic life and not just a holding pattern. I think the pandemic drew the process out a few months longer.