After his second year of FIRE, an early retirement partially funded by shares in a startup that went public, Adam reflects on what life has been like.
This update is noteworthy in that his second year was consumed by COVID, so his early retirement hasn’t looked exactly like what he had in mind. I can say the same about mine, a retirement from medicine that started about 8 months after Adam left his office job.
After two years of early retirement I’m still figuring things out. Here are a few ways this year has been… unique.
December 14, 2020, marked two years since my last day of work. In a weekend, I went from working in an office 40 hours a week with an hour bus/train commute each way to having full control of my own schedule. FIRE was a goal I’d worked towards for more than a decade – but how would it feel in practice?
Would I get bored? Would I want to go back to work?
This post will look at how the 2nd year of RE has felt different from the first. Even besides everything else happening in 2020, it’s felt a lot different.
How We Got Here
Quick backstory. I graduated from college at age 23 and started working at my first programming job. A few weeks later, my mom passed away. She left me the house I grew up in, a mortgage on it, a deadbeat tenant, and about $100,000 that she’d inherited when grandma passed away only a year earlier.
Over the next year or two, a lot happened. I learned how to invest, fixed up & sold the house and started my own post-college life. I was extremely fortunate to start from $0 debt-wise. I was able to start building wealth immediately out of college – something those who take on debt to graduate cannot maximize on.
Combine that with the inheritance, years of index fund investing and saving as much of my income as possible, and I had a very fortunate financial start in my early 20s.
Fast forward 10 years, and I’ve been working as a software developer at various companies. I’ve jumped from startups I felt wouldn’t pay off financially to one that I felt had a shot at hyper-growth. I was lucky to be in the right place, at the right time with the right set of skills – followed by years of 40 to 80 hour weeks.
That startup, Code School, was acquired by another amazing company (Pluralsight) for some cash and stock. I thought “Great! The startup dream has been achieved!” and kept on working. That acquisition cut years off my working career but didn’t push me past the 4% FI barrier.
4 years later, Pluralsight went public and those stock options were suddenly worth something. Not long after that, I left my job to retire early. This graphic shows this in a much clearer way.
Side note: do you see how sometimes my progress goes backward even though I’m saving money? That just means my stock market investments went down by an amount greater than the amount I deposited those years.
That brings us up to the present! I left my job two years ago. For the first year, Mrs. Minafi continued to work before leaving her job in early 2020 – just before COVID hit. Since she worked in the travel industry, her getting out when she did spared her from many unpleasant calls.
Oh, and we’re child-free with a super-cute 12 year old, 20 pound dog named Lily.
Ok, got it? Good.
#1: FIRE is Different With a Spouse
You’re going to spend a lot of time with your spouse if you’re both retired. Prioritize that relationship above money, hobbies, and everything else if you want to keep it.
For my first year of FIRE, I stayed at home while my wife went off to work. I’m a bit of a loner, so I didn’t mind having a lot of time to myself to figure things out. During that time I learned what I really wanted to do with my earned time.
As Mrs. Minafi’s job got more stressful, I spent more emotional energy supporting her. With plenty of FU money, she could quit at any time, but she wasn’t ready. After a year of this, she was ready and took the plunge into not-working.
This is where our stories diverge. For me, I never wanted to work for someone else again. Mrs. Minafi wasn’t (and isn’t sure) what her future holds long-term. For now, she’s enjoying the flexibility of volunteer-work, personal growth and sleeping in.
The worrier in me thought that having her home 24/7 would lead to a pressure-cooker situation where we’d end up at odds with each other. After 1-year that hasn’t happened at all.
Some of the biggest obstacles in relationships – kids, money, family – have been the easy ones (namely because we have money and don’t have kids). It’s been more difficult to set aside time for heart-to-heart talks, make sure we’re still going out of our way to appreciate each other, or make time for focused work when we both aren’t on a schedule. That’s led to many days of just hanging out, enjoying each other’s company without going crazy in the process.
We spend an embarrassing amount of time just hanging out in our bed – often with me programming and her painting. With the wrong person, our creative muscles would atrophy. With the right person, you have a study-buddy.
#2: Be Flexible With Your Travel Goals
Your vision of retirement travel might not match reality due to any number of things (illness, emergencies, pandemics). Be flexible and try to adapt your goals within your new life.
