psychology of giving up the paycheck?

[4tify]

Hi

I'm working psychologically on pulling the plug now that I'm FI, and I've come to realize that part of not wanting to let go of the paycheck is because on some level I don't trust that my stash will truly suffice.

How did those of you who gave up the paycheck make the leap in your minds?

Currently at 3.5% SWR according to FireCalc--without SS.

Thank you!

[deborah]

I took three years. This was well before I found MMM. I had three years worth of spending, and saving in spreadsheets. I went to some retirement seminars, put on by the people who run our equivalent of 401k s. I discussed my situation with them, and although I was young, they all thought I had more than enough once they saw the spreadsheets (they had to believe the numbers because of the amount their paperwork said I was putting in). I didn’t believe them, so I took an extra year and did the yearly figures again. Then I took off a year without pay, and did the figures again. I had more than I’d had at the beginning of the year, so I finally decided that I’d be ok. In the ten years I’ve been retired my stash has grown significantly.

[bmjohnson35]

I was burned out with the corporate world.  I had already done the various calculations and used the common FIRE spreadsheets.  It took figuring out health insurance. I also figured that as long as I had healthcare for a year, I could always go back to work if that fell apart. 

In our minds, we often treat retirement as jumping off a cliff. It's not an absolute.  We can always go back to work in one form or another.  Since you have already determined your FI, only very significant events should blow up your plan.  Another way to look at it: let's say our economy totally collapses in 5 years or your health (or your significant other's) takes a severe turn for the worst. Would you prefer to have continued working up until that time or would it be better that you had enjoyed 5 yrs of temporary retirement? Scientific studies have proven again and again that fear is often a stronger motivator than hope for the the majority of us.  The secret is leveraging this knowledge in a constructive way.

[infromsea]

Time.

You can run the numbers and make a gazillion different spreadsheets with different formulas and graphs and charts etc. but the true test comes in spending a year with your reduced income/cash flow from a w-2 and seeing that you survive, just as other posters mentioned.

Your lizard brain is going to SCREAM, don't do it, don't leave the cash flow.

Your ego is going to holler, you are not as worthy/valuable/important without the job title and income.

Your associates are going to give you crazy looks and try to pull you away from the ladder (monkeys in the cage with a bunch of bananas hanging over the ladder story).

You've decided this is a thing you are going to do, don't fight the fear, the uncertainty, don't even feel bad for feeling those things, just put in the time to get to where you want, move on to the next phase (no job) and put in some more time and, given a period of time equal to XXX you'll look back and realize you most likely spent much more time worrying than the situation deserved (but most of us do...).

Enjoy your journey on the path!

[NotJen]

It has been easier than expected, though I'm not at the 1 year mark yet (and technically I'm contracting to my old company right now, but I keep forgetting that (!) because the work has turned out to be extremely sparse, and it looks like I'll only make $3-4k off of it).

I quit before I reached my 25x, but hit it a few weeks later because of market gains (then lost it, then got back even higher, *shrug*).

I've been telling myself that I will still make money somehow in the future, and apparently that's enough to keep my brain satisfied.  I only have to worry about myself, though.  I'm adaptable, and I'm pretty sure I'll always have "enough".  It just wasn't worth it to stay in a career I'd lost all interest in, even though I could coast there forever.  No regrets, and no fear yet (I just had to get over the hump of sadness/nostalgia I had my last week of work).

[secondcor521]

One thing I did that was surprisingly helpful was to change my direct deposit and transfers around.

Most of my working life, I had my paycheck deposited into my checking account, and then moved money from there to savings and investments.  Somewhere in the last few years of working, I changed it so that my paycheck was direct deposited into my savings, and then whatever I needed for spending I transferred from my savings to my checking.

When I went to actually retire, it was a much smaller step, because my paycheck went away, and I just refilled my savings from my investments.  I was already refilling checking from savings, so that was no different.

...

A second thing that helps is to actually sit down and determine exactly how your FIRE plan is going to work in detail, rather than just handwave that you spend less than 4% of your stash.  Which accounts will you pull from?  How much?  How often?  What method?  This makes the whole thing real and gets your brain more used to the idea I think.

...

Finally, as someone mentioned above, time to see it actually working.  I retired in 2016 and have been invested mostly in US stocks, so I've been fortunate that my investments so far have gone up faster than I have withdrawn and spent.  So that helps me think that it is working OK.

...

Finally I'd say that even though most days I feel confident, and mentally I know that I have more than enough, there are those times when the IBL (Inner Bag Lady) feeling shows up.  When this happens I think I probably need to look at where that's coming from and if there's anything I can do about it.  The IBL feeling doesn't happen very often for me, so this hasn't been much of a priority.

[better late]

One thing I did that was surprisingly helpful was to change my direct deposit and transfers around.

Most of my working life, I had my paycheck deposited into my checking account, and then moved money from there to savings and investments.  Somewhere in the last few years of working, I changed it so that my paycheck was direct deposited into my savings, and then whatever I needed for spending I transferred from my savings to my checking.

When I went to actually retire, it was a much smaller step, because my paycheck went away, and I just refilled my savings from my investments.  I was already refilling checking from savings, so that was no different.

...

What a good idea!

