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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
And that in an economic downturn, assuming there is cash available (because selling stock in a downturn would likely be painful), the cost of goods and experiences may be cheaper. So keep working while the economy is good and it is relatively harder to get fired or laid off. Then when the economy is down and the buy outs or severances are extended, take the offer. Or, drop down to a part time job now while the economy is still good, because those part time jobs will be harder to come by when the economy is weaker.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I've read all the replies to this post. I'm impressed that the replies weren't all....
"OFF WITH THE OP'S HEAD FOR SUGGESTING SUCH A RECKLESS PLAN!!!"
On the expenses side: Yes... it's risky that the expenses can remain so low, especially without owning a home in a LCOL area. But while I'm skeptical about the expenses side of things... maybe I'm wrong? The OP knows much more about his lifestyle than any of us do.
On the revenue side: Based on information I've gotten from a very, very, very smart BH'er.... a 3.5% SWR, and the correct AA... a person would never run out of money at any point in the past 125+ years with a 40 year retirement. Maybe 50. Maybe even longer. (The AA's mentioned on this thread do not match precisely the AA I'm referring to).
I hope the OP proceeds with the plan and keeps us updated on how it's going over time. This would make for a great case study for the folks on this forum who are constantly advocating for very conservative / cautious strategies.
--- Brian
"OFF WITH THE OP'S HEAD FOR SUGGESTING SUCH A RECKLESS PLAN!!!"
On the expenses side: Yes... it's risky that the expenses can remain so low, especially without owning a home in a LCOL area. But while I'm skeptical about the expenses side of things... maybe I'm wrong? The OP knows much more about his lifestyle than any of us do.
On the revenue side: Based on information I've gotten from a very, very, very smart BH'er.... a 3.5% SWR, and the correct AA... a person would never run out of money at any point in the past 125+ years with a 40 year retirement. Maybe 50. Maybe even longer. (The AA's mentioned on this thread do not match precisely the AA I'm referring to).
I hope the OP proceeds with the plan and keeps us updated on how it's going over time. This would make for a great case study for the folks on this forum who are constantly advocating for very conservative / cautious strategies.
--- Brian
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I mean, I think most of us are just wildly disconnected from reality.. a huge huge number of Americans (much less ex-US) live off $30K/year.brian91480 wrote: ↑Wed Jan 19, 2022 7:23 pm On the expenses side: Yes... it's risky that the expenses can remain so low, especially without owning a home in a LCOL area. But while I'm skeptical about the expenses side of things... maybe I'm wrong? The OP knows much more about his lifestyle than any of us do.
Us saying those expenses are unrealistic is just not reflecting how a millions of people live. It may not be the life Average Boglehead would pick, but it is eminently doable, proven by those examples.
I also hope the OP goes for it and keeps us updated.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
As stated many times already in this thread.... the housing and medical costs are the 2 areas that could sink him. There's real risk here. I support his plan AND acknowledge the real risk.fortunefavored wrote: ↑Wed Jan 19, 2022 7:31 pmI mean, I think most of us are just wildly disconnected from reality.. a huge huge number of Americans (much less ex-US) live off $30K/year.brian91480 wrote: ↑Wed Jan 19, 2022 7:23 pm On the expenses side: Yes... it's risky that the expenses can remain so low, especially without owning a home in a LCOL area. But while I'm skeptical about the expenses side of things... maybe I'm wrong? The OP knows much more about his lifestyle than any of us do.
Us saying those expenses are unrealistic is just not reflecting how a millions of people live. It may not be the life Average Boglehead would pick, but it is eminently doable, proven by those examples.
I also hope the OP goes for it and keeps us updated.
--- Brian
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Op,
I am the same age, year older then you. Reading your first post was honestly inspiring. I am a numbers guy too and As many have pointed out, there are risks and perhaps the equation will not work through till 100. I don’t have more to add but Perhaps I would put a small spin on your thought process. These types of FIRE decisions are never binary. If you feel the way you do today that’s great. Take the year off or two or three and see how you feel. Most importantly keep investing in yourself to keep your skillset fresh cause as they say, one plans and then life happens. I wish I was as active in investing as you were in your 20s Great work on your savings so far! Stay loose with your plan and don’t lose your skills that made you these 800 in the first place. Cheers.
I am the same age, year older then you. Reading your first post was honestly inspiring. I am a numbers guy too and As many have pointed out, there are risks and perhaps the equation will not work through till 100. I don’t have more to add but Perhaps I would put a small spin on your thought process. These types of FIRE decisions are never binary. If you feel the way you do today that’s great. Take the year off or two or three and see how you feel. Most importantly keep investing in yourself to keep your skillset fresh cause as they say, one plans and then life happens. I wish I was as active in investing as you were in your 20s Great work on your savings so far! Stay loose with your plan and don’t lose your skills that made you these 800 in the first place. Cheers.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
You don't have enough bonds. You will get a higher return over infinite scenarios with your portfolio, but you don't get to live life an infinite number of times and take the average return.
Assuming your numbers on social security and spending are correct, your current allocation only has a historical SWR of 3.06%, including a 75% payout on social security.
If you moved to 15% bonds, you get to 3.46%
If you moved to 20% bonds, your SWR goes up to 3.61%.
If you moved to 25% bonds, your SWR goes down to 3.56%.
I am allocating bonds in those calculations at a ratio of 25% short-term treasuries, 45% intermediate-term treasuries, 30% long-term treasuries.
Rates are rising right now, so I would buy that as 55% short-term treasuries and 45% intermediate, and then in 2-3 years, buy the long-term ones.
I plan to retire at 48 with 70% Stocks, 25% Bonds, 5% Gold.
Assuming your numbers on social security and spending are correct, your current allocation only has a historical SWR of 3.06%, including a 75% payout on social security.
