Did the Great Resignation class of 21-22 just pick the worst time to retire?

[tooqk4u22]

Has anyone figured how much has a bond tent helped this time around as bond have been smashed along with equities? Very little, I would wager given how far eg BND has fallen.

I admire the bravado on display from our recent cohorts. You may yet survive this all. However, if it were me who pulled the plug 12 months ago, went about my new life, forgot about the markets and came back a year later to find that between withdrawals, market falls, and inflation my x25 stash had now shrunk to a x17 stash after just 1 year of retirement I would be shitting myself.

I can tell you it hasn't helped and in fact has hurt.   Here I am a little over 3 years since FIRE and my portfolio is getting close to where I started. Why is that....first there are the withdrawals, obviously.   And if the equity portion of my AA is still up handsomely then it must mean the bond portion has taken it on the chin.  The crazy thing is that when pandemic rates went to zero and fed did 5trillion of qe Ioved most of bond AA to cash, ultra short and short term bonds so I didn't get hit nearly as hard had I been in BND (intermediate).   

But yeah, if there was ever an argument for 100% equities (20/20 hindsight of course) it was the last few years....I would be up about 15% after all the ups and downs.   

I am still glad to be above where I was after not working for 3+ years but that is offset with higher spending, my WR is closer to 4% now vs 3.25-3.5% when I FIREd. 

It's likely my portfolio will go below with next withdrawal combined with markets going down further once earnings start falling and recession is all but certain.   

I do think now would be a good time to do a bond tent and rates for intermediate and long term probably won't go much higher.   

I think the original question was best - will 21/22 end up being one of the 4% failures? This is an academic question and has nothing to do with personal circumstances and hopefully takes the emotional responses out of the equation.

And to the OP, yes I think that FIREing in 21,22 when equities and bonds were crazy over valued relative to any measure, it resulted in the term TINA afterall, probably means a lot of those people will be going back to work, and for their sake the sooner the better.   

I am sure I can find some posts of mine from 2020 and 2021 saying it wasn't a good time to FIRE at 4%. 

As insaid above I am 3 years out and it's on my mind.

[EscapeVelocity2020]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

Also, Retiree A has 29 more years and Retiree B has 30 more years of retirement. 

[bryan995]

I think the original question was best - will 21/22 end up being one of the 4% failures? This is an academic question and has nothing to do with personal circumstances and hopefully takes the emotional responses out of the equation.

The answer is more likely a yes, than it is a no.  I think we can all agree on that.

All this talk of the 4% SWR not being fixed, and retirees can adjust their lifestyle / spend / etc is besides the point.  Sure - you can always adjust spending and lifestyle down to absorb for market downtrends.  In fact you can likely do that infinitely - claiming a successful FIRE 100% of the time.

But the lifestyle you planned for and the lifestyle you ended up with will be totally different. 

We need to fix the SWR side of the equation to then have a standardized definition of success & failure.  So if a fixed 4% SWR has a high likelihood of failure for any given start year (21/22?) then while a savvy mustacian could skimp/save/adjust to survive retirement, it likely wont look anything like what they had planned.

And for those that are so willing to adjust their lifestyle all throughout FIRE - why did you not just do that initially?  And FIRE even sooner?  I don't track this magical capacity to optimize a budget years and years into FIRE.  Folks have been planning 10, 15, 20, 25 years for this!  You will likely need to adjust spending UP to track with inflation and keep your lifestyle fixed through retirement years.

[wageslave23]

The one positive in all this is for those who are still 1 to 3 years out. This is a good gut check time, can you handle losing a few hundred thousand in your first year or two of retirement.  I for one, have realized that I need to have more cushion in my FIRE budget. Because if I had retired with my original FIRE number, I would be sweating bullets.  Hopefully everyone gets the chance to weather a recession with a large amount invested before they pull the plug on full time employment.  It really gives you insight into your own risk/cost/benefit analysis.

[GuitarStv]

The one positive in all this is for those who are still 1 to 3 years out. This is a good gut check time, can you handle losing a few hundred thousand in your first year or two of retirement.  I for one, have realized that I need to have more cushion in my FIRE budget. Because if I had retired with my original FIRE number, I would be sweating bullets.  Hopefully everyone gets the chance to weather a recession with a large amount invested before they pull the plug on full time employment.  It really gives you insight into your own risk/cost/benefit analysis.

I'm in this boat.

Hit my number last year, and seriously contemplated pulling the plug on work.  Decided to hang on for a few more months as my current situation is far improved from where I was when I started down the ER path.  Really, really glad that I stayed the course.  I too would be sweating bullets if I had retired when I had originally planned to.  My friends who early retired late 2020 aren't exactly screwed, but they are really feeling the squeeze.

[Cranky]

Also, we haven't actually touched any of our investment accounts. They can just sit there and do their thing. We're living - carefully - on dh's pension. We have a pretty good cash reserve for major items like the new windows. My social security goes directly into savings.

So maybe the message is - have multiple sources of income.

[tooqk4u22]

Also, we haven't actually touched any of our investment accounts. They can just sit there and do their thing. We're living - carefully - on dh's pension. We have a pretty good cash reserve for major items like the new windows. My social security goes directly into savings.

So maybe the message is - have multiple sources of income.

Yeah, but most people can't just create a pension, let alone one that covers all of your expenses and by definition if you FIRE you are not yet eligible for social security.    Beyond that,  other sources of income generally involve working, even blogging is work.

[mistymoney]

Has anyone figured how much has a bond tent helped this time around as bond have been smashed along with equities? Very little, I would wager given how far eg BND has fallen.

I admire the bravado on display from our recent cohorts. You may yet survive this all. However, if it were me who pulled the plug 12 months ago, went about my new life, forgot about the markets and came back a year later to find that between withdrawals, market falls, and inflation my x25 stash had now shrunk to a x17 stash after just 1 year of retirement I would be shitting myself.

I can tell you it hasn't helped and in fact has hurt.   Here I am a little over 3 years since FIRE and my portfolio is getting close to where I started. Why is that....first there are the withdrawals, obviously.   And if the equity portion of my AA is still up handsomely then it must mean the bond portion has taken it on the chin.  The crazy thing is that when pandemic rates went to zero and fed did 5trillion of qe Ioved most of bond AA to cash, ultra short and short term bonds so I didn't get hit nearly as hard had I been in BND (intermediate).   

But yeah, if there was ever an argument for 100% equities (20/20 hindsight of course) it was the last few years....I would be up about 15% after all the ups and downs.   

I am still glad to be above where I was after not working for 3+ years but that is offset with higher spending, my WR is closer to 4% now vs 3.25-3.5% when I FIREd. 

It's likely my portfolio will go below with next withdrawal combined with markets going down further once earnings start falling and recession is all but certain.   

I do think now would be a good time to do a bond tent and rates for intermediate and long term probably won't go much higher.   

I think the original question was best - will 21/22 end up being one of the 4% failures? This is an academic question and has nothing to do with personal circumstances and hopefully takes the emotional responses out of the equation.

And to the OP, yes I think that FIREing in 21,22 when equities and bonds were crazy over valued relative to any measure, it resulted in the term TINA afterall, probably means a lot of those people will be going back to work, and for their sake the sooner the better.   

I am sure I can find some posts of mine from 2020 and 2021 saying it wasn't a good time to FIRE at 4%. 

