Has your shrinking retirement portfolio left you considering part-time work to ease your anxiety? Inspired by a blog post from Go Curry Cracker, we discuss BaristaFIRE, time freedom, what it means to be “unemployable”, and what work we might consider post-retirement. Be sure to see the links below for the show notes and to the blog post referenced in the video.
Show notes may be found below the video
Never heard of BaristaFIRE before? Check out one of our earlier episodes, “So What’s Your Financial Independence (FI) Number?”. In this video, we talk about the different flavors of FIRE, decode the math used to calculate our FI numbers, and discuss where our FI numbers fall on the FIRE spectrum.
This isn’t the first time we’ve tackled the idea of working post-RE on the show. In “Financial Independence, Retire Early…Go Back to Work?”, we talked about an enticing job prospect that provided a lot of temptation for Jason. One of our temporal check-in episodes, we also discussed Eric’s strong focus on saving to achieve FI, how “vacation time” is different post-RE, as well as some recommended podcasts and books.
Failing at Early Retirement, a Go Curry Cracker blog post, was the inspiration for this episode. As we discussed in the video, in the article you’ll learn how author Jeremy took on some seasonal part-time work as a UPS driver, and what he learned from the experience.
We talked a lot about BaristaFIRE in today’s episode. The linked post from Financial Samurai is a comprehensive look at this path, and is a good primer for those seeking more information. In addition to the financial calculations provided in the article, there are numerous supporting tools available online including this BaristaFIRE calculator from Walletburst.
Do you want to avoid the biggest retirement risk? This simple to use tool will let you model your safe withdrawal rate and help ensure you don’t run out of money. In this walkthrough video, we teach you how to use this powerful, flexible, and FREE tool created by Karsten Jeske. Using the SWR Toolbox, you can ensure that you have a personalized plan that works with your own financial situation.
Part 2: Eric + Jason discuss how they’re using the SWR Toolbox and how Jason is struggling to spendas much as he can safely doin early retirement
How much money can you safely spend in retirement? In part two of this series on safe withdrawal rates, we discuss the #1 tool we’ve found to help you answer that question. Topics covered include the SWR Toolbox, our thoughts on Social Security, the challenges of spending in retirement, and how to get comfortable with increasing your withdrawal rate.
Download the Safe Withdrawal Rate (SWR) Toolbox
The Safe Withdrawal Rate Toolbox is available via Karsten Jeske’s Early Retirement Now blog. The current version can be downloaded via Part 28 of the SWR series. This is also the post where the revisions to the calculator are described. To see the history of this tool, you’ll need to go back to Part 7. We found reading both posts to be essential to really understand how the tool works. Please ensure you follow the directions in the video to make your own copy of the tool. There’s no need to email Karsten to request edit rights!
Essential Blog Posts
Safe Withdrawal Rate series: This is the landing page for the 56-partSWR series (it will surely continue to grow) for which Karsten is best known. Be sure to start with the guidance he provides on how to navigate this great but expansive content. Many essential topics are covered in the series and not all of them involve deep dives into math! While we think all of his posts are interesting, you’ll find guidance below about the specific articles we think are most important to the topic of this video – in addition to Parts 28 and 7 listed above.
Sequence Risk is more important than your average return rate. Surprised? Be sure to check out Part 15: More Thoughts on Sequence of Return Risk. As mentioned in the video, SWR is overwhelmingly determined by the first 10-15 years of portfolio drawdown.
Are you the kind of person who wants all the gory details about the math underlying the SWR Toolbox? If so, you won’t want to miss Part 8: Technical Appendix. It’s got all the information you need to fully understand how Karsten’s approach works. There are also some good references at the bottom of the post on related material found elsewhere.
Did you know we’ve spoken to Karsten twice before?“What the FIRE Community Gets Wrong” was the first time he came on Two Sides of FI. We covered a lot of ground in this episode about safe withdrawal strategies – so much so that we also released a follow-up video called “Karsten Spoke, We Listened. Here’s What We Learned”. These two episodes are popular with our audience for a good reason and are definitely worth viewing for anyone interested in SWR strategies.
Our second conversation with Karsten also featured Fritz Gilbert (from The Retirement Manifesto), in a continuation of their debate about the merits of bucket strategies. In “What’s Wrong with This Popular Retirement Strategy?” we covered a lot of ground that you won’t want to miss!
