Note: this post was inspired by a reader who's been following since 2019. He raises some great questions, but I won't mention his real name because I don't want to tip off his current employer and colleagues. 😉 Let's just call him Rob because I don't know very many "Robs".
The first of Rob's questions was whether we feel the same way now as we did when we retired. I interpreted this to mean "would you change anything you've done, if you knew more back then?".
I'll answer that question at the end of the post, so let's move on to the next one, which is around retiring early and finding out all your friends are working so hard they aren't available to enjoy life with you. They all say their parents won't let them come out and play! This was Rob's past experience and was one reason he returned to the grind. I identify with this issue, as our Colorado friends were all so busy, we just decided to move out of the country! Haha, not really, we knew all along we were both born for the tropics, but we also knew we needed to make new friends along the way. It's equally important to try to keep in touch with old friends - this is something we continue to work on, as friends are a key factor in happiness and even life expectancy!
Rob also asked about how to manage that crossover point where the stresses of the job start to outweigh even the best salary and benefits.
There is a limit to what a person can handle and I was getting close to it in 2017. I actually felt like the retirement opportunity was a lifeline of sorts. It had it's own stress, but it had a great reward as well.
But really, this is a very personal question that each individual must answer for themselves. To start, how is the stress manifesting? Is it affecting your health? And how solid are you financially if you were to quit working now? It's a scary time, thinking about that one-way street out of a job that pays well week after week, year after year. It's an oft-discussed point in early retirement forums, where some people try to avoid (and some don't) OMY Syndrome, "I'll work just One More Year". The best advice I have is to do your homework on the financial side, and then look deep inside yourself. This includes long discussions with your partner about it - it's critical to be on the same page. I wrote a series of four blog posts that go into detail on this subject, which can find here. With good planning and communication, you'll come to the right decision for yourself. (PS. We continue to be thrilled with our decision).
So thanks "Rob" for inspiring us to get a post out as we passed the five year milestone of retirement! With his polite encouragement, it seems like a good time to take a look at where we are now, and ask ourselves whether we're still "doing it right". There's an old Internet joke where you're asked to describe your job, poorly. As retirees, speaking for both Deb and I, I'd put it something like this: "We do random things, on purpose, while staying knee deep in it". That about sums it up! That's all for this post, have a good day!
OK I do have more to say, but you might regret it. In some of my past reading about retirement planning, I'd read that the last 5 years before retirement and the first 5 years after retirement are the most important. I took that to heart, figuring the last 5 years before retirement were important to get all the ducks in a row financially, but also mentally and emotionally. We did pretty well in the last 5 years before retiring, excepting the fact that we didn't really know we were going to retire a full 5 years out. But we were doing the right things: living well below our means, paying off the house, getting out of all other debt, and investing.
The first 5 years after retiring are also important, figuring out how to manage the whole retirement thing not just in spreadsheets, but in real life, without going broke. In my humble opinion, it's very important to enjoy your life as you go, not just amass money to hang onto and sit in a chair until you are done. So I say walk the tightrope between too much and too little - it's worth it. This meme describes the struggle I think!
So the first five years after retiring are important, but when you retire in your 50s, there is a longer timeline to deal with. Not to be morose, but we know retirement planning is all about planning for your eventual death. Let's put it a better way: it's about having a great life along the way, for the whole journey. Maybe this longer timeline means the first 10 years after retirement are important but I feel that it's all pretty important until we start drawing Social Security. Once that starts, the finances are pretty well set in stone because all streams of income are locked in.
I'll explain more on SS later, but first I want to briefly look back at where we've been. We started off on our adventures in 2017 planning to head to Vieques, Puerto Rico. Two Cat 5 hurricanes later we were fortunate we hadn't arrived just a couple of weeks earlier. We were forced to reroute and so we spent the rest of that year and into 2018 in the islands of Honduras (such a hardship!). It was a very different existence for those few months, with "our feet as our only carriage", and I mean that literally. We lived very simply, walking a lot, swimming, snorkeling, drinking Salva Vida beer, and learning a bit about the world and ourselves. We are actually grateful for this change of plans because it allowed us to see parts of the western Caribbean that we may not have ever seen.
We got to Vieques at the end of January 2018 to see an island that, 5 months after the storm, remained closer to "devastation" than it was to "recovery". We had a lot to learn about our new island, but we enjoyed watching it slowly recover and helping out where we could. The island seemed to breathe a bit more freely with each passing month and eventually there was more talk about the future than the past. Of course, the beaches in Vieques were amazing and we enjoyed exploring them for over two years. Seeing the need, we also created the Vieques Beach Map website to help people find the treasures of the island.
We met so many great people there (some are our closest friends today) and were starting to discover the riches of mainland Puerto Rico when the pandemic hit in 2020. Then when they told us we couldn't go to the beach on this tropical island, let's just say that life changed for us. It affected us deeply and we don't think we were unique - the pandemic made many people look deep inside and try to figure out what they truly wanted in life. We refused to just let it happen, so we made some big changes. Emotionally, we jumped back and forth between raging against the machine and going with the flow. I guess it was a mix of fighting back and going with the flow, but the current seemed to want to carry us back to Florida. So that's what we did in May of 2020 in the midst of it all. We double masked, got on a plane filled with Puerto Ricans headed to the States, and stayed with my brother for a little while. We bought a car and drove to CO, practicing excellent social distancing along the way.
