New article saying not to FIRE

[TwoWorlds]

https://www.marketwatch.com/story/heres-why-you-shouldnt-retire-super-early-even-if-you-can-2018-08-30

[FIRE@50]

This was a surprisingly decent article. I expected a whole bunch of 'you'll be bored' and 'what about saving for the grand kids?' stuff, but this was fairly balanced.

Thanks for sharing.

[DS]

Dogen said he suffered an identity crisis after giving up his title as executive director at an investment firm. He also doubted himself for the first few years of early retirement. He stopped telling people that he had retired early because he worried they just wouldn’t understand.

Oh no, an identity crisis. poor bb.

[ixtap]

If you can replace your current after tax income, it may work.  Uh, I currently save more of my after tax income than I spend, why would I aim to replace it all?

Of course, that would get me beyond the 50x you often see over on bogleheads...

[mathlete]

Dogen said he suffered an identity crisis after giving up his title as executive director at an investment firm. He also doubted himself for the first few years of early retirement. He stopped telling people that he had retired early because he worried they just wouldn’t understand.

Oh no, an identity crisis. poor bb.

I had an identity crisis when I quit my first job at 17. I anticipate this being a big issue for me if/when I quit for good.

[SansSkill]

Meh, a lot of these issues are USA specific.

As for the 'stockmarket downturn' point, those are baked into the SWR unless we get a period literally worse then any period at any time up to now and do not adjust at the time, so that's more of an emotional question than a rational one IMO.

[ixtap]

Dogen said he suffered an identity crisis after giving up his title as executive director at an investment firm. He also doubted himself for the first few years of early retirement. He stopped telling people that he had retired early because he worried they just wouldn’t understand.

Oh no, an identity crisis. poor bb.

I had an identity crisis when I quit my first job at 17. I anticipate this being a big issue for me if/when I quit for good.

Most people do, that is why we have the advice to retire to something, rather than from something. Just by planning what you will retire to, you begin shifting your self perception.

[DreamFIRE]

Article states:

Here’s one way to figure out if early retirement is a sound financial decision: if savings and investments can produce equivalent after-tax earnings to your current income and there’s a chance those earnings will grow similarly to a salary or bonus, then it may work,

This isn't even close to true for me.  While working, I have after-tax earnings around $90K, while I could FIRE with after-tax earnings of $23K, and that's with double my after-tax spending in FIRE than I do while working!  Principal on investments and cash equivalents can cover around half my spending rather than relying only on earnings.

[Much Fishing to Do]

"Social Security, Medicare and other federal benefits have age restrictions. Many individual retirement accounts and 401(k) plans aren’t available without penalty under age 59 ½, said John Middleton, a financial adviser at Brighton Financial Planning in Clinton, N.J.

“The early withdrawal penalties are severe enough to make it unlikely these income sources will sustain early retirement through age 62, at which point individuals could claim Social Security income,” he said. "

So you can't possibly live without government assistance and anyway the money you have socked away is gonna be destroyed if you touch it before 59... eh...hard to believe what gets printed...

[OurTown]

There are several ways to get the funds without penalty before age 59 1/2.  There is even a thread about that somewhere on this very board.

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

[DreamFIRE]

There are several ways to get the funds without penalty before age 59 1/2.  There is even a thread about that somewhere on this very board.

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

Yeah, there's a "sticky" thread on this in one of the sections.

[Firehazard]

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

One thing I would like to add to the above comment....while that statement is technically true, it may not be the solution for all those who plan to quit the year they turn 55.  I happen to be the plan administrator for my company's 401k, and looked into this with our Fidelity rep for my own purposes.  Yes, I could quit at 55 and be free to take a full distribution.  However, my employer's plan doesn't allow for partial distributions.  I could take it all, along with a whopping tax bill, or I could take a partial distribution and at the same time roll the balance into a traditional IRA.   So I could probably get the money I need for year one of early retirement, but would need another solution after that.    I would not have the option of taking distributions from my 401k as needed over the years.  These rules vary by plan, so find out how yours would handle an age 55 retirement.

I had been considering working part-time until age 55 so I could have unrestricted access to my 401k, but after learning that that is not the case, I'll be quitting earlier and starting a 72(t) plan instead.

