We didn’t mean to, but we saved too much for retirement- way too much. This happened for a few reasons, including marital politics and a retirement package that I would get if I waited just a LITTLE longer. Thanks to a roaring bull market and being heavily invested in equities, we now have about twice my original savings target. Due to the retirement package, we won’t need to take a dime out of the portfolio for at least three more years. If we started spending now, we’d be withdrawing 2% of our portfolio- far less than our 3.5% target. In a few years my husband will be old enough to get Social Security which will reduce the withdrawal rate below 1.5%. We are actually having trouble wrapping our heads around our current account balance. We never expected to have so much.
Having this much money wasn’t really the goal- the goal was just to get away from my job. After the ’08-09 recession, I decided I didn’t want to work in my industry any longer. Unfortunately unemployment was sky-high, and I was the only thing keeping some of my clients invested in the market. I didn’t want to abandon them when things seemed so uncertain. I didn’t know what else I wanted to do, I only knew I was tired of what I’d been doing for the last 13 years. Like everyone else’s finances, ours were slow to recover after the recession. Early retirement didn’t look like a possibility until 2012 or 2013. At that point all the investments we purchased when the market was at rock bottom were looking brilliant, my job was more tolerable, and I was making more money than I ever had. I was still looking at other jobs, but I would have had to take a huge pay cut. I ran the numbers, and if I stayed where I was and continued to invest like we had been, I could retire in 2017 or 2018. If I changed jobs, I would be working longer.
Just before 2017, when I was looking seriously at turning in my notice, the company came out with a really good retirement plan. It included several years of severance pay and access to health insurance, which was increasingly attractive in an uncertain healthcare environment. The best part about it was that my husband liked the idea. Up until this point he had been completely against me quitting my job. The worst part is that I didn’t qualify for it because I was too young. I would have to wait till February 2020 to do it. My husband loved that part too. The severance pay added a degree of safety to the plan that I appreciated, since I’d seen first hand how fast a plan dependent on market returns could go wrong. I decided to stay even though our assets reached the “safe retirement number” by December of ’17. The market continued its upward climb, and by the time I was “old enough” to retire, we had much more than the original goal.
We don’t LOOK like we have this much money. I drive a 3 year old Subaru that I bought used, my husband (like most other men where we live) drives a pickup truck- a pretty average one. Our house is very nice, but not especially large or luxurious. I don’t really care about designer things, so I don’t have any, though I will admit that my kids sport the usual assortment of athletic brands on their clothes and shoes. They have about average for the kids where we live. The only way people would know is that we take long vacations to some interesting (and not cheap) locations.
We don’t really want anyone to know our financial situation. It was the thing I was most nervous about when I announced that I was going to retire. I had to call all of my clients, and when you call 300 people in a small town, EVERYONE will know. Some people already knew the “scoop” by the time I called them on the second day. There are a lot of stay-at-home moms around here, and I’m trying to masquerade as one of those. When people asked, I implied that I plan on getting another job after a few years off. People treat you differently when they know you have money, and not always in a good way.
I suspect our spending has gone up a bit since the last time I tracked it. I stopped looking at it for a while when I was busy working, but I am logging expenses again. Even tracking it for just a little while, I have noticed some areas that could be improved. Do I need to improve them? Probably not, but I dislike waste. I’m still frugal. I can’t seem to help it and neither can my husband, but as we have accumulated a somewhat daunting net worth, we have relaxed a little about our spending.
My more relaxed attitude about money doesn’t seem like a big deal, but its lovely not to obsess about every purchase. We spent a weekend in the mountains recently, just to get out of the house. For a lot of reasons, including some changes in the weather, it wasn’t really much fun. It wasn’t cheap either. A few years ago, I’d have been upset that our trip didn’t go as planned, and that the accommodations were not as advertised, but I’m a little more relaxed about it now. It would be lovely to make optimal decisions about everything, every time, but life doesn’t work that way. No point in being upset about that. We have decided that vacation is not the time to be penny-pinching, or to beat yourself up over a spending mistake. It interferes with fun, which is the point of vacation, so stop it already.
We are upgrading a few things and tending to some overdue maintenance. We finished the barn behind our house and made a really nice workshop that my husband and kids are enjoying. That freed up some storage space to make a nice potting shed for me. We also built a pergola over the back porch and finished an outdoor grilling station we had been meaning to install since we moved in 8 years ago. We’re going to put new gravel at the camp because it becomes a muddy mess when it rains. I hate the chest freezer I bought for the house, and we’re going to buy an upright one, even though there is nothing wrong with the one we have. I’m even considering laser surgery for my eyes. Contacts worked well for me when I was young, but my aging eyes like them less every year. We might even start flying business class for longer trips.
We have thought about increasing our daily spending habits, but haven’t done it for a couple of reasons. The first is that we have everything we need and most of what we want. We’re not comfortable with being “flashy.” We both grew up in rural areas and are used to a low-key lifestyle. Honestly, if you stopped by my house in the summertime, you’d probably see me barefoot in the yard with my hair in a ponytail. Our typical get-togethers with friends are barbecuing in the backyard, drinks around someone’s fire pit, or kayaking on one of the local waterways. A friend who moved here from New York City told me that his favorite thing about living here is that its so cheap to have a good time.
Where we live, its actually harder to spend money. There are very few restaurants to choose from (and none of them are fabulous) and its a half hour drive to a mall or shopping center. Until last year, we didn’t even have a coffee shop. There is only one club to join in town. Its a golf club and we don’t play. Also, thanks to the coffee incident, we have learned that making luxuries a habit can make you LESS happy, and we certainly don’t want to do that. The occasional treats have become a little more frequent, though.
From a strictly financial point of view, its obvious I could have retired a few years ago. It is a pointless exercise to analyze whether or not I made the correct decision, but I can’t seem to help doing it. And I do know that people justify whatever decision they made as the right one, even if the evidence is to the contrary. I’ve had several people tell me that they sold their stock investments at the bottom of the market decline in 2009, but that was a good decision, because they paid their house off, or whatever.
The results of the choice I didn’t make (retiring at 44 instead of 48) are unknowable, but there are a few decisions that might have been different. We stumbled on a cabin on a local river that we bought and have come to love. It was a purchase we probably would not have made had I not been working at that time. We were grateful to have it last summer when every other fun thing to do got cancelled. A year ago, our 16 year old began having some issues that we couldn’t seem to solve. A private school was an option that we probably wouldn’t have considered due to the hefty tuition. We decided to enroll him and it has turned out to be a wonderful solution.
I don’t know what our portfolio is doing on a daily basis anymore. I know that’s partly because I’m not at work staring at stock quotes all day, but its nice not to have to think about it so much. I thought I’d be even more worried about our finances since I will soon no longer have a paycheck, but that hasn’t been the case.
The last few years at work were pretty miserable, and retirement so far has been wonderful. Did I make a good trade by sticking out the last few years? Impossible to say for sure, but maybe I did.