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Discuss Latest POF Blog Post: Creating a Withdrawal Strategy when Accidentally Retired Early

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  • Discuss Latest POF Blog Post: Creating a Withdrawal Strategy when Accidentally Retired Early

    There is a lot of material out there on the interwebs about saving for retirement. Coverage of decumulation, however, and ... Read more

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  • #2
    1. “This way it helps feel like we are living on a budget and also doesn’t feel like we are just seeing our very large emergency fund run bone dry.”
    A lot of flexibility and “passive income” and websites contributing 20% and withdrawal rates and glide paths.
    To me this not enough financial capital to retire.

    2. “The goal is simple enough: build up enough passive income to offset all current expenses, and be able to continue to live our current lifestyle.”
    To me this simply a goal to break even.
    A choice that personal capital has a lower bar, do something to stop the damage in 1. above.

    I guess it’s okay. “I feel confident that at the very least, my FIRE goals are all in my hands.”
    Has a two year timeframe.
    His life is dependent on the stock market and his web business.
    Financial capital and personal capital. I would suggest a business plan at an early age.
    3. Contingency Plan:
    “If I have to go back to work part time, I will. Or perhaps my wife will want to work part time, once both of our kids are in school full time?”
    This can be difficult. Has risk too.

    My take is batter up. Three strikes and you out.
    Not FI. Good luck. Watch out for a curve, knuckleball or a fastball.


    • #3
      Fair criticisms, but I think this guy will be fine. Those on this board tend to be much more conservative than is likely necessary.

      Chances are very high that this individual continues to generate some sort of income in the remainder of his life, and he is flexible enough to change paths if need be.


      • #4
        While I don’t agree with all of his conclusions I do applaud his planning effort. Most of us would benefit from a similar exercise just for the mental preparation for the switch to drawing down assets. Side note on his ERN summary for those of you on a traditional retirement timeline - he got it basically right but the caveat is that Karstan is talking about SWR in early retirement.


        • #5
          Originally posted by familydocPA View Post
          Fair criticisms, but I think this guy will be fine. Those on this board tend to be much more conservative than is likely necessary.

          Chances are very high that this individual continues to generate some sort of income in the remainder of his life, and he is flexible enough to change paths if need be.
          Not really criticisms. He has at least identified his assets and a need for some type of income and alternatives. Running a website is a business. Ponder this: A 68 year old screwing around trying to stay technically current, generate content and negotiation revenue deals just to maintain 20% income for two more years and claim his social security. The proverbial “one more year” choice.
          No good answer, but my thought is 35-40 is rather young to make that choice. If you are FI (questionable for most), strongly consider a higher bar than breakeven. Not FIIF (financial independence IF), being able to retire. He will make that choice within 2 years. Might be part time and a pizza shop! He will figure it out.


          • #6
            He talks about flexibility in the drawdown plan but he doesn’t talk at all about spending flexibility, which I think is probably the most important type of flexibility with ER planning.

            Take 2 situations:
            A couple with no kids and no plan/desire to have kids with NW of 5 million, annual spend of 200000 but can live quite happily on 100000 and could even go down to 60000 for awhile if they really needed to cut back without too much emotional hardship. They have more expensive interests but they also have less expensive/free interests that they would be happy to occupy themselves with. And no kids so they just have to say no to themselves, and they notice their interests have become simpler with age anyway

            A family of 4 including 2 young children with burgeoning interests that the parents want to support. Current net worth 2.5 million, current spending 100k. Might be able to cut back to 60-80k but not without stress/guilt regarding how they are impacting their children. How far will that sports interest take them? What type of education will they want to pursue? Will they still be living at home at age 25? Might they develop a medical issue that is expensive and precludes leaving the nest? There are so many more variables and the emotional strain of reining in spending when you have a young family—sure, lots of young families live like this at baseline, but when you made an active choice to leave a high paying job and retire early and then have to make those choices I would imagine there is a lot more potential guilt/emotional distress.

            Early retirement without kids seems a lot easier to navigate than with. And early retirement with “almost 25x expenses” is meaningless until you know the breakdown of those expenses in terms of discretionary/non-discretionary and how important the extra/non-discretionary spending is to the person planning their early retirement.


            • #7
              I may have not understood it perfectly but if you lose your job (at 36) prior to a planned retirement I would focus on finding income not optimizing withdrawals.

              I agree, do not panic. Be like JL Collins and chill but my plan would be:
              1. spend as little as possible
              2. find some meaningful work

              I guess if you are a CEO or a business person you have the luxury of taking breaks without losing skills & credentialing but if you are a 36 year old surgeon, you need to be grabbing some gigs.

              If you are a 56 or 66 year old doc, different discussion.
              Last edited by Tangler; 04-17-2022, 04:13 PM.


              • #8
                Since he has retired accidentally at 36 and the "age of retirement" articles is trending down fast I can guess the next two ones will be

                -I am 18 and have retired even before I started a job ( probably a trustee kid)

                and finally -I am not yet born but I have already retired from a job.

                At 36 most docs here would have just started a real job after residency and fellowship and would have a ton of student loans. Unless they become disabled, none can afford to become accidentally retired forever.


                • #9
                  Hey everyone. All good points. Sorry I missed this, Leif just sent it my way over this past weekend.

                  I agree with much of the criticism and for me, this is good to see where the pain points might be in my plan. Responses:

                  Tim's points were all strong. I don't consider myself to have met and surpassed FI yet - not at our current spending levels. And since I originally created and published this piece, I did go out and purchase a website with the goal of covering up to 50% of our yearly expenses. The results so far have been sub-par and more at the 20% level, but hopefully I got that sorted out:

                  The bottom line there, currently I have been working on that website an average of 3 hours a day. So it hasn't been passive, but also not full-time either.

                  Anne Agree. I did not talk about flexability with our expenses, but it is of course a last-resort option that we could take in a dire circumstance or super prolonged bear market. We are more in the 2nd situation you describe (2 kids, etc.) and so yeah I wouldn't want to cut back a ton. But this is also where the website covering our expenses kicks in to help with SWR.

                  Tangler Yeah for me, my skills aren't going to dry up or look bad on my resume. I didn't lose my job - in fact I was able to engineer my way out whilst my business partner chose the more conservative route and is still working with the latest company we were divested to. However, for me I knew that I was done working for someone else in a situation that was not of my choosing. Secondly, buying a web business and running it, I hope can act as a resume hedge of sorts if I ever needed to go looking for a job

                  Kamban Yeah totally different world. I have a friend who is a doc who just started to make good money and is in accumulation mode. For me personally, my accumulation happened in the five years leading up to my accidental retirement, and I was lucky enough to have just enough that I could consider not going back to work in a traditional manner.