Damn it Feels Good to be a Gangsta

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classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

ertyu wrote:
Sat Jan 25, 2020 1:47 am
It is condescending of you to:
I think we have basically butted heads from your first post onward. That's a good thing though, because the people with whom we most violently disagree, are generally the people we can learn the most from. This is also why this place is great, it's one of the few places where people with opposing opinions can duke it out for the world to see.

In general, I post the way I do because it's who I am. Maybe even more importantly I want to proffer reasonable alternatives to the rather singular, INTJ personality, pessimistic about future world, point of view that dominates this board. I purposefully interject emotional and practical-mined arguments into my posts because most humans are not calculating, machine-like in their thought processes. Also, because I think the INTJ weak point(s) are moving theory into practice, and often missing the pleuthera of type II errors that occur in favor of guaranteed results in the type I arena. This last post was on the extreme side. I sat there for about 15 minutes trying to decide if i wanted to post it or not. In the end, I wanted to elicit discussion and bring emotional responses to the table, so I did post it.

The tax argument was simply an example of showing how a conservative refrain that's posted all over the forum here (pay all taxes now or else they will be more later) ends up creating other problems (ie I want to sell but I can't do it). Sometimes the conservative option ends up creating unanticipated problems too. I think it would suck to work an extra several years a job one dislikes only to have created extra problems for yourself. I guess that's an opinion though.
Smashter wrote:
Sat Jan 25, 2020 9:04 am
All I see in this thread is him trying to grapple with a difficult issue in a reasoned and thoughtful way.
Thanks!
Fish wrote:
Sat Jan 25, 2020 3:15 am
IOW, Jacob’s advice of 44x is not for you. It’s for the uninformed lurker who gets here via google search and sees it out of context.
I think it's the type of thing that enures uninformed lurkers will be turned off to the concept of ERE. E-ER vs ERE, your explanation is basically the wiki. Maybe 44X is the smart move for an INTJ, failure is not an option, pensionless, risk averse, person who likes their job and wants E-ER. It's like ultra guaranteed success, with almost guaranteed type II errors baked in. So yes, I think there is an audience for this, I just happen to disagree that that audience is potential ERE'ers. Has @jacob, creator of ERE, ever drawn on his capital? I can't find any post to indicate that he has, but he can enlighten me if I'm wrong. That's really the way ERE is supposed to work though, no? Live a life of producing value on your terms, in your way, reduce consumption to 1/4th through personal application of systems design. IMO advocating saving 44X spending to start doing that is a overboard. It only applies to very specific circumstances, and very specific personalities. It's not a good general rule.

Personally, I think I oversaved at 16X, my # at time of semi-ERE. Not because I think that'll last me forever, but because I worked in a personally unfulfilling situation to save more and more. Post semi-ERE I quickly realized:

a) I will never feel safe just living on capital, so I will always need some form of income, even if it is intermittent or from some quasi self-employed ERE activity.

b) I need some form of structure in my life to maximize free time usage. Some type of occasional work fits the bill and it also makes a bunch more money.

c) My spending naturally reduced by about 20% when I wasn't working, plus I was more easily able to identify areas of improvement to potentially drag this lower.

These are three errors in judgement that would still be present even if I saved to 33X or44X, it's a REALLY good thing I didn't. I would have wasted 4-6 more years of my life in an undesirable situation. Think about that, 10% of my adult life gone! If that doesn't give one pause to think, I don't know what will.

