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Episode #625 - Retire on FIRE -Rocking an Early Retirement: Meet Henry and Lucy

Roger: Some rules are nothing but old habits that people are afraid to change. Therese Ann Fowler.

Well, hey there. Welcome to the show dedicated to helping you not just survive retirement, but to have the comfort and the confidence to lean in and create a great life in retirement. To rock retirement. My name is Roger Whitney. I'm excited to be here with you today.

ROGER INTRODUCES A NEW RETIREMENT PLAN LIVE CASE STUDY SERIES AND PREVIEWS THE UPCOMING LIVE COMMUNITY MEETUP ON JANUARY 29.

Roger: Now, today on the show, we're starting a retirement plan live case study. Now, this is where we take a listener, someone like you, and we meet them, we talk with them and walk through who they are, which we're going to do today. You're going to meet Henry and Lucy next week. They're going to share what goals they have for retirement. They want to retire in their 40s. They're changing a habit there. And then the week after that, we're going to have them share what resources they have to pay for this retirement. And then on, January 29th, I believe it is, we're going to have a live meetup or I'll be there, Henry and Lucy will be there. Hundreds of you will be there. And we're going to go through the analysis as to whether it's feasible for them to hit that goal, and if not, what pathways that might they consider and if so, how they might make it resilient. So we can do all that together live on the 29th. you can go to livewithroger.com to register for that. Even if you can't be there live, go ahead and register because we'll send out the replay and in addition, we'll have a Q and A about the Rock Retirement Club and our fall cohort to help, you plan better for retirement so you do all that live with roger.com so on deck today is to meet Henry and Lucy. We're going to do a smart sprint. We're going to talk about words, share some words at the end of the show that's been a hot topic.

RETIREMENT TOOLKIT

ROGER REVISITS THE 4% RULE, EXPLAINING WHAT IT IS, WHERE IT CAME FROM, AND WHY IT IS OFTEN MISUNDERSTOOD

Roger: But first, I want to go to the retirement toolkit and talk about a common heuristic and when to use it and when not to use it. In today's retirement toolkit, I want to talk about a heuristic that can help answer the question, what's my number? How much money do I need to have to support my lifestyle? Do I have enough? This is important questions when it comes to the financial side of retirement planning M. And the heuristic I want to talk about is the 4% rule. Now, if you've listened to the show for a while, you know that I'M typically very critical of the 4% rule because I think it's often misused and I think it's way over talked about. It's one of those things that just caught fire. It's easy to write blogs about, it's easy to podcast about. Influencers like love to talk about it all the time. And it drives me nuts because it's not retirement planning. It was never meant to be used as a system to pay for your life in retirement. It's a heuristic. So usually I'm pretty critical of it. But in certain situations, it's a great heuristic to start the conversation, to answer some really important questions in retirement. So that's what we're going to talk about. So let's get a baseline knowledge of what the 4% rule is. It's been around for decades. A financial planner did a study or analysis that he published trying to answer the question, okay, if I have this amount of assets and I want to spend from it, and my spending needs to increase every year for inflation and I don't want to run out of money in the next 30 years, what percentage of those assets can I take safely? Safe withdrawal rate. So he did a lot of analysis. He assumed that you invested, I think, I believe it was 50% stocks, 50% bond portfolio. Using historical data, it adjusted the income coming out for inflation. It didn't account for taxes. It didn't account for other, income sources like Social Security to determine, well, if I had X amount of assets, how much money could I take out? Go to the end of the story. It was 4%, roughly 4%. And the gentleman that did the study came out with a more recent book and now maybe it's four and a half. Who knows what it is? That's that part I don't care about. So as an example, if it's 4%, the 4% rule, if you have $2.5 million using this rule of thumb, you could spend $100,000 and feel relatively safe based on historical data, that you're not going to run out of money. And that $100,000 would increase every year by inflation. So as an example, if you spent $100,000 in the first year, the next year would be 103,000 and so forth. So that is essentially what the 4% rule is. A, good back of the napkin. I have this amount of money. What might be a safe spending now as fire has become more popular, financially independent. Retire early. We'll talk about what that is in more detail in a minute.

ROGER TALKS ABOUT THE 25X RULE COMMONLY USED IN THE FIRE COMMUNITY.