If you moved to 15% bonds, you get to 3.46%
If you moved to 20% bonds, your SWR goes up to 3.61%.
If you moved to 25% bonds, your SWR goes down to 3.56%.
I am allocating bonds in those calculations at a ratio of 25% short-term treasuries, 45% intermediate-term treasuries, 30% long-term treasuries.
Rates are rising right now, so I would buy that as 55% short-term treasuries and 45% intermediate, and then in 2-3 years, buy the long-term ones.
I plan to retire at 48 with 70% Stocks, 25% Bonds, 5% Gold.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
We don't all drive "to impress people" Until that electric bike can take me on a multi-state cross country road trip, haul all my camping gear on a trip up into the mountains,transport a couple thousand pounds of lumber from HD to my house for my DIY projects or any one of a half dozen other use cases its not going to replace an automobile. Even for a single person.
Yes, I agree that city dwellers who rent and don't have outdoorsy hobbies can probably live without a car, but that doesn't describe everyone.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
It's certainly not possible for everyone, but it is for us (me). I haven't had a car for about half of my adult life, while living in LA, two different areas of Utah, Mesa, and Houston. Wife and I (with 2 professional careers and two super busy kids) have shared a single car for 6yrs and we've never had to borrow or a rent another in that time period. Of course I work from home and have a short walk to my office when I am needed there. Also we live in a very walkable suburb, where most places I regularly go (grocery store, library, parks, our BJJ/MMA gym etc.) are within easy walking distance. This is something we planned; we bought in this area specifically because I could walk to work (I haven't always been WFH) and everything was so close, and we do almost everything as a family.jharkin wrote: ↑Thu Jan 20, 2022 2:32 pmWe don't all drive "to impress people" Until that electric bike can take me on a multi-state cross country road trip, haul all my camping gear on a trip up into the mountains,transport a couple thousand pounds of lumber from HD to my house for my DIY projects or any one of a half dozen other use cases its not going to replace an automobile. Even for a single person.
Yes, I agree that city dwellers who rent and don't have outdoorsy hobbies can probably live without a car, but that doesn't describe everyone.
Interestingly we ordered a pair of e-bikes (in May), and my wife's is scheduled to be delivered today (mine has yet to ship for some reason). These are just toys, not needed for transportation.
- quantAndHold
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
OP can’t afford a multi-state cross country road trip. Or DIY projects that require lumber. That’s how $30k/year budgets work.jharkin wrote: ↑Thu Jan 20, 2022 2:32 pmWe don't all drive "to impress people" Until that electric bike can take me on a multi-state cross country road trip, haul all my camping gear on a trip up into the mountains,transport a couple thousand pounds of lumber from HD to my house for my DIY projects or any one of a half dozen other use cases its not going to replace an automobile. Even for a single person.
Yes, I agree that city dwellers who rent and don't have outdoorsy hobbies can probably live without a car, but that doesn't describe everyone.
A cross country trip on an electric bike would be really fun. Like regular bike touring, only without the pain of having to pedal all that camping gear up the hills.
Electric bikes don’t solve every transportation problem, but they can solve a lot more than they’re currently solving, and depending on where OP lives, might indeed save them some money. It’s kind of irrelevant to OP’s basic problem, though, which is that the budget doesn’t have much give to it.
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- willthrill81
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I entirely agree. We are frugal but live in a very nice home we own free and clear, and our total spending for our family of 3 last year was just $50k. For four years, my DW and I lived on about $15k annually, including rent, and we were very happy.fortunefavored wrote: ↑Wed Jan 19, 2022 7:31 pmI mean, I think most of us are just wildly disconnected from reality.. a huge huge number of Americans (much less ex-US) live off $30K/year.brian91480 wrote: ↑Wed Jan 19, 2022 7:23 pm On the expenses side: Yes... it's risky that the expenses can remain so low, especially without owning a home in a LCOL area. But while I'm skeptical about the expenses side of things... maybe I'm wrong? The OP knows much more about his lifestyle than any of us do.
Us saying those expenses are unrealistic is just not reflecting how a millions of people live. It may not be the life Average Boglehead would pick, but it is eminently doable, proven by those examples.
I also hope the OP goes for it and keeps us updated.
The Sensible Steward
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Inflation drives up the cost of EVERYTHING, including the things that you DO pay for, as well as the things you MIGHT need to pay for. Things such as clothing, medical care, the streaming services you enjoy, your ISP, the cost to run your local public library or emergency care facility, repaving the street in front of your house or apartment, repairing your roof when the insurance company pays for a new roof but your deductible is $5,000, or when the schools in your area get a millage increase passed, and much much more. All of these things can and will impact the budgets of everybody, including renters. And maybe renters more than anybody else.fortunefavored wrote: ↑Mon Jan 17, 2022 7:24 am... I still pay $10 for 60 eggs and $2/lb for chicken. I own my own home, I don't need a new car, I consume little energy, I have no need for college expenses. Inflation for people in that scenario is not a huge impact...
Higher inflation means all of those things will cost you more, including the eggs and chicken you might buy every other week.
And then there's risk planning. What do you do if your house burns down and the insurance only pays out 90% of the cost of building new? Build anyway, or just sell the slab for whatever the market will bear?
What do you do if you're in a car accident and that car that's been so reliable for 5-10 years now needs to be replaced, and the insurance only pays out 90%, while you're also struggling with injuries sustained in the accident and trying to fight with your insurance company just so you can get your legs or spine functional again? Forget about taking on a physical job in situations like this; you might be forced to just survive as best you can through it. And spend more than your budgeted $30,000 while you're doing so.
Compared to the above, the prices you pay for eggs and chicken are nothing more than anecdotal, and are less than helpful to anybody thinking they're going to retire for 60 years on 20, 30, or even 40K.