We had a great visit that summer, spending a couple of months with friends and relatives, but then headed back to Florida where we belonged. We had a great plan to do an extensive months-long search for a place to live. It started off with the "Deb Line", a line in the sand if you will, that demarcated a latitude where we would "not see any 6's as the first character in the temperature". So no 60's, I got it. That line across Florida fell somewhere around Daytona Beach on the east coast, and Cedar Key on the west coast. We were obviously looking at being near the water, so that meant we wanted to be in one of the Chamber of Commerce "coasts" of Florida (Sun Coast, Space Coast, Treasure Coast, Emerald Coast, etc.).
Now if you've followed this blog closely, you know this word "plan" is a running joke with us. Fueled by the pandemic and boredom-stricken buyers, the real estate market was heating up very rapidly at that time, pushing us to act quickly. So, with intimate knowledge of the area I grew up in, a couple of open minds, and a big bag of good luck, we threw the plan in the ocean. In very short order we'd bought a house a half mile from where I grew up and started our last major renovation. Two years later, we are as happy as clams as we have finished renovating what is planned to be our forever home, and home base for later travel.
Whew, that was a long side road; sorry about that!
In our first blog post we talked about our retirement dreams, something I encourage everyone to do. They included "a short walk or bike ride to the beach (check), AC in the bedroom (in FL it's the whole house - check), a decent bed (Sleep Number FTW!), and a place to store a surfboard, a paddle board, and bikes (check & check). Our perfect retirement daydreams included "a simple breakfast, a morning stroll on the beach, fishing, surfing, spear-fishing, afternoon beers, grilled fish for dinner, and a tiki bar thrown in for good measure." Except for an acute lack of fishing and spear-fishing (insert grumpy face), we've pretty well nailed these as well. We also discovered some new activities that rival our dreams, such as sunrise walks on the beach as the baby turtles make the dash to the waves, and SpaceX & NASA launches at any hour, lighting up the sky in amazing ways.
OK, so now we're 5 years into retirement, and I'm approaching 62. This is the time to start looking at Social Security, specifically the question of "when to take it". I worked a lot of years for the man, and paid all those taxes for all that time. Naturally, I'm looking forward to finally getting some of that money back, but when to pull the trigger? That's the $64,000 question.
I described this decision in detail in this post so I won't dig too deeply here, except to say that each year you wait, the payout is higher than it would have been the previous year. But of course, the previous year you were getting $0, so it takes time to make up that difference. There is a break-even analysis that basically says if you are going to live longer than about 82, you should delay taking SS until age 70. That will get you more money over your lifetime than if you'd taken it earlier. That's what I've been planning on doing from the beginning (obviously planning to live longer than 82). Making more money over our lifetimes is a nice advantage. But taking the money earlier has advantages as well.
One key factor in taking SS early is the returns you would make on the money that remains invested (instead of being spent to live on). This pushes out the age that you would break-even. As important, economic downturns (as I type this, the stock market is down about 20% year to date) are a good time to consider taking SS, to ease the burden on the investment portfolio that we live on. That's because drawing from already-down investments makes it that much harder for them to recover. As an example, if your financial bucket is down 20% and you take out another 4% to live on, now the investments have to recover from -24%, so the "hole" is now deeper.
There is a lot of uncertainty that makes the math even more complicated, but what's not complicated is the fact that taking SS can make for more happiness over time. That's assuming we/you/anyone may get to enjoy more travel and adventures, or even stuff, earlier in life. Wait too long, and travel and other adventures can become more difficult or even impossible. My current plan is to evaluate yearly from age 62 to 70 and act when it makes sense for our situation. It's a tough decision because you only get one shot at this. Once you make that decision, you have to live with it, so you may as well think it over thoroughly.
Looking ahead, I'll be doing some deep dives into our own finances and try to come up with some guidelines for a future version of me. There's no point in relearning/re-remembering the important factors every year. It's along the lines of a "note to self", except this will be a written plan to execute each year. It will involve evaluating the current portfolio and spend rate, any expected large expenditures, and some buffer for the unexpected ones. It should also involve points of consideration to help trigger the eventual day we decide to take SS.
As for the fun side of retirement, we're seeing more opportunities for island travel but we recently found out we have a couple of grandkids on the way, yay! So that will redirect some of our travel to the domestic side. We also want to watch our budget more carefully now as the markets decline and recession threatens. We've said we would do this all along, spending more in good times and less in hard times - it just makes sense.
So that's where we are today. To answer Rob's original question, we couldn't be happier, even if we knew then what we know now. There were surprises, but nothing we couldn't handle, with the right attitude. We're happy to settle down a little, happy to welcome grandkids into the world, and starting to think about future trips to some new islands. One life, right?
TODAY'S SPECIAL: Don't Blink, by one of our faves Kenny Chesney. We're not turning 102 yet, but our babies are turning into Moms and Dads. Life goes faster than you think - these first five years sure did.