This one isn’t specific to a normal 2nd year of retired life. 2020 isn’t a normal year. Throughout this year, Mrs. Minafi and I will turn to each other and say “Remember X?” – where X is something from the before-COVID times.
“Remember Travel” was the biggest one. We had planned a 3-week trip to South Korea and Taiwan in late March. By the end of February, we started to worry the trip might be in jeopardy. If you remember what was happening back then, Korea was one of the first countries to get hard and close down. Our flights were canceled in February and we got refunds (or points) for everything.
We canceled a few other trips this year – FinCon, our first time at Disney Land, and a Yosemite trip we penciled in. In its place, we backpacked and camped in our own backyard – sometimes alone, sometimes with friends in our quarantine bubble.
We spent about 30% of our allocated travel budget for the year. It’s only that high because I consider some camping gear a travel expense. We did a few weekend getaways throughout the year, but only to hotels where we could spend days hiking, avoiding people, and eating in our room.
Without the ability to jet-set to exotic destinations, it didn’t take long to adjust to a new normal of local-only travel. I expected to mourn the loss. Instead, we embraced local travel! I made a list of things to do locally, we found the most beautiful hikes we could and set off into the unknown.
I miss the smell of travel. Of walking through a new city with my eyes darting in all directions to take it all in. Once it’s safe to travel we’ll do those things again.
#3: Keep Calm and Don’t Sell
There’s a fine line between being informed and being scared. Finding it helps both mental health and financial health.
In March of 2020, we experienced our first major market dip since retiring. When I gave notice at my job we would have been able to use a 3.2% withdrawal rate on our investments. By the time I left my job that was down up to a very-scary 4.7%.
At that time I was still selling off IPO shares. After that, it calmed down to a comfortable ~4%. Mrs. Minafi was still working too, which meant our actual WR for the first year was just under 2%.
After Mrs. Minafi left her job in January of 2020, we knew our WR would jump. We aimed for it would stay around 4%, but we didn’t have control of the stock market.
For the first two months of 2020 things were fine. We were spending under 4% on a monthly basis, which was a good sign. Then March 2020 happened. Suddenly our investments dropped 25% in a month! Our WR shot up to almost 5%! We knew that wouldn’t be sustainable.
In early retirement terms, we were just hit with an awful sequence of returns. The thing you absolutely, positively do not want is to need to sell anything during these times. Instead, you want to hold onto what you have and rely on the cash you’ve set aside.
That’s exactly what we did. In the years before, we’d set aside 3 years of cash in our high-yield savings accounts. This would be plenty for a downturn. We just hoped the markets would recover within 3 years, otherwise we were out of luck.
The stock market has proved to be completely out of sync with most people’s lives. In a year with the longest food lines since the great depression, the stock market has hit all-time highs. That’s been nice for retirees like us, but not for the country as a whole. I’m all for replacing how we talk about this:
The one thing we didn’t do when the market dropped: sell! Well, technically we did rebalance and tax-loss harvest. At the end of the day, our portfolio was allocated to 60% stocks & 40% bonds. That’s our target ratio for about the next 3 years. Around then we’ll increase stocks back up to 80% by changing how dividends are reallocated and let time do the rest.
If we had sold then, two things would have happened:
- We would have locked in our losses – up to 25%.
- We would have needed to pay taxes on funds that had grown overall.
- We would have missed the largest growth jump in the market in decades!
It’s easy to buy and hold when the markets are constantly climbing. By having experienced 2008 and other market declines with less invested, we were able to hold tight and not make decisions that we’d regret.
I’ve panic sold in the past. I likely will again in the future at some point. The phycology around investing can be difficult if you’re constantly listening to news of the world on fire (more on in Takeaway #7). I’ve found the more I listen to the news, the more worried I get – and the more likely I am to make rash investing decisions.
#4: Health Insurance Is Better Now
Understanding health insurance is like understanding investing. Once you learn the basics it takes far less time and induces much less stress.
For my first year of FIRE life, we stayed on Mrs. Minafi’s health insurance. When she left her job we switched over to a plan from healthcare.gov. The process went like this:
- Start your research into health insurance plans. You can have everything planned even before you leave your job.