Why does this have me all fired up? Well, if you not needing a new car or college funding is all you're assessing in order to advise the OP, and nobody calls you out on it, then we as a collective are not really giving RESPONSIBLE advice. We're not following the spirit of Jack Bogle.
When they say on the radio that inflation has gone up 20%, that means everything you pay for has become more expensive. Let's say the OP is planning to live his life on $30,000 per year and right now he has money left over after spending $25,000. This year's 20% inflation means that next year, it will cost him $30,000. That's his whole budget, only now there's no slack for emergencies. And if inflation continues at 20% again next year, then he'll need $6,000 more, or $36,000 to live THAT year, also with no emergency funds set aside.
Eventually, the OP will need to start spending savings or investment capital just to maintain minimums such as food, health care, transportation, utilities, shelter, clothing, and so forth. A retirement picture like that is only sustainable if you have enough investment capital to outlast your burndown rate until the day you die +1.
I get what you're saying about not retiring if you don't have confidence about the economy going forward. But what I'm saying is that the OP should be feeling un-confident right about now, and very few respondents to this thread have actually emphasized this point to the degree that we should, especially if we care about this OP as we do all of our other forum members here.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Inflation has not been remotely close to 20%. It's closer to 7% right now.Flight Plan wrote: ↑Sat Jan 22, 2022 2:39 pm When they say on the radio that inflation has gone up 20%, that means everything you pay for has become more expensive. Let's say the OP is planning to live his life on $30,000 per year and right now he has money left over after spending $25,000. This year's 20% inflation means that next year, it will cost him $30,000. That's his whole budget, only now there's no slack for emergencies. And if inflation continues at 20% again next year, then he'll need $6,000 more, or $36,000 to live THAT year, also with no emergency funds set aside.
The Sensible Steward
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
It is not that difficult to live on $1,000 a month net of housing expenses (including property taxes, maintenance, and insurance). Outside of trips, gifts, eating out, and luxury items, I estimate I spend less than $10,000 a year on this. It includes gas, car insurance and maintenance, food, utilities, etc. In much of America the per capita income is less than $30,000. This is what I say when I say it wouldn’t be that much of a challenge to survive for $30,000 a year. It is not going to be a luxurious existence but if one is allergic to work, they have enough to subsist for the rest of their life.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
This is my view too. Low or close to zero housing costs and 1k or so extra a month is doable. There's lots of us who perceive the bare necessaries in life to be the utmost luxury, with maybe a small hobby on the side.calwatch wrote: ↑Sat Jan 22, 2022 3:05 pm It is not that difficult to live on $1,000 a month net of housing expenses (including property taxes, maintenance, and insurance). Outside of trips, gifts, eating out, and luxury items, I estimate I spend less than $10,000 a year on this. It includes gas, car insurance and maintenance, food, utilities, etc. In much of America the per capita income is less than $30,000. This is what I say when I say it wouldn’t be that much of a challenge to survive for $30,000 a year. It is not going to be a luxurious existence but if one is allergic to work, they have enough to subsist for the rest of their life.
Healthy food, nature, walks and hikes, reading, philosophy. I'm living a wonderful life in San Diego right now for about 36k year. Of course rents are starting to kill this type of existence. I'm looking at moving to lower costs.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
OP might want to go to the doctor in the snow or rain occasionally:) Every time I look at them I go I can use them to avoid putting miles on my car but I can't replace one.quantAndHold wrote: ↑Thu Jan 20, 2022 2:53 pm
OP can’t afford a multi-state cross country road trip. Or DIY projects that require lumber. That’s how $30k/year budgets work.
A cross country trip on an electric bike would be really fun. Like regular bike touring, only without the pain of having to pedal all that camping gear up the hills.
Electric bikes don’t solve every transportation problem, but they can solve a lot more than they’re currently solving, and depending on where OP lives, might indeed save them some money. It’s kind of irrelevant to OP’s basic problem, though, which is that the budget doesn’t have much give to it.
In the end we can go in circles. Would it be safer to have 900k (i.e. 20k emergency fund) and still spend the same 30k? Of course. We can debate how much of safety margin someone wants and how much they want to spend to live. I know I could definitely live without my 30 bucks/month of chipotle. I am also willing to work the half dozen days to fund it. YMMV.
- quantAndHold
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
OP can take Ubers a couple of times a week and still save money over owning a car. Regardless, it isn’t really relevant to this discussion, because selling the car and buying a bike isn’t going to fix the basic problem, which is that living on $30k, year in and year out, for decades, is possible but really limiting. I know plenty of people who live on $30k because they have to, and they get by, because they have to, but I don’t know anyone who has the ability to make more than $30k who intentionally decided to just live on $30k. For one thing, anytime there’s a car repair bill or medical bill or the rent gets raised, it’s really stressful.randomguy wrote: ↑Sat Jan 22, 2022 3:51 pmOP might want to go to the doctor in the snow or rain occasionally:) Every time I look at them I go I can use them to avoid putting miles on my car but I can't replace one.quantAndHold wrote: ↑Thu Jan 20, 2022 2:53 pm
OP can’t afford a multi-state cross country road trip. Or DIY projects that require lumber. That’s how $30k/year budgets work.
A cross country trip on an electric bike would be really fun. Like regular bike touring, only without the pain of having to pedal all that camping gear up the hills.
Electric bikes don’t solve every transportation problem, but they can solve a lot more than they’re currently solving, and depending on where OP lives, might indeed save them some money. It’s kind of irrelevant to OP’s basic problem, though, which is that the budget doesn’t have much give to it.
