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September 22, 2012

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Bob Lowry

Welcome back to blog world, Syd. I was afraid you had become soooo mellow during this permanent retirement you'd lost the will to blog (or it could have been that clothing optional beach in Australia finally got to you).

I like the reference to retirement being like a liquid...just naturally flowing everywhere. I couldn't agree more.

Retired Syd

Thanks Bob! I hope I never lose my will to blog. I do often think, "I should write a post today." But the today's have been getting away from me lately.

New at this

So to your question, do you ponder if you had waited until now to retire, would you be better off? You'd have another 4 years worth of net earnings to spend freely on whatever wild fantasy you can dream up....and you would just now be experiencing the virgin excitement of what it feels like to be newly retired.

Retired Syd

New: A couple of thoughts here. First off, if I was just retiring now as a "virgin," I would probably be struggling a little more. As I said, it was harder the first time, so this would be the first time if I just retired now. (In other words, the feeling of being retired now is a lot better than it was back then since I know a few things now.)

Secondly, I wouldn't have had the opportunity to have the most fun job of my life (the part-time consulting gig), because I would have still been working at my old job.

And lastly, and I think this is the most interesting: As of today, 4 1/2 years later, I have the exact same size nest egg as I did 4 1/2 years ago. Which doesn't sound that great at first glance, but since the market has recovered to where it was when I first retired, that means I have the SAME amount of money as I did then, but then with 4 1/2 FEWER years to cover (because I'm older, you see, with 4 1/2 years less to live).

If I kept working, I would have more money, you are right, but no, I wouldn't trade the time I got these last several years for more money that I don't need.

You can't get that time back.

Jacq

Yes yes on the time aspect. I've worked for many years for the time away every day that I do now, but I don't think I've ever resented the time it takes as much as I do now. For years it was something I didn't think I had a choice about and now I know that I do. Maybe sometimes we have to not have something for awhile to truly appreciate it when we get it back.

So you don't think there's a hedonic adaptation aspect to retirement?

dgpcolorado

It's been a long time since I pulled the plug on my career. I had been downsized but it wasn't until a few months later that I realized that I could use an amortization formula for SEPP to live off of my IRA without an early withdrawal penalty. But once I realized that I was early-retired for real, I don't recall any transition problems. Two weeks later site preparation work started on my lot, purchased years before for a future retirement house. A month after that I moved to the new area so that I could de-clutter my city house to put it up for sale. Once it sold, construction started on my new house out here in the boondocks. In short: I was ready! I had been planning/plotting my early retirement for more than a decade.

Since then I haven't looked back. When I would visit my former colleagues and boss I'd sometimes get asked when I was coming back to work—my answer was that the 600 mile daily commute would be brutal! After a couple of years they realized that I really was retired for good and stopped asking.

However, as I've mentioned before, I keep busy with massive amounts of volunteer work, in addition to hobbies and the like. Perhaps that's what makes the difference; I'm not at loose ends, I've never been at loose ends. Too many interesting, useful, or fun things to do with life!

So, I don't know. Doesn't seem so hard to me to make the transition. Everyone's different though.

Tom Sightings

I was gonna pat myself on the back for being so smart, because I've only retired once . . . I got it right the first time! But then I realized, I'm still working part-time. So maybe I'm not so smart after all.

fred doe

Retired four years? Me too:) retirement only solves 50% of the game. This year i've shifted to a new astral plain ( not to sound to Timothy Leary like). It's as though synchronicity taps me on the shoulder or slaps me on the back of my head:) You can't look for it? Only recognize when it's there. It's wonderful. I don't know where it's taking me but I'm on my way. One thing i've become is apolitical ( at parties your better off telling some one your an atheist then being apolitical) It's not apathy though. Try it your blood pressure will drop ten clicks. Sports is better to follow. What are them 49ers gonna do this year?

Retired Syd

Jacq: I think you hit it on the head. I would never have described my first years of retirement as unhappy--I totally enjoyed it even then. But I think losing that freedom for a couple years really brought home what I had been under-appreciating at the time. Definite hedonic adaption. Slap me when I start taking it for granted again . . .