- Leave your job. You lose health insurance at the end of the month you leave, so it’s best to leave early in the month. This is a qualifying event that allows you to enroll.
- Let HealthCare.gov know about your qualifying event. You won’t be able to do this until you get Cobra or other paperwork from your employer.
- Choose your plan! In our case, we were able to pay for our first month immediately and have it start the day after we lost coverage.
Medical bankruptcy scares the hell out of me, so we took this very seriously. We chose a high deductible plan with an HSA option. At only $350/month for the two of us, it was still $650 less than the $1k/month we budgeted (that’s with a $350/month subsidy).
We used this healthcare a few times throughout the year – our yearly checkups, prescriptions, and vaccinations. In all cases, we paid next to nothing. It helps that our high-deductible plan comes straight from the University of Utah, which has hospitals, doctors, and ERs we can use. Having a one-stop-shop for all medical care and insurance keeps things easy. If you can go that route, I’d recommend it.
#5: We Think Less About Money
Getting to the point where I think less about money meant first obsessing about it. After that, I began peeling back areas that weren’t helping. Layer by layer I refined how I track and think about money. What’s left are the most helpful tools and processes.
During my first year, I thought about money about the same amount as when I was still working. My money spreadsheet was up to date every few days. I stayed on top of our monthly spending to make sure it didn’t exceed certain boundaries (like 5% when annualized).
We continued spending on areas that were most important to us: travel, tasty food, good concerts and performances, games, time with friends.
But at the back of mind I was always running the numbers. How would this expense impact our yearly budget? Last month was above our budget, so this month should be lower, right? Where else can we cut to make up for this purchase?
Since that’s the mindset that allowed me to retire early, my lizard brain assumed it was a survival tactic and kept it around. What my mind didn’t realize is that it wasn’t necessary while I was working – or after. It was helpful to run faster and escape my job, but that’s nothing like running to escape a lion. Yet my mind had somehow juxtaposed those dangers.
I didn’t make an organized attempt to think less about money – it just happened. After I launched the Minafi Invest Bootcamp, I spent less time writing here on Minafi. That meant less time thinking about money. Which meant less time updating and tracking my own accounts.
Now a days I still track two financial metrics for my own sanity:
- My overall spending by category using Tiller
- My investment allocation (US/Intl/Bonds) using Personal Capital
I started using Tiller in November of 2019, and have absolutely loved it so far. It pulls all of my transactions into a Google Sheet, auto categorizes them, and has a ton of tools to build on that data. I can also create my own sheets that reference data pulled in by Tiller. That allows for creating personal dashboards like this that anticipate our yearly spending.
Side note: I have way too many categories in this sheet. In 2021 I’m planning to slim it down quite a bit.
- How close to my target yearly spending am I?
- Is my spending in any category too high? (I use conditional formatting to indicate this)
- How’s the sparkline look for expenses? Is it relatively even? Or does it jump around?
- Is our investment portfolio allocated in line with our target allocation?
- How far off is it? Is it enough to rebalance? Or should we change where dividends reinvest?
Personal Capital allows for manually setting what’s in accounts that aren’t fully linked as well. I do this for my Vanguard accounts. That way I don’t need to give Personal Capital my username/password, but I’m still able to use their tools to analyze my investments. I wrote a full article about how to protect your investments from theft that digs into why I did this and how.
This chart tells me how close I am to my target allocation. Looks like ~67% stocks, ~33% bonds & cash as of today. That’s about 7% more stock than we’d like, but not too far off.
To sell anything now would move us higher into a spot where we’d pay higher health insurance costs. We’ll wait until the new year to rebalance so that it can be on our 2021 taxes.
#6 – I Miss Collaboration, Kind Of
There’s a broad spectrum of collaboration – from full-time work to occasional drop-ins. I’ve found I love collaboration when I’m able to asynchronously pop in and help on my own schedule.
I’m a self-professed loner. I get a ton of enjoyment out of programming on my own. In video games, I pick characters where I can solo for as long as possible and learn about the world. I like projects I can work on at my own pace – or completely drop when I’m no longer interested.