Roger: When that movement came, they came up with another heuristic which is basically the inverse of the 4% rule, which is, how much money do I need to save to be able to spend a certain amount? And the 25x rule is, well, if I want to spend a hundred thousand dollars a year, multiply that by 25 and that tells you what your savings target would need to be. Two and a half million. Math works the same way either way. So that is a complementary heuristic for someone that's younger. Now the benefits of these heuristics are that they're just simple frameworks I could do on, the back of the napkin. And the research done gives you some basis for, okay, this should be plausible that this would last 30 years and I wouldn't have to worry about running out of money because of bad markets and other things. That's really helpful as a conversation starter on a very difficult topic of retirement planning. And if you're younger, it's a great target. From a savings perspective. We are all teleological in nature. We love to have targets, things that we're working for. So if you're younger, this will help you set a target of what you might need to save. If you're older, you can look at your spending relative to the 4% rule, just as sort of a quick fact check. In our retirement planning, when we do long term cash flow projections, we pay attention to what the withdrawal rate is. The only difference is we're more worried about trends and averages than we are each year. 4%. Some years we might have 8% and then it might go down to 2% later in life because income sources kick in. So we still pay attention to it. so it has a lot of benefits.

HE DISCUSSES THE DRAWBACKS OF USING THESE HEURISTICS AND WHO THEY ARE BEST USED FOR.

Roger: Now what are some of the drawbacks to using these heuristics? Well, one is they're very limited. When you get past the rule of thumb, part of it, it's assuming static spending. There's little or no flexibility to it. And especially if you're older and retire, if you're in retirement, the 4% rule can act as an anchor and become a ceiling to your spending rather than a floor. And that can cause you not to spend money and ultimately have too much money towards the end of life, which is just as tragic as running out of money. So there are some disadvantages to this as well. So who is it best used for? When do we want to use this type of heuristic? Well, number one is gonna be those early and mid retirement savers, people in their 20s, 30s and 40s that are starting to think about retirement and they're trying to figure out how much money do they need to save so they can determine their savings and their investing and their lifestyle choices. Well, this is where that 25x rule. Well, it's a great. If I wanna have $100,000 in spending, a good target might be two and a half million. Seems like a lot, right. But that can help inform their savings program and also how much risk they take as they're saving. So that can help set lifestyle targets and also becomes a behavioral anchor because we like to have targets to aim for something to see how we're doing year by year relative to that target. And that's a very helpful thing when you're saving over time. Now here's an interesting thing. If you're going to use it for that, generally when we, this is for all the younger fire type people. Generally when we use it, we're thinking about how much do we need to save. But there's two numbers in that equation, right? There's the amount that you need to have, but there's also the amount that you're trying to solve for in terms of spending that is really important. And we've seen that in the retirement plan live case studies that we've had over the last nine years, 10, 12 years, and you can get all of those in our new resource center, by the way, which is@RogerWhitney.com we've had people that they needed to spend $200,000 a year. That was their target, which meant what's the math on 200,000. What's 200,000? Well, see now these heuristics come into handy. Times 25, that's $5 million. You want to spend $200,000, you're going to aim to try to get to $5 million. We've had people that they needed that. So they needed to have a lot of assets because they demanded a lot to maintain their lifestyle. But we've also had case studies where I think the lowest one was someone spend like $50,000 a year or less. And they were one of the happiest couples that we talked to in the series. Equally as happy as everybody else. They designed a life that was fulfilling for them. It didn't cost a lot of money to do. And by doing that, the target for how much they needed to save or what their number was wasn't near as high. So we don't want to forget that part of it and just focus on the savings and investing part of it because those are trade offs.

Now in some ways you can do that. You know, I'm thinking of myself here, is I live, you know, in the burbs of Dallas, Fort Worth. Ultimately I'm going to be living in Colorado in a small town where everything we, I'm going to have a paid off mortgage. Everything we do once we have the equipment, the bicycle and the hiking shoes and things like that don't cost a lot of money and we won't live around a lot of people that are living a lot of money. And we're not always going to the new restaurant and everything else. And we're around the things that we love to do. Trying to organize your life around that will support you doing the things that are meaningful for you from a community aspect, et cetera, while you're still working will set yourself up not to necessarily have to save a ton of money. So I just want to make sure we pay attention to both of those numbers, not just the savings amount or the amount you need to have. All right, so mid to early retirement savers. This is a good heuristic to work off of planning since we can't even think about what retirement actually is.

ROGER SHARES HOW THE 4% RULE CAN HELP OVERFUNDED RETIREES MOVE BEYOND SCARCITY AND SPEND MORE INTENTIONALLY.