Anyway, my point is that ERE really is Semi-RE, if you are planning to be value producing. This all comes down to the definition of what retirement means in ERE. I think the biggest enticement for ERE, outside of it's robust nature, is that you do not need to be FI to be ERE. A clear definition of retirement in ERE should be the disclaimer point, not amount of savings.
7Wannabe5 wrote:
Sat Jan 25, 2020 9:29 am
The 3% historical average vs. much higher average over last 100 years is due to differences in primary energy sources combined with approximately 1/3 contribution to growth by means of human ingenuity. This article may help to explain:
I almost addressed this directly on my first post/rant because I knew you or @jacob would bring it up. Yes, obviously fossil fuels have added a huge return to capital post industrialization. I certainly do not debate this, nor do I debate that eventually it'll just be used up. My point of contention is that 1/3 from human ingenuity. I think it's at least that much. I also think we will not lose that productivity increase from ingenuity to the sands of time. Economic systems, social systems, government types, computing power, agricultural methods, electricity use, and many, many more human accomplishments that will exist post fossil fuels. We may not have attained these things without oil, but now that we have, we've got them. I also think there's a ton of human ingenuity we've barely begun to tap, like bioengineering or quantum computing, that are not super energy intensive, and can continue to develop indefinity. Additionally, some ingenuity is not being used to it's practical limit because we still have oil (permaculture). Once it's economically feasible, some of these things will go into more widespread use and help reduce the impact of productivity loss from lack of easy energy. Bottom line, we've got some huge problems to overcome. However, we also have a hugely increased tool kit to address them thanks to our time spent in easy energy.

Now, i know i'll be accused of being a techno-optimist. That is not the case. I think transitions are difficult and I also think this one will hit us hard, a techno-optimist would dispute that. However I do think that the end result of this situation will probably not look as bad as the doomers think it will. I also think the doomer timelines are often extremely exaggerated. I think the bulk of the problems from climate and energy will not come into play for decades, which is far longer than the average investors timeframe in a single investment vehicle. Case in point, the new peak oil thread. I was absolutely amazed to read @jacob's comment, who was heavily involved in the movement, that the peak oil folks had no idea how much fracking would impact the timeline of the issue in the late 1990's, 2000's. I didn't give a s**t about peak oil back then, yet I knew of fracking's potential because I had a couple of beers with a single geologist one night. Like, no body in peak oil bothered to investigate this stuff? Or was it, this obviously readily available information, didn't fit into the doomer peak oil confirmation bias so they ignored it? Either way, they missed it completely. Obviously it's not just the average joe, c_L type who can fall victim to confirmation bias. As a matter, of fact I think the intellectuals are much more likely to fall into this trap because they bubble themselves off from reality into self reamfirming think tanks.

My basic point is that we are not going to fall into the dark ages in the near future. Returns on capital will slow, particularly as these things manifest themselves. However, I do not think it's fair to say they will return to 3% real of preindustrial revolution.
jacob wrote:
Sat Jan 25, 2020 10:14 am
If the market dropped 66% over the next few months (pulling another credit crisis), my calculations would actually look pretty good suggesting that "15 years" would be a reasonable number. Would that make me an optimist?
Yes, it would. Were you suggesting 15X back in 2009? I don't see that in the blog. Probably because no one knew the outcome and how all this QE would inflate assets.

Im sorry I came across so strong. I just want to make an counterpoint that also plays into emotions. I do, however, think you are a pessimist, which is not a bad thing. Look, I'm not arguing that a E-ER person who wants to "set it and forget it" invest, can sustain 60 years on 25X with no other income. That's a huge risk! I do think they'd be safe at 33X, even in these valuations. The thing is though, that's not ERE. That's mainstream FIRE, or E-ER. ERE has never advocated a static, singular investment strategy. I think you're giving mainstream FIRE financial advice, but giving it to people trying to do ERE.

Mainstream FIRE can be found all over the place now-a-days. It's essentially evolved into something only the top 20% in income can attain because they are saving half of their 150K+ dual income salaries. That leaves a huge gap of people who get excited about reducing consumption, then read into it and realize it's unattainable for them. This is where ERE comes in, because it's attainable for almost everyone. You don't really even have to be FI to do it, you just have to make sure you want a "retirement" in line with what we define. Value producing, 1/4 of resource usage through systems design, active, self directed.

People come to ERE because it's different than FIRE. Something they feel they have a chance to attain. I simply want to be a voice encouraging them to go for it if they are unhappy with their current arrangements. That's why I detail my struggles trying to reach some semblance of an ERE lifestyle in my journal. I feel it's semi-ERE, not because I still work intermittently. I think ERE demands value producing work. It's because I haven't been able to fully integrate the systems thinking and 1/4 spending. Basically, I just don't want the casual reader to come in here and think they need to save 44X their current spending to make this work and click "x" because it's even worse than what the FIRE sites are telling them.