In the end we can go in circles. Would it be safer to have 900k (i.e. 20k emergency fund) and still spend the same 30k? Of course. We can debate how much of safety margin someone wants and how much they want to spend to live. I know I could definitely live without my 30 bucks/month of chipotle. I am also willing to work the half dozen days to fund it. YMMV.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
US Median Income is $31,133 in 2019.
OP is close to being above 50% of the population income in one of the richest country in the world.
OP will be fine.
OP is close to being above 50% of the population income in one of the richest country in the world.
OP will be fine.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
No doubt, however all the SWR studies ALSO include all those high inflation periods. So unless, again, you think inflation will be "worse than the worst ever" - it is poor advice. The fact is my personal rate of inflation is no where near 7%.Flight Plan wrote: ↑Sat Jan 22, 2022 2:39 pmfortunefavored wrote: ↑Mon Jan 17, 2022 7:24 am... I still pay $10 for 60 eggs and $2/lb for chicken. I own my own home, I don't need a new car, I consume little energy, I have no need for college expenses. Inflation for people in that scenario is not a huge impact...
Inflation drives up the cost of EVERYTHING, including the things that you DO pay for, as well as the things you MIGHT need to pay for. Things such as clothing, medical care, the streaming services you enjoy, your ISP, the cost to run your local public library or emergency care facility, repaving the street in front of your house or apartment, repairing your roof when the insurance company pays for a new roof but your deductible is $5,000, or when the schools in your area get a millage increase passed, and much much more. All of these things can and will impact the budgets of everybody, including renters. And maybe renters more than anybody else.
<snip>
Renting has been covered for sure and I do agree that is a huge risk. Any variable expense risks are dangerous (another big one often under estimated is caring for elderly parents.) The more you can eliminate, the "safer" you are.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
If someone truly believes their personal rate of inflation is 20%, they have no business even pondering retirement ever. They should be working continuously to leverage their human capital to "stay ahead" - likely also using leverage to buy as many hard assets they possibly can. Pretty much the exact opposite of OP's life philosophy.willthrill81 wrote: ↑Sat Jan 22, 2022 2:43 pmInflation has not been remotely close to 20%. It's closer to 7% right now.Flight Plan wrote: ↑Sat Jan 22, 2022 2:39 pm When they say on the radio that inflation has gone up 20%, that means everything you pay for has become more expensive. Let's say the OP is planning to live his life on $30,000 per year and right now he has money left over after spending $25,000. This year's 20% inflation means that next year, it will cost him $30,000. That's his whole budget, only now there's no slack for emergencies. And if inflation continues at 20% again next year, then he'll need $6,000 more, or $36,000 to live THAT year, also with no emergency funds set aside.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Did you just advocate for eliminating elderly parents?fortunefavored wrote: ↑Sat Jan 22, 2022 7:04 pm
Renting has been covered for sure and I do agree that is a huge risk. Any variable expense risks are dangerous (another big one often under estimated is caring for elderly parents.) The more you can eliminate, the "safer" you are.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Lol! ha, I meant waiting until those obligations are past. Much like waiting for kids to graduate college and be launched.sailaway wrote: ↑Sat Jan 22, 2022 7:19 pmDid you just advocate for eliminating elderly parents?fortunefavored wrote: ↑Sat Jan 22, 2022 7:04 pm
Renting has been covered for sure and I do agree that is a huge risk. Any variable expense risks are dangerous (another big one often under estimated is caring for elderly parents.) The more you can eliminate, the "safer" you are.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
So now our OP is limited to leaving the house a couple times/week instead of being able to drive 2 miles ever day for 4 months of the year? And yes I know some people who don't mind ebikes or motorcycles in poor conditions. But we are talking exceptions not the rule:) Other than trying to race to the bottom (why not just have a friend drive you around or walk), these discussions aren't useful. You can always cut money from a budget...quantAndHold wrote: ↑Sat Jan 22, 2022 5:26 pm OP can take Ubers a couple of times a week and still save money over owning a car. Regardless, it isn’t really relevant to this discussion, because selling the car and buying a bike isn’t going to fix the basic problem, which is that living on $30k, year in and year out, for decades, is possible but really limiting. I know plenty of people who live on $30k because they have to, and they get by, because they have to, but I don’t know anyone who has the ability to make more than $30k who intentionally decided to just live on $30k. For one thing, anytime there’s a car repair bill or medical bill or the rent gets raised, it’s really stressful.
There is a bit of difference between living on 30k/year with no saving and a job and living on 30k with 880k in the bank and all the time in the world. Our poster isn't going to stress out about car repair, medical bill, and the rent being raised is a long term problem rather than a short term one. I know when I was living on 8k/year in grad school it wasn't remotely stressful even though the budgets were tight. Why? Cause I had the bank of Mom to bail me out if I got hit with some unexpected bill. The OP is in a similar place.
30k/year isn't my goal in life. I am sure I could do it but why? But if the OP has spend the last 15 years living that life and is happy with it, who am I to argue? Personally at 39, I would do one more year for another 3-4 years. At 55, I would be retiring...
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Probably true. But intentionally pulling plug at 39 to live on 31k is a bit of a head scratcher. Why not try something else, at least on a part-time basis? If nothing else just to get out of house a bit and hedge bets.ccompounder wrote: ↑Sat Jan 22, 2022 6:46 pm US Median Income is $31,133 in 2019.
OP is close to being above 50% of the population income in one of the richest country in the world.
OP will be fine.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
OP, do yourself a favor and backtest your situation for the 1966 cycle on ficalc.app except use cash at 0% in lieu of bonds.
If you can pass 1966 then I'm confident you will make it.
If you can pass 1966 then I'm confident you will make it.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Good point.. a lot of people live on that and manage, myself included. I believe last year I spent under $30k (excluding health though as my employer pays for it), but I live very comfortably no issues.ccompounder wrote: ↑Sat Jan 22, 2022 6:46 pm US Median Income is $31,133 in 2019.
