My current questions about FIRE

Thus far my blog has been a bunch of motivational posts trying to get some of my friends to consider their spending habits and the possibilities of FIRE.  There were also some spending updates, and a general reflection of the relief I have that I’m finally comfortable enough with myself not to care what others think about my lifestyle.  I’ve convinced a few friends to make some changes, and I’ll count that as a win!  

As for my spending, it has been under $1k/month for 2017, but that’s about to change… here comes the nice weather, stay tuned for future updates.  I hope when we see the entire year’s spend it will indeed average out to under $1k, but that may be a stretch.  Those that know me personally know that I will try, and also that my evil (:p) MINI enthusiast friends will encourage me to pull out my wallet for endless corners with squealing tires, long weekend trips, and good eats.  There are certainly worse “friends” in life.

With that said I’d like to get off my high horse a bit and get away from preaching FIRE while detailing some of the questions I have about retirement and living a nomadic lifestyle.  These questions constantly circle around my head, lingering like buzzing mosquitos.  I swat down one or two and more questions pop up, but my knowledge on the subject of FIRE has grown immensely in the past year or so and I enjoy the process.  I consider myself better educated about retirement than the average person, but I still have many questions to answer before I feel comfortable exiting the game.  I suspect this is part of the classic “one more year” syndrome for retirees where you continue to work just a little bit more and never pull the trigger because they have so many unknowns.  The other part of the syndrome that leads to continued work is wondering if you have the proper funds to support your lifestyle and all the calculations that go into that.

Off the top (or circling around inside) of my head, here are some questions that I’m working on:

    • Budget.  In a previous post I stated having the correct mindset of conscious spending was more important than having a budget, but not so once retired.  When someone retires early it’s already assumed they are conscious of their spending, else the road to FIRE would most likely not happen early.  But once you pull the pin, you better have your budget locked down and it’d be a good idea to not only have plan A, but plan B, and plan C too.  This way you can design in some flexibility to vary your spending in an up or down market.  This flexibility  isn’t absolutely required for a successful retirement, but it can definitely help deaden a recession’s effect on your retirement nest egg, give you peace of mind, and increase the chances it will outlast you.  The flexibility is even more important the longer you plan to be retired for due to all the extra exposure your nest egg will have without the nicety of a paycheck to bail you out when the going gets tough.  Here is my current take on it, items in red I am currently researching.  I’ve also asked my elders to review my budget as they know more about costs due to aging (medical, dental, prescription)  and have handled more curveballs in life than I.  I also asked a fellow van dwelling nomad or two their thoughts as well on my nomadic budget. 
    • Lifestyle inflation.  Will the person I am today be the same guy, with the same spending habits to achieve happiness at age 50 or 60?   I certainly am a different person now than I was 10 years ago and I definitely spent a whole lot less, but in a decade will I want to spend more?
    • What worldly considerations would I need to make if my nomadic lifestyle was predominantly traveling in foreign countries?  How do visas work and how do I renew them?  How will I adjust to not speaking the native language and will I be lonely because of that?  Will I be able to properly estimate costs?  Will I be content being so far from family? So many more variables are introduced when it’s hard enough to budget/plan for nomadic life in the US.
    • How do I calculate state income tax from dividends and capital gains if I were to domicile in NY or CT?  A lot of retirees settle in states with no state income tax as they can be a major drag on your retirement funds.  People worry about paying over 1% for a mutual fund expense ratio (as they should), but are they weighing the considerably higher draws on retirement funds from state income taxes?  I know I am, and while NY and CT really aren’t friendly to retirees, I may still reside in NY or CT due to family and friends and that’s ok so long as I factor those costs in.
    • If I resigned today from my stressful career today, how long would it take me to save the same amount I can currently save in a year?  The first part of FIRE is Financial Independence and a related term is “FU Money,” or the ability to walk away from a poor job situation for a short time to take a break and find something with a better work/life balance that you enjoy.  That’s all fine and good, but I ~never~ want to work again unless I want to.  To walk away from a good paying job due to stress is a very big decision when you consider how long it would take to sock away that last little bit you need in order to retire at a much lower paying, but less stressful job.
    • Health insurance. It’s been on the minds of US citizens for years as well as mine with a knee replacement in my future and who knows what else as I age.  If you were an early retirement blogger when the Affordable Care Act passed years ago, that was seemingly your ticket to financial freedom without the worry of health care insurance bankrupting you by relentlessly outpacing regular inflation, or throwing your retirement calculations out of whack with a major medical event. But now I bet if you ask those same bloggers what you should do if you are close to retiring, they would say “wait and see.”  With a preexisting condition and the current political climate, will I have to work just for health insurance?  Maybe take a less stressful job for coverage?   I’ve had US healthcare my entire adult life (thankfully), will I be comfortable with medical tourism?  How do I account for out of pocket expenses with the budget?
    • Shiller CAPE index and withdrawal rates.  The Shiller CAPE index, historically one of the best models for forecasting long terms stock returns, is pretty darn high these days.  It’s one thing to be actively contributing to a retirement that is many years to come, but to be on the verge of retirement when the Shiller CAPE index is so high makes me pause.  If you believe in the index’s forecasting abilities,  our portfolios are in for a rough ride these next 10 years and if your portfolio gets hammered in the first 10 years of retirement, you’re subject to a sequence of returns risk.  So what to do?  Wait until valuations lower in a recession, then see how your portfolio has done and retire then?  Invest new money in bonds with historically low bond prices likely to go higher to lessen the blow?  Not sure.
    • Significant other. Relationships are hard enough as it is, now try to find one that works while on the road 24/7 and ask them to leave their perfectly good job without the same retirement funds in the bank… yeah, that’s seemingly impossible.  Easier to be single for life?  Time will tell.
    • Will I lose touch with old friends? It’s interesting how my worries/questions about nomadic living centered around the mechanics of how to do it…. Where to get water?  Where to park?  What if my vehicle breaks down?  Etcetera.  But now they center around how I will feel and how it will affect others close to me.  I really enjoy my time with my MINI and camping friends, as well as my family.  Their friendship means a lot to this extrovert.  When I hit the road things will certainly change, will these relationships stand the test of time or will then go dormant much like some friends who are busy raising families and lead a much different life?
    • Do I have enough buffer in my budget?  Lifestyle inflation is one thing, but do I have enough fat in my budget for incidentals and things I have not considered?  I’m confident being retired will be absolutely wonderful but if I’ve done a poor job of estimating costs, figuratively being stuck on the porch while life passes me by because I don’t have the funds doesn’t sound like much fun.  I’m willing to make some lifestyle compromises to retire early, but only to a certain extent.
    • Where do I stick cash?  I’ve been piling up a substantial amount of cash ever since the election of President Trump.   I’m scared of the current political environment and while I realize politicians have a very small effect on the economy over the long haul,  this combined with the current Shiller Cape Index has me worried.  I’m so close to retirement I’ve become extremely risk averse, but how do I ever get the motivation to get back in?  I know I need to eventually go in order to maintain my lifestyle over the next 60 years with spending and to keep up with inflation, but for now I’ve relied on my massive savings rate to continue to increase my wealth.
    • What’s so special about the US stock market?  A lot of early retirement bloggers are heavily invested in US Markets and have realized amazing gains since I’ve started to pay attention.  Will that continue over the long haul? Will we be like Japan?
    • When I do decide to invest, will I got VTIAX or VTSAX? Bonds? I’m a man of average intelligence, increasingly valuing simplicity in my life and that includes my investing style with passive indexes/ETFs.  Once I retire I don’t plan to touch my investment allocations but which funds and at what allocation?  I’ve been a fan of Vanguard for years so I’ll likely stay in their family of offerings.  We’ll see.
    • Do I fully understand van-life and living a nomadic lifestyle?  Of course not, but enough to know I’ll like it when considering the pros and cons?  Will I regret the decision to sell my paid off, tiny apartment and pull up roots?  God knows I’ve spent enough time on the Cheaprvliving forums asking questions and watching Vlogs on Youtube from vandwellers, but do I truly have a handle on what is in store for me?  This worry is fleeting the more I research, but it’s still in the back of my head, especially knowing my desires are so different from the norm.

So this is what’s currently buzzing around inside my head.  I’d love to hear what concerns you have and any suggestions for additional things I should consider.  I’ve definitely taken an active role in my financial and lifestyle planning and every little bit I learn gives me confidence I’m making the right decisions for me.  Knowledge is power!

6 thoughts on “My current questions about FIRE

  1. So you don’t have it all figured out yet? Great post, possibly the best so far….
    Things that would worry me if I were you:
    1. What if you don’t like the concept of living in a tiny (super tiny) space? Are you ready to make an investment and get something bigger? Is it in your budget?
    2. If for any reason you had to go back to work, what type of work would you do? How would you explain to employers a gap in jobs?
    3, Health Insurance.. I would not count on things improving in the US Healthcare system… but you could start researching with your current doctor if he can recommend hospitals or other doctors outside the US that can successfully perform what you will need.
    4. If you are thinking about living abroad, learn a new language (or more than one!). Google translator doesn’t count as there are places in the world where internet is not widely used. It could also help you make new friends on the road if you get lonely. The benefits are SO many….