As insaid above I am 3 years out and it's on my mind.

Thanks for this. Very useful insight into what was suspected to be the case with bond funds.

[mistymoney]

The one positive in all this is for those who are still 1 to 3 years out. This is a good gut check time, can you handle losing a few hundred thousand in your first year or two of retirement.  I for one, have realized that I need to have more cushion in my FIRE budget. Because if I had retired with my original FIRE number, I would be sweating bullets.  Hopefully everyone gets the chance to weather a recession with a large amount invested before they pull the plug on full time employment.  It really gives you insight into your own risk/cost/benefit analysis.

Yes - it certainly does!

While I am not making any decisions until well into next year - if no strong positive changes occur in the market, I will be likely to OMY out of the 2023 cohort. Not 100% on that, as I may be able to swing it at this level and 6-12 or so more months of prep time. But another 10% drop takes it off the table entirely.

[PhilB]

I think the original question was best - will 21/22 end up being one of the 4% failures? This is an academic question and has nothing to do with personal circumstances and hopefully takes the emotional responses out of the equation.

The answer is more likely a yes, than it is a no.  I think we can all agree on that.

All this talk of the 4% SWR not being fixed, and retirees can adjust their lifestyle / spend / etc is besides the point.  Sure - you can always adjust spending and lifestyle down to absorb for market downtrends.  In fact you can likely do that infinitely - claiming a successful FIRE 100% of the time.

But the lifestyle you planned for and the lifestyle you ended up with will be totally different. 

We need to fix the SWR side of the equation to then have a standardized definition of success & failure.  So if a fixed 4% SWR has a high likelihood of failure for any given start year (21/22?) then while a savvy mustacian could skimp/save/adjust to survive retirement, it likely wont look anything like what they had planned.

And for those that are so willing to adjust their lifestyle all throughout FIRE - why did you not just do that initially?  And FIRE even sooner?  I don't track this magical capacity to optimize a budget years and years into FIRE.  Folks have been planning 10, 15, 20, 25 years for this!  You will likely need to adjust spending UP to track with inflation and keep your lifestyle fixed through retirement years.

Because happiness vs money is not a step function!  None of us who have recently FIREd went into it believing that if we had $x pa we'd be happy and $x-1 we'd be miserable!

In real life you are looking at the overlap of two curves.  One is our expected net happiness / comfort vs income level, the other is the probability curve for sustainable income from our assets.  And as Malcat keeps pointing out, happiness is not an absolute, it's the net happiness compared to how we would be if we'd kept working that matters.  You pull the plug when you are comfortable with the overlap between those curves, not when the probability of your income exceeding $x exceeds y%.

I could argue that in many ways the great resignation class picked a great time to retire, simply because most of them have just had direct experience of living through a period of enforced minimal spending during the pandemic. They actually know from experience that they could be perfectly happy if they needed to cut back to that level again.

[MisterA]

There are some really good points being made, about happiness, adjusting your spend/expectations, testing your resolve, etc. Really good points.

But, inflation is running at 10%-ish (I'm in the UK), and portfolios are down by 15%-ish, so a hit of 25% in one year (and that's not including any draw-down). If this continues, it is simply not sustainable for anybody who doesn't have other income streams. And I can't see any end in sight.

This is particularly pertinent to me, as I plan to FIRE in a little over 1 month, and I'm concerned. On the plus side, I've continued investing heavily during the current dip, and so have weathered one of the worst years in recent history. I'm only 5 years until my (UK) state pension starts, and my spouse is continuing to work for the next couple of years. But I worry that 2023 could be a repeat of 2022, and recovery might not be for years.

I think I need to FIRE, it's that time in my life and career, I've had enough and am looking forward so much to my time being my own. But it is a choice, what to do? Yes our eyes are open, but weren't they always?

[tooqk4u22]

I could argue that in many ways the great resignation class picked a great time to retire, simply because most of them have just had direct experience of living through a period of enforced minimal spending during the pandemic. They actually know from experience that they could be perfectly happy if they needed to cut back to that level again.

I see it as the opposite, the forced minimal spe ding was just for a few months when the economy was completely shut then the spending flood gates opened wide with Ron's of free money via zero rates and helicopter money for nothing from the dumberment.   

The message was more like "Hey I don't have to work and still spend freely!"

Our massive inflation is proof that they couldn't be perfectly happy at those spending levels!

[Metalcat]

I could argue that in many ways the great resignation class picked a great time to retire, simply because most of them have just had direct experience of living through a period of enforced minimal spending during the pandemic. They actually know from experience that they could be perfectly happy if they needed to cut back to that level again.

I see it as the opposite, the forced minimal spe ding was just for a few months when the economy was completely shut then the spending flood gates opened wide with Ron's of free money via zero rates and helicopter money for nothing from the dumberment.   

The message was more like "Hey I don't have to work and still spend freely!"

Our massive inflation is proof that they couldn't be perfectly happy at those spending levels!

Inflation is coming from a lot of factors, which is why it's affecting so many countries, not just the US.

Also, we already know that the majority of people spend whatever they can get their hands on, this proves nothing about early retirees.

Personally for me, retiring in line with the pandemic absolutely reminded me how comfortable I can be with spending less. Here in Canada things were closed quite a bit longer, but we also got A LOT more money from the government than you did at the time.

I spent mine on tuition and medical care btw.

I live in a major city and have always loved the various cool activities here, but 2 years of most of it being shut down on and off really made me comfortable with a different lifestyle that focuses more on nature and less on cultural outings. Which is why I bought a much cheaper house in a beautiful rural location and plan to relocate there where my COL is much lower.

So yeah, some of us FIRE folks *did* actually learn something from the world being shut down.

As for the people of the great resignation, many of them resigned because they were miserable, not because they hit an arbitrary savings goal coincidentally with a pandemic. Many of them will go back to work once they figure out what they want to do next.

[Metalcat]

There are some really good points being made, about happiness, adjusting your spend/expectations, testing your resolve, etc. Really good points.

But, inflation is running at 10%-ish (I'm in the UK), and portfolios are down by 15%-ish, so a hit of 25% in one year (and that's not including any draw-down). If this continues, it is simply not sustainable for anybody who doesn't have other income streams. And I can't see any end in sight.

This is particularly pertinent to me, as I plan to FIRE in a little over 1 month, and I'm concerned. On the plus side, I've continued investing heavily during the current dip, and so have weathered one of the worst years in recent history. I'm only 5 years until my (UK) state pension starts, and my spouse is continuing to work for the next couple of years. But I worry that 2023 could be a repeat of 2022, and recovery might not be for years.

I think I need to FIRE, it's that time in my life and career, I've had enough and am looking forward so much to my time being my own. But it is a choice, what to do? Yes our eyes are open, but weren't they always?

As someone who didn't have a choice about retiring from my career during the pandemic, I made the choice to focus on my ability to generate income as needed, hence why I'm retraining. But I love school and learning, and read and take courses in my spare time anyway, so this is just what I do. Easy option.

Everyone has to make trade offs.

If SORR is a major concern for when you are considering retiring, you have a few options:
-work longer (current job or switch jobs and/or downshift)
-spend less
-find some income (doesn't need to be now, and doesn't need to be in your current profession)

What option is easiest or most comfortable for you?