[Fuzzy Buttons]

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

One thing I would like to add to the above comment....while that statement is technically true, it may not be the solution for all those who plan to quit the year they turn 55.  I happen to be the plan administrator for my company's 401k, and looked into this with our Fidelity rep for my own purposes.  Yes, I could quit at 55 and be free to take a full distribution.  However, my employer's plan doesn't allow for partial distributions.  I could take it all, along with a whopping tax bill, or I could take a partial distribution and at the same time roll the balance into a traditional IRA.   So I could probably get the money I need for year one of early retirement, but would need another solution after that.    I would not have the option of taking distributions from my 401k as needed over the years.  These rules vary by plan, so find out how yours would handle an age 55 retirement.

I had been considering working part-time until age 55 so I could have unrestricted access to my 401k, but after learning that that is not the case, I'll be quitting earlier and starting a 72(t) plan instead.

This is something I've been concerned about as well.  My company recently added a partial distribution option for retirees before age 59 1/2, but I think it's just a single chance to split it. 

But wouldn't the 72(t) plan run into the same issue?  The IRS might be fine with you taking distributions according to the 72(t) formula, but if the 401(k) plan prevents regular distributions aren't you still stuck?

[Slow2FIRE]

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

One thing I would like to add to the above comment....while that statement is technically true, it may not be the solution for all those who plan to quit the year they turn 55.  I happen to be the plan administrator for my company's 401k, and looked into this with our Fidelity rep for my own purposes.  Yes, I could quit at 55 and be free to take a full distribution.  However, my employer's plan doesn't allow for partial distributions.  I could take it all, along with a whopping tax bill, or I could take a partial distribution and at the same time roll the balance into a traditional IRA.   So I could probably get the money I need for year one of early retirement, but would need another solution after that.    I would not have the option of taking distributions from my 401k as needed over the years.  These rules vary by plan, so find out how yours would handle an age 55 retirement.

I had been considering working part-time until age 55 so I could have unrestricted access to my 401k, but after learning that that is not the case, I'll be quitting earlier and starting a 72(t) plan instead.

Why not live on Roth IRA contributions and taxable brokerage account savings while rolling the 401K into an IRA and doing yearly IRA to Roth conversions.  The original Roth Contributions / taxable account only needs to have enough funding for 5 years of expected expenses before you can get at the rolled over IRA to Roth funds.

Understandably, this wouldn't apply to someone who never started a Roth IRA nor had a taxable brokerage account - but I think is valuable information for someone at the beginning of their planning phase for an early retirement to set up these various accounts to provide the flexibility to access all money without the hoops of a SEPP under rule 72(t) and to also have greater control over the taxes paid on their 401K (or IRA) by getting most of the money out before RMDs hit.

[Zikoris]

The "identity crisis" thing is so interesting to me. I wonder if it's more of an American thing? I've just never been like "RECEPTIONIST is who I am!" or "Filing paperwork is a major part of my identity!". I mean shit, what I cook for dinner seems like a more personally significant part of my life than my work - I certainly talk a lot more about food than work, unless something major has happened like quitting a job or something. Maybe I'm the weirdo here though?

[bacchi]

FI Samurai, from what I gather, is/was a Master of the Universe MBA finance professional. It's almost required for a MotU to wrapped up in her/his job as an identity. Your school encourages it, your colleagues encourage it, your company encourages it, and there's probably some self selection in there too.

[DreamFIRE]

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

One thing I would like to add to the above comment....while that statement is technically true, it may not be the solution for all those who plan to quit the year they turn 55.  I happen to be the plan administrator for my company's 401k, and looked into this with our Fidelity rep for my own purposes.  Yes, I could quit at 55 and be free to take a full distribution.  However, my employer's plan doesn't allow for partial distributions.  I could take it all, along with a whopping tax bill, or I could take a partial distribution and at the same time roll the balance into a traditional IRA.   So I could probably get the money I need for year one of early retirement, but would need another solution after that.    I would not have the option of taking distributions from my 401k as needed over the years.  These rules vary by plan, so find out how yours would handle an age 55 retirement.

I've checked my withdrawal forms for my employer's 457B and 401a plans, and both types of plans allow me to setup withdrawals of an amount I define with an optional expiration date and specifically mentions the option to complete a new form to make changes.

[elliha]

The "identity crisis" thing is so interesting to me. I wonder if it's more of an American thing? I've just never been like "RECEPTIONIST is who I am!" or "Filing paperwork is a major part of my identity!". I mean shit, what I cook for dinner seems like a more personally significant part of my life than my work - I certainly talk a lot more about food than work, unless something major has happened like quitting a job or something. Maybe I'm the weirdo here though?

