Outside the Box

Jan. 16, 2021, 6:33 p.m. EST

So much of retirement planning is wishful thinking — what I’ve learned after 3 years of actually being retired

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By Chris Mamula

About this time two years ago, I shared  the struggles of my first year of early retirement . That blog post flowed out of me in about an hour. 

It ended up being one of the most read things I’ve ever written, viewed by several hundred thousand people. After seeing the impact that had, I assumed I would share my thoughts and lessons in a recurring annual blog post.

Year 2: Nearly 2 years into early retirement, here’s all that I’ve gotten wrong :

Well, 2020 has been quite a year. So here is what I’ve learned…

If 2020 hasn’t demonstrated that the future is unpredictable, I’m not sure what will.

Though we can’t predict what will happen, we can be cognizant of chance and luck. We can develop a robust planning process that enables us to adapt to better or worse than expected outcomes, even if we don’t know what the causes of those outcomes will be in advance.

This March I shared  the thought process I used to analyze how to manage my and my parent’s investments  amidst extreme volatility. I reached different conclusions for each of us, then acted decisively despite imperfect information.

Both decisions were correct in hindsight. That has nothing to do with the short-term results that I frankly would have never predicted. Instead, they were correct because they were made by following a process developed from planning ahead of time.

Can I retire yet? When people ask this question, they’re really asking: Do I have enough money to maintain my desired lifestyle forever? Unfortunately, there are too many unknowable variables to ever answer that question with certainty. 

Ponder that for a minute. It’s scary.

When I left my career in December 2017, we knew Kim’s ongoing income would cover most if not all our expenses. It was still scary to give up the security of the high savings rate we had as a two-income household. When the market dropped a year later, it was confirmation that we were right to be scared.

In 2019, the markets rebounded. We were made whole and much more. It was a rare year when virtually  every asset class went up . All investors made money, it was just a matter of how much. But everything’s not supposed to go up simultaneously. That’s rare. It couldn’t last. That scared us.

This March, the bottom fell out of the stock market as the impact of the pandemic became apparent. There were debates about whether we were in a recession or a depression. Of course, we were scared.

As the year progressed, many segments of the economy remained restricted. Yet our portfolio started going back up. Over the past month, the pandemic substantially worsened. The stock market set new all-time highs. Sometimes things don’t make sense. It doesn’t feel real. It feels… scary.

Do you notice a theme here? As a community of savers, many of us find security in building wealth. We therefore find it scary to spend from volatile portfolios.

It’s normal to be afraid, regardless of what is happening around us. That doesn’t make it healthy or productive. Making big changes requires acknowledging our fears and taking action in spite of them.

When sharing my thoughts one year after early retirement, I wrote priorities won’t magically change when you retire. After three years, I believe this even more strongly.

So many of us cling to stories that simply are not true. We use work as an excuse for everything that we choose not to make a priority in our lives or that we’re afraid to do.

I’m going to be brutally honest. If there’s anything that you think you will do in retirement that you’re not doing now, you probably won’t.

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