I also realize you are probably a bit conservative because of all the times you took it in the proverbial a** from the casual observers/media not understanding when you were actively blogging. You took it for all of us back then, so thank you. I can see how you, as the creator of ERE, wouldn't want to be called out for recklessly advising people they don't need to be FI, only financially secure, to quit their jobs and try this lifestyle. I, however, am a nobody, so I can do it as much as I want.


@J+G
Thanks for letting me use your journal! :D

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Re: Damn it Feels Good to be a Gangsta

Post by jacob »

@cL - I'm absolutely open-minded towards people pulling the plug with lower savings. ERE is very flexible in that regard and FI didn't get that much more coverage than semi-retirement or intermittent work as a strategy in the ERE-canon. However, since FI means "never having to work again ever" and since that's what people are asking about, then I would not consider someone who is invested in the US to be in a stage of "never having to work again ever" with less than 44 years savings (in spring 2020). My default fair-value number (as per the book) would be 33x (3% WR). When I retired in 2009, the markets were just about fair valued but my WR was 3.67% or 4.67% (see above) which is more than 3%, so I guess that was optimistic of me. Or maybe not, since I had the copy-editing gig.

I have indeed never drawn from my investments. I've tried several different ways to make money, albeit not very desperately(*) The ones that could have covered my expenses were copy-editing (2009-2010), quant finance (2012-2015), and book sales (2010-2020)---there's some overlap but you note it covers the entire period from physics retirement to now. The ones that would have failed to make enough are blogging, bicycle repair, woodworking, and the sustainable nonprofit. None of these ever exceeded half my spending except maybe blogging for a couple of the early years(?).

(*) I do think that having oversaved makes me lazy or rather picky when it comes to income opportunities. This in turn might exclude me from other opportunities as I just sit here at home supporting my capital investments and watching the money roll in instead. It's a debate I've had with Ego over the years and I think he's right.

The pertinent question is, of course, could I easily go back to work if I had to at this point. I don't know but it doesn't feel as easy as it did 10 years or even 5 years ago. I don't know, I haven't tried, but I feel stale when it comes to work. This is part of why I'm not a fan of the common "always 25x because I hope I can go back to making $25k/year 20 years from now if the money is about to run out"-strategy.

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

classical_Liberal wrote: My point of contention is that 1/3 from human ingenuity. I think it's at least that much. I also think we will not lose that productivity increase from ingenuity to the sands of time.
Even though "ingenuity" is assigned magical importance in our modern economies, it is very poorly defined and understood. So, it seems like both optimists and pessimists feel free to blithely insert or dismiss it as a factor. The spark of invention itself does not require scale, and, in fact, can't be brute produced by scale or commonly assumed economic incentives. It almost always and only occurs at the level of internally motivated individual within small group freely engaging in collaboration to solve problems in which they are intrinsically interested. However, what modern government models and large corporations are good at is providing incentives and facilities necessary to bring inventions/innovations to general population scale of distribution, and general distribution of prior inventions is obviously of great benefit since even if your personal collaboration village of 150 includes the reincarnations of Claude Shannon, Benjamin Franklin, Albert Einstein, and Ada Lovelace; you will be a bit screwed at moving forward if you have to start from level of Primitive Technology scratch. For example, almost all of Franklin's many and varied livelong examples of homespun ingenuity were based on books or thinking society models which he acquired directly from London. Therefore, whether or not "lost to sands of time" is highly correlated with ability to maintain large affluent cities (subtract slums) and complex communication networks which is highly correlated with ability to produce/store and transport large flows of food and other supplies into cities and large flows of waste out of cities, while simultaneously suppressing crime and disease. Right now in the U.S., these flows are almost exclusively handled by trucks running on petroleum. So, do your own back-of-the-napkin calculation for next best (or better! cheaper!)substitute likely to be available by 2050.

