Things To Prepare For During FIRE

[dbfire]

Hi all,

An area that has interested me recently is all the things that could deviate a linear FIRE plan after one has retired. The things that make FIRE an active strategy to manage as opposed to something passive.

For example, here are a few things I thought of that need to be prepared for in the ongoing FIRE journey:

- Sequencing of returns, unexpected market crash
- Unexpected changes in partner status, children status (e.g. having kids, getting married)
- One-time or ongoing large medical expenses at various points along the path
- One-time large other expenses at various points along the path (e.g. you find an amazing deal to buy a small cabin)
- The possibility of expenses being higher earlier in FIRE as opposed to later so you can "live now"
- Unexpected changes in tax laws, social security, etc. (as impossible as it is to plan for)

What types of things do you think of when you think about FIRE being non-linear? What other scenarios would you add into your mental or financial plans based on your lives?

Thanks for contributing!

[Caoineag]

Freak weather events. Natural disasters do occur on a regular basis even on a small scale. Could count as a one time expense but more likely would be more complex than that depending on what your areas is prone too (i.e. ice storms, hurricanes, flooding, tornadoes, etc). I have seen people have to give up on their properties because a 100 year flood came through and did so much damage that it wasn't feasible to rebuild that area. The federal government offered payouts to have them not rebuild.


A favorite quote in my household is "plans are useless, but planning is indispensable".

[dbfire]

Freak weather events. Natural disasters do occur on a regular basis even on a small scale. Could count as a one time expense but more likely would be more complex than that depending on what your areas is prone too (i.e. ice storms, hurricanes, flooding, tornadoes, etc). I have seen people have to give up on their properties because a 100 year flood came through and did so much damage that it wasn't feasible to rebuild that area. The federal government offered payouts to have them not rebuild.


A favorite quote in my household is "plans are useless, but planning is indispensable".

Ah yes, good one!

[bmjohnson35]

Having to take on the responsibility of aging family member sooner than expected or a small child as a god parent.
Finding out you or your partner is not properly prepared for FIRE.
Getting sued (not insured adequately)
Having too much in one investment (Example: a large amount tied up in one stock where the company fails)
Pension provider defaults

[BZB]

Diminished mental capacity to handle your own finances or make good financial decisions (such as early onset Alzheimer's or traumatic brain injury) - can be partially addressed by having well-written estate documents, a good financial power of attorney, and clear instructions about your investments and how you want them handled

[sisto]

A life event causing disability.

[chasesfish]

I agree with most listed above...

The financial stuff is just that, financial.  If you have enough money, it's resolvable.

The non financial stuff is tougher:

- Will you be expected to care for an aging parent or take on all the estate work because you have capacity?
- Can you find fulfillment in your life outside of work?  We have decades of programming in us that says achievement comes from accomplishments others recognize

[Dee_the_third]

Diminished mental capacity to handle your own finances or make good financial decisions (such as early onset Alzheimer's or traumatic brain injury) - can be partially addressed by having well-written estate documents, a good financial power of attorney, and clear instructions about your investments and how you want them handled

This. This. This.

Dad managed his own investments for years, mixing and matching all sorts of risky bets to keep himself entertained. (e.g. taking out a HELOC to day trade) He's frugal and supplemented it with a 6-figure engineer job so it was okay for a while, but then he got rapidly progressing Parkinson's with the commensurate mental decline and didn't have a good exit plan. By the time I figured out what was happening and took over, he'd lost about 500k.

[chevy1956]

My approach has been to get to just enough and then quit. I can't control stuff that is going to go wrong. I don't think being FIRE'd is going to change any of that. The big risk with having just enough is if I get divorced. I'll face that if it comes.

I do have some financial buffers but there is stuff I just have to accept I might not be able to do ala buy a small cabin because it's on sale.

At least I know I haven't worked too long.

The reality is that worrying about a whole bunch of risks comes with a cost especially when the typical cost of any risk occurring is a hit to the portfolio.

[FiveSigmas]

Diminished mental capacity to handle your own finances or make good financial decisions (such as early onset Alzheimer's or traumatic brain injury) - can be partially addressed by having well-written estate documents, a good financial power of attorney, and clear instructions about your investments and how you want them handled

This. This. This.

Dad managed his own investments for years, mixing and matching all sorts of risky bets to keep himself entertained. (e.g. taking out a HELOC to day trade) He's frugal and supplemented it with a 6-figure engineer job so it was okay for a while, but then he got rapidly progressing Parkinson's with the commensurate mental decline and didn't have a good exit plan. By the time I figured out what was happening and took over, he'd lost about 500k.