Roger: Where I have been using this heuristic a lot more though, because I don't work with mid, I don't work with retirement savers per se. Where I've been using a lot more though is with people that are near or in retirement, that are overfunded, they have too much money, they've overshot the goal. Those are the people where this can become very helpful. Because when you have more money than you need, that presents a particular problem because it doesn't, you know, it takes away some of the anxiety of retiring. But honestly it doesn't in a lot of ways because we are scarcity creatures physiologically. Our body holds onto fat if it can, because it wants to store just in case. And we're. Michael Easter highlighted a ton of research on this. In the scarcity loop. We constantly think more is better just in case. That is just how we are wired as humans. And getting out of that scarcity loop, it doesn't matter if you intellectually know you have way more than you need. More is always better. And sometimes, let's be honest, when we're growing our wealth, whether it's through the amazing income that we have or the income and our savings, and I just updated my net worth statement here, at the end of the end of the year, we get addicted to more. More is better. It feels better, it makes us feel safe. It makes us feel like we, we grew. We don't want to see it go down. That doesn't feel safe. We're addicted to more in many times because we've been in this performance build wealth mentality for decades. And it challenges to people that are overfunded is they fear the unknown just as much as anybody else. Doesn't matter whether it's rational. We're not rational beings per se. And all of this is happening in retirement when we have the best opportunity to create experiences or have impact on our community, when we're younger, when we're worried about our older selves and we can't get over ourselves. So using this heuristic to help build a floor but not have a ceiling to help them see that they could spend more earlier and still be okay. Whether it's spending more on trips or on giving to the community or to their family, using this heuristic is really helping those people really get over themselves and expand the possibilities, not stay in that scarcity mentality. That's where I've been using this heuristic much more.

A BREAKDOWN OF FIRE- FINANCIAL INDEPENDENCE, RETIRE EARLY.

Roger: So this is a good retirement toolkit to talk about today as we meet, as we meet Henry and Lucy, which we're going to do here in a second because Henry and Lucy want to do what's called fire. And we did a month long episode on that that we'll put a link to that in the noodle. But F.I.R.E. is an acronym that stands for Financially Independent Retire Early. Right, that's the acronym. So let's focus on the first two letters of that. Financially Independent. What does that mean? Independent from what? Well, if you think of you and I, if you're still working, you are dependent on your ability to work and earn an income to fund your life now and pay your bills and also to build your wealth so you can fund your later life. So we are dependent upon that income and that really shapes the choices that we make in where we live, who we associate with, what we do every day, the games that we play, or the things that we'll put up with from a work perspective, whether that's nonstop travel, endless meetings, the political stuff that happens in corporations, the dynamics between superiors and subordinates, what we say yes and no to because we're financially dependent on our income that's produced by work, it forces all these choices. So financial independence, what is that? Well, I think it's the opposite, right? It's where we have enough resources, income sources or money that we don't need to work for income to support the life that we want now or in the future. That's pretty cool, right? Doesn't mean we don't work. I dislocated my finger on New Year's Eve and slept with it that night and then went into, like one of those standalone ER places in Mansfield, by the way. It was an amazing experience. They were wonderful. Want to go to one of those? I was asking my son. You need to go to the ER or something. Standalone ones are great. And if you go like 6am to 7, 8am, that's when you want to go. You start going at nine, they get really crowded. So I went and they were wonderful. I think I doctored. They were just great. But I was talking with the radiologist, the lady who took the X rays of my fingers. Her name is Mihen. I want to give her a shout out because she was a wonderful spirit. And I had a vagal episode. I passed out, which is fun, falling off the bed. but she and I were having a conversation because I had to drink, and they were all worried about me after I fell out of bed. but her husband's retired. She's worked at high pressure hospital. She was just telling me some of her stories. She's in her 60s and she works a couple days a week at this little standalone er. She loves the people she works with. She gets a lot of fulfillment from it, but she doesn't need to work. She and her husband are financially independent, but she's choosing to work. But she structured her choices differently because she doesn't need the money. She still wants to work. So she left the big high pressure hospitals in Dallas and works a couple days a week at this place. And when she doesn't want to work, she can easily do that. She gets to hang out with a team that she loves. She gets to serve using her skills. That's the difference between, financial dependence on your work and financial independence. So that's the first fi of F I R E. Retire early is the second part. And that's what Henry and Lucy are talking about. So let's go have a chat with them and what's driving them to try to do this.

RETIREMENT PLAN LIVE

Roger: So today we're going to meet Henry and Lucy. They're going to tell us a little bit of their story and where they're trying to go. And then next week, we're going to have them explain their goals and their values and what they see their life looking like if they have the resources to do it. So let's have that chat.

Roger: I'm here with Henry and Lucy. How are you?

>> Henry: Good, good, Good. Roger.

>> Roger Whitney: So I know you. You shared before we started that you really thought a lot about these names that you're taking on. How many hours did you spend, would you say?

>> Lucy: Well, I wouldn't say hours. It was probably a half hour, I would say to an hour at the most. he got annoyed by me sending texts of different suggestions.

>> Roger Whitney: Well, it's sort of fun. It's sort of fun. and so what is the origin story of the names?

>> Lucy: Well, he originally suggested something, some couple names, pseudo names from a show we used to watch, but I didn't really like one of the male names, so then that started me down the path of just looking at movies and, TV shows with couples, and things that we had liked or watched together and came up with Henry and Lucy from 50 First Dates, which is one of our favorite chick flicks, I would say. His favorite, but mine.