OP is close to being above 50% of the population income in one of the richest country in the world.
OP will be fine.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I would find living with that little margin absolutely terrifying. And the risk is that you find yourself broke in early 60s with no work history and having to work a bottom of the barrel job. Then what happens is social security early and a downward spiral. Saw it happen with a family member.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Van life always sounds funny to me as someone in Canada. It was -30 this week!quantAndHold wrote: ↑Sun Jan 16, 2022 10:16 amIf you want to do that, at least read Nomadland first. It is not an easy life. We travel several months per year, and know a lot of vandwellers. A few people find it rewarding, at least for awhile, but most of the people I’ve met are really doing it because they got priced out of their previous life. I can’t imagine someone who wants to sit in the house all day playing video games would be happy living in a van for several decades. For one thing, it takes effort to get reliable internet.
Bulls make money, bears make money, pigs get slaughtered.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Please end the suspense! The successful asset allocation is.....?brian91480 wrote: ↑Wed Jan 19, 2022 7:23 pm
On the revenue side: Based on information I've gotten from a very, very, very smart BH'er.... a 3.5% SWR, and the correct AA... a person would never run out of money at any point in the past 125+ years with a 40 year retirement. Maybe 50. Maybe even longer. (The AA's mentioned on this thread do not match precisely the AA I'm referring to).
--- Brian
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
My impression is that most lean FIRE types would not find it terrifying. As someone wrote in a different thread, FIRE is inherently optimistic. Yes, there's a chance that you'll be broke and umemployable in 20 years if you hit an extremely bad sequence of returns and spend a lot more than expected. No one is saying that it's not possible. But it seems more likely that you'd find a way to adapt before the situation gets too dire.softwaregeek wrote: ↑Sun Jan 23, 2022 12:55 am I would find living with that little margin absolutely terrifying. And the risk is that you find yourself broke in early 60s with no work history and having to work a bottom of the barrel job. Then what happens is social security early and a downward spiral. Saw it happen with a family member.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I would endorse this idea. Many people who plan to FIRE (see the MrMoneyMustache forums) do exactly that. They plan typically for $10k a year of income doing something they like. Or if they come to find out they don't like it, they just quit and try something else.Firemenot wrote: ↑Sat Jan 22, 2022 10:17 pmProbably true. But intentionally pulling plug at 39 to live on 31k is a bit of a head scratcher. Why not try something else, at least on a part-time basis? If nothing else just to get out of house a bit and hedge bets.ccompounder wrote: ↑Sat Jan 22, 2022 6:46 pm US Median Income is $31,133 in 2019.
OP is close to being above 50% of the population income in one of the richest country in the world.
OP will be fine.
While there are plenty of Bogleheaders who really like expensive, exotic vacations that cost the family $20k, some (like me) would much prefer to stay home, forest manage their property and end up with a bunch of cords of firewood to reduce cold weather heating costs. A bike can get a young, healthy person around, but as one ages, this gets more difficult. At 64, I'm certainly experiencing this. I've sold my road bike that was built as a state of the art roadrace bike in 1974 because I'm not willing to take the risk with 16 year old girls constantly swerving their Wranglers while responding to the LOL on their phone. I do still have the mountain bike as the squirrels are still pretty alert.
Bogle: Smart Beta is stupid
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I have a relative that lives on less than $30k per year and is happy as can be. It is baffling to everyone because it just seems odd.
He has no desire for kids nor wife. He spends his day on the internet playing games, playing with his pet, and photographing nature on his phone.
He is in a VLCOL and bought a home on 5 acres for $150k in cash. Yearly prop taxes are $1500. Utilities are less than $100/month as he only heats/cools one room if needed and most times they are not on. He has furniture he needs. The secondary bedrooms are empty because he has no need to furnish them. He has no couch or dining table no need. He is currently replacing the carpet with LVP and is hiring the work out. He pays someone to mow the lawn cause he doesn't like to.
He gets his groceries delivered and that is around $25/week.
Owns 6 shirts and 5 pairs of jeans.
He has zero desire to travel. Has a vehicle he bought 8 years ago for $1500. Does his own repairs. Buys a gadget every now and then.
It sounds like the worst lifestyle TO ME but he loves it.
He doesn't entertain. Has no desire. He goes out with friends but it is 1-3x a month to a local place and that's less than $10.
But again, he is happy and so low stress it gets mistaken for "not caring". I do a lot of advocating for him with relatives because they can't wrap their head around it.
He has no desire for kids nor wife. He spends his day on the internet playing games, playing with his pet, and photographing nature on his phone.
He is in a VLCOL and bought a home on 5 acres for $150k in cash. Yearly prop taxes are $1500. Utilities are less than $100/month as he only heats/cools one room if needed and most times they are not on. He has furniture he needs. The secondary bedrooms are empty because he has no need to furnish them. He has no couch or dining table no need. He is currently replacing the carpet with LVP and is hiring the work out. He pays someone to mow the lawn cause he doesn't like to.
He gets his groceries delivered and that is around $25/week.
Owns 6 shirts and 5 pairs of jeans.
He has zero desire to travel. Has a vehicle he bought 8 years ago for $1500. Does his own repairs. Buys a gadget every now and then.
It sounds like the worst lifestyle TO ME but he loves it.
He doesn't entertain. Has no desire. He goes out with friends but it is 1-3x a month to a local place and that's less than $10.