DPG: You are lucky, especially as a man. I get a higher percentage of those struggling emails from men (although it's not exclusively men, so I can't over-generalize). And especially since you had been downsized, you sure rolled with the punches well! Sounds like you had some big projects to delve into right away, which probably was part of the trick.

Tom: Yeah, not so fast!

fred: Nope, you can't look for it. You're right. (And you're right about the politics and the blood pressure too. Sometimes people just have a hard time fighting addiction, even when they know it's bad for them.

George

So I must admit that I don't see where all the drama comes from. But since I haven't done it yet, trust that there is something that I'm missing. If you really, really, really know that you have enough money to live the lifestyle you want for the rest of your life without saying yes sir to a boss ever again, whats so hard about that?

It seems to me that anyone having trouble adjusting to this kind of freedom is just not completely confident about really having "enough". And therefore live with a little subconscious voice always asking, should I really be "wasting" my day gardening? Because if calamity strikes and it turns out I don't have enough, I sure screwed up my life.

Janette

I returned to work six weeks ago. I am now KICKING myself! I miss retirement madly. The advantage is that I am seeing what I am missing and making plans for when I retire again (in five more - six week periods). I am begging to get out of my contract.
I am thankful that I did not take the overseas position that would have put me in the same place, work wise, instead of where I am. That would have been a disaster.
We are in exactly the same place, finically, as we were two and a half years ago when I left the workforce the first time. Last May we figured out that we actually could make this work well. So, George, it was all about the job to me.

Elle

Congrats Syd on riding the roller coaster back to where you were 4 years ago. My question is therefore, what now? It would seem that you've already won the game, will you continue to put money into the stock market? Especially now that it looks like Obama might be spending us into oblivion for another 4 years, without his needing to artificially inflate the stock market with QE1,2and3 to try and get re-elected?

And any ideas on how to protect your stash from obamas tax-the-rich goons? I've heard he is now talking about implementing a wealth tax to pay for all his welfare programs he is using to buy votes...

Retired Syd

George: I totally get what you are saying. What's so hard about retirement, you just quit your job and start enjoying life, right? I get it!

I will tell you this, though--out of the hundreds of emails I have received about the challenges of adjusting to retirement, I have only received one that has mentioned a worry about money. It's not generally the money. It's about all the other things you are giving up with work, a built-in social life, "being somebody", a sense of achievement without really having to try that hard, feeling part of a community, and probably many more things I'm not thinking of. The great news is that this feeling usually works itself out within the first year, sometimes two. I wouldn't call that "drama," I'd just call it normal.

Jeanette: I know EXACTLY what you're feeling! But as Jacq pointed out, it's a good cure for Hedonic Adaptation!

Elle: Riding out the last 5 years of the stock market calmly has taught me a lot of lessons. I will need my nest egg to provide for me for the next 4 or 5 decades--not just the next couple of political cycles. I ignore the hysteria around me and just stick to rebalancing my portfolio each quarter to the asset allocation that lets me sleep at night. I will write a post about that approach on Monday, it's a little long for a comment.

As far as tax rates, I've been assuming for the last decade that rates would go up after the Bush tax cuts expired. There comes a time when that balloon payment comes due. The corollary to your comment is that you can't keep buying votes with low tax rates either--eventually you gotta pay for all the stuff you bought on credit! It's just math.

deegee

I am definitely better now than I was 4 years ago. I retired at the end of October, 2008, at age 45. Getting out at theat time was a big financial gain for me because the company stock I cashed in was still valued high while the bond fund I bought into was near its low point thanks to the financial meltdown. This has made my ER quite a bit easier than I first thought it was gong to be. And all the stock funds I own have recovered quite nicely and then some, giving me an overall higher net worth now than when I was still working and earning money!

I was working only 2 days a week in the 17 months prior to ERing (and part-time for 7 years) so it was not a big change to my lifestyle to working zero days a week. I have NO desire to go back to work ever again after 23 years.