>> Roger Whitney: All right, so, Henry, should I put this on my list? Because I don't think I've seen it or.

>> Henry: yeah, it's. It's pretty good. It was an Adam Sandler movie.

>> Roger Whitney: So we're already getting a sense for your intentionality here. Okay, and so what year were the both of you born? So I was born in 1980-1981. Okay. I graduated, graduated high school in 1985, which makes me feel. And so you're both 45, right?

>> Lucy: Until 44.

>> Henry: Yep.

>> Lucy: Yep.

>> Roger Whitney: Oh, okay. I'm not putting the exact birthday, so I'll have this off a little.

THEY SHARE HOW THEY DISCOVERED FIRE AND WHAT IT MEANS TO THEM

Roger: Tell me what FIRE is, and what you understand it to be and what it means, what you think it is.

>> Lucy: So the acronym is Financial Independence. Retire Early.

>> Roger Whitney: Okay.

>> Lucy: I first heard about it in, I think, like, 2017 from a coworker just had offhand mentioned that acronym to me as we were talking about some things. And so that's. I had never heard of it. So I looked it up, and I'm like, oh, I like this. Like, the thought of. For me, it really is about retiring early. whereas I think a lot of times now people are trying to talk more about just the financial independence part of it, as well. But, for me, it's always been like, no, I don't want to be in this grind anymore. I just want to do what I want when I want to have our time. Freedom to do. To do that. so that's what FIRE is to me. But I Don't know if you. So then you know, it's just learning about that and like, how do you even contemplate.

>> Roger Whitney: So you were in your 30s. You were in your 30s when it came into your, your universe?

>> Lucy: Yeah. Yep.

>> Roger Whitney: Did it seem wacky or is like, heck, yeah, that's what I want?

>> Lucy: no, I mean, we had, we had talked previously, like when I first started with my first real job and signing up for 401ks and know, talking about that stuff and the thought of working 45 years was like crazy to me. Like, what if I got to work that long? So I think we always had it kind of in our mind, like we wanted to retire early, like 50 kind of a thing, but didn't know how to even contemplate doing that. We just were putting away in our 401ks and really even only our minimums at that point. So I feel like it was really a pipe dream at that point. But then once I started actually hearing about this movement and researching it and reading blogs and things like that, that's where I'm like, oh, this is how you do this and how you get there and stuff like that. So just sparked me on my journey to really learn about the stuff. Ah, Henry wasn't, as gung. Like he was interested in the whole concept to do it, but learning about it, that wasn't his interest.

>> Henry: Yeah, I mean, typically finance is like my Achilles heel. So I'm, I'm not real strong in that area. I'm strong in a lot of other different areas. But, I struggle with finances, accounting, all that kind of stuff just was never really big for me. And you know, Lucy's amazing at it, so it's, you know, kind of a, a good matchup here. So, I just really appreciate everything she's done because growing up, I was not taught about being frugal and being, you know, smart with your money and budgeting and things like that. I mean, I always joke, like, if we didn't get married, I would have a lot of cool stuff, but I'd be broke.

>> Roger Whitney: So did you have, did you make material changes to your life when you discovered it, or were you already pretty much savored?

LUCY REFLECTS ON SPENDING HABITS, SAVING, AND BUDGETING

>> Lucy: We were savers based on different things. in our past, I guess, starting out, we were living on his entry level income. I was still in school, so we were living on my student loans as well. So I've always had a budget, always had spreadsheets to kind of manage that. And we had nothing to start with other than student Loan debt. so it was pretty basic at that time. But then we were always kind of savers. We had our, That we were saving for a house and stuff like that. once we had our house, then we were saving to have a child. So that was just kind of how we always were. And then as we paid off our house or as we got raises, or as we didn't have to pay childcare anymore, rather than increasing our lifestyle, it was just kind of putting the money back into savings type things. So, I mean, we're comfortable how we were living. Did we do everything that we would. I don't feel like I feel that we missed out on things at all. but there are definitely times where we look at some other people, like, oh, they just do things on a whim and do whatever and it's fine, and put on the credit card and life goes on. Whatever. We were never like that. It was like, nope, we don't have money for that. That's not in our budget, you know, or whatever. So that's just how we lived.

>> Henry: Different goals.

>> Lucy: So. Yeah. So then once I found out about, like, so my. My daughter would have. Or, our daughter would have just been going into kindergarten, so we were starting to no longer have childcare and just. Or just in the summer. So it was like, well, that was a big chunk of money that was now freed up that I'm like, okay, let's just start putting more towards retirement.

>> Lucy: And then she got done that. We paid off our house in 2013, I think. So then it was like, okay, well, all that money could now shift to savings. And then we paid off our student loans, and that money can shift us. Okay. Savings. So that's kind of how we shifted things. And.

HENRY TALKS ABOUT THE START OF THEIR RELATIONSHIP.