2020 made me realize how much I do enjoy some collaboration. I miss going to CrossFit three times a week to exercise with friends and feeding off their energy. I miss going to game nights and being introduced to new people and games I’ve never heard of. I miss showing up to friends’ houses to eat things I’ve never tried and hear stories about their lives.
Collaboration has always been difficult for me. I love the feeling of accomplishing things with friends by working together, yet I’m reluctant to commit to projects that I might not be able to take to completion.
This year, I participated in a 4-day leadership training course run by an old friend and coworker of mine through the Elar Institute. It was called leadership training, but it focused on mental health by connecting your feelings to your needs and providing more language (and personal systems) to help get those needs met. Being an introvert, I was surprised that one area in which I had unmet needs was collaboration.
I’ve found that for me, finding the right level of collaboration is the key. I want to be able to jump in and collaborate for a while on my own schedule – similar to picking any CrossFit class. Knowing that has helped shape the type of collaborations I look for.
Collaboration doesn’t mean returning to work full-time. There are aspects of working together with very smart people that I do miss though.
This is still a work in progress, but I’ve found a few areas that I enjoy. We have a weekly online game night with friends. I’m volunteering with a small (but talented) development team helping with some fun projects. I occasionally collaborate on podcasts or one-off chats with people. All are the kind of flexible collaborationI’m looking for.
I’m still on the lookout for other flexible collaboration options. I’m not sure what’s next with this, but realizing the type of collaboration I’m looking for at this point in my life is a win. Peloton? MMORPG? Online class? We’ll see!
#7 – Social Media is Bad. Really Bad.
Be careful with anything – good or bad – that can fill all available time. Social media and news in particular provide a dangerous and addicting loop.
There are a lot of hours in a day. We’ve organized our life in a way that allows us to have a LOT of time to do what we want.
That can be good and bad. When I have active projects I’m able to stay busy. If I don’t, then I can end up spending hours (or days) just wasting time on social media.
My problem is when I’m not sure what to do I turn to relaxing for a few minutes on Reddit or Twitter. After I finish working on a task I’ll take a little break to check in on the news.
Checking the news for most of 2020 meant doom-scrolling election updates and COVID cases. After Biden won the election, it turned to glee-freshing.
I’ve tried digital detoxes before and they’ve helped reset my focus and undo some of those bad habits. Now that the election is over and the chances of a successful coup are relatively low, I’ve decided to set personal guidelines for my own social media usage.
Side note: When I wrote this in mid-December I had no idea how prescient this coup statement would be.
These are a work in progress, but here’s what they currently look like:
- Stay off Facebook (& FB companies) altogether and don’t give them any money/attention.
- Limit Twitter/Reddit usage to only after dinner.
- Retrain my attention to no longer seek out quick dopamine hits.
- Switch from endless news sources to news feeds.
I decided to start another digital detox in early December of 2020. We went on a 2-week road trip around southern Utah which was the perfect opportunity. It was a chance to get away from the city, hike out in the middle of nowhere and get outside before the snow hits.
Of course, we hiked with our masks on when around other people, ate all our meals in our room, and limited any time indoors with other people to a minimum.
In past years these kinds of trips would be a natural reset for me. This time it was out of necessity since we were so busy and often in places without a cell signal.
Our trip took us through Goblin Valley State Park, Capitol Reef National Park, Escalante National Monument, Bryce Canyon National Park, Lake Powell, Horseshoe Bend, and finally the south rim of the Grand Canyon. We spent two nights there staying at the Yavapai Lodge just steps from the visitor center.
Since it was December, the crowds were minimal. We estimated that we saw fewer people during the entire trip than we’d see on a single trip to Costco. We were also extremely lucky that it didn’t snow.
With winter setting in, this will be our last chance to appreciate the outdoors without snow for about six months. Now that we’re back, we’re quarantining for two weeks. 10 days in now with no symptoms!
I’m optimistic about what year three will hold. I’m continuing to get better at realizing what I enjoy and what I don’t. Couple that with another year of COVID restrictions in a better political climate.
What I anticipate is that we’ll continue focusing locally on what makes us happy, stay connected with friends and family virtually, and keep exploring our own backyard.
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Have you left your job or retired early? How has your outlook on retirement changed from what you imagined?