While I think that I have enough interesting things in my life that "teacher" is not the only thing that I am I still think that what I do for a living is important. If I would retire early I think there is a good chance I would look into teaching in a less formal way or if I did not still be proud of my former career if someone asked me what I used to do. I don't think this is only Americans as I am not an American.

[MrThatsDifferent]

What a shit article. It didn’t present any case studies of people who retired early and then realized, oh shit, I fucked up! The whole concept of FIRE is reducing your expenses so that it is achievable and sustainable and yes, it may require some years of sacrifice, around 10 if you structure things well, but look at the payoff. And identity is only an issue until you stop making your identity about what you do to earn money and start making it about what you do to enjoy life. I guarantee the people who say, keep working, you need more, say that because they never stop acquiring more things that cost more, of course they can’t retire. When I was considering buying a place, everyone said, get the most expensive place you can afford. Are you kidding me? So funnel all my money to that? For what? But that’s how people think. Get the mortgage, the car loan and put everything on the credit card and then work like a dog to pay it all off. Fuck. That.

[Firehazard]

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

One thing I would like to add to the above comment....while that statement is technically true, it may not be the solution for all those who plan to quit the year they turn 55.  I happen to be the plan administrator for my company's 401k, and looked into this with our Fidelity rep for my own purposes.  Yes, I could quit at 55 and be free to take a full distribution.  However, my employer's plan doesn't allow for partial distributions.  I could take it all, along with a whopping tax bill, or I could take a partial distribution and at the same time roll the balance into a traditional IRA.   So I could probably get the money I need for year one of early retirement, but would need another solution after that.    I would not have the option of taking distributions from my 401k as needed over the years.  These rules vary by plan, so find out how yours would handle an age 55 retirement.

I had been considering working part-time until age 55 so I could have unrestricted access to my 401k, but after learning that that is not the case, I'll be quitting earlier and starting a 72(t) plan instead.

This is something I've been concerned about as well.  My company recently added a partial distribution option for retirees before age 59 1/2, but I think it's just a single chance to split it. 

But wouldn't the 72(t) plan run into the same issue?  The IRS might be fine with you taking distributions according to the 72(t) formula, but if the 401(k) plan prevents regular distributions aren't you still stuck?

Sorry, I forgot to say that I would first roll my 401k into a traditional IRA, and then do a 72(t) plan from that.

[Firehazard]

E.G., you can get at your 401(k) without penalty if you retire from that job as early as the year you turn 55.

One thing I would like to add to the above comment....while that statement is technically true, it may not be the solution for all those who plan to quit the year they turn 55.  I happen to be the plan administrator for my company's 401k, and looked into this with our Fidelity rep for my own purposes.  Yes, I could quit at 55 and be free to take a full distribution.  However, my employer's plan doesn't allow for partial distributions.  I could take it all, along with a whopping tax bill, or I could take a partial distribution and at the same time roll the balance into a traditional IRA.   So I could probably get the money I need for year one of early retirement, but would need another solution after that.    I would not have the option of taking distributions from my 401k as needed over the years.  These rules vary by plan, so find out how yours would handle an age 55 retirement.

I had been considering working part-time until age 55 so I could have unrestricted access to my 401k, but after learning that that is not the case, I'll be quitting earlier and starting a 72(t) plan instead.

Why not live on Roth IRA contributions and taxable brokerage account savings while rolling the 401K into an IRA and doing yearly IRA to Roth conversions.  The original Roth Contributions / taxable account only needs to have enough funding for 5 years of expected expenses before you can get at the rolled over IRA to Roth funds.

Understandably, this wouldn't apply to someone who never started a Roth IRA nor had a taxable brokerage account - but I think is valuable information for someone at the beginning of their planning phase for an early retirement to set up these various accounts to provide the flexibility to access all money without the hoops of a SEPP under rule 72(t) and to also have greater control over the taxes paid on their 401K (or IRA) by getting most of the money out before RMDs hit.

This is, I think, the way to go if you've planned for it.  Personally, I just don't quite have enough in those accounts to make it work for me.  My 72(t) plan should provide enough annually to cover my needs and maybe a bit extra to set aside.  I can tap the Roth and taxable brokerage account for unanticipated expenses if needed.  I'll be 53.5 when I retire, so my 72t plan only needs to go 6 years before I'm free to make changes.