Imprudent retirement

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prudentelo
Posts: 173
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Imprudent retirement

Post by prudentelo »

I actually retired just now.

Spending 1.5 JAFI [exactly]

Thought it would be higher but the Jacob has inflated quite a lot. JAFI number from 2021, so guess it's even lower in 2022.

Net Worth: 25 years of expenses [exactly]

Hm. The 4% rule. Dont worry, that's not why I retired. This is probably the worst time to retire. Not exactly, because January would have been worse. But almost. Maybe it's like retiring in that 1966 stagflation year that set the lowest SWR for USA. Maybe its worse. Ultimately, a big pile of money let me do what I wanted to do, rather than what I want to do being decided by needs of big piles of money. Do you want more security in retirement, or another five years of freedom in your youth? Made second choice. Dont know yet if it's right.

Quit job due to combination of crisis of faith, and pull of the new. Job was easy and well paid. Honestly too easy. I had hacked the thing so I didnt have to do anything. Figured if I were working for smart people, wouldnt have let me do that. Since they were also nasty, didnt feel sorry for them. Working for dumb and nasty people isn't how to live, so, good bye.

Social life basically online/spread across the world. One reason to ditch job is mobility, not just for geoarbitrage (possibility) but make it easier to see friends. Got a few standing invites for long stays at nice houses owned by people I know. Dont wanna take advantage of this for financial reasons, but it's a way to live.

Making the journal mostly because it's such a bad time for market sentiment, people are going back to work, etc. etc. Gotta show some example of doing the "wrong" thing.

AxelHeyst
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Re: Imprudent retirement

Post by AxelHeyst »

Nice! Congrats and I dig the concept of starting a journal this way. I'm interested in any details you care to share.

Scott 2
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Re: Imprudent retirement

Post by Scott 2 »

I think the first year of retirement is one of the most interesting, and unfortunately unexamined. Excited to see what you get up to. Congrats.

Smashter
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Re: Imprudent retirement

Post by Smashter »

It takes guts to leave a cushy job at this moment in time. I think it's really cool that you're not only bucking the trend, but writing about it! I look forward to following along.

candide
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Re: Imprudent retirement

Post by candide »

Joining the chorus that's happy for you.

You can't be working for dumb, nasty people when you have better options. So no matter how the next bit works out, you're making the right call.

sky
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Re: Imprudent retirement

Post by sky »

Protip: take naps.

prudentelo
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Re: Imprudent retirement

Post by prudentelo »

good sleep pays great dividends

sleeping well has never been a strength of mine

UrbanHomesteader
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Re: Imprudent retirement

Post by UrbanHomesteader »

Congratulations!!
Keep us posted on your activities.

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Lemur
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Re: Imprudent retirement

Post by Lemur »

Yeah that is probably the thing I'm looking forward to most one day - no damn alarm clock. I'm interested to see how you will spend your time without being in the salt mines.

MBBboy
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Re: Imprudent retirement

Post by MBBboy »

Congrats and looking forward to following along.

And FWIW, there's some research / speculation that retiring during down markets is actually a GOOD time to retire. One of the big killers in retirement is Sequence of Return Risk (SORR). When there's period of great market returns, lots of people hit their retirement numbers and retire......only to then face the downside of the cycle in their earliest retirement years.

By retiring during a bear market, SORR could work in your favor. You were at your number when things were bad, so might be facing a recovery over the next few years. After all, expected return is higher after downturns

Of course, this time could be different yadda yadda yadda

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Alice_AU
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Location: Sydney Australia

Re: Imprudent retirement

Post by Alice_AU »

Congratulations! How much is 1 JAFI these days?

prudentelo
Posts: 173
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Re: Imprudent retirement

Post by prudentelo »

July Update


First month of retirement. But not really because I got paid anyway. Bit of cheating. But I ran it like for real. Ignoring the second to last salary:


Spending: 1.39 JAFI-month

Hoped for more drop, but it's still a drop.

Side income: 0.04 JAFI-month

Mostly sign up offer, intro stuff that I didnt spend time for with a good salary. Barely worked on this at all, and only at the end. So, maybe it can grow next month.

Net spending: 1.35 JAFI-month

Net worth: 28 years expenses (3.55% WR)

Small market rally plus small drop in expenses make my retirement suddenly prudent. Journal is now over.


OK not really.