Other Show Notes
cFIREsim (or Crowdsourced Financial Independence and Retire Early Simulator) is a very popular and powerful FIRE calculator created by Lauren. We found a lot of value in this tool throughout our FIRE journey, and clearly many others do as well. In the developer’s words, “What can cFIREsim do? At its core, you can enter information in the a few simple inputs and return the basic simulation. At its most complicated, it can determine your portfolio success based on 80 individual portfolio adjustments, multiple types of inflation, multiple types of market returns, and graphically show you the results. There are many options to choose from outside of the ‘Basic Inputs’ ”
Variable Percentage Withdrawal (VPW) is another method besides CAPE-adjusted WR for allowing market conditions to influence the amount you take out of your portfolio in drawdown. As mentioned in part 2, VPW is popular among some adherents the Bogleheads approach to investing. As you’ll read at this link, this method “adapts adjustments to portfolio withdrawal amounts to the retiree’s retirement horizon, asset allocation, and portfolio returns during retirement… to allow the retiree to spend most of the portfolio using return-adjusted withdrawals. By adapting withdrawals to market returns, VPW will never prematurely deplete the portfolio.”
stickK is the app Eric mentioned to help track adherence to a goal – like keeping to spending your planned withdrawal rate. Created from a behavioral economics framework, stickK allows you to create “Commitment Contracts, [which are] a binding agreement you sign with yourself to ensure that you follow through with your intentions—and it does this by utilizing the psychological power of loss aversion and accountability to drive behavior change.” We’ve not tried this yet but this is a pretty appealing (an a little scary) idea!
You can find information on the tools we mention in each episode along with additional information in the Resources section of this site.
Do you worry about running out of money in retirement? How do you draw down your assets without tanking your portfolio? Eric + Jason talk with FIRE bloggers Karsten Jeske and Fritz Gilbert about the bucket strategy. Is it a reasonable withdrawal plan or nothing more than a gimmick? They discuss alternative approaches, how to generate a retirement paycheck, and the role of cash. Whether you’re interested in FIRE or on a traditional retirement path, you can’t afford to miss this episode!
Would you like to meet Karsten and Fritz? If you didn’t stick around until the end of the video, you might have missed Fritz’ comment about them attending FI Chautauqua in Ecuador this year. Get all the details here on this conference and how you can attend.
Fritz Gilbert’s Content
How To Build A Retirement Paycheck is the first of (currently) four great posts on Fritz’ implementation of the bucket strategy, which we discussed at length in this episode and also in prior videos. The other articles in the series are linked here too, including one he mentioned in this episode, “How to Build a Bond Ladder”.
In 2021, Fritz recently wrote a book called “Keys to a Successful Retirement” which captures the many lessons he has learned on his retirement journey so far. This is a great read for all current and future retirees. It goes far beyond the financial, and leans heavily into the social and emotional aspects of retirement, just like his blog. Highly recommended!
Freedom for Fidois the charity that the Gilberts started, whose stated purpose is to: “Free the dogs who live on chains in the North Georgia Mountains. We are a charity which provides free fencing and dog houses for low-income residents of the Blue Ridge area.” To learn more about this passion project, be sure to check out this link,
Karsten Jeske’s Content
Safe Withdrawal Rate series: This is the landing page for the 56-partSWR series (now; it will surely continue to grow) for which Karsten is best known. Be sure to start with the guidance he provides on how to navigate this great but expansive content. Many essential topics are covered and not all of them involve deep dives into math!
Portfolio rebalancing is an essential part of both strategies discussed in today’s video. This key topic is addressed in Part 39 of the SWR series. Rebalancing isn’t a panacea for sequence risk, but it’s certainly an important element to consider. As we’ve discussed previously, being consistent + avoiding market timing is essential.
A topic we didn’t hit on today but have talked about extensively in the past is Karsten’s Safe Withdrawal Rate Toolbox. We will be talking more about this powerful, free downloadable tool very soon. In the meantime, Part 28 is the post where the revisions to the original calculator are described and the latest tool is linked. To see the history of this tool, you’ll need to go back to Part 7 of the series.
Unsurprisingly, the always active Bogleheads forum got in on the action with this lengthy comment thread about the bucket strategy debate. If you want a broad range of opinions from many different viewpoints, look no further than this post, Just be prepared to deep dive for hours if you do!
Popular YouTuber and author Rob Berger also weighed in back in 2021 with this video on the bucket strategy. In it, you’ll learn why he thinks this plan is flawed and advocates you should take a different path.