That said, as I implied with the :lol: I inserted in my last post you referenced, 33% is just my very rough conservative semi-intuitive guesstimate based on my reading. The much more important point I was attempting to make is that it is not 0% or 100%.

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

jacob wrote:ERE is very flexible in that regard and FI didn't get that much more coverage than semi-retirement or intermittent work as a strategy in the ERE-canon.
Very true. In fact, I sometimes have to go back and re-read the book in order to shake off the influence of the FIRE network majority. Kind of like if you read an advert for a gym and you are sold on basis of "New rotation of fun classes every month!", but then the reality is mostly people silently lifting heavy weights or running laps because "efficient." OTOH, I do find the math attached to the FI alternative rather seductive.

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Re: Damn it Feels Good to be a Gangsta

Post by jennypenny »

7Wannabe5 wrote:
Mon Jan 27, 2020 9:30 am
In fact, I sometimes have to go back and re-read the book in order to shake off the influence of the FIRE network majority. ... I do find the math attached to the FI alternative rather seductive.
It's seductive because of Drucker's adage “If you can’t measure it, you can’t improve it.” Well, it's seductive to the types of people that frequent this forum. Other types might be better at assessing (and therefore acquiring) social capital and would place their faith in that to sustain them. Still others like Ego are better at assessing market and skill value and put their faith in that. I don't see smaller bank balances or 'semi' ERE as risky per se ... it's the total package that's important. The risk (IMO) is that the other skills are generally harder to measure, so while other types of capital may at their core be more valuable, there's also more room for a catastrophic error in judgement because of the imprecision in measurement.

7Wannabe5
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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

@jennypenny:

It's also seductive for reason advert promulgated by the Tulip Bulb King is seductive; promise of great increase of wealth inherent in exponential growth.
The risk (IMO) is that the other skills are generally harder to measure, so while other types of capital may at their core be more valuable, there's also more room for a catastrophic error in judgement because of the imprecision in measurement.
Mark Boyle, like me (except in much more sincere, serious NF manner), often uses sex as end case example of the rut you wind up in seeking safety in that which can be measured:
Advertising slogan for the BlackBerry Playbook. It goes "Anything worth doing is worth doing faster."

Good point, Blackberry. Why spend an hour or two slowly making love when you can fuck somebody for five minutes, after all?- "The Way Home"
I know you would agree that at some point in your lifestyle systems design you have to start considering "qualities" and the factors that make up "the good life" vs. "quantities" and the more measurable factors considered in "standard of living." For instance, Mark Boyle forgoes running water in his cabin, but devotes 2 evenings/week to the practice of tantra based couples massage in front of fire. At what net-worth or SWR would you recommend switching over from hours-devoted-to-paid-work vs. hours devoted to tantric couples massage in front of fire? Or other simple sensual or aesthetic pleasures such as taking the time to arrange small bouquet on table when sharing a home-made meal? My argument is that 2 days/week of paid work, given other obviously needful factors, allows for plentiful free time for tantric massage, floral arrangement, plunking out blues on piano, creating garden sculptures, walking in the woods, lying on the beach, etc. etc. So, sometimes what is going on is that continued focus on that which is measurable alone or primarily might be avoidance mechanism, such as the fearful notion that young men often develop that informs them that money is primary attractant for female attention, rather than qualities less easily measured (obvious further note being that another easily measured asset is also often assigned critical importance.)

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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

horsewoman wrote:
Wed Jan 22, 2020 2:09 am
People fear to lose what they have, what they are used to.
I'd need ~100x expenses in order to feel comfortable retiring. That's because I've only ever used money from working and never from investment. So I want enough money to cover my expenses in cash for the rest of my life AND enough for a 3% SWR. I don't know a lot about investment, but I know enough to understand why this is a bad plan. That's still what I'd need, right now, in order to feel comfortable doing what I'm not used to.

