How I Knew I Had Enough To Retire Early
Many people want to retire early to live a life free from the rat race. It takes having a certain mentality and the financial means to pull it off. Even with meeting those requirements on paper, it can be difficult to really know when we have enough to retire early and make it work over the long-term.
I was mentally ready and willing to ditch the career at age 40. But it wasn’t hard to figure out then that I didn’t have the means to do it. At that time in 1998, I only had around $100,000 in my 401K ($160K converted into today’s dollars), some debt, and no idea how to fund our lives without my demanding career. So began an early retirement plan and the 10 year journey to get there. Then came questioning my readiness until the moment I knew I did have just enough to retire early. Enough in more ways than one.
Once I Knew I Had Just Enough To Retire Early It Was Easier To Jump
Knowing that you have enough to retire early is a lot tougher than knowing you don’t. It was obvious when I first started my early retirement journey to see there was no way to pull it off. But as financial goals are met and numbers vastly improve, the real math and mind warp begins.
The Mechanics Of Knowing I Was Good To Retire When I Did
I Became A Budget Master
I wouldn’t have been able to call it time to retire without first knowing exactly what our preferred lifestyle would cost. We had years to dial it in. I knew how much I not only needed to fund our lives but how much I wanted.
I Cleared Date Milestones
When I started my FIRE quest, I knew when I would qualify for some retirement benefits at my job. My 10 year plan revolved around hitting those milestones for a pension and retirement healthcare. Even though during my 10 year plan the company was taken over through a merger and the company promised retirement benefits were heavily diminished, I still cleared the date milestones to get what was left that I’d earned. Other milestones to consider are bonuses, meeting 401K thresholds or company match payment dates, stock option vesting, or other beneficial age based milestones.
I Tracked My Portfolio And Retirement Calculator Results
I tracked my early retirement portfolio chances through the FIRECalc retirement calculator during my 10 year plan. Talk to 100 people about what kind of a calculated success percentage they need to feel comfortable pulling the retirement trigger and you’ll get 100 different answers from 85% to 200%. Everyone has to make that decision. I was satisfied with 90% and up.
Settling The Mental Conflict Of Taking The Retirement Leap
Reversing Decades Of Conditioning
We are preconditioned to always want more. Better grades, bigger degree, more pay, higher career position, newest doohickey, the list goes on. Our dreams can even become inflated. I knew I was mentally ready to retire after years of reversing that conditioning through frugal living and distancing my identity from what I did for money. It was easy to walk away and made it easier to get through my retirement transition.
Trusting The Numbers And Accepting Calculated Risk
It’s easy to submit to doubt when breaking norms. There’s a feeling of safety in conformity and portfolio overkill. For anyone who doesn’t equate retirement to a traditional or particular age, or having a million dollar plus portfolio, actually knowing you have enough to retire goes far beyond running numbers. It requires trusting the plan, your calculated results, and believing in your own ability to adapt and be flexible as things change going forward. There is always risk for those who don’t have the benefit of an extremely fat portfolio. I was mentally ready and willing to accept that risk for the reward it offered.
Acknowledging The Work And Lifespan Tipping Points
I was there, I knew I mentally had enough to retire early. I was at the working tipping point when the job became less attractive than the income and portfolio padding it provided. The little voice became louder that there must be something better than this. Then the lifespan tipping point of years slipping away. Years that can’t be bought back.
I Still Had A Hiccup
I had done everything right and still had to make an adjustment until I could confidently know both financially and mentally that I could retire early.
The recession set in just as I approached my planned early retirement date of October 2008. It sent many of my financial goals into retreat. Numbers can look good one day and bad the next with market volatility. But the recession’s subsequent and prolonged market drop was off the charts. I delayed retirement a year until I felt the market drop had bottomed out and my calculated success rate returned within an acceptable range. That and a little mental push, courtesy of new asinine executive directed policy and work changes coming. I had enough!
Seeing what we need to see to know we have enough to retire early is going to look different for everyone. It’s like beauty. It’s always difficult to explain but we know it when we see it. The same applies to knowing it’s the perfect time to retire on our terms when we’re truly ready both financially and mentally to take the leap.
Note: This article originally appeared at Leisure Freak.
Category: Personal Finance