[toocold]

For 3 years prior to pulling the trigger, I deferred my compensation so I had $0 paycheck (available at certain comp levels).  I pulled out a set budget every month from my investment account and that's how we lived.  Getting paid was invisible to me.

Now that I no longer get a paycheck, I still pull out my budget plus ongoing healthcare premiums. It works flawlessly.  This investment account is where I have my emergency fund, which slowly goes up.

This helped convince my wife, who was nervous about ER, to get used to living this way.

[Metalcat]

I retired back in March and barely noticed not having a paycheck.

I got drawn into a project, but won't get any comp for it for the first 6 months, and I still don't even really notice.

We live on a certain amount, and although my income has been highly variable, like +/- over 100K some years, that's never really affected our spending, so whether or not I have income just doesn't make a difference whatsoever.

[elaine amj]

We OMY'ed for a while as DH wasn't convinced. Then I discovered I qualified for an employment insurance plan while my DH went through cancer treatments. I took 10 months off through that and although it was reduced wages, it was still enough for us to keep saving as he was getting reduced wages too.

I went for a Camp Mustache shortly before I was due to return to work and I grimaced every time I talked about going back. At the end of Camp, I realized I had very negative feelings about returning, especially after they told me I would be reporting to someone different (and I knew I would hate working under him). So I finally pulled the plug.

Since then, my squirrel of a DH keeps uncovering little pots of money. And I am so, so, so glad I didn't go back. Before, I thought about savings quite a lot. Since FIRE, I am way more relaxed about spending. And 2yrs later, we have more money than we started with somehow. (Although I haven't really tracked this year with all the weird ups and downs of the market).

Sent from my VCE-AL00 using Tapatalk

[bmjohnson35]

I forgot to mention it, but we also created a detailed budget and tracked all of our expenses 3 yrs prior to pulling the plug.  Two years out, we started tracking our outgoing cash very closely.  We trimmed where we saw excess and added where it was short. By the time we pulled the plug, we knew exactly wheat we needed to maintain our lifestyle.  I no longer track it as closely post FIRE, but I still monitor total spent each month against the planned monthly target. 

[soccerluvof4]

Yeah for me it was basically figuring out a budget and trying to stick to it for about 18 months I believe when I threw in the towel of working. I figured too I could always find something too if I was a little short in my numbers though I figured my budget about 10% high across the board. You can second guess the hell out of things but at some point you can only run so many calculations, do budgets etc.. and you just have to go for it.

[Much Fishing to Do]

One thing I did that was surprisingly helpful was to change my direct deposit and transfers around.

Most of my working life, I had my paycheck deposited into my checking account, and then moved money from there to savings and investments.  Somewhere in the last few years of working, I changed it so that my paycheck was direct deposited into my savings, and then whatever I needed for spending I transferred from my savings to my checking.

When I went to actually retire, it was a much smaller step, because my paycheck went away, and I just refilled my savings from my investments.  I was already refilling checking from savings, so that was no different.

+1

I ran a business with extremely variable income but lived off the salary I paid myself, so had already divided the idea of income from expenses which I think was helpful for many reasons.  For the last few years of working I now receive a paycheck, but have it deposited directly into my investment account Money market where my cash allocation exists and my taxable dividends go.  I set up a monthly transfer of what I'm comfortable drawing every month in retirement from the investment acct to my checking (the checking also maintains an approx. one month spending buffer in it to balance out over time big infrequent payments like the annual property tax bill or big trip expenses).  So I don't think I'll notice a difference much of a difference when the paycheck stops.  I think the savings I expect to see from getting an ACA subsidy (I currently pay a lot for health insurance) should cover whatever additional expenses I end up having post-FIRE, so I think keeping the spending level constant is going to work out fine.

[markbike528CBX]

I worked around the issue by putting some cash into a money market account and drawing as needed from that, replenishing the money market account as needed.
I pay all necessities and most discretionary spending this way.


For DW, I did a SEPP (72(t) from a small tIRA.  The SEPP is split between a savings account for her (salary replacement) and a "heath care account".  She gets exactly the salary she did when working.  Except I screwed up and dispersed twice the amount for the first few months of 2020... oops.  Her "salary" check for the rest of the year is one-half of the amount to account for it.   This arrangement made her feel better about losing a paycheck.  She _feels_ less dependent on me and I don't have to look at her detailed spending.

[4tify]

Thanks everyone for some really thoughtful advice here. I really like the idea of shifting the way my 'spending' accounts will work, so I'll look into that. Thanks @toocold and @secondcor521 for sharing about that.

@soccerluvof4 @bmjohnson35 @infromsea I appreciate the friendly push! I know I can always "go back" but from what everyone says it sounds pretty unlikely! I'm trying really hard to reframe the leap more like a sabbatical or a trial run. I feel like I'm getting close.

[BTDretire]

We never had any problem, we were self employed. My wife, who hated going to the bank, made a deposit every 3 or 4 weeks of our business income. We lived below our means, so when it came time to fund our IRA, wrote the check, fund the SEP, wrote the check, kids tuition, wrote the check, taxes, wrote the check. Had about 20 years where we never saw a paycheck, so it was never missed.
  Now that we are retired, so far I'm funding my checking account with our expenses in December for the following year. We expect to have money left, we have $18k in checking for the next 13 weeks. :-)