Early Retirement & Personal News

No, the news is not that I am retiring.

Marketwatch had an article saying that more people say they want to retire before age 60. It then goes on the explore the idea. Obviously I can't say whether anyone should or should not do something but I will share my thoughts on how to make this assessment as well as a couple of other considerations that I think are important.

The article has plenty about things like gap analysis (what you need from savings/investment to make up the presumed shortfall from just relying on Social Security), envisioning your day to day retired life and strategies for taking Social Security.

Obviously the earliest you can take Social Security is 62 and for each year you wait to start taking SS, the payout increases by 8%. There are plenty of valid argument for both taking it at 62 and waiting as long as possible to take it (no added benefit waiting past 70), there's no wrong answer for this as far as I am concerned.

My view on "retiring before age 60" then becomes about managing worst case scenarios. Let's say you want to retire at 58 and plan on taking SS at 66. Can your portfolio (plus maybe some sort of part time side gig) sustain you for at least eight years? Obviously if this was your plan then you would believe your portfolio could sustain for that long and much longer. What about if a couple of years in, there was an adverse sequence of returns the took the S&P 500 down 40% over a two year stretch (this is similar to how the tech wreck unfolded) combined with some sort of financial emergency that necessitated you taking out 15% of your portfolio (I've seen this more than a couple of times)?

Where would you be then? What is your optionality in the face of a series of bad luck events? Don't limit your thinking on this to the narrowly defined items I came up with, we're talking about your retirement. This is not an argument to not retire, but to think things out more thoroughly to better withstand an adverse life sequence.

I've been very clear that I have no plans to retire but that we save money like I am desperate to retire last year. I have also said that my preference for Social Security is to wait until 70 so that if I die early my wife would have a bigger payout. If my hand was forced and I had to stop working now, could I make our money last until I was 70 (hopefully longer than)? What if our accumulated savings didn't last that long? Could we make it to when I turn 62 on what we have? What is my optionality for other types of income if something unexpected were to happen? What is your optionality in the face of an adverse life sequence?

I've thought this out for myself and to a certain extent I've put a couple of things in place to improve our optionality. I would encourage you to figure this out that improves your optionality regardless of whether you plan on retiring "early" or not.

​As for personal news, it's sad news. The Chief of our fire department from when I joined in 2003 passed away over the weekend. He had a huge impact on my life and it was one of my great privileges in life to have known him and worked with him. The family has asked me to speak at his memorial which is one of the great honors of my life.

The news of his passing is heartbreaking and, a word I used when my father died in 2015, it is heavy, there is a feeling of heaviness that goes with these milestones. But they are also complicated. Leading up to my father's passing I had to go to Spain (he lived there for the last 35 years of his life) twice just a few weeks apart and then there were a lot of moving parts to getting his remains back to the US and arrangements made at the VA. I will spare you our family dynamics as to why this fell on me exclusively but one of my brothers called what I did for our dad a mission. It was very sad but something I will always remember, it felt important in real time.

So it is with Chief's passing. I am heartbroken but being able to speak at the memorial is something I will always remember, it is important in real time. It is a chance to think about fires fought and other things worked on or events attended like the picture of us from 2010 in the header of this blog post.

Rest easy Chief, we'll take it from here.

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