2017 Year End Summary
Well, I'm a few days late with this. From a financial perspective 2017 went quite well overall. I keep some financial projections I made in 2012 of my financial trajectory. I finished 2015 behind those projections. I finished 2017 ahead of them, for all intents and purposes at where I projected I'd be around the end of Q1 2019. And those projections did not reflect a substantial withdrawal to purchase the cabin.
IRL things were not so rosy, but not awful. My mom continues fighting the good fight, but the overall trajectory is still downward. Some of that is the cancer and its treatment, some is just the natural order for someone headed into their upper 70s. My sister had a lot of setbacks but there is light at the end of the tunnel there. Things at work have improved. A couple years ago I made up a plan to ready my house for sale starting 2 years out from leaving work, but I haven't really done much on that front. I just don't have the motivation for that and with 17 mos still to go at minimum, it hasn't become urgent. I'm starting to look at some trade-offs for working all of 2019 versus leaving at the end of May. I'm starting to think I might be better off spending a little more on my downsized retirement home to get into a bit better (safer) neighborhood. If working a few more months will get me there it might be worth it.
Yesterday at 1:00 a.m. my new granddaughter entered the world. Just before Christmas I learned I have another grandchild due in August of next year. Those events weigh heavily on me while wrestling with decisions to pull the plug. Not everyone agrees with me, but I still kind of look at families as units, even beyond the nuclear, and so I have no way of avoiding having to assess the consequences of my decisions a little more, I dunno, maybe holistically, in the context of family. It's the price of being an anachronism, I guess.
Spending for December came in at 2,424 making it the second consecutive month (third overall) where spending came in below my notional "SWR" based on existing financial investment assets alone. For the year, excluding income tax, I spent $37,500 compared to $31,500 in 2016. That's not good but it is still below what I'm targeting for spending post-ER. The increase was largely due to "hobby" spending, specifically guitar/music-related toys. With the Trump Effect causing a surge in my net worth I decided to lean forward and effectively cash in some profits and get an early start on my hobby music "studio". Since I started collecting comprehensive data in 2012 my all-in spending (including major home repairs/upgrades) has been around $3,100/mo, so I came in pretty close to that. Still, I hope to do better in 2018.
During December 2017 invested assets increased by about $16,700 and for the year by a little over $230,000. That's the highest 12-month total I've had and is the first year where investment return made a substantially larger contribution to growth than my ongoing savings. Net worth growth pretty much tracked invested asset growth. I don't bother to factor in any change in value of my real estate, but the tax authorities seem to think the value of those is increasing as well. My bank account balances were down slightly thanks to all my spendy-ness.
If I'd have walked away at the end of last year and the future followed my forward-looking assumptions I'd expect an increase of about 18% in my financial assets from now to age 70. Net of the anticipated proceeds from selling my current home/downsizing, my invested asset multiples are about 44X anticipated average annual withdrawals through age 70, and around 62X anticipated average annual withdrawals through age 80.
During the upcoming year I plan to significantly reduce my exposure to US equities in increments (as of this writing I've already made one move in that direction by selling off 10% yesterday). I don't buy into the, "If you've won the game, then stop playing" school of thought. I'll continue to play because that's what I do, but dialing down my risk seems increasingly prudent. Even though my intellect believes it is the right thing to do, I still find it difficult to sell against the Trump Effect.