>> Roger Whitney: Okay. And how old were you when you got married?

>> Lucy: 22. Yeah, 22 and 23.

>> Henry: I was 23. Yeah.

>> Roger Whitney: Who asked who out?

>> Henry: I asked Lucy out twice.

>> Roger Whitney: Twice. it took me.

>> Lucy: It took me a year to come around.

>> Roger Whitney: And so what was it about her that sort of spurred that? I'm just curious.

>> Henry: I just, you know, I was. I was hanging out with some friends and walked in the room, she was in there and just was kind of just dumbstruck. And I was like, wow, you know, just beautiful girl. And, yeah, that's kind of how it all started. And then, you know, over the course of a year, because she wouldn't go with me right away.

>> Lucy: I was dating someone else.

>> Roger Whitney: I was gonna get to that reason Henry. I was gonna go there. That's his problem.

>> Henry: I mean, no, we got, you know, we got to become friends and get to know each other, and then, yeah, kind of just went from there.

>> Roger Whitney: Okay, so now I know why you said no the first time when you said yes. What was it that said, oh, there might be something there?

>> Lucy: well, actually, so by the time, like, I started realizing, like, we were friends, we went away after my freshman year of school, where I both went home for the summer and stuff like that, and I came back and I was like, oh, I miss this guy. And it was fun. I no longer had a boyfriend or anything like that. And. But he had a girlfriend now, and I would just finally, like, after. And, she didn't like me, so didn't want him talking to me or whatever. So I'm just like, ah.

>> Lucy: So we didn't talk too much, but then I'm like, you know what? I'm just gonna talk to him and something happens. Something happens. Whatever. So that was the decision I made, that I was gonna start pursuing him. but fortunately, he actually, that weekend that I made this decision, like, I called him up or whatever, and he just invited me over or whatever to hang out and found out that he broke up with his girlfriend that weekend. And then he asked me out to actually go out to dinner then the next night, and together ever since then.

>> Roger Whitney: Okay. Okay.

>> Lucy: So it was more of a timing thing for us to just get on the same time.

>> Roger Whitney: I didn't tell you I was going to ask you about this stuff, so I appreciate you just rolling with it.

>> Lucy: that's okay.

HENRY AND LUCY DISCUSS HOW SAVING IMPACTED THEIR LIFESTYLE.

>> Roger Whitney: Henry, you talked about absent Lucy. You would not have any money, but have a lot of toys. So how did you. How did you fall into that same rhythm of sort of doing it without. Right. Some of your buddies had cool toys while you guys were snowballing your savings.

>> Henry: Yeah. So, I mean, I think it just became apparent to me that that wasn't a sustainable way to live. Like, I don't want to just keep jumping from iceberg to iceberg as the previous iceberg sinks. And then, you know, that's not how I wanted to live. And that, you know, when I started my first job, you know, we. I got in there and they started talking about 401k. And, I mean, I knew my dad had a 401k, but, you know, I. I knew he was just kind of automatically kind of. He wasn't, like, paying attention to it, managing. He was just putting the minimum in and everything like that. but the more they talked about it, the more I realized that we got to get on this early because of the, you know, the snowball effect. Right. And how much it becomes like the sooner we start doing this. So I came home and talked to Lucy about it and at first she's like, no, we don't have money for that right now. That's not where we're at. And I said, no, we hit. This is something we really should be doing. You know, if. And if I'm saying that knowing as little as I know about money, it's probably.

>> Roger Whitney: Oh, so it was you that started that. I love it. I love it.

>> Lucy: It actually was him. I, I didn't know anything at that point. And I was like, no, I, we don't have money. We have to use this money to of like to be socking this away. And I also remember we brought, someone had recommended the book, every Day Millionaire.

>> Henry: Oh, the millionaire next door.

>> Lucy: Next door, yep. So he had, we listened to that on audio book for that and like, oh, that's really interesting.

>> Henry: Like a big influence for me as well.

>> Roger Whitney: That Tom Stanley, I think was the author. Yeah.

>> Henry: Just understanding, you know, you don't, you don't have to keep up with people. And the people that look like they got it all, probably all they really have is a bunch of debt.

>> Roger Whitney: Cash flow millionaires, we call it.

So professionally, what industry are each of you in? Um, I'm on my second career

So professionally, what industry are each of you in?

>> Lucy: well, I'm on my second career. I'm in tech. I'm a software, programmer. But I started out in like financial aid, at a university.

>> Roger Whitney: Okay. Okay. What about you, Henry?

>> Henry: I'm also on the, on the technology side. I'm, I guess you'd call me a business, ah, process automation, architect. I kind of create automations for business processes and you know, the company I work for and manufacturing.