But again, he is happy and so low stress it gets mistaken for "not caring". I do a lot of advocating for him with relatives because they can't wrap their head around it.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
We're in a pretty similar situation, except we're a family of 4. We're essentially FIRE already (>40x expenses, paid off home, 529s for kids) and we're averaging ~$45k/yr over the last 5yrs if you take into account mortgage (gone for 1.5yrs), wife's tuition (done last year), daycare (for 2 kids, done 2yrs ago), and that we are buying a truck that is a want tis year. For 2021, our total household expenditures were ~$25k. On that budget, our lifestyle is a lot fancier that what either wife or I grew up in.willthrill81 wrote: ↑Thu Jan 20, 2022 8:32 pmI entirely agree. We are frugal but live in a very nice home we own free and clear, and our total spending for our family of 3 last year was just $50k. For four years, my DW and I lived on about $15k annually, including rent, and we were very happy.fortunefavored wrote: ↑Wed Jan 19, 2022 7:31 pmI mean, I think most of us are just wildly disconnected from reality.. a huge huge number of Americans (much less ex-US) live off $30K/year.brian91480 wrote: ↑Wed Jan 19, 2022 7:23 pm On the expenses side: Yes... it's risky that the expenses can remain so low, especially without owning a home in a LCOL area. But while I'm skeptical about the expenses side of things... maybe I'm wrong? The OP knows much more about his lifestyle than any of us do.
Us saying those expenses are unrealistic is just not reflecting how a millions of people live. It may not be the life Average Boglehead would pick, but it is eminently doable, proven by those examples.
I also hope the OP goes for it and keeps us updated.
We're not considering retiring for another decade or so because wife and I agree our jobs bring something else to our lives and we're concerned about the cost of medical care for what may be a 50+ year retirement.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I hope those who are looking at SS estimates realize that those estimates assume you continue to make the same salary as the previous year until retirement. In your case, if you average 18 years of zeros in the formula instead of you previous years salary (SS is based on highest 35 years of inflation adjusted salary), the payout will be dramatically lower than their projection.poker27 wrote: ↑Mon Jan 17, 2022 2:39 pmI'm a few years younger than the OP, and I was pleasantly surprised by my SS estimates for 17ish years of work (if delayed to 70)rgs92 wrote: ↑Mon Jan 17, 2022 12:40 pmSocial Security is going to be pretty dismal I think with a retirement age of 39.Zardoz wrote: ↑Mon Jan 17, 2022 12:18 pmOne way I like to look at funding early retirement is how you will bridge to social security at age 70. In your case you would need to cover 31 years of expenses, and 31 years x $31k = $961k. By this framework, your retirement is not yet fully funded. That is, you don't have enough to fund your retirement based on your savings -- you are counting on stock market returns to fund your retirement.aaaaaa111111 wrote: ↑Mon Jan 17, 2022 12:22 am While I don't necessarily need to be 95% stocks, I don't want to go overly conservative either, since stifling future returns is a risk as well. Just need to get the right balance...
Wrench
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
On that subject there are calculators that let you plug in zero's for the remaining working years.Wrench wrote: ↑Sun Jan 23, 2022 9:25 am
I hope those who are looking at SS estimates realize that those estimates assume you continue to make the same salary as the previous year until retirement. In your case, if you average 18 years of zeros in the formula instead of you previous years salary (SS is based on highest 35 years of inflation adjusted salary), the payout will be dramatically lower than their projection.
Wrench
https://ssa.tools/
https://www.ssa.gov/benefits/retirement ... pplet.html
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Remember that the OP is 39. If the margin is insufficient, s/he can return to work with ease.softwaregeek wrote: ↑Sun Jan 23, 2022 12:55 am I would find living with that little margin absolutely terrifying.
Our local Amazon fulfillment center is advertising $22/hr. plus $3k sign-on bonus and benefits right now. They're asking people not to apply unless they're willing to start working immediately.
The Sensible Steward
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
It does seem that van life is only for certain people, generally those who really like being outdoors a lot and are willing to go out of their way to not spend much. Internet access can certainly be a challenge, depending on where one remains, but perhaps Starlink will really improve that.quantAndHold wrote: ↑Sun Jan 16, 2022 10:16 am If you want to do that, at least read Nomadland first. It is not an easy life. We travel several months per year, and know a lot of vandwellers. A few people find it rewarding, at least for awhile, but most of the people I’ve met are really doing it because they got priced out of their previous life. I can’t imagine someone who wants to sit in the house all day playing video games would be happy living in a van for several decades. For one thing, it takes effort to get reliable internet.
The Sensible Steward
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
s about asn hour tio
https://www.youtube.com/watch?v=ENZ2KjlN71A
If anyone has about an hour to kill.
Many of these people live on $600 / month or less and seem happy.
Without Bounds: Perspectives on Mobile Living.
https://www.youtube.com/watch?v=Lg37Cbx-kak
Not exactly the kind of life I would like to live, but there is something appealing about the freedom of living this way.
Many of these people head south for the winter, but not all. Check out the video. Guy lives in Alaska in his home built truck camper with a woodstove for heat.canadianbacon wrote: ↑Sun Jan 23, 2022 4:04 amVan life always sounds funny to me as someone in Canada. It was -30 this week!quantAndHold wrote: ↑Sun Jan 16, 2022 10:16 amIf you want to do that, at least read Nomadland first. It is not an easy life. We travel several months per year, and know a lot of vandwellers. A few people find it rewarding, at least for awhile, but most of the people I’ve met are really doing it because they got priced out of their previous life. I can’t imagine someone who wants to sit in the house all day playing video games would be happy living in a van for several decades. For one thing, it takes effort to get reliable internet.
https://www.youtube.com/watch?v=ENZ2KjlN71A
If anyone has about an hour to kill.
Many of these people live on $600 / month or less and seem happy.