Some Observations on WRs

WR logic isnt perfect, like all logic, like all predictions for the future. But it makes some assumptions, and they assumptions often conservative. Biggest one is that you retire in very worst possible moment ever. This is conservative, makes sense, because you don't know for sure. It also lets WR logic give "fire and forget" advice because you are not giving catastrophe level advice even without knowing someone's circumstances, when they are reading your article, etc. etc. But important to remember that most times are not the worst possible time. Of course can also say, worst moment of the future can be (eventually WILL be) worse than worst moment of the past. You dont know we're not in that one. But at any given time, and especially if Great Depression didn't already start, you probably are not.

Another thing often forgotten is WR is not instant quantity. Not a moment to moment constraint. WR is the inflation adjusted absolute value of this percent of your original portfolio and stay constant throughout withdrawal period. What it means is that in many runs momentary WR can become large. If you impose different constraint, that WR can never be higher than that %, you are much more conservative than logic that leads to 3.5 or 4% as lowest WR. If you will (and can) go back to work as soon as WR rises above X, then X can be higher.

I notice there is bit of drift in thinking as FIRE-seeker seek more security: 4% as "safe enough" -> 3% as "safe worse than worst case" -> 3% as "average condition baseline" -> 3% "never to be momentarily exceeded". Each stage appear to human brain like mild additional safety margin. But really more like 2-3x as much money required. And almost always will never help, just more money you will eventually spend when you get old (or not)

With imprudent retirement, I observe following things:

1. WR is quite high with not much margin

2. Market conditions arent "good"

BUT

3. retired ~8mo after start of current "bear market", not in worst possible month, and saved considerable fraction of total scince then.

4. market conditions arent as bad as GD, tech bubble, etc. either (but could be as bad as the 70s stagflation)

So, it is likely I will not get rich from investments, but also, investments probably will survive.


Sleep

Never been strong point of mine. Like to sleep naturally 4am-noon, not very good for work life or social life. Started napping (suggested in this thread) for first time in life. Feel awake all the time, generally, even if I have to sleep in. Being really tired and forcing myself to do something anyway now a bit of shock. How did I live like this before? Maybe benefit #1 of early retirement, even semi-ERE.



Exercise

Is new #1 "growth zone". Never was particularly fit. Now I have the time for it. Hope to feel better, look better. But also, get new hobbies, make new friends outside of now defunct "work zone". Figure sports/outdoors is where the non-workers who go outside are likely to be. Let's see.

DutchGirl
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Re: Imprudent retirement

Post by DutchGirl »

Nice, how your sleep is improving - or at least your energy levels are improving with a sleep pattern that fits you.

What are you doing with exercise? Going to a gym, or working out outside, or yet something else?

prudentelo
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Re: Imprudent retirement

Post by prudentelo »

Currently, bodyweight and running

Move on to gym (hopefully), built solid base of fitness

THen move to "active hobbies" like hiking, climbing, perhaps learn diving.

Team sports, needing practice with the team, don't fit the lifestyle too well right now. But maybe.

M
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Re: Imprudent retirement

Post by M »

Posting to follow. I know there are some people who retired on 1 JAFI or 1.5 JAFI but it seems like a lot of people wind up in lifestyle inflation mode and going back to work or continue working for some reason.

Do you think you will ever go back to work in the future or are you done for good?

prudentelo
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Re: Imprudent retirement

Post by prudentelo »

" Do you think you will ever go back to work in the future or are you done for good?"

good question - though as ever hard to answer

I dont believe I willever be "forced" back to work. Unless capitalism ends/stock market fully expropriated or other such impersonal disaster. I can live well on 1.4 JAFI for life. WR logic suggests it will last my life.

But as always I wont refuse a job that serves my goals just to prove point to internet. It can happen. Would I accept a job ONLY for more money, if my stash remains good for 1.4 JAFI but I just want more [spending possibiltiy/security] ? maybe, but only if 1. it's a lot of money 2. it's pleasant/very painless work 3. no other big project going on 4. "I feel like it" My main ideal problem with this would be sense that it proves I have actually nothing to do with my own time, that is worth more to me than $30 or $40 per hour (at the high end, probably), which I like to think is not so.