For a lot of people with one career skillset that they no longer want to use, one income stream, and their entire retirement is being funded by investments?

Yes, retiring right now would be very intimidating. But that doesn't mean you don't have options.

[2Birds1Stone]

Well here is a good breakdown of returns/inflation adjusted returns on any given asset class going back to 1928...https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

My takeaway from this simple table, is that we've only had 4 years since 1928 with SP500  inflation adjusted returns that were -25%+, with another 5 years that were -20-25%. The really bad SORR look like two of those years stacked right next to each other.

So if the 4% rule has a 95% success rate when ignoring valuations, that means 1 in 20 cohorts fails after 30 years. Since we're ~-25-30% real returns for 2022, it's pretty safe to say we're in the bad company of the aforementioned 9 years with the worse SP500 returns. Another years or two of negative real returns and this can definitely be the most unfortunately cohort in 90+ years......mathematically.

As many others have already repeatedly pointed out, anyone here who has been around and internalized the common advice/path here and implemented even some contingencies (SS, inheritence, PT job, fat to trim, starting WR <4%, return to work for a year or two, etc etc), will be more than fine and still likely made the right choice over trading their youngest future years for more $. 

[2Birds1Stone]

Full transparency, personally plan on joining the late 2022 or very early 2023 cohort regardless of what happens in the markets/inflation. It's not really that intimidating at this point, one of the historically worse 12 month periods is already behind us. Very comfortable using a rising equity glidepath with a 3.75% WR based on current asset valuations/prices.

[Metalcat]

Well here is a good breakdown of returns/inflation adjusted returns on any given asset class going back to 1928...https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

My takeaway from this simple table, is that we've only had 4 days since 1928 with SP500  inflation adjusted returns that were -25%+, with another 5 days that were -20-25%. The really bad SORR look like two of those years stacked right next to each other.

So if the 4% rule has a 95% success rate when ignoring valuations, that means 1 in 20 cohorts fails after 30 years. Since we're ~-25-30% real returns for 2022, it's pretty safe to say we're in the bad company of the aforementioned 9 years with the worse SP500 returns. Another years or two of negative real returns and this can definitely be the most unfortunately cohort in 90+ years......mathematically.

As many others have already repeatedly pointed out, anyone here who has been around and internalized the common advice/path here and implemented even some contingencies (SS, inheritence, PT job, fat to trim, starting WR <4%, return to work for a year or two, etc etc), will be more than fine and still likely made the right choice over trading their youngest future years for more $.

Over trading their younger years for a job that they are likely so unhappy doing that they are willing to give up years and years of income to get away from.

People who truly retire substantially early don't tend to be people who were enjoying their jobs. I've been here long enough and known enough retirees now that the ones who make decent money and don't hate their jobs don't tend to retire when they can afford to, they OMY their way to a serious Fat FIRE level typically.

The person who introduced me to FIRE was like this. Hardcore savings rate, set to retire in her 40s, but just didn't hate her job and loved working with her long term clients. Ended up planning to work into her mid/late 50s when a pension would kick in. Was already FI when she inherited 6 figures, still intended to stay in her job because she loved her clients and her team, although job details were getting to her.

She only decided to retire early when her manager retired, her teammates left, and her employer implemented a series of policies that specifically made it impossible for top performers to maintain their performance and therefore their bonuses. She was ultra stressed, stopped exercising, started binge eating sweets, became rather overweight, and started having joint pain.

She quit because she became miserable.

Most people don't leave gobs of income on the table because they feel all Tra la la, footloose and fancy free having saved an arbitrary target that they set for themselves many, many years ago.

I would hazard that an extreme minority have the stones to quit a decent, reasonably pleasant job, that would be hard to replace when the market is acting crazy.

And I don't blame them.

But that's kind of my whole point. The kind of people quitting now are the kind of people whose risks from staying are higher than their risks from leaving.

[tooqk4u22]

Full transparency, personally plan on joining the late 2022 or very early 2023 cohort regardless of what happens in the markets/inflation. It's not really that intimidating at this point, one of the historically worse 12 month periods is already behind us. Very comfortable using a rising equity glidepath with a 3.75% WR based on current asset valuations/prices.

3.75% after passing bear market in stocks AND bonds is probably a good place to be....but for the person who FIREd in 2021 or beginning of 2022 at 3.75% wr that is now a 5% wr....that's a tough spot, especially if lean FIRE.

@Malcat is right though that people who FIRE tend to hate their jobs or even if they like them enough they are burnt out or have been doing it for 15-20 years and just need a break from the grind.   

I certainly fell into one or all of those and I admit that if it I was blissfully going in everyday I would have kept going even though I had enough to be FIRE.   

I may be going back after 3 years FIRE partly weather this storm but partly also to see if I can get that balance of being blissful and productive bc thebfew times in my career when it worked that way i really enjoyed it...but given history and nature of the field I don't have high hopes for it.  But joining a team of people I had experienced it with hopefully increases the odds.  If not I won't stay long.

[Metalcat]

Full transparency, personally plan on joining the late 2022 or very early 2023 cohort regardless of what happens in the markets/inflation. It's not really that intimidating at this point, one of the historically worse 12 month periods is already behind us. Very comfortable using a rising equity glidepath with a 3.75% WR based on current asset valuations/prices.

3.75% after passing bear market in stocks AND bonds is probably a good place to be....but for the person who FIREd in 2021 or beginning of 2022 at 3.75% wr that is now a 5% wr....that's a tough spot, especially if lean FIRE.

@Malcat is right though that people who FIRE tend to hate their jobs or even if they like them enough they are burnt out or have been doing it for 15-20 years and just need a break from the grind.   

I certainly fell into one or all of those and I admit that if it I was blissfully going in everyday I would have kept going even though I had enough to be FIRE.   

I may be going back after 3 years FIRE partly weather this storm but partly also to see if I can get that balance of being blissful and productive bc thebfew times in my career when it worked that way i really enjoyed it...but given history and nature of the field I don't have high hopes for it.  But joining a team of people I had experienced it with hopefully increases the odds.  If not I won't stay long.

Yes, and anyone who lean fires should be prepared to pull the "more income" lever at some point.

That is the trade off for lean fire. No one should retire substantially early on a tight budget without having a willingness to generate more money if shit hits the fan.

It's actually extremely rare that we see someone here talking about retiring very early on a tight budget.

Let's not forget that Pete himself didn't retire without income streams, even aside from the blog. He talked often about post-FIRE income as a powerful lever, because even generating an extra 5-20K/yr can have a massive impact on SORR.

I personally just picked up a stupidly easy, very part time job that has nothing to do with my previous career to cover a temporary increase in costs from buying a second house that I can't relocate to yet.

I don't actually need the income, but the budget was getting a bit tight to the point that an extra few thousand in unexpected expenses would be uncomfortable. I like a buffer.

So I applied, got the job the next day, and it's practically free money. I was ultra over qualified for the role because of the related volunteer work I did for fun.

In the 2+ years I've been retired, I've developed a whole collection of employable skills for fun and for options. I've volunteered, read literally hundreds of informational books, taken dozens of free/cheap online courses before starting a whole new degree.

I'm now have professional level competencies in event coordination,  meeting moderation (online and in person), technical writing, crisis counselling, addictions services, financial advising, and in depth cultural knowledge of several important minority groups in the region, which is a strong asset around here.