Without Bounds: Perspectives on Mobile Living.
https://www.youtube.com/watch?v=Lg37Cbx-kak
Not exactly the kind of life I would like to live, but there is something appealing about the freedom of living this way.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I think that's assuming that this would be available at the time you needed a job. Which is why I had suggested a greater bond allocation, or at least three or four years in subsistence expenses in savings or safer investments (I Bonds, CDs, short or intermediate term investment grade bonds) as a backstop. That way, if 2008 had happened and you needed a job, you could wait it out for a few years without having to take an undesirable job. Jobs are often out there especially for seasonal work, but may not be in the location that you are living in or doing something desirable.willthrill81 wrote: ↑Sun Jan 23, 2022 11:32 amRemember that the OP is 39. If the margin is insufficient, s/he can return to work with ease.softwaregeek wrote: ↑Sun Jan 23, 2022 12:55 am I would find living with that little margin absolutely terrifying.
Our local Amazon fulfillment center is advertising $22/hr. plus $3k sign-on bonus and benefits right now. They're asking people not to apply unless they're willing to start working immediately.
On another thread I was looking at bus driving positions, and for school bus driving there does seem to be a lot of early retirement types who are just looking for something fulfilling to do - https://www.mukilteoschools.org/Page/14983 I suspect a lot of these, like park ranger, bus driver, etc. positions are hard to fill in boom times like these, but likely tough to get in a recession where older people are laid off and also want fairly easy, modestly paid jobs.
I do hope, though, that the plan for early retirement involves more than staring at screens. This analysis of 25-54 year old men not in the labor force (not working or actively looking for work) is pretty depressing: https://ifstudies.org/blog/what-do-prim ... sic-income
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
It's fine to be a Diogenes Boglehead, what I am.
Accrue assets while reducing costs and material desires.
Not completely relatable to a lot of the well meaning Bogleheads that respond with good points to keep in mind. Mixing and matching Bogleheads and FIRE is excellent and practical.
Accrue assets while reducing costs and material desires.
Not completely relatable to a lot of the well meaning Bogleheads that respond with good points to keep in mind. Mixing and matching Bogleheads and FIRE is excellent and practical.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Some of these posts are really interesting. I live in a town with median household income of less than 45k. Vacations for a lot of people around here are visiting family. I know quite a few people who have never flown. The idea of having investments is nonsense to a lot of people. You absolutely can live on 30k, but I would be very careful about choice of where to live. Your immediate surroundings would seem to be more important than for someone planning to spend a lot more money on travel and experiences.
Anyway, my advice is similar to some other posters. Find something fun that makes a few bucks and then re-assess at some interval.
Anyway, my advice is similar to some other posters. Find something fun that makes a few bucks and then re-assess at some interval.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
When haunted by waters, all you need is a fly-rod and box of flies.flyfishers83 wrote: ↑Mon Jan 24, 2022 11:08 am Some of these posts are really interesting. I live in a town with median household income of less than 45k. Vacations for a lot of people around here are visiting family. I know quite a few people who have never flown. The idea of having investments is nonsense to a lot of people. You absolutely can live on 30k, but I would be very careful about choice of where to live. Your immediate surroundings would seem to be more important than for someone planning to spend a lot more money on travel and experiences.
Anyway, my advice is similar to some other posters. Find something fun that makes a few bucks and then re-assess at some interval.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Nice summary OP. A good lesson on risk vs. reward imo.aaaaaa111111 wrote: ↑Mon Jan 24, 2022 10:33 amAs much as I appreciate the views expressed in this thread and am taking a "listen rather than talk" approach, I do want to jump in here and say that the opinions of a deeply conservative think tank, especially one like the IFS, don't really work for me personally.calwatch wrote: ↑Mon Jan 24, 2022 12:00 am.
I do hope, though, that the plan for early retirement involves more than staring at screens. This analysis of 25-54 year old men not in the labor force (not working or actively looking for work) is pretty depressing: https://ifstudies.org/blog/what-do-prim ... sic-income
I do accept the lifestyle-focused posts in this thread as well meaning thoughts from posters who are offering what may be sound advice for people who are seeking a more traditional life path. If I thought there were even the slightest chance that I may one day want to, for example,, start a family, I would consider myself nowhere remotely close to my goal.
But when my expected life in retirement is mostly the same as when I was working (just without the bad part, the working) the posts I'm finding most actionable are the ones on whether the math can actually work, what kind of economy could derail it, and how to best mitigate those risks.
For example in response to this thread I've finally upped my bond allocation (in the middle of the market drop... but at least not at the bottom I suppose) and spent a lot of time looking more seriously at lowering my rent (found a nice place that would knock off $250 a month, provided they still have a unit when my current lease is up). I've also identified a few more small but unnecessary expenses I could lower. And most importantly, between here and other research I've done, I feel like I understand a lot more about how investing and taxes work than I did, which has been unexpectedly enjoyable.
Of course, as I watch the S&P gleefully jump off a cliff, almost as if in direct response to my post, the pure math may be answering everything for me, hah.
There's still 11 months left in the year before I decide whether to pull the trigger or not, and even if I do it's not an irreversible decision (so maybe that's a bad metaphor) by any means. But if today goes as badly as it's started (down another 2% as I type this) I'll have gone from a 3.4% srw to a 3.8% srw in a month. Not that I truly need $30k a year - frankly it looks like I could get this year closer to 27k than 30k even if I don't switch apartments. But I still want buffer room.
As for the points about getting back into the workforce at an advanced age, I absolutely agree! Any job I'd find at 60 would be even worse than whatever I'd find next year. There is a certain amount of risk I'm absolutely willing to take for the monumental reward I'd realize if it all works out, but that is definitely one of the biggest concerns.
I will say that I've been scanning job listings again just to see what's out there if the market doesn't turn around. It's depressing work. Try finding the needle of a legit remote data entry job in the haystack of "fill out surveys for cash!!" scams, for example. I've been successful at the jobs I've done (too successful in some ways, that's how I moved into management roles I utterly loathed) but my skills are very nebulous to describe and even harder to identify in a job listing. It feels like I turned out to be good at things that I hate.