I did not work long enough to qualify social security in my country. So if I never work again otherwise, will likely go back to work (at store or whatever) to qualify social security close to the retirement age (currently very far away). diversification to "inalienable" bond is just too good to not take

That's for "conventional" work. I have an interest in "side income" "incidental income" etc. as I discussed in other threads, like AxelHeyst's thread. I have no plan, insight, or experience in getting it. But it is something I actively think about always. I have some ideas, and one particularly may become enough income to live on, possibly much more than my withdrawals, at which point my stash may runaway and explode. Incidental income must be either so easy as to be negligible time/energy sink OR feel like a hobby (not just thematically related to hobby e.g. running store selling things related to hobby, that is store work not hobby work)

I would have no "ideological" problem spending the more money, but right now I dont really know what I would buy. I don't feel my life is constrained in any way by money. Can I spend money to speed up my VO2/muscle growth ?


though retirement is imprudent I feel comfortable right now, and comfortable about future. excited even

Scott 2
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Re: Imprudent retirement

Post by Scott 2 »

prudentelo wrote:
Tue Aug 16, 2022 8:01 am
Can I spend money to speed up my VO2/muscle growth ?
Absolutely. This is my biggest optional expense. Instruction, access to facilities, equipment for active hobbies, events, medical exams, recovery tools, etc.

For most people - making an active hobby part of your identity, is more effective than arbitrary fitness goals. Unless, of course - you want to identify as a gym rat. The advantage of seeking instruction, is you can quickly immerse in that hobby, see what the people are like. Do you want to be one of them?

To make some sweeping US centered statements - you'll find each sport has a type. Yoga tends towards liberal women in their 30's and 40's. Power lifting towards conservative men in their 20's and 30's. Endurance sports lean introverted, power sports extroverted. Not to say people don't mix, but there is definitely a dominant representation.

Personally (assuming a zero start) - I'd prioritize: moving better (injury prevention), then muscle (strength really), then v02. The number one priority is to not get injured.

prudentelo
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Re: Imprudent retirement

Post by prudentelo »

One can certainly force spending if required. But how many events and coaches are going to improve my running more than just running extra 5 minutes per session (assuming joints can take it)?

Exercise is not complex, most info on the internet now for free, difficulty is in execution. Discipline and consistency.

For sure if I must participate in sport such as fencing, dressage, elephant polo,etc. there will be costs. But unless already invested in elephant polo social circle, also free to choose soccer.

Got to admit I was impressed how Jacob managed to do sailing for "free". But Jacob is special guy.


"The number one priority is to not get injured."

Completely agree

Scott 2
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Re: Imprudent retirement

Post by Scott 2 »

In the case of running, you can spend on access to cross-training, recovery tools, training groups and gear. Heart rate monitor, for example.

The money goes into increasing your volume, intensity and adherence. You can buy down injury risk, buy up fun and social support.

Not that any of this is necessary, of course. But there are advantages to be gained. Your conditions can be so favorable to exercise, that the hardest part is resting enough. No discipline is required. You're excited to do the thing, all the time. The activity is part of your identity. It's far more sustainable than getting there through discipline, will power and hard work.


Jacob made the other end of this trade with sailing. The boat owners were buying their way better - getting access to his youth, strength, reliability, etc. That's definitely a more ERE focused tactic. I think what's special about his effort there, is he spent so little to get up to speed. There was no credential, just proof of work. That's a high bar to clear.

mathiverse
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Re: Imprudent retirement

Post by mathiverse »

If you want to get into sailing for races for free, it's not so hard if you are already living somewhere with a sailing scene like jacob did. First step, find where free beer can races are held, step two, show up to beer can races and ask if you can join someone on their boat who doesn't have a full crew. Done, you are now sailing for free. Next, take advantage of being on the boat to learn what is what and do your research with books so next time instead of just being rail meat (sit on the side of the boat that is high to balance it), maybe you can move up to another position like controlling a sail. Maybe someone will let you go out on their boat and show you some of the ropes after the beer can racing is over. Maybe someone is looking for crew next weekend for another race or for pleasure cruising. Basically, you won't know what the next step is until you get there and see what opportunities there are.

If that seems too hard, then taking a sailing class at one of the sailing clubs nearby can help you meet people who will invite you on their boats or introduce to someone who needs crew and you get direct instruction on the sailing part before you start beer can racing. That costs money, but let's say spending less than $1k a year is a win, then this works. (I'll note jacob paid some amount a year for sword fighting classes, so I don't think this is any less jacob-y than getting it completely for free.)

If you're lucky you'll live near a cheap, volunteer based sailing organization like https://www.cal-sailing.org/ where you can get free lessons and where you can go out on a boat all the time. If you are ERE, you can even use your time-rich lifestyle to get a discounted or free membership by volunteering to maintain the boats and sails (hey, also more skills to help you appeal as a crew member later when you are trying to do other sailing activities).

If you are in a bad location for having a sailing scene, then it seems harder than it is. Choosing something else is easier.

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