My primary career was extremely specialized, but it hasn't taken much for me to pick up skills that make me easily employable in fun, easy part time jobs.

I'm doing full retraining not because I need the income of a whole new career, but because I like being efficient, and if I'm going to read and take courses I might as well step it up and get skill/credentials that open doors to $100+/hr jobs that are more interesting and create more rewarding volunteer opportunities.

Just because you leave a full time job doesn't mean your professional skills and network get locked in a time capsule, never to be expanded or updated, and slowly left to degrade over time until they're useless.

Work after FIRE doesn't have to look anything like the career you left. Not if that doesn't work for you.

[BlueMR2]

Let's not forget that Pete himself didn't retire without income streams, even aside from the blog. He talked often about post-FIRE income as a powerful lever, because even generating an extra 5-20K/yr can have a massive impact on SORR.

Even deciding to OMY a couple more times for safety (was in 2020 cohort originally), I'm going to *try* to stay full time for another year and a half.  Recovery by then or not, I'm looking at part time income for perhaps 5 years after that for something to do as well as additional risk mitigation.  Running the numbers, yes, even $5k can make a big difference for us with low COL.

[mistymoney]

Let's not forget that Pete himself didn't retire without income streams, even aside from the blog. He talked often about post-FIRE income as a powerful lever, because even generating an extra 5-20K/yr can have a massive impact on SORR.

I think this bears repeating.

I was trying to model some stuff in broke rich or dead either including or excluding my side gig money, and if I could increase that side money, or if I lost one but not both side gigs. So as I was playing around with the alterations, being impatient I thought is 40k spend/1m with 10k side income really that different than 30k spend on 1M - because, typing all these numbers is hard, lol!

And yes - it did make an appreciable difference in fail rate! Makes perfect sense as that income is not subject to potential market loses....although - it could be subject to other loses if you lose the gig, so maybe keeping it in there with a measure of risk attached makes sense?

I consider my side gigs to be relatively high risk to lose the income. But if that extra income is absolutely guranteed, soc sec, etc. then it eally does make a huge difference in fail rate.

[Metalcat]

Let's not forget that Pete himself didn't retire without income streams, even aside from the blog. He talked often about post-FIRE income as a powerful lever, because even generating an extra 5-20K/yr can have a massive impact on SORR.

Even deciding to OMY a couple more times for safety (was in 2020 cohort originally), I'm going to *try* to stay full time for another year and a half.  Recovery by then or not, I'm looking at part time income for perhaps 5 years after that for something to do as well as additional risk mitigation.  Running the numbers, yes, even $5k can make a big difference for us with low COL.

Yep, on an annual spend of 60K, a 5K income alone would drop someone with 1.5M down from a 4% WR to a 3.6%.

And that's a teeny, tiny amount of income.

SORR has the most impact on people with very high, inflexible spends. Think 6 figure spenders who are maintaining an expensive mortgage in retirement and paying enormous fees for kids education.  We recently saw an article about these exact folks in the antimustachian hall of fame, many of whom have one partner continuing to earn specifically because of inflation concerns.

But the kind of people who make the decision to be high spenders are already people who for YEARS decided that working was worth it to spend more, so of course those people are more likely to pull the lever of working longer. And they should be more conservative about their retirement timing and their SORR risk.

On the flip side, we have lower spend folks who spend literally half of their annual budget on international travel. If they have the ability to cut an entire half of their spend at will without causing any damage to their day to day quality of life, that's a MASSIVE lever to pull.

A close friend is married to a high earner who retired in 2021. They live a relatively modest lifestyle because they're outdoorsy people but have an astronomical luxury travel budget because they like to be outdoorsy in exotic locations and ship their own equipment to do so. The pandemic dropped their WR down to absurdly low levels because they focused on domestic travel, which is basically just road trips with a bike rack.

So big 6 figure retirement spending folks who can so easily drop their spending by massive proportions that they don't need any other levers because that really is the most comfortable and convenient for them. Their core lifestyle costs about 50K/yr I would guess, and their travel budget is well over 100K.

Basically the lower someone's lean expenses and the easier it is for them to make money, the less they need to worry about SORR, especially if you throw in rental income, pensions, etc that offset the market performance side of SORR.

SORR is a relative risk, not an absolute one. It's important is entirely relative to the various factors that can hedge against it.

For one person it will be a VERY big risk, and for another it will be virtually irrelevant. The key is to understanding those hedging levers and evaluating which levers are the easiest for *you* to pull.

As I said above many times, these are *lifestyle* decisions. Which levers are best to pull will be completely determined by their lifestyle impacts.

What's easier for my travel-obsessed friends? Cutting travel budget or picking up lucrative $300-600/hr consulting gigs? That's a lifestyle question.

For me, making money is easy, but I had to figure out how I could comfortably make money as I steadily become more physically disabled. I had to look at what options were available to me that I could do severely disabled and ask myself "would I truly enjoy that as part of my best life?"

[Metalcat]

Let's not forget that Pete himself didn't retire without income streams, even aside from the blog. He talked often about post-FIRE income as a powerful lever, because even generating an extra 5-20K/yr can have a massive impact on SORR.

I think this bears repeating.

I was trying to model some stuff in broke rich or dead either including or excluding my side gig money, and if I could increase that side money, or if I lost one but not both side gigs. So as I was playing around with the alterations, being impatient I thought is 40k spend/1m with 10k side income really that different than 30k spend on 1M - because, typing all these numbers is hard, lol!

And yes - it did make an appreciable difference in fail rate! Makes perfect sense as that income is not subject to potential market loses....although - it could be subject to other loses if you lose the gig, so maybe keeping it in there with a measure of risk attached makes sense?

I consider my side gigs to be relatively high risk to lose the income. But if that extra income is absolutely guranteed, soc sec, etc. then it eally does make a huge difference in fail rate.

Depends on the side gig.

I trained in technical writing because I'm a medical professional and there is literally always demand for technical writing from actual medical professionals.

I also noted that I just keep building professional competencies, so my range of levers that I can pull for income is ENORMOUS.

That said, I'm someone who loves learning new skills and volunteering at a highly professional level, so whether I ever needed more money or not, I would build these skills anyway.

It's REALLY easy to build professional, marketable skills that are responsive to market trends when you have a lot of free time. My current part time job is based on skills I picked up from a volunteer role I did out of personal interest for a year.

I'm quite literally seriously disabled, with a main career I can never go back to that has almost no transferable skills. I have to work from home, I have to be able to fuck off for 6 weeks at a time for surgeries over the next few years and I can only give a months notice, I can never work full time, and I need a flexible schedule.

And STILL!!!! I've found it stupidly easy to find decent paying work that I find easy and enjoyable.

Yes. I could lose this specific income at any point, but I can pick up other options fairly easily. Also, there's a difference between periodically picking up work to offset a few years of whacky markets vs your entire retirement plan depending on ongoing, reliable work.

If I retire to a coast-FIRE lifestyle that absolutely depends on me generating 20K/yr to meet my expenses, that's not being flexible, that's retiring with too little money to cover my bills. That is indeed a high risk plan.

[Metalcat]

Full transparency, personally plan on joining the late 2022 or very early 2023 cohort regardless of what happens in the markets/inflation. It's not really that intimidating at this point, one of the historically worse 12 month periods is already behind us. Very comfortable using a rising equity glidepath with a 3.75% WR based on current asset valuations/prices.