Retired Syd

Deegee: Maybe that's part of the secret to your successful transition. You kind of stepped it down first before going full-throttle into retirement. Although, I suspect you would have always had an easy time with the adjustment--you have lots of outside interests and volunteer activities and your life improved so much without your long commute. But it probably played a positive role in the transition nonetheless.

Elle

Or the third corollary, they simply need to STOP spending us into oblivion. I honestly thought the crazy spending would stop when we got rid of Bush. But to my amazement, Obama added another $5.5T on top of the mess we already had....I can't believe he even has the verve to run again!

Obama: "Take it from those who make it, give it to those who don't, and destroy everyone's incentive to do anything ...." Worked pretty well for Greece.

Retired Syd

Elle: Yep, it's going to be painful, one way or another to pay the piper. Spending cuts will be painful to many members of our society and tax increases will be painful to many members of our society--you got that right. Just like a family that decides to get serious about paying down their debts--things will be tough for awhile while you do that. Everyone is going to feel the pinch. I worry a lot about those that are barely surviving, though. I really worry a lot about them.

Laraine Walker

Hi Syd, I always enjoy your posts. I am in my first year of retirement, and the thing I do enjoy the most is the opportunity to allow time to structure itself, with no rush. I am taking the first year to allow myself to do what I please, to explore the world of writing. whenever I feel pressure, I just tell myself that there is no pressure, I can do what ever I want to do.
You are having a wonderful time. Enjoy your freedom.

Retired Syd

Laraine: Looks like you are a quick-study on this retirement thing. You enjoy your freedom too!

Elle

Agree with worrying about those that genuinely need the help. But for everyone that we are "helping" that actually can't provide for themselves, there are a pile of others that are abusing the system. I know you already know this though, as haven't known you to be patronizing.

But to connect this back to my original comment, how are you preparing to protect yourself from a wealth tax? If you really are living on 3% of your stash, it's going to be really tough if Obama decides to take 1 or 2% from you to give to someone else.

Retired Syd

Elle: I consider myself very fortunate to be in a position to be able to handle it. Don't worry about me.

Elle

So now I'm confused. Can you actually live on 1% per year? I can't, so are you living by different guidelines than your representing to the rest of us. Happy for you if you can but please don't pretend because some of us may actually follow what you are saying...

Does anyone else have any thoughts on how to invest your money in a way that might be protected from a wealth tax? Anything analogous to a muni that protects the principle instead of just the interest? I've heard they had a weath tax on principle in Florida for a while. Thanks in advance for any insights?

Retired Syd

Elle: Sorry, I misunderstood your original concern, I thought you were really talking about income tax increases, which I'm sure we will see in the future.

Are you really concerned about an "Obama Wealth Tax?" I must say I'm not worried about that and am not therefore preparing for that. Maybe some other readers have some ideas for you on that.

Tamara

Welcome back Syd! I'm now 18 months into retirement, still evolving, and in complete agreement with you that the transition from full time employment to retirement is indeed significant. Even though I was more than ready to leave my job, it did take some time to figure who I was without it.

I received a communication last week about a consulting job a former co-worker had recommended me for. I was immediately sure I was not interested. Seriously, I've just now begun to unwind enough to be able to sleep past 6:00 AM! In any case, as appreciative as I was at being considered, having the financial freedom to politely say "no thank you" was wonderful.

BTW - We're ending this year at a 2.5% withdrawal spend, which gives me a great deal of peace of mind that we can withstand a lot of financial turmoil should it arrive. We're also not including our home in our financial plan at this time, giving us even more bob-and-weave ability going forward.

Much of our current spending strategy is due to the advice about your own retirement that you've so generously shared here, so thank you.

Retired Syd

Tamara: You are really in great shape if you are ending your first year at a 2.5% withdrawal rate. I think you can breathe a big sigh that you guys are doing more than ok! You've got it under control. Plus the backup bob-and-weave. Excellent.

Now on to the important stuff--YOU are my retirement role model! You have such an active, fulfilling retirement. It seems to me you got in the swing of things without any problem at all! Thanks for all your contributions to the conversations. I love it!

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