>> Roger Whitney: Okay. I was curious because those are very high demand. They're demanding careers. I know software project managers and anything in tech because I was a little surprised. Like the, the thought of working for 40 years or whatever it is. You like said it like you almost shivered because I'm looking at you. Is it is the drive to quote unquote, fire or retire early, which we'll talk about in a second, trying to take away the pain of the pace or what is it?

THEY DISCUSS WHAT DRIVES THEIR DESIRE TO RETIRE EARLY.

>> Lucy: for me, I don't necessarily have a passion for do at all. Like to me it's a paycheck. It's a means to pay our bills and to save for our future. So to me I've never, I don't know, I don't look at it like it's what I want to do forever.

>> Henry: And for me, two years ago, I started a new job at the company that I'm now. The previous seven years I was a consultant using the same software that I use now. And that was a pace where like, for me was even a much more bigger deal then because of that pace and the stress and everything of being a consultant and constantly being billable and just being pushed up at that company to, from a developer where I was happy doing what I was doing all the way to the principal architect there, where it was kind of was more sales than anything and I should not be in sales ever. and, you know, so I got doing something that really just drained me all day and I was like, I got it, I gotta do something else. And, you know, the sooner we can get out of here, the better, you know. But things have slowed way down for me. Still want to get out just because I want to do what I want to do, you know, business process automation is. It's fun and cool and everybody loves what I do for them. But it. I don't wake up in the morning going, yeah, I just can't believe I'm living my dream, you know, because it's not the case.

ROGER REFLECTS ON HIS FIRST IMPRESSION OF THE FIRE MOVEMENT.

>> Roger Whitney: Okay, that makes sense because I always. My internal criticism of the fire movement back when I definitely didn't know much about it, was retire early. It sounds more attractive than it is because you can look at, a lot of the science around happiness and contentment is happy people have projects. Right. And have some structure and striving. and everybody I knew that said they were fire never actually retired. They still side gigged all over the place. So they really were working. It was just in a different way. So.

>> Lucy: No, that is not our intent at all.

>> Roger Whitney: Okay. Not our intent at all. Okay.

>> Lucy: I mean, I'm looking for structure and stuff like that, but structure on our terms. Like, you know, like, yeah, I want to get up every day and have stuff to do and whatever, but it's what we want to do.

WHAT ARE THE OBSTACLES OF RETIRING SO EARLY?

>> Roger Whitney: Okay. Okay, Last question on this whole fire thing is 44 and 45 right now. And we're talking about retiring in a year or two or a few years. What are the obstacles you see as you think about this? You know, it's like a 45 year time horizon.

>> Lucy: Yep, yep.

>> Roger Whitney: What are the obstacles that you like, oh, my goodness. How do we navigate this?

>> Lucy: I mean, fire has all these, you know, 4% rules or 25% or 25 times your state, expenses to come up what you need. But I just don't feel like that feels like, is that right? And like, especially like, yeah, we want to do 45 years. That's a long time. so that's one of the bigger things, like trying to run the calculators and trying to account for things, because there are so many unknowns during that time like that you can't, you can't account for them. So it's, it's some of that and trying to come up with a plan. Like, okay, so we're, we want to do this, but what if the market starts tanking? What are we going to do then? So I think it's coming up and being flexible and that I have like our base great life. I have what are. What I'd like have to describe spending and I have like, oh, well, things are really bad. I have a lower than our base great life that we can drop to as like that we can kind of go back and forth between budgets to be like, all right, this is fine, we can do this, but now we got to do this. Whatever. and I think probably the biggest thing that I see as an obstacle for us is the first 17 years of,

>> Roger Whitney: The first 17 years.

>> Henry: Well, you know, being, being at that age, you know, you gotta, you gotta, you have to pay for your own health care completely like you, you know, so it's. That's a big chunk of money, you know. Well, we gotta figure out.

>> Lucy: Yeah, but. And how we figured it out is looking at the ACA and the subsidies that are there. So that's a big part of our plan. And that's also a big plan part. That's an unknown. Like, what could change with that and what would we do? And we've had discussions on that. Like I said, what happens if that does go away? I'm like, because now we're looking at. That's going to add probably at least 20 grand to our budget for a year.

>> Roger Whitney: Yeah. And as we look at your budget, that's a good percentage.

>> Lucy: Correct? Correct. So that's a, you know, big thing I said, do you, you know, especially under, not to be political, but we know right now, like, that's something that's looking going away. I mean, the subsidies already, that the extra ones are already set to go away next year, which doesn't affect our plans because where I'm planning to keep our income, we would still be in the, the lower level, that still getting the subsidies. So.

>> Roger Whitney: Well, you said you have a If you think about it, you have a 45 year time time horizon that's over 11 presidential cycles.

>> Lucy: Yeah.

>> Henry: Yeah.

>> Lucy: But I only got to worry mostly about the first 17.