3.75% after passing bear market in stocks AND bonds is probably a good place to be....but for the person who FIREd in 2021 or beginning of 2022 at 3.75% wr that is now a 5% wr....that's a tough spot, especially if lean FIRE.

@Malcat is right though that people who FIRE tend to hate their jobs or even if they like them enough they are burnt out or have been doing it for 15-20 years and just need a break from the grind.   

Although some of us loved our jobs but they seriously cut into doing other things we loved - some that may be easier done while younger - so quitting asap once FI (or even lean FI) meant adding something of greater value to our lives then added wealth.

Yes, exactly.

That's why I said earlier it's a matter of risk analysis. It's best to leave your job when the risks of staying outweigh the risks of leaving.

Even if you like a job, the risk of missing out on something more important might tip the scales to quitting. Such as caring for children or aging parents, or just having adventures you don't want to frickin' wait for any longer.

[BeanCounter]

Also, we haven't actually touched any of our investment accounts. They can just sit there and do their thing. We're living - carefully - on dh's pension. We have a pretty good cash reserve for major items like the new windows. My social security goes directly into savings.

So maybe the message is - have multiple sources of income.

I think the message is have good diversification, including some cash.

[BeanCounter]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

Lol, valuations matter.

Well, I think you all are forgetting that Retiree A had the shares that made the original valuation possible. So yes retiree B dropped down to the same amount as Retiree but he still has the shares that will, in time go back up. Retiree B never had those assets.
In 2008 retiree A’s assets may have dropped down to retiree B’s total but in two years they would have risen again to their previous value.

Both have a 17 pot multiple as things stand. Same number of units in relation to their desired expenditure.

Ret A would have had more units at the outset but has had to sell units into a falling market to fund his lifestyle, which has simultaneously been getting more expensive

Ret B may never have accumulated as many units a Ret A at his peak, but he has more units at his point of retirement than he ever had before

This assumes that Ret A HAS to sell units. Being diversified helps with that. Before I FIREd (in late 2020) I looked at all the data sets in the cFIREsim models and determined that two years of basic expenses in cash would get us through a downturn. Or most of one and then I could pull from bonds. Market downturns, even big ones are going to happen. You have to plan for them before you FIRE and then ride the wave.
OMY just doesn't help enough to move the needle for me. Be miserable and OMY and wait for what? To see if the market recovers or if I have to OMY again? In the meantime you'll just keep moving the bar. No thanks.

[Metalcat]

Also, we haven't actually touched any of our investment accounts. They can just sit there and do their thing. We're living - carefully - on dh's pension. We have a pretty good cash reserve for major items like the new windows. My social security goes directly into savings.

So maybe the message is - have multiple sources of income.

I think the message is have good diversification, including some cash.

Not necessarily. For some people it truly is best to just continuing to OMY until their 'stache is so frickin' massive it would take a collapse of modern civilization to topple. Those are generally the super high earners who just want to keep working. They don't need any diversification, their day job is the only lever they'll ever need.

But the more levers you have available to you, the less dependent you are on WR to determine your long term success, and therefore the less dependent on the initial value of your investments.

For one person cash might be an excellent hedge, for another a liability. Depends on their particular risk factors and levers.

[Must_ache]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

This is an important point I have tried to make before.  People that say the 4% rule has a 95% probability of failure don't complete the sentence.  The 4% rule had a 95% probability of failure across a number of scenarios in the past.  It doesn't make any guarantees about the future.  Assume that market conditions are truly awful (or were 6-12 months ago): valuations are sky-high, the bubble is going to burst, etc.  Unless you account for recent awful conditions you are comparing apples to oranges. 

Below is the historical P/E ratio.  Let's say you are looking back at 1940-1990 for your history.  The P/E ratio during that time frame is rarely above the current value of 18.70 and it's nowhere near the peak of 37 a couple of years ago.  Today's P/E ratio is still like the 90th+ percentile during 1940-1990.  When the P/E ratio gets below 15, then I'll believe that valuations are more comparable.  But hey stocks would have to come down another -20% to get there. 

[Metalcat]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

This is an important point I have tried to make before.  People that say the 4% rule has a 95% probability of failure don't complete the sentence.  The 4% rule had a 95% probability of failure across a number of scenarios in the past.  It doesn't make any guarantees about the future.  Assume that market conditions are truly awful (or were 6-12 months ago): valuations are sky-high, the bubble is going to burst, etc.  Unless you account for recent awful conditions you are comparing apples to oranges. 

Below is the historical P/E ratio.  Let's say you are looking back at 1940-1990 for your history.  The P/E ratio during that time frame is rarely above the current value of 18.70 and it's nowhere near the peak of 37 a couple of years ago.  Today's P/E ratio is still like the 90th+ percentile during 1940-1990.  When the P/E ratio gets below 15, then I'll believe that valuations are more comparable.  But hey stocks would have to come down another -20% to get there.

Anyone who assumes that a blind faith that they can withdraw 4% +estimated inflation, down to the cent, year after year, regardless of what the markets actually do, and that that will predict the future of their investments is...well...reading comprehension impaired...at best.

I personally have never, ever, not once, ever, in MANY years spending MANY hours here EVER seen someone actually pull the plug at exactly 25X their estimated (aka made up) annual spend, with a blind faith that the 4% "rule" would protect them from portfolio failure.

Maybe this magical unicorn that people have referred to for years actually exists, maybe, but I've never encountered them in my rather extensive tenure talking to FIRE folks.

Between when people discover the 4% rule and when they actually have analyzed it enough and saved enough to pull the plug, they've typically gone WAAAAAAYYYYYYY down the rabbit hole of scaring themselves utterly shitless about SORR.

Which is why I've literally never seen anyone retire with blind faith in the 4% rule alone, and have seen endless, countless examples of people who are hesitant to retire even with a fat, padded, 6 figure budget (just in case) and a 2% WR. Those are a dime a dozen here.

Excessive, unrealistic faith in the 4% rule just isn't the pathology that this particular population suffers from I'm afraid.

[vand]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

This is an important point I have tried to make before.  People that say the 4% rule has a 95% probability of failure don't complete the sentence.  The 4% rule had a 95% probability of failure across a number of scenarios in the past.  It doesn't make any guarantees about the future.  Assume that market conditions are truly awful (or were 6-12 months ago): valuations are sky-high, the bubble is going to burst, etc.  Unless you account for recent awful conditions you are comparing apples to oranges. 

Below is the historical P/E ratio.  Let's say you are looking back at 1940-1990 for your history.  The P/E ratio during that time frame is rarely above the current value of 18.70 and it's nowhere near the peak of 37 a couple of years ago.  Today's P/E ratio is still like the 90th+ percentile during 1940-1990.  When the P/E ratio gets below 15, then I'll believe that valuations are more comparable.  But hey stocks would have to come down another -20% to get there.

Anyone who assumes that a blind faith that they can withdraw 4% +estimated inflation, down to the cent, year after year, regardless of what the markets actually do, and that that will predict the future of their investments is...well...reading comprehension impaired...at best.

I personally have never, ever, not once, ever, in MANY years spending MANY hours here EVER seen someone actually pull the plug at exactly 25X their estimated (aka made up) annual spend, with a blind faith that the 4% "rule" would protect them from portfolio failure.

