The bear market has forced many to revise their FI goals and retirement plans. In this episode, Eric talks with Jason about pushing back his FI date, options he’s considering, whether BaristaFIRE could be the answer, the possibility of redefining work, and advice for others in a similar position. See the link below for the show notes.
Show notes may be found below the video
If you’re newer to the show, you’ll want to catch up on Eric’s story. We’ve listed some of the key episodes below that set the foundations in his life, business, and his recent financial thoughts + decisions. This is all relevant information to the conversation we had in the current episode.
- Our very first episode of Two Sides of FI lays out a good deal of important background for our respective paths to FI. You won’t want to miss “Our Financial Past and our FIRE Present” to get all the details.
- In “Two Careers, Two Paths to Financial Independence”, Eric talks about his journey to starting his own business. Given the essential role that this has played on his FI path, it’s must-see content.
- The two episodes describing Eric’s building of his business which yields 90% passive income are an important follow-up to the prior video. Check out Part 1 and Part 2 here to learn from his example.
- Our two-part series where we invited our spouses to the show is some of our most popular content. Learn more about Eric + Laura’s FIRE journey in Part 1 and Part 2 of this conversation.
- Asset allocation has been a key topic on Two Sides of FI over the course of our series. While our portfolios have changed a bit over time, if you haven’t watched our first two episodes on the topic (part 1 and part 2), this is relevant background. However, perhaps more important is the two-part series where Eric + Laura decide to move to a more conservative 70/30 portfolio. Here is Part 1 and Part 2 of that series, as well as some behind the scenes footage of how they made this decision.
- We’ve discussed the current market downturn several times this year. Our first discussion took place in “Our FIRE Portfolios are Down 20%, Now What?”, with the follow up episode, “Stock Market on FIRE – What We’re Doing in a Downturn”.
- We spoke with Safe Withdrawal Rate expert Karsten Jeske several months ago, and Eric references this in this episode. As we talked about in “Karsten Spoke, We Listened. Here’s What We Learned”, Eric later unwound some of his bond position moving to an 80/20 allocation.
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.
- Jason’s FI Blog
- Eric’s business: 30X40 Design Workshop
- Eric’s YouTube Channel
- Our podcast
4 Replies to “My Plan to Retire Early is ON HOLD”
Thank you for sharing a heartfelt episode. The market is slowing, but I think you are overstating the severity of the downturn on your retirement. Share values are 20% down, but future earnimgs are not.
We plan to live from the earnings business in our portfolio will produce in the next decades. The expected earnings are not down 20%, they are more heavily discounted by higher risk free interest rates. Stock prices are down, but saving for the future got easier. I got this idea from the rational reminder podcast.
I appreciate you sharing your experience. I’m right there with you and many others. Not easy times.
I also feel my date slipping due to current market conditions. I invested aggressively coming into COVID…100% individual stocks, heavily weighted into tech/growth. The market spike in 2020/21 shot the portfolio well beyond my target number so I began working toward a 2023/24 date.
Late 2020/21 I adjusted my portfolio allocation to reduce volatility a little.
– Trimmed large positions back to ~8% max
– New funds focused on stable, dividend paying companies…targeting ~30%
– Began slowly building a cash position to mitigate sequence of return risks…targeting 3+ years spending outside the portfolio
The market drawdown surprised me. My portfolio is ~40% off the high from about a year ago, so its no longer prudent to fund my cash pool by selling stocks. My portfolio is 15% off my original target. I do expect the market will resume an upward path as it has historically. My plan was to use the cash pool to protect me from bear market timing impacts. If I really believe I can rely on this strategy, it should apply in this moment.
I concluded I would be willing to retire with my current portfolio WITH about 3 years of spending in cash. So I am…
– Maximizing retirement account savings…still in equities
– Putting all new funds outside retirement accounts in cash
– Maxed out investment in I-bonds, built a ladder of 26-week T-bills, balance in high-yield account
– Re-planned transition to new post-retirement home – slowly after retirement rather than acquiring in advance
– Leisurely research and source our new destination rather than buying before retirement
– DIY improvements to home being sold…look for opportunities for a direct sale
– Continue a localized side business that defrays some of the out of pocket costs during this time
I’m standing by the strategy, building cash, letting the market do its thing. My actual retirement date depends on when I achieve the cash goal…the ballast for my strategy. I have a good paying job I like. With a little luck, 2024 may be achievable. I’ll play it by ear.
Great episode. This is super relevant to me too. I think in Jan I was right about where you were. FI in 2024 or maybe 2025. Now it’s at least 4-5 years from today. It’s a bummer to do this calculation. I try hard to remind myself every day that this is expected but it’s still frustrating. Here’s a few things I’ve been doing that help.
1. Stop looking at the market daily. This is hard, but I’ve moved towards looking once a month only. I realized that my mood was entirely different on a 1% up day vs a 1% down day. The goal of FI is to not worry about money. It’s not worth it to stress out about it daily.
2. I reread a lot of the early MMM posts. I’ve realized that there is a pretty big divergence between what they were talking about 10 years ago vs what a lot of people are talking about now in R/financialindependence. In the early years, MMM had a huge focus on reducing expenses by focusing on what really matters in life. Maybe rethinking some of these things will help you remember that you COULD get by with much less than you think you need. You could probably even quit now if you wanted to cut back in places. This is the stuff that really resonated with me when I started the path to FI back in 2016. The weird thing is comparing this to reddit and other platforms now. A lot of people these days are still working towards fire, but the number and spending levels are still in the range of normal consumerist society. This is kind of at odds with the original ideas of only needing enough to live a meaningful life.
3. I’ve been thinking about what to do in the meantime if this takes longer. I currently live & work in a HCOL city on the east coast where I’m not super happy, but have a great income. I’m working to find a remote role that will allow me to move back near family in a MCOL/LCOL area in the next year or two. This will likely be at a lower salary, but will let me start living a life closer to the early retirement life that I wanted sooner. This would allow me the flexibility to keep earning and investing (and keep health insurance) while being able to spend more time with family and enjoy life more. If this means slowing down a bit on the FI path, but gaining a much better life until then, it might be worth it.
Lastly I think the big thing to remember is why the Fed is raising rates. We’ve had 10% inflation over the past year. That’s already happened, there’s nothing we can do about it. These rate raises are to prevent 10% inflation every year for the foreseeable future. While this is blowing up our portfolios, it SHOULD make life more affordable in the future. This in itself will eventually make your portfolio stretch farther in retirement than it would if inflation goes out of control. In the long run, it shouldn’t matter if you need $10m to fund $400k a year or $2m to fund $80k a year. Before the rate raises, we were on the path towards needing a much higher number with years of 10% inflation. Ideally this helps keep things in check so we don’t need $400k a year to live on 20 years from now.
Thanks so much for sharing, Lee. There’s a lot of wisdom in what you’ve written. We appreciate your support + wish you all the best on your own FI journey.