Time to Retire? – Winter of 2022
8 years ago when I put pen to paper, I had marked the Winter of 2022 as my target date to retire. Like most multi-year estimations, I was wrong. 8 years ago I did not have a wife. I did not have 3 kids. I did not own a house. And I understood very little about personal finance. In this post, I will talk about how far off I think my estimation was and the lessons that I’ve learned as a result. Are you ready? Standby.
Estimation
As of 12/26/2022 I am off of my retirement target by $274,510.63. It honestly feels like a rounding error in the grand scheme of things, but I am going to hold myself accountable to the strictest standards. Retirement shouldn’t be taken lightly and it’s something I believe one should do conservatively.
So what exactly is my new retirement target date? This is something that I’ve been wrestling with for the last half year. Since so much of my net worth is tied to the stock market and not my income, it’s hard to estimate. However, my best estimation is to estimate when the markets will recover and/or when one of my previous startups IPO’s, whichever is first. When any of those events happen, I’ll be way ahead of my original $4,000,000 retirement goal.
Finally, through the massive inflation we’ve seen in the last 2 years, I’ve changed my perspective on how to compute the retirement number. I will into more detail in a different article, but the general idea is to protect one’s biggest expenses from inflation.
Top 3 Lessons Learned
Early retirement planning and execution has been the longest and hardest project I’ve worked on in my life. So far, here are my top 3 lessons about planning for FIRE:
You want to minimize big financial changes during retirement – I recommend securing your primary residence before retiring, especially if you’ve never been a homeowner. I feel especially strong about this if you have kids. My biggest flaw in my retirement plan was I totally overlooked the retiring early (“RE”) part of FIRE. I solely focused on building my portfolio and maximizing my income (i.e. offense) that I forgot to switch gears and go into pre-early retirement (i.e. defense). For example, what I believe is the “wrong” path is to switch from a growth stock portfolio to a conservative stock portfolio after retirement. Or to purchase your primary residence after your retirement. When you are working is when you have the most resources to deal with any headwinds that may (will) occur.
Be flexible with the plan, inflexible with retirement conditions – 8 years ago I had no idea what it was like to be a father, husband, and son to aging parents. All I know was that I wanted everyone in my family to live a normal upper-middle class life and not have to stress about money or work in order to do so. Those conditions stay true today, however, the cost and the way to do that are different. The cost of housing, high inflation on consumer goods, and the cost to borrow have all impacted the difficulty of retiring early. It has crossed my mind to just close my eyes and retire early with what I have. There’s a good chance I will be fine doing so. But that type of thinking isn’t what I built my success on. As a result, I’ve changed my plan to not only have a net worth target but also have a set of “readiness” conditions. More on that in a future article.
Build a spreadsheet and have a rough estimate for your FIRE timeline – this keeps you honest and encourages you to keep controlling the controllables in your road to FIRE (e.g. keeping spending in check, earning as much as you promised yourself, investing consistently, etc.). Even though I was off, I wouldn’t have been close to where I am today if it weren’t for my spreadsheet that I look at daily. Having a system for accountability that is accurate, consistent, and non-emotional has been my best tool in achieving multi-year goals.
Final Thoughts
One of the best things about my personal road to FIRE is that I’ve been able to enjoy the long ride. I’ve been able to grow my family without hesitation about finances. I’ve been able to enjoy every single holiday season without penny-pinching. I’ve been able to invest in my hobbies with little compromise. In short, I’ve been very fortunate. While I do my yearly reflection in life, even though I fell short of my FIRE plan, there are many things for me to be grateful for. My early retirement will come, it’s just waiting on some things that are out of my control at the moment.
OK, now back to work.
2023 was a fantastic year for people who held on to their stocks–up ~25% for the year. Despite interest rates, the cost of housing, and the cost of cars still being high, it was an overall good year for investors. As long as you were in crypto, bonds, or stocks it was pretty hard to have lost money. In this post, I will go over some of the highlights of my year. Are you ready? Standby.
Over the last 8 years as a manager of engineers and having been in hundreds of conversations about promotion candidates, I have learned that there is a huge disconnect between employee expectations and reality. Specifically, there is a gap in understanding of the employee’s role in the promotion process vs their manager, of the employee’s impact vs how hard they work, and of the employee’s behaviors vs how they are perceived by others. If you are frustrated about your lack of promotion or just want to learn how the sausage is made, this post is for you. Are you ready? Standby.
4 years ago when I started MyRoadToFire I got a good amount of readers because the FIRE community was defining fatFIRE as having a net worth of $2,500,000 but I, and many of you, believed that to be too low. In 2019, I strongly believed that having $4 million would comfortably allow a family to FIRE. Fast forward to the end of 2023, I strongly believe that having only $4 million would be extremely risky for that same family to FIRE. So was I wrong? As one of my most annoying managers used to say “yes and no.”