Maybe this magical unicorn that people have referred to for years actually exists, maybe, but I've never encountered them in my rather extensive tenure talking to FIRE folks.

Between when people discover the 4% rule and when they actually have analyzed it enough and saved enough to pull the plug, they've typically gone WAAAAAAYYYYYYY down the rabbit hole of scaring themselves utterly shitless about SORR.

Which is why I've literally never seen anyone retire with blind faith in the 4% rule alone, and have seen endless, countless examples of people who are hesitant to retire even with a fat, padded, 6 figure budget (just in case) and a 2% WR. Those are a dime a dozen here.

Excessive, unrealistic faith in the 4% rule just isn't the pathology that this particular population suffers from I'm afraid.

I feel you need to state this denial Once More, With Feeling...

Maybe the good folk of Turkey and Sri Lanka simply have read enough MMM this year to unlock the key to infinite lifestyle optimisation, although I once read that one dude did manage this at one point around a couple of thousand years ago. Mind you, he also walked across liquid surfaces and started a well known cult in the process.

[Metalcat]

Retiree A pulls the plug in Sept 2021 with a x25 stash/4% SWR, which according to Cfiresim has a 91% success rate for 40yrs with a 75/25 stock/bond split. Since then between expenses/inflation/markets his stash is down to x17, but according to everything he’s read he’s not worried because 1 yr returns are meaningless in their correlation with SWRs and failure rates.

Retiree B pulls the plug in Sept 2022. He never managed to build it up to x25 but decided to go ahead and pull the ejection cord with a x17 pot (5.9% SWR). Cfiresim tells him that his chances of success are 41% - same 40yr timeframe and 75/25 split.  “But I’m in no worse position than Retiree A” he claims - and he is right, they both now have identical financial snapshots.

So you have the same historical data telling you that your chance of failure going forward is 9% or 59%. Both these cannot be right.

This is an important point I have tried to make before.  People that say the 4% rule has a 95% probability of failure don't complete the sentence.  The 4% rule had a 95% probability of failure across a number of scenarios in the past.  It doesn't make any guarantees about the future.  Assume that market conditions are truly awful (or were 6-12 months ago): valuations are sky-high, the bubble is going to burst, etc.  Unless you account for recent awful conditions you are comparing apples to oranges. 

Below is the historical P/E ratio.  Let's say you are looking back at 1940-1990 for your history.  The P/E ratio during that time frame is rarely above the current value of 18.70 and it's nowhere near the peak of 37 a couple of years ago.  Today's P/E ratio is still like the 90th+ percentile during 1940-1990.  When the P/E ratio gets below 15, then I'll believe that valuations are more comparable.  But hey stocks would have to come down another -20% to get there.

Anyone who assumes that a blind faith that they can withdraw 4% +estimated inflation, down to the cent, year after year, regardless of what the markets actually do, and that that will predict the future of their investments is...well...reading comprehension impaired...at best.

I personally have never, ever, not once, ever, in MANY years spending MANY hours here EVER seen someone actually pull the plug at exactly 25X their estimated (aka made up) annual spend, with a blind faith that the 4% "rule" would protect them from portfolio failure.

Maybe this magical unicorn that people have referred to for years actually exists, maybe, but I've never encountered them in my rather extensive tenure talking to FIRE folks.

Between when people discover the 4% rule and when they actually have analyzed it enough and saved enough to pull the plug, they've typically gone WAAAAAAYYYYYYY down the rabbit hole of scaring themselves utterly shitless about SORR.

Which is why I've literally never seen anyone retire with blind faith in the 4% rule alone, and have seen endless, countless examples of people who are hesitant to retire even with a fat, padded, 6 figure budget (just in case) and a 2% WR. Those are a dime a dozen here.

Excessive, unrealistic faith in the 4% rule just isn't the pathology that this particular population suffers from I'm afraid.

I feel you need to state this denial Once More, With Feeling...

Maybe the good folk of Turkey and Sri Lanka simply have read enough MMM this year to unlock the key to infinite lifestyle optimisation, although I once read that one dude did manage this at one point around a couple of thousand years ago. Mind you, he also walked across liquid surfaces and started a well known cult in the process.

I'm sorry but I don't understand your point.

[2Birds1Stone]

Vand's cheerioes taste so poor,  he has nothing better to do with his time than try to piss in everyone else's.

[nereo]

I feel you need to state this denial Once More, With Feeling...

Maybe the good folk of Turkey and Sri Lanka simply have read enough MMM this year to unlock the key to infinite lifestyle optimisation, although I once read that one dude did manage this at one point around a couple of thousand years ago. Mind you, he also walked across liquid surfaces and started a well known cult in the process.

Yeah, chalk me up as utterly confused about how Jesus and Dri Lanka relate to anything that’s been said… can you connect those dots a bit more explicitly?

[Metalcat]

I feel you need to state this denial Once More, With Feeling...

Maybe the good folk of Turkey and Sri Lanka simply have read enough MMM this year to unlock the key to infinite lifestyle optimisation, although I once read that one dude did manage this at one point around a couple of thousand years ago. Mind you, he also walked across liquid surfaces and started a well known cult in the process.

Yeah, chalk me up as utterly confused about how Jesus and Dri Lanka relate to anything that’s been said… can you connect those dots a bit more explicitly?

So it's not just me?

I was sitting there feeling kind of dumb for several minutes thinking "I feel like this should make sense..." but I couldn't for the life of me parse what was even being said.

[Tyson]

Vand:  "What if stocks and bonds go down and never recover, won't that mess up your retirement plans?". 

Well, yeah. 

[mspym]

The pandemic accelerated our FI plans. The rich, broke or dead calculators that showed me I was 4x more likely to be dead rather than broke* was the final straw. Besides, if the world really is going to hell in a handbasket, wouldn't I be better off building strong local connections and trying to effect change in my community than working more in the hopes that a slightly fatter stash is going to save me? I'm not a billionaire, I can't buy my own island, I need to commit to the people and place that I live with.

*where 'broke' means living on the state pension and where we will still be better off than a lot of people because we have a paid-off house.

[BeanCounter]

I feel you need to state this denial Once More, With Feeling...

Maybe the good folk of Turkey and Sri Lanka simply have read enough MMM this year to unlock the key to infinite lifestyle optimisation, although I once read that one dude did manage this at one point around a couple of thousand years ago. Mind you, he also walked across liquid surfaces and started a well known cult in the process.

Yeah, chalk me up as utterly confused about how Jesus and Dri Lanka relate to anything that’s been said… can you connect those dots a bit more explicitly?

So it's not just me?

I was sitting there feeling kind of dumb for several minutes thinking "I feel like this should make sense..." but I couldn't for the life of me parse what was even being said.

Same
But then it does kind of make this head banger of a thread make more sense.

[BeanCounter]

I get that people will always want to justify OMY because it sucks so bad. If they truly loved their work they wouldn’t spend so much time on the forum trying to prove why it won’t work and why they are stuck.
 I’m such a risk adverse person that I could have easily OMY’d myself into the grave. Thankfully I listened to advice on this forum. I also dug into the historical data and built some contingencies based on that. Could I be wrong and this time it will be like no other? Sure! But I think it’s a risk worth taking. I might very well be dead before portfolio failure kicks in anyway.