I'd need ~1 JAFI (which is about 66% of the maximum amount of money I spend on head tax/ consumption in a year) in order to feel comfortable semi-EREing with part-time work. That's because I've never worked a 9-5 full-time job, never been in debt (the exception being college loans, which I paid, in full, the day they started accruing interest), have experience in not having a home, have very low expenses and have experience drawing on social and cultural capital.


The more tightly coupled you are to your means of income generation (stock of capital) the less flexibility you'll have and the more afraid you'll be to lose it.

It's a Wheaton Level thing. All of the part-time (already retired) people can't imagine working full-time (at all). FIRE people can't imagine relying on someone in their social network to fulfill a material need. Those with high-incomes from working fear losing them, regardless of happiness and investment income.
bigato wrote:
Mon Jan 27, 2020 4:43 am
c_L: maybe you remember when I told you that what you were calling semi-ere was just ere. And that you’d certainly decrease your expenses even further after you had more time in your hands. Well, I see the difference now: you are still tightly coupled to the need of having a job to sustain your lifestyle. Not only that, but so far you are tied to that one specific job. Why is that so? Do you think it’d be fair to say that had you somehow be able to sustain your desired lifestyle at 3 or 2%, maybe you’d have been more adventurous on the income making front by now?
@c_L and I always reach an impasse because I've never had a high-income (by middle-class U.S. standards) and my expenses have always been very low. It's hard for me to understand why you'd need/ want either of these things because they aren't my experience.
bigato wrote:
Mon Jan 27, 2020 4:43 am
To me, this is the crucial component that is lacking on a lower safety margin like 15x: loosely coupling. That is not enough freedom for me. It’s little more than FU money.
To me, this is an insane amount of safety margin. It's hard for me to understand why you would ever need more than 15x expenses saved. This is more money than I've ever had. This is more money than anyone I've ever known has ever had*.

*Possible exceptions being musicians who've written hit songs, successful small business owners that I know and a couple of people from this forum that I've met.

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Re: Damn it Feels Good to be a Gangsta

Post by 7Wannabe5 »

Jin+Guice wrote:It's a Wheaton Level thing. All of the part-time (already retired) people can't imagine working full-time (at all).
Not true. I am waiting to hear on whether I got a full-time job as I type this. Why? Because I want to quickly get my roll back up to the level necessary to finance a couple specific new ventures. The hardest thing about doing this at my advanced age is not learning new things, spit-polishing up my resume/certifications, or interviewing with people significantly younger than me. The hardest thing is still not becoming completely aggravated with those in my social circle who see this as a sign that I am finally coming around to conventional wisdom/lifestyle.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

bigato wrote:
Mon Jan 27, 2020 4:43 am
c_L: maybe you remember when I told you that what you were calling semi-ere was just ere....To me, this is the crucial component that is lacking on a lower safety margin like 15x: loosely coupling.
I do remember. This is a great point! After some thought, I think I'm coupled to my current field for a few reasons.

a) Burnout decompression. It has taken me months to really feel like myself again. I worked too long in an unsatisfactory arrangement and haven't put any effort into looking for other value producing options.

b) Inertia. I got myself into this retirement thing without truly being prepared. I wasn't really sure what I wanted to do, I just knew it wasn't what I was doing. I really should have started thinking about this a year before I semi-RE'ed and got the ball roll'en. Since I didn't, I'm letting inertia win.

c) I make too much money. Part time work in my current job has a big golden handcuff factor. It pays too well, if it paid less I would have a lot more options at the lower pay level. So here, maybe, money comes into play. Really though it's just an efficiency thing, coupled with not wanting to do anything value producing for less than I know I could get nursing. An income-based cousin to the "too much money" @jacob wrote about above.

While "a" is fading with time, "b" is kind'a linked to the measurement issues that @JP talks about above(her comments are super important, IMO), I spent a lot of my off time dealing with the question of how to measure the impacts of various activities in relation to systems theory. Lastly, "c" is going to be an issue for as long as I'm qualified for this type of work. I have no progress here, and I will never feel safe living off investments completely (2% or 3 % won't cut it without cash flow from activities or at least some way to measure progress in non cash flow realms), so I need to make some. Advice would be greatly appreciated, throw it in my journal if you have any.