>> Roger Whitney: Yeah.

>> Lucy: Years to get to Medicare. I'm less concerned at that point when we get to Medicare age. Could things change with that? Sure.

>> Roger Whitney: yeah. I mean they talk about the viability of Medicare and the viability of Social Security and you know, when, when I'm generally thinking about it, Lucy, I'm like, well you're 60 so you're probably fine. You know, but you are 44. You know, whether it's Medicare or Social Security, you know, who knows, Right. There are a lot of unknown unknowns because of the time frame and because.

>> Lucy: Of Social Security like that. I, when I run my numbers and look at things, I don't include that in my numbers.

>> Roger Whitney: Okay.

>> Lucy: I have, I can toggle it on and off in my spreadsheet because then it does feel a lot less tight when I toggle it on. And I even toggle it. Like I think I only have like half of what it says we should get. And when I say what they say we should get, it's. I've done the detailed calculator based on having years of zero earnings. as well. So. So yeah, I mean the Social Security part, I feel like I've always tried to keep it out.

>> Roger Whitney: Okay. Okay.

>> Lucy: Just because yeah. It. We don't know. I, I think something will be there. I think it'll be reduced if it becomes means tested. Now that's maybe a bigger deal for us that it wouldn't be around or.

ROGER TALKS ABOUT THE DIFFERENCE BETWEEN A COMPLICATED PROBLEM AND A COMPLEX PROBLEM.

>> Roger Whitney: Something but, but you're testing without it as somewhat of a safeguard. Okay. And we'll put a link in the noodle to an interview I did where we explored the difference between a complicated problem and a complex problem. Because that is really what I'll, you know, we're dealing with that even you know, for someone that's 60 or 65 in that and the short, you know, since you guys might not have heard that is a complicated problem. Is complicated. But it's figureoutable, I would think like code or a process. It's just building the right protocol. Right. But it can be insanely complicated. But it's figureoutable. A complex problem is one that's so multifactored that and the time rise in that you can't predict anything and you can't figure it out. The only thing you can do is manage it.

>> Roger Whitney: And that's a lot of, you know, even In a traditional retirement is the case, but for you two, because of the, you know, the different butterfly flaps have a lot bigger impact downstream. That's hard. You can't even figure it out. You just not figure out.

>> Lucy: Yeah, and that's probably my biggest struggle because I am very analytical and love my spreadsheets and all that stuff and like to build like this. Yep. This, this, this, this, and have a plan and. Yeah, so that's why I have my backup plans too. Like, okay, we could do more when this is good or do less. Like to have. I guess it's kind of like the guardrails, but not necessarily like.

>> Roger Whitney: Yeah, yeah.

ROGER ASKS IF THEY THINK ABOUT LANDMINES THAT COULD POP UP WITH SUCH A LONG RETIREMENT.

One last question about this, for today's conversation, and that is how much do you think about like the optionality that you have over this 47 years if something goes wrong, we can do this. Do you think about what happens if we can't? Like a major health event or. we could always go back to work at some level, but maybe you're not even physically able to go back at work at some level and foregoing those earnings years. How much do you think about those landmines that could pop up?

>> Lucy: I mean, I think based on our current savings, like we both could have much lower paying jobs and live, I mean we, we basically live off of one income at this point already. So for me like all of a sudden, if push came to shove and I had to go back to work because something happened to him and now I needed a, you know, he needed to go into assisted living type things or something that, in terms of. That I couldn't take care of him myself. Not that we're all, you know, at the point of being that age, but because I can't take care of him physically or whatever, because of the needs he, he has. Like, would I be happy about having to go back to work?

>> Henry: No.

>> Lucy: Could I do it? Yes. So, I mean, I know that's an option. I think he'd have an easier time going back to work compared to me.

>> Roger Whitney: Yeah, yeah. But have you, have you imagined a scenario where let's say you retire, you're five or seven years in filling your days and something happens and let's say one of you had to go back to work. Well, haven't your skills deteriorated to where you might not be employable?

>> Lucy: Yeah, yeah. Well, I think in, in our current career, sure. But I wouldn't go back to my current career at that point. Like I said, we could work lower paying jobs.

>> Roger Whitney: Okay.

>> Lucy: at that point, okay.

>> Roger Whitney: And Henry you're about to say something, I cut you off. So I want to make sure I captured it.

>> Henry: No, it's all good. I mean, yeah, I would have a lot easier time going back to work and it wouldn't need to be something that was at the level that I'm at now either. You know, I mean I could go work at, you know, hardware store or something, you know, like one of the, the Home Depot or you know, whatever type of place. You know, there's things like that and wouldn't bother me that much knowing the situation, you know. So I mean it, it's definitely something we've thought about like what if things don't go exactly the way we want and we have to, you know, call an audible and make an adjustment. That's, that's something we've kind of thought about for sure.