[Scramblin Rover]

It's best to leave your job when the risks of staying outweigh the risks of leaving.

What an insightful idea! I'd never thought about retirement this way, but after reading your post this seems like the only way to think about it.

[Metalcat]

I feel you need to state this denial Once More, With Feeling...

Maybe the good folk of Turkey and Sri Lanka simply have read enough MMM this year to unlock the key to infinite lifestyle optimisation, although I once read that one dude did manage this at one point around a couple of thousand years ago. Mind you, he also walked across liquid surfaces and started a well known cult in the process.

Yeah, chalk me up as utterly confused about how Jesus and Dri Lanka relate to anything that’s been said… can you connect those dots a bit more explicitly?

So it's not just me?

I was sitting there feeling kind of dumb for several minutes thinking "I feel like this should make sense..." but I couldn't for the life of me parse what was even being said.

Same
But then it does kind of make this head banger of a thread make more sense.

What I don't get is that all of my responses talk about risk.

My posts are never about excessive optimism, they're about understanding the big picture of risk better. My main argument is that a focus on SORR and WR is too narrow a focus for risk assessment.

I'm ALL about being ultra conservative about risk. I just have a bigger picture of risk.

[Metalcat]

It's best to leave your job when the risks of staying outweigh the risks of leaving.

What an insightful idea! I'd never thought about retirement this way, but after reading your post this seems like the only way to think about it.

Hey, anything else just sounds irresponsible to me.

That's how you have to assess everything in life. The key is to have a solid sense of what your *actual* risks are, not just the ones spot out by an online calculator.

I find it hilarious if anyone interprets anything I've said as being overly optimistic. I'm one of the most financially conservative people on this board. I just don't worry about SORR because it's not relevant to *me*.

My personal risks are far better hedged by pulling other, more powerful levers. But yeah, my level of conservative risk management is borderline crazy. Like a monstrous level of overkill on the risk-hedging front, because I'm *that* realistic about my high, high probability of serious risks coming into play.

SORR just isn't one I need to worry about. But that's NOT because I'm overly optimistic.

[mistymoney]

I get that people will always want to justify OMY because it sucks so bad. If they truly loved their work they wouldn’t spend so much time on the forum trying to prove why it won’t work and why they are stuck.
 I’m such a risk adverse person that I could have easily OMY’d myself into the grave. Thankfully I listened to advice on this forum. I also dug into the historical data and built some contingencies based on that. Could I be wrong and this time it will be like no other? Sure! But I think it’s a risk worth taking. I might very well be dead before portfolio failure kicks in anyway.

Is OMY really that repetitive? one is one, doesn't seem so bad depending on circumstances, and then maybe a two if things or emotions are shaky, but do people really go into 3/4/5? after hitting FI and maintaining that status for several years?

That would seem really odd. That would seem like they have to be getting a lot of good out of their jobs. Especially the past decade where every year would bring 2-3 mulitples of expenses, so go from 25 to 27.5 for omy, then over 30 for tmy. Assuming about 10% increase a year, even with 3% inflation and 1% investment expenses.

If you invested $100 in the S&P 500 at the beginning of 2011, you would have about $439.61 at the end of 2021, assuming you reinvested all dividends. This is a return on investment of 339.61%, or 14.41% per year.

https://www.officialdata.org/us/stocks/s-p-500/2011?amount=100&endYear=2021

For myself, I didn't even have a year picked out until fall of last year. I was thinkin I had years to go yet - like 3-5 or so, but the money was just bunching up.

...:::oh gosh! was it me? I declared myself about to be FI and the whole world financials started crumbling almost on cue! I'm sorry!:::...

So I kind of did 2-3 LYs less than a year ago, and now thinking to maybe roll that back a bit. I won't make a decision until about April of 2023 if I am going to go OMY or not. I don't think that seems too reactionary. I wasn't at that level all that long after all.

I would think most people in 21/22/23 cohorts got there quicker than they were thinking due to a more than usually generous market.

Stock market returns between 2016 and 2021
If you invested $100 in the S&P 500 at the beginning of 2016, you would have about $266.04 at the end of 2021, assuming you reinvested all dividends. This is a return on investment of 166.04%, or 17.71% per year.

Was  averaging nearly 18% the past five years...

[bmjohnson35]

It's best to leave your job when the risks of staying outweigh the risks of leaving.

What an insightful idea! I'd never thought about retirement this way, but after reading your post this seems like the only way to think about it.

Hey, anything else just sounds irresponsible to me.

That's how you have to assess everything in life. The key is to have a solid sense of what your *actual* risks are, not just the ones spot out by an online calculator.

I find it hilarious if anyone interprets anything I've said as being overly optimistic. I'm one of the most financially conservative people on this board. I just don't worry about SORR because it's not relevant to *me*.

My personal risks are far better hedged by pulling other, more powerful levers. But yeah, my level of conservative risk management is borderline crazy. Like a monstrous level of overkill on the risk-hedging front, because I'm *that* realistic about my high, high probability of serious risks coming into play.

SORR just isn't one I need to worry about. But that's NOT because I'm overly optimistic.

It's easy to get tunnel vision. I certainly have been guilty of this plenty of times.  I find a SWOT analysis is a nice tool to break out of this mode.  It can still take some effort to step back and take a broader look at things. 

[Metalcat]

I get that people will always want to justify OMY because it sucks so bad. If they truly loved their work they wouldn’t spend so much time on the forum trying to prove why it won’t work and why they are stuck.
 I’m such a risk adverse person that I could have easily OMY’d myself into the grave. Thankfully I listened to advice on this forum. I also dug into the historical data and built some contingencies based on that. Could I be wrong and this time it will be like no other? Sure! But I think it’s a risk worth taking. I might very well be dead before portfolio failure kicks in anyway.

Is OMY really that repetitive? one is one, doesn't seem so bad depending on circumstances, and then maybe a two if things or emotions are shaky, but do people really go into 3/4/5? after hitting FI and maintaining that status for several years?

That would seem really odd. That would seem like they have to be getting a lot of good out of their jobs. Especially the past decade where every year would bring 2-3 mulitples of expenses, so go from 25 to 27.5 for omy, then over 30 for tmy. Assuming about 10% increase a year, even with 3% inflation and 1% investment expenses.

If you invested $100 in the S&P 500 at the beginning of 2011, you would have about $439.61 at the end of 2021, assuming you reinvested all dividends. This is a return on investment of 339.61%, or 14.41% per year.

https://www.officialdata.org/us/stocks/s-p-500/2011?amount=100&endYear=2021

For myself, I didn't even have a year picked out until fall of last year. I was thinkin I had years to go yet - like 3-5 or so, but the money was just bunching up.

...:::oh gosh! was it me? I declared myself about to be FI and the whole world financials started crumbling almost on cue! I'm sorry!:::...

So I kind of did 2-3 LYs less than a year ago, and now thinking to maybe roll that back a bit. I won't make a decision until about April of 2023 if I am going to go OMY or not. I don't think that seems too reactionary. I wasn't at that level all that long after all.

I would think most people in 21/22/23 cohorts got there quicker than they were thinking due to a more than usually generous market.