___________

I feel I made my points effectively, the responses have been thought provoking, but I still think I'm mostly right :D . I don't wanna keep taking up J+G's journal going back and forth, if he keeps It going I'll keep reading though. Thanks all.

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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

7Wannabe5 wrote:
Mon Jan 27, 2020 12:35 pm
Jin+Guice wrote:
It's a Wheaton Level thing. All of the part-time (already retired) people can't imagine working full-time (at all).
Not true. I am waiting to hear on whether I got a full-time job as I type this.
Haha, well, people do make changes.
7Wannabe5 wrote:
Mon Jan 27, 2020 12:35 pm
The hardest thing is still not becoming completely aggravated with those in my social circle who see this as a sign that I am finally coming around to conventional wisdom/lifestyle.
If only I could have the persistence/ conviction that "normal" people feel for the efficacy and rightness of "normality."




@c_L: "a" is totally valid. With 15x expenses saved, if you have to burn 1x decompressing, you've still got 14 left. To "b" and "c," just go back and try it? I know that's what you're doing. If you are absolutely miserable, then you can quit. If it's kind of o.k., you can look for other options in between now and your next contract. If you love it you can take another break and then go back to your next contract.


Also, I don't think it's a hi-jacking if you're discussing the issue of the thing I posted about. I did want to start a blog and having it here allows me to post infrequently, engage my target audience and ensure the quality of the comments. I want to hear about individual situations and opinions as they relate to what I've posted about and others' comments about the post.

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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

Paid Employment as an Investment Vehicle

In my last post I hoped to highlight that a fear of running out of money should be balanced against a fear of running out of time to do what you want (even if you just want to relax).

While I think fear of the latter is underestimated and fear of the former is overestimated, today I'm going to talk about strategies for not running out of money. I believe that semi-ERE is a more robust cashflow strategy than full ERE.

Why? It's more diverse. ERE is the means to maintain cashflow to support the life that you want. Utilizing semi-ERE may decrease the amount of total paper assets you hold, but it increases your the number of streams of cashflow you have access to. What happens if your entire portfolio fails? You still have your job to rely on. No holes in the resume to worry about. What happens if you get fired? You have your assets to drawn down on.

Remember that, at a 3% assumed withdrawal rate, $1,000/ year of earned income replaces $33k ($44k at current market prices?) of savings. If you're confident in your ability to earn $3k a year you can now weather a ~100k (~130k!) decrease in your portfolio.

Of course correlation between paid employment and other assets is important. If you hold only stocks working on Wall Street won't provide much diversity and if you hold only bonds working for the government isn't likely to be the most robust strategy. Assuming you haven't intentionally created a scenario wear the correlation between paid work and paper holdings is 100%, having a part-time job is guaranteed to diversify your cashflow portfolio.

Now imagine the robustness of a diversified portfolio and holding 2 or 3 part-time jobs.

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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

When you start looking at income vs SWR of portfolio, the more pessimistic one is about returns on capital, the more appealing income streams from other sources become. Which is interesting, because in practice, most folks on here who are pessimistic about future returns seem to argue a double-down strategy on the lowest yielding potential future cash flow, and decide to just save more capital.

Sometimes, I think all the discussions around here about one strategy being better than another really revolve around personal preferences and life experiences. Then we create reasons to show why one way is safer, or more robust than the other based on our personal mythos of "what if's".

Some people try 1-2 different lifestyles and find one that fits really well. Like J+G and his multiple income streams, doing many different things in a given month. Some people try many and can't seem to find one that fits and continue to struggle to find something that works best for them.

Most have only tried one, specialized salaryman, and know it's not a good fit, so are trying to transition to another, FI-retired. The real risk here is that after years of working in the former to reach the later, it's very possible they'll realize FI-retired isn't a cure-all, and maybe even a worse fit for their personalities than specialized salaryman. The false dichotomy here can be very costly in terms of life energy and happiness.