>> Lucy: And even it's something we talked about now like if like my current employer, like every once in a while there's rumblings about going back into the office because I'm full time remote and it's just like I just can't imagine going back into an office anymore. And then so then I start looking like, well, what else could I do? Like to not do this or levers can we pull? Yeah, like four. I just retire and he keeps working because we just need to let our savings grow a little bit longer. Not that we have to keep putting a bunch away like we've been, but it just needs more time to grow.

ROGER INVITES LISTENERS FURTHER ALONG THE RETIREMENT PATH TO SHARE PERSPECTIVE AND ADVICE FOR THEIR 40-SOMETHING SELVES.

Roger: Well one thing that we're asking for from everybody listening and I'll, and this is, this will be, I'll do it here is the average age of the person is much higher than you that listens to this show which is an advantage in that there, it's like if you're on a trail, they've already walked the trail and so they can come tell you watch out for that or hey, maybe go check this out. So for those of you that are listening, if you have perspective that you want to share to let's say it's your 44, 45 year old self on life and work and what would you tell them and just go to AskRoger, me and type it in or leave an audio question because I think on the show in the subsequent episodes we'll share some of that perspective of maybe cautionary tales but also encouragement that might be helpful for you guys and others listening in some way that be cool. So we will do that. And next time that we chat we're going to talk about Your values and your goals. Sound good?

>> Henry: Y yeah, sounds good.

Roger: All right. Next week we're going to get into their financial resources. But for now, let's go set a smart sprint.

SMART SPRINT

Roger: And we're off to set a little baby step you can take in the next seven days to not just rock retirement, but rock life.

ROGER ENCOURAGES LISTENERS TO UPDATE THEIR END-OF-YEAR NET WORTH STATEMENT AND IDENTIFY TRENDS FOR THE YEAR AHEAD.

Roger: It's the beginning of the year and you know it. It's the beginning of the year and you know it. It's beginning of the year. Which means we get to update our end of year net worth statement. I won't sing anymore, but I have. Oh, how I love my net worth song. I, I, I, it's a good barometer. And end of year I, I do mine once a month, but I'm silly. Don't do that. Twice a year is a great barometer or a great sequence to do this. But if you do it once a year now you can look at where all, what the value of all your assets are and your liabilities and you can compare them to the same time next year and that will reflect back to you where your debt levels are. Did you pay down debt? Did you take on debt? It'll reflect back where your cash reserves are. Did you build cash reserves? Did you drain them? Where your investment accounts are, did they grow? Did you contribute to them or did they not? You really can't hide from a net worth statement, which is beautiful. And as you build that up year by year, you can start to identify trends to help inform your decision making. So that is your sprint, my friend. You have all your year end statements. Update your net worth statement. And we have a resource to do this in our resource center if you've never done one before. So you can go to the resource center@rogerwhitney.com and grab that and once you've updated it, reflect back on where it was a year ago or set some themes for this year of where you want to improve. Maybe you want to pay off some debt, maybe you want to build up some after tax investment assets because you have too much in Iraq. Look for soft spots that can help focus your attention for this year. Oh, and by the way, if you have a partner or spouse, once you do it, print two copies, share it with them and talk through it so they understand it too.

CLOSING THOUGHTS

Roger: So what your word for the year is and what words we want to retire when we retire has been filling up my email inbox. I know we did some last week so I thought I'd share them at the end of the show for a few shows and we'll see how it goes. This one comes from Lindsay. Lindsay says my word for 2026 is listen. That applies to friends and family members, to people I meet at parties, to strangers who talk to me. Rather than thinking about what I should say next, I want to listen deeply to what they're telling me before responding. The word also applies to listening to myself. To not. Not to be comparing my life to others and to trust my instincts more. That doesn't mean I won't seek advice when needed, but I just. But just that I'll measure the advice against what is most important and true to myself. Lindsay, I love that word. Listening and asking questions just changes your entire life. Like my conversation with Meehan and the er just learning about. Oh, really? Why is that? Tell me more about that. I love that for you, Lindsay. And I'm reading a book right now about listening to yourself. Let me see if I can find the title. One second. Let me open my Kindle. It says I am reading lead yourself first. Which Lindsay is essentially a study on self listening, giving yourself space of silence because to get you out of that comparative nature. So I love that for you, Lindsay. I'm excited to hear how that works and you have an amazing knitting website and we'll share that in the noodle. I appreciate your passion for the arts and doing cool stuff. Is it knitting or quilting now? I forget. But anyway, we'll share it in the noodle. Have a great day.

The opinions voiced in this podcast are for general information only and not intended to provide specific advice or recommendations for any individual. All performance references are historical and do not guarantee future results. All indices are unmanaged and cannot be invested in directly. Make sure you consult your legal, tax or financial advisor before making any decisions.