Stock market returns between 2016 and 2021
If you invested $100 in the S&P 500 at the beginning of 2016, you would have about $266.04 at the end of 2021, assuming you reinvested all dividends. This is a return on investment of 166.04%, or 17.71% per year.

Was  averaging nearly 18% the past five years...

Yes, we've seen it here many, many times. People just constantly moving the goal posts as to what actually makes them feel like they have "enough."

It doesn't usually manifest as specifically OMY though, it's more insidious. They don't get to their goal and then suddenly OMY for years as much as they start approaching their goal and preemptively lower their target WR even more, and then add a requirement for a cash buffer, and then, and then, and then. 

We do have people who specifically get cold feet right at the trigger pull and back down for a few years, but that's not as common as the people who tack an extra 5+ years onto the timeline before even getting there.

All the power to them if they like their jobs. It's a good lever to pull if it doesn't present with too much risk.

OMY for one person could be no big deal, or it could be the direct cause of FIRE failure because they're already years past their best before date at their job, and another year of burnout damage might be the factor that pushed divorce from "probable" to "inevitable."

Have you read the burnout threads? The unstable moods, the memory loss, the physical symptoms? The systematic destruction of people's core capacity to function? Nasty shit. Don't play with that fire. Too much risk.

Divorce is a VERY common outcome of burnout. With divorce being the single most probable and catastrophic source of FIRE failure for many people, this is exactly what I mean when I talk about bigger picture risk analysis.

[BeanCounter]

We have seen people OMY for several years. They just keep finding ways to talk themselves out of it. I think it's often because OMY does not really help that much in an economic downturn. It will be 2-3 years to get back to where you were and for things to feel stable again (with the exception of 2020)

What I don't understand about those that OMY is that even if you do put in another year or two, there will still be another rocky market around the corner. It's the nature of the beast. So if you haven't developed tools to deploy when the market goes south again what will you do? Keep going back to work? What's the point of RE then? Better to know that bad market returns will happen. Portfolio losses will happen. You have to be ready to adjust in some way and keep going. If you can't do that then you should just keep working forever, or at least until you are well into traditional retirement age.

Which brings me to another point. People on this forum seem to forget or not realize that the 4% rule has a far, far greater failure rate when applied for >30 years. It took me awhile and a lot of math to move past thinking that that means RE doesn't work to understanding that it is still possible you just have to have different strategies in place if you're retiring young.

[tooqk4u22]

I would think most people in 21/22/23 cohorts got there quicker than they were thinking due to a more than usually generous market.

Stock market returns between 2016 and 2021
If you invested $100 in the S&P 500 at the beginning of 2016, you would have about $266.04 at the end of 2021, assuming you reinvested all dividends. This is a return on investment of 166.04%, or 17.71% per year.

Was  averaging nearly 18% the past five years...

And that's why markets are statrting to wash out, probably with a bit more to go (we still havent seen panicselling or super negative sentiment yet)....prepandemic high is definitely in sight and 10-15% below that as sentiment will overshoot to the downside especially as earnings come down, but then fed will pause or pivot and it will be all up from there. Setting aside fundamentals or inflation, regression to the mean was bound to happen.   Return over past 5 years to today avg about 9% (+ 1.2% for divis) now, still pretty darn good but definitely more normal. 

But if sp500 hits 3000 that would be about 4% (+1-2% for divis) for last 5 years, so 2018 (or 2019 in my case) FIREee will be feeling the pinch and should be fine but doubts will start creeping in.  For each year past that to 2022 it just gets worse.

 However if you have 4% or less wr after the stock/bond declines then you are sitting pretty.  If not, I would definitely keep working to increase the stash.  However, as @Malcat indicated even at 17x you have power and flexibility to not stay in an awful job.

[wageslave23]

For those taking this thread personally, don't.  Obviously no one knows your personal situation and reasons for FIRE (and to a certain extent, no one cares).  Pointing out blindspots is helpful, on both the conservative and risk side.  I for one have found the discussion interesting and informative from both viewpoints.  I think age at FIRE is also a factor.  If you are in your 50's you should probably error on the side of YOLO'ing and making the most of the younger years you have left.  If you are thinking about FIRE in your 30's and have no idea what your expenses will be over the next 5 decades, then working an extra year or two in order to have more income for the next 50yrs might be a good tradeoff. 

[maizefolk]

I think age at FIRE is also a factor.  If you are in your 50's you should probably error on the side of YOLO'ing and making the most of the younger years you have left.  If you are thinking about FIRE in your 30's and have no idea what your expenses will be over the next 5 decades, then working an extra year or two in order to have more income for the next 50yrs might be a good tradeoff.

It seems a weird sort of imbalance.

To a 30 year old sacrificing a year of life now so their 70 year old self will have more money feels like a good and responsible thing to do.
Yet most 70 year olds would probably sacrifice a lot of money to buy one more year, particularly that that extra year was a healthy 30-something year.

[wageslave23]

I think age at FIRE is also a factor.  If you are in your 50's you should probably error on the side of YOLO'ing and making the most of the younger years you have left.  If you are thinking about FIRE in your 30's and have no idea what your expenses will be over the next 5 decades, then working an extra year or two in order to have more income for the next 50yrs might be a good tradeoff.

It seems a weird sort of imbalance.

To a 30 year old sacrificing a year of life now so their 70 year old self will have more money feels like a good and responsible thing to do.
Yet most 70 year olds would probably sacrifice a lot of money to buy one more year, particularly that that extra year was a healthy 30-something year.

That's probably true but those 70 yr Olds with money to sacrifice have extra money. They wouldn't have that option if they undersaved. I also look at in terms of percentages. If you consider ages 20-60 as prime years. A 50 yr old choosing to work 2 more years is sacrificing 20% of their prime remaining years. A 35 yr old working 2 extra years is sacrificing 8%.

Also if the 50 yr old undersaves, then they face 20 yrs of living a little more frugally then they would like. After that they are probably just watching TV on a little smaller TV and cheaper recliner. A 35 yr old faces 35 yrs of living more frugally than they would like.

I think of it the same as planning a vacation.  If you can have a frugal 5 day vacation for the same price as a nicer 3 day vacation, them I'm probably choosing the 5 day vacation. But if I'm choosing between a frugal 30 day vacation or a nicer 28 day vacation, then I'm probably choosing the nicer 28 day vacation.

[EscapeVelocity2020]

I think age at FIRE is also a factor.  If you are in your 50's you should probably error on the side of YOLO'ing and making the most of the younger years you have left.  If you are thinking about FIRE in your 30's and have no idea what your expenses will be over the next 5 decades, then working an extra year or two in order to have more income for the next 50yrs might be a good tradeoff.

It seems a weird sort of imbalance.

To a 30 year old sacrificing a year of life now so their 70 year old self will have more money feels like a good and responsible thing to do.
Yet most 70 year olds would probably sacrifice a lot of money to buy one more year, particularly that that extra year was a healthy 30-something year.

This is what I think about when I think of that Y2K retiree.  If that person was 30 when they retired, they are just 52 now and probably biting their nails on what to do.  But if they were 50, then they are well in to claiming SS (probably wisely deferred until full retirement benefits age) and have Medicare.  It's never fun to lose money, but they'll ride it out OK.  It's also not like they ever planned to go back to work and at this stage in the game it won't be necessary (this is roughly my Dad's situation, so I'm quite familiar with it)...