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Re: Damn it Feels Good to be a Gangsta

Post by 2Birds1Stone »

classical_Liberal wrote:
Thu Feb 06, 2020 8:37 pm
Most have only tried one, specialized salaryman, and know it's not a good fit, so are trying to transition to another, FI-retired. The real risk here is that after years of working in the former to reach the later, it's very possible they'll realize FI-retired isn't a cure-all....
And for some of us, it's just what the Dr. ordered ;)

I'm actually looking forward to my next "job" or opportunity to earn a little income, now that I don't *need* it. The points about keeping some semblance of employ-ability (at least on paper), and another you made a while ago, about hedging against inflation are the biggest reasons.

Damn, it really does feel good to be a gangsta.

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Re: Damn it Feels Good to be a Gangsta

Post by flying_pan »

Hey, @J+G, great journal. I enjoyed your thoughts about semi-ERE and resilience. I do agree that many people like to treat full-time job as a one-time (although a long one) inconvenience to reach the magical 25x/33x number and never worry about it again.

Although they still have to worry, because:

1. unexpected spending might happen any time (health being the biggest offender here)
2. negative feedback loop from the market
3. nobody knows what will happen in 50 years

So I do think that many people worry even after reaching that number. However, when people argue that they won't be able to be employed at their cushy six-figure jobs again, I personally don't understand why they need it. If you have enough funds and market still grows (so we are not in negative rates), you just need to have a relatively small income to maintain your life, and it does not even have to be 100% of your expenses (again, assuming you already have some funds saved).

So, I agree that part-time work can solve a lot of troubles and worries. I guess people are afraid to work somewhere else compared to what they are used to; even though it might be only temporarily and part-time.

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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

classical_Liberal wrote:
Thu Feb 06, 2020 8:37 pm
When you start looking at income vs SWR of portfolio, the more pessimistic one is about returns on capital, the more appealing income streams from other sources become. Which is interesting, because in practice, most folks on here who are pessimistic about future returns seem to argue a double-down strategy on the lowest yielding potential future cash flow, and decide to just save more capital.
This is something I was trying to talk about in a previous post about how low the actual return rate on a 3% SWR is. Using the moneychimp CAGR calculator... it looks like the CAGR is 1% (assuming a 60yr time period). Using the moneychimp annuity calculator, it looks like the growth rate is 2.3% (again assuming a 60 yr time period). If you need 44x expenses it's a CAGR of 0.5% and a growth rate of 1.11%. Sounds like it's a pretty good time to be working for pay.
2Birds1Stone wrote:
Fri Feb 07, 2020 10:12 am
I'm actually looking forward to my next "job" or opportunity to earn a little income, now that I don't *need* it.
A glowing endorsement for rejoining the workforce from the recently retired, haha.
flying_pan wrote:
Fri Feb 07, 2020 3:53 pm
However, when people argue that they won't be able to be employed at their cushy six-figure jobs again, I personally don't understand why they need it. If you have enough funds and market still grows (so we are not in negative rates), you just need to have a relatively small income to maintain your life, and it does not even have to be 100% of your expenses (again, assuming you already have some funds saved).
I agree in principal; however, there are those who are in good situations and I think it can be worth it to wait it out as long as there is (1) a realistic plan on when quitting will actually occur (golden handcuffs are real) and (2) some semblance of a plan for life after full FI.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

Jin+Guice wrote:
Tue Feb 11, 2020 3:04 pm
If you need 44x expenses it's a CAGR of 0.5% and a growth rate of 1.11%. Sounds like it's a pretty good time to be working for pay.
Add to this the fact that pay from jobs almost always lines up with inflationary pressures over enough time. It's one of the best protections from inflation.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

I know we're all obsessing over coronavirus currently. Personally I'm doing fine, quarantining with a stack of cash in the bank. I'm eyeing the possibility that 1) assets are soon to be on sale after being overvalued for a long time (FWIW I don't think they're "on sale" yet) and 2) that inflation may be coming, meaning I need to get out of cash. As I've stated other places on the forum, my plan is to move towards Golden Butterfly if cash starts looking bad, while I continue to learn about investing to come up with a long-term strategy.