Yeah, apparently it’s very easy to fall into cognitive decline as one ages and still feel fully competent. This also appears to happen at a distressingly young age (around 65 or so).

For this reason (and others), I think it’s incredibly valuable to have a close friend/relative that you respect and trust and can be fully open with financially. Start a conversation with that person early and keep them up to date. It probably also helps if that person is significantly younger than you are.

This thread has another tangential concern:

https://forum.mrmoneymustache.com/welcome-to-the-forum/now-this-scares-the-crap-out-of-me/

 

[American GenX]

With the rampant runaway inflation we're seeing, you can most certainly expect expenses to be HIGH in both early retirement as well as for the rest of your retirement.  OMY should be embraced in this inflationary climate.  With all these big spending bills in the pipeline, the worst is yet to come.  Hold on to your hats (and your wallet!)

[Metalcat]

With the rampant runaway inflation we're seeing, you can most certainly expect expenses to be HIGH in both early retirement as well as for the rest of your retirement.  OMY should be embraced in this inflationary climate.  With all these big spending bills in the pipeline, the worst is yet to come.  Hold on to your hats (and your wallet!)

Because one extra year of savings is going to offset runaway inflation?

Should all retired people also rush back to work?

The typical plan I see here these days is a high 5 figure/ low 6 figure spend, a 3% or lower WR, maybe a few years expenses in cash, plus a paid off house.

I suspect everyone here will be fine.

Even the rare old school mustachian types who are still around are resourceful and will figure it out. If inflation really gets out of hand, @Zikoris might take one less international trip each year for a bit.

Also, early retirees could always ride out bad inflation with some geo-arbitrage.

Or yeah, everyone could just keep working full time at jobs they don't want...

[chasesfish]

I agree with @Malcat - FIREd 24 months ago, net worth is up 25% after withdrawals and I'm invested more conservatively than the market.

Owning assets and specifically businesses that have pricing power / pass through business models are a decent enough.  I'm the outlier that likes VIG over VTI

[Linea_Norway]

Not sure how much to prepare for it, but war or some other type of unrest or mass moving of people. I think climate changes could lead to that. Or maybe extremely poor people will turn violently towards the rich. Maybe also food shortages, if climate changes make draughts, floods, fires and hurricanes more common.

I am not suggesting to become a real prepper. But become a bit less independent on society. Maybe grow some vegetables yourself? Although, all of us who are depending on medicine or glasses will pretty soon have a problem if society collapses.

My MIL kept som gold coins in her house. The idea was that in case of war, everyone could take one and have something to bargain with. Not sure how useful that thought was.

[Missy B]

Not sure how much to prepare for it, but war or some other type of unrest or mass moving of people. I think climate changes could lead to that. Or maybe extremely poor people will turn violently towards the rich. Maybe also food shortages, if climate changes make draughts, floods, fires and hurricanes more common.

I am not suggesting to become a real prepper. But become a bit less independent on society. Maybe grow some vegetables yourself? Although, all of us who are depending on medicine or glasses will pretty soon have a problem if society collapses.

My MIL kept som gold coins in her house. The idea was that in case of war, everyone could take one and have something to bargain with. Not sure how useful that thought was.

Most don't like to think about this stuff, but I think everyone would be served by considering (especially if you are retiring and have the time) how to better support yourself if there are interruptions or grid failures. The more people who are prepared to ride out difficulty there are, the more stable the whole.
People freaking out and acting like idiots because they're panicked -- (or not panicked but enjoying that they can act without consequence because emergency services is overwhelmed) is as big a problem as the actual environmental damage from a flood or an earthquake.
Communities that are fed, watered and powered aren't that likely to riot and cause further damage.

[soccerluvof4]

Political/Civil Unrest is to me the biggest worry but I dont dwell on it. Our country (USA anyhow) to me is at a pivot point with all of the spending and quarrelling that has been going on the last 25 years in particular. Yea , both sides have been split forever but not like now where unrepairable damage is being done seemingly to get back at each other. So to me this is the biggest concern in my retirement.

[FLBiker]

Political/Civil Unrest is to me the biggest worry but I dont dwell on it. Our country (USA anyhow) to me is at a pivot point with all of the spending and quarrelling that has been going on the last 25 years in particular. Yea , both sides have been split forever but not like now where unrepairable damage is being done seemingly to get back at each other. So to me this is the biggest concern in my retirement.

I feel similarly.  We moved to Canada last summer.  I sometimes wonder if I should shift assets more to ex-US equities, but so far I haven't.  For one thing, it isn't clear to me whether or not this political disfunction is bad for business.