But I'll keep at it. And I'll continue to find ways to lower expenses, keep an eye on how the portfolio goes, and plan for delaying retirement if it comes to that. And once again thanks for all of the discussion in this thread, I didn't really anticipate it getting beyond a few posts!
My only advice is try to get yourself close to 40X or around $1.2M. Not far off from where you are, but will give a bit more wiggle room . Work 1-2 more years and you’re there? Can you imagine how much sweeter retirement day will be
“At some point you are trading time you will never get back for money you will never spend.“ |
“How do you want to spend the best remaining year of your life?“
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I’ve posted before, but did want to comment on the ‘picking up jobs later in life’ posts. Jobs are everywhere right now, and anyone with a pulse can get hired. If the OP needed to get a job, odds are it would be during a economically depressed time. Thinking back to 2008, I don’t think retail type jobs were that easy to find.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
If the comments were made in a normative manner that was not intended. I've always believed that folks are free to do and live their life the way they want, as long as they don't harm other people. I think you are at your goal if you conserve your money and play it a little safer. I know you don't like the MMM boards, and they do get political and hypocritical, but certainly there are many financial independence blogs, many of them listed here, that will provide a lot of good information (Early Retirement Now is very good and quantitative). I do wonder about someone who has the skill and ability to earn, not inherit $880,000 over a period of less than two decades just shutting it off, but your experiences are your own. Best wishes on keeping your expenses down and moving forward.aaaaaa111111 wrote: ↑Mon Jan 24, 2022 10:33 amAs much as I appreciate the views expressed in this thread and am taking a "listen rather than talk" approach, I do want to jump in here and say that the opinions of a deeply conservative think tank, especially one like the IFS, don't really work for me personally.calwatch wrote: ↑Mon Jan 24, 2022 12:00 am.
I do hope, though, that the plan for early retirement involves more than staring at screens. This analysis of 25-54 year old men not in the labor force (not working or actively looking for work) is pretty depressing: https://ifstudies.org/blog/what-do-prim ... sic-income
I do accept the lifestyle-focused posts in this thread as well meaning thoughts from posters who are offering what may be sound advice for people who are seeking a more traditional life path. If I thought there were even the slightest chance that I may one day want to, for example,, start a family, I would consider myself nowhere remotely close to my goal.
Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
Great point. If OP doesn't like current job, now is a great time to find something new. With OP savings, just doing something that provides fulfillment with health care coverage should more than do it. While OP should not fully retire, OP certainly can "retire" from a miserable position and find a new profession.poker27 wrote: ↑Mon Jan 24, 2022 10:01 pm I’ve posted before, but did want to comment on the ‘picking up jobs later in life’ posts. Jobs are everywhere right now, and anyone with a pulse can get hired. If the OP needed to get a job, odds are it would be during a economically depressed time. Thinking back to 2008, I don’t think retail type jobs were that easy to find.
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Re: Early retirement plan advice (39yo, $880k, ~3.5% withdraw)
I tried to early retire when I was 36 on about $2 million. We traveled and pursued hobbies, but still ended up back at work (albeit part time) a few years later. Why? Because I was so accustomed to living with an abundance mindset (e.g., when you make $100 but only have to spend $5, you feel like you have a ton of money) and switching to a scarcity mindset (e.g., now you watch your nest egg drop like sand going through an hourglass) was too jarring.
From 29 or so when I first heard about FIRE, I locked myself in to a strict low-cost of living lifestyle in order to get to the "finish line" as fast as possible. I told myself that things like getting married, having kids, and buying a house would only move the finish line farther away. But I met the right person and we got serious and a few years later we got married. I found it tremendously rewarding and fulfilling. It bumped my annual spend from about $27k to $45k. Then it gradually moved up to $55k. Then after retiring and going back to work, we bought a house and had a kid, which with an aggressive mortgage payment bumped our spending to $125k (not pinching pennies anymore). Now we have a second child. Each step was totally worth it. We are still FI because I went back to work and the market conditions have been good. We're not in accumulation mode or decumulation mode. We're in a weird spot where my paycheck pays for everything we want and then some and we have a FI nest egg on top of that.
I guess the short story is in order to live life to the fullest, you have to accept what it has to offer, even if it is not within your current planning. Also FIRE doesn't have to be black and white where you work, then never work again. When you "retire," be open to going back in the future to your current line of work, or a different line of work. Think about how going from an abundance mindset to a scarcity mindset affects you personally. Maybe you will not mind it at all and will thrive in retirement.
From 29 or so when I first heard about FIRE, I locked myself in to a strict low-cost of living lifestyle in order to get to the "finish line" as fast as possible. I told myself that things like getting married, having kids, and buying a house would only move the finish line farther away. But I met the right person and we got serious and a few years later we got married. I found it tremendously rewarding and fulfilling. It bumped my annual spend from about $27k to $45k. Then it gradually moved up to $55k. Then after retiring and going back to work, we bought a house and had a kid, which with an aggressive mortgage payment bumped our spending to $125k (not pinching pennies anymore). Now we have a second child. Each step was totally worth it. We are still FI because I went back to work and the market conditions have been good. We're not in accumulation mode or decumulation mode. We're in a weird spot where my paycheck pays for everything we want and then some and we have a FI nest egg on top of that.
I guess the short story is in order to live life to the fullest, you have to accept what it has to offer, even if it is not within your current planning. Also FIRE doesn't have to be black and white where you work, then never work again. When you "retire," be open to going back in the future to your current line of work, or a different line of work. Think about how going from an abundance mindset to a scarcity mindset affects you personally. Maybe you will not mind it at all and will thrive in retirement.