As a break from all of this here's a semi-ERE post that I've been planning for awhile. I am planning one about coronavirus, resilience and semi-ERE when this is all over.


Semi-ERE and Still Retire Early:

Laying out the argument for semi-ERE I've been focused on the "representative full semi-EREer." That is, someone who works for their entire life, but only enough hours to earn what is needed in any given period.

This is just an example of another extreme of extreme early retirement. In practice I imagine semi-EREers will do some combination of working full-time, working over-time, working part-time, working multiple jobs at once, working no jobs at all and accidently earning income from various pursuits.

Discovering ERE has the curious quality of reducing the expectation of full-time work from 40+ years to 5-7 years. One day your hating your job, desperately searching the internet for a way to shorten your prison sentence by a few years, the next your cursing yourself for having to work another month. While I argue that a brief period of (often painful) full-time work is not necessary to enjoy the fruits of extremely low expenditures, I do think there is a high value in saving excess money generated from working. Even if some of this money is spent during sabbaticals or "mini-retirements," I believe it is likely that the semi-EREer will end up with enough money to retire much earlier than traditional retirement age.

Starting down a path towards semi-ERE does not block you from eventually pursuing ERE full throttle. 5 years (which requires a very high, though certainly attainable, savings rate) is an incredibly short amount of time to work to save enough for your entire life. 5 years is also an incredible amount of time to waste devoting most of your time to something you dislike. However, if it takes ~5 years to save the requisite 35x expenses and you dick around for 14 years doing stuff you like and "only" saving 50%, you now have the opportunity to retire with 3 years of full-time work.

I could come up with a million different combinations of intermittent full and part-time work. The point is, quitting a highly paid job you dislike today (or in 3 months or 6 months or a year) and working part-time while leading a more enjoyable life does not suddenly disqualify you from working full-time ever again or retiring before traditional retirement age.

classical_Liberal
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Re: Damn it Feels Good to be a Gangsta

Post by classical_Liberal »

Given the current investment climate, I feel I should add to J+G's post. Semi-ERE'ers are basically immune to sequence of return risk. This bear has thus far been surprisingly nonstressful for me, considering I pulled the trigger on Semi-ERE just six months before onset.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

@c_L: Good point. This goes back to my last semi-ERE post, which was about how I've come to view part-time work as another leg of my investment portfolio. A diverse portfolio of jobs, employment opportunities and skills reduces the chances for failure. Employment diversification may come at the expense of $/ hour, but as with investments, risk and return can be balanced. The salaryman is much like the total stock market portfolio, lucrative in good times but volatile when things go wrong.

Like c_L says, sequence of return risk is greatly reduced if not eliminated and the problem of anticipating what you and the world will look like in 50 years is also minimized.

Jin+Guice
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Re: Damn it Feels Good to be a Gangsta

Post by Jin+Guice »

The girlfriend and I are having some issues (you guys know that I'm eventually going to give you the juicy details in the polyamory thread) so I moved out for half the week to my friend's urban garden on the other side of the Mississippi River. He's got a tiny container house that he lives in (illegally) and I'm living in a Travel Trailer behind his house for half the week.

I'm pretty excited about the move, I think it'll give me some chances to up my higher Wheaton level skills. My gardening skills are pretty weak, but I'm helping him with the urban garden and am hoping to help him get off grid. Taking a residence off the grid is something wanted to do for a long time, but it seems so much more achievable with a tiny house a little further removed from society than a stick house in the middle of the city. My girlfriend is pretty introverted and we end up hanging out at home a lot. I'm excited to go out a bit more* and my friend also has people over to his property a fair amount.

*After then coronavirus bans are over of course! I stopped being super careful about this two weeks ago. I'm still taking a lot of precautions but I'm not quaranting anymore. I know I've been exposed to the virus several times, but obviously I don't know if it transferred to me or not. I had a very weird illness in the beginning of March after my GF's friend visited from Oregon, but I haven't gotten sick after any of the confirmed exposures.

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