    1. Great thoughts Cristina.

      1. Yes, the current vehicle of choice is a Toyota RAV4 Hybrid because it can provide true air conditioning vs. fans and swamp coolers in other vehicles. I don’t want my travel to be dictated solely by weather. If it is August and there is a festival in Georgia I want to attend… by golly I’m going (with A/C!)! But if that vehicle proves to be too small or not enough ground clearance, I’m confident I can trade it in for a more traditional rig for the same price or quite possibly less. Toyotas have great resale value. I’d be out A/C but other vandwellers seem to get along fine with that. I’d also get worse MPG, but that would most likely be offset by the lower purchase price and insurance costs. So I consider it a wash. I might have to travel less miles per year, but I’m currently budgeting for 20k/yr with higher gas prices in my budget, so even 15k sounds pretty good.
      2. I would not return to the corporate world. I think once I get a taste of what else is out there it would be hard to go back. I’d love to work at a camp for kids, or perhaps a dude ranch. If my body does not allow me, learning to program has always interested me. Heck, with my spending, even being a fulltime hall monitor at a school would be enough to lower my withdrawal rate significantly in a recession to give me portfolio some time to recover. Minimalism has its benefits. But yes a large gap in employment for the corporate world would be an issue.
      3. Agreed.
      4. Learning spanish would be wonderful, but in terms of priorities it comes second to fully figuring out my financial situation.

  2. It sounds like you have plenty of valid concerns, but for many of them, I think the answer is: you won’t know until you do it. You won’t know ahead of time if its enough money or if your lifestyle will expand. You won’t know if you’ll be satisfied as a single nomad until you spend some time living this way. I think one of the key advantages to FIRE is that you are still relatively “young” when you walk away. You are still employable and there will still be plenty of opportunities to return to some form of work if you decide that the lifestyle you’re planning isn’t quite what you wanted. Maybe you’ll love your new lifestyle and never go back. Maybe you’ll get back and return to work on your own terms. Either way, you’ll never know for sure until you jump in and do it. Leap of faith! (Also, please send this comment back to me in ~2 yrs when I’m in this position and afraid to walk away.)

    1. I agree. Though I love camping and minimalism, I may not enjoy the nomadic lifestyle. I think the psychological effects of being alone may be a bigger factor, but I also look forward to the freedom to explore as well as come and go as I please. There’s no free lunch! I ~know~ I am employable, but I also know I’ve got it pretty good right now and due to imposter’s syndrome (https://en.wikipedia.org/wiki/Impostor_syndrome), I question if I could do well in another corporate environment with a slightly different role. The other alternative is to do something that makes a decent wage (not a Walmart greeter, however low stress it might be), just not quite the level of responsibility…perhaps a single contributor. In any event, I ~really~ don’t want to face any of those scenarios after dreaming about retirement for ages, I’d much rather save “enough” and be done with it. Honestly, if I had healthcare squared away, I’d be done now. That’s is the single greatest risk to anyone finances in early retirement. It is downright scary! I really hope you guys make it in two years, would love to lounge around and reflect together!

  3. It is easier than ever to stay in touch with people. I can think of at least 10 ways to do so, most of which will require some type of data signal, but that is easier than ever to access (make sure you budget appropriately), and will only get easier as time goes on.

    Whether or not you will need the intimacy of direct human interaction is something you’ll need to experiment with. You’ll likely have direct contact with many new and interesting people wherever you go, especially since you are an extrovert. Will that suffice if your more entrenched relationships with friends and family are largely digital? I can’t tell you that, and you probably can’t either. You’ll just have to try it out and see.

    The beauty of your retirement is that you’ll likely have time and budgeting allotted to experiment with this before diving head first into the deep abyss. Stick your toes in first. Travel for a month, then come back. Travel for a year, then come back. My guess is that you will figure it out pretty quick.

    In any event, stay in touch. I’ll sure miss you.

  4. I hear you on staying in touch digitally, heck we do that now, I think it’s the in person stuff I’ll miss and the goal will be to stay active (meetup.com comes to mind) in meeting new people to fill my extroverted wants. Though my frugal self doesn’t like the idea, I’ll most likely keep my small apartment for a period of time while I am on the road just to make sure the nomadic lifestyle is right for me. I will surely miss all of my MINI crew, but the benefit of being nomadic is that I can come visit. 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *