What If We Retired Today? // Almost Year-End Progress Check-In

It feels like a charged time around the ONL house. The recent election has thrown a bunch of things into question, especially how we’ll get our health care in retirement, and whether that changes our timeline. (Favorite new saying: “We don’t want to retire into a black hole.”) We’re less than three weeks away from knowing what both of our bonuses are for the year, and therefore if we have to work all of 2017 (the health care abyss notwithstanding), as well as having to figure out how to allocate this year’s windfall in light of possible market bubbles. And there’s general work anxiety about 2017, as well as the big question of what we say in our year-end reviews this year, knowing that we can’t out ourselves yet but also don’t want to lie about our future plans.

It absolutely doesn’t feel like the exciting time that it should be, given how close we are to reaching our biggest life goal.

But then, on the flipside, there’s good stuff: markets are rallying, so our investments look all big and plump. We’re more ahead of schedule on our savings for the year than we were the last time we updated the charts (we’ve hit our year-end stretch goal for taxable accounts already, pre-bonus). And we’ve met up with some FI blogger friends who’ve given us great insights and ideas, as well as just being lots of fun as always.

Oh, and it finally started snowing. #prayforsnow

So we’re anxious right now, but we also have nothing to complain about. Life is treating us well, even if we aren’t giving ourselves enough time to enjoy it.

And maybe it’s this combination of feeling both unsettled and good that has us wondering: What if we retired today? The unsettled for the urgency, and the good for the optimism that maybe, just maybe, we could make it work. (And Maggie, we already know what you’ll say!)

Our timeline for saving is not that much longer. We have a few more dollars we’d like to sock away in our taxable accounts, and a little bit left to go on the mortgage. Unless a major market crash happens in early 2017, we should be at our biggest stretch goal by mid-2017, something that we never thought we’d be able to do even by the end of 2017. Hooray for laser focus and conservative growth projections.

All of that stuff is right around the corner… sort of. But it’s still taking a toll, and rapidly. This year at work, we’ve already pushed way beyond burnout to a place where we not only have no hope of catching up on sleep, we are struggling just to avoid going farther into sleep deficit. And there’s always the possibility that either of our companies could be looking at layoffs early next year, and we’d feel all kinds of bad if we let others lose their jobs while we stuck around only a little longer, just to save a few more dollars. That’s not something we want to carry around with us for the next 50+ years. So the desire to get out as soon as absolutely possible is very real, both for our own health and for the economic sake of others.

What If Our Last Day Was Today?

Going with this thought experiment, what would happen if today was our last day at work? Though we’re ahead of our planned saving pace, we’re still short of our most bare bones taxable savings target, and we still have a balance on the mortgage, which we’d hoped to have paid off before we quit. We’d be a bit farther along if we waited until bonuses come out at the end of December, but for the sake of the question, let’s just assume we’re quitting today. We’re technically financially independent, after all, so it’s not that crazy of an idea.

Get Our Next Business Life in Order

If we assume that ACA subsidies go away, then we no longer need to constrain our income in retirement for health care purposes, and we can focus on earning a bit more than we’d originally envisioned, something we’d have to hurry up and do.

We’ve long known that we want to form an LLC for our post-retirement business activities, and got some great advice over beer and homemade tacos this past weekend from Mr. and Mrs. 1500 on how we should go about that. (Thanks for hosting us! You guys rock.)

So we’d be looking now at incorporating our LLC in the low-fee state where we own our rental property, and then working quickly to develop the new side hustles we’ve long been dreaming of pursuing. (Stay tuned… we’ll definitely share more about all of this once we actually retire!)

Though I’m still 100 percent precious about my creative projects, there’d be new urgency to hurry up and earn something, given that we’d have less in our investment accounts than we’d planned to have, and a mortgage still to cover. So I’d have to decide pretty quickly which is worse: doing different work that I don’t love or forcing my creativity to pay the bills. (I’m glad I’m not having to make that decision in reality.)

Or, as Mr. and Mrs. 1500 put it, if we keep living cheaply, we could probably work at McDonald’s at this point and still cover the bills. Mr. ONL would vote for working on the ski patrol over slinging burgers, and I’d see if I could help friends who own small businesses with their blogs and social media before I’d resort to fast food. (Because, unlike Lester Burnham, I have no fast food experience.)

What If We Didn’t Work?

If we either couldn’t find work or we just decided that we’re done with it for a while, we could certainly start tapping into our cash savings and taxable investment accounts. And they’d last us a while… though not long enough. At our early retirement budget plus mortgage payments for a few more years, we’d expect our current savings to last us eight to 10 years, far short of the 18ish years we need them to last to get us to 59 1/2, when we can tap our much larger 401(k) stockpile.

Of course, if we went that route, we’d probably reverse ourselves on our decision not to tap our 401(k)s early, and we’d pull some money down each year via backdoor Roth conversion. We’d also start opting into our contingencies, looking at downsizing our home to free up cash, and maybe even moving to a lower cost-of-living area or going full-time nomad for a few years. Dramatically downsizing our home could provide us with several more years of funding, though without some major market tailwinds, that likely wouldn’t make up all of the shortfall we’d be looking at, even with the Roth funds. So we’d have to cut costs dramatically, too.

Cutting Our Spending

See the pic below with Mr. ONL enjoying a mimosa at brunch? Yeah, that’s something we never want to give up entirely.

As it is, we only have brunch a few times a year, and the thought of squeezing our spending to eliminate meals out altogether sounds like zero fun. (That’s what we’d consider a retirement deal breaker.) Props to people who can be happy never eating out, but that’s not us.

So finding big places to cut our retirement budget would be tough, but not impossible. Our biggest line item is groceries, something we’ve spent extravagantly on in the past, and while it would make us sad to do so, we could trim a few hundred dollars each month from that budget by cutting out organics and non-essential items. Our next biggest line item is travel, something we value like crazy, and we could make different choices about travel — only going places where we can camp for free or cheap, or doing overseas travel via work exchanges like WWOOFing. We’re already pretty bare bones with utilities and couldn’t take the thermostat much lower in the winter, but we could potentially give up our ski passes in favor of only skiing the backcountry, avoid buying any new gear or clothes, and stop all outsourcing of any kind, like plowing the snow off of our driveway.

(Note: We’ve shared in the past that our retirement budget is padded to allow us to spend significantly less in retirement if we have to, and that’s true. But it’s a different thing to talk about sustaining that spending level for 18ish years until we get to our larger nest egg than it is to have a lean year or two while we wait out a market dip.) 

The Big Trade-Off

Retiring today — when we’re almost but not quite ready to pull the trigger at fully funded levels — fundamentally comes with a big trade-off, either:

1. Work enough in retirement to defeat the purpose of retirement
2. Lose the home base we love, or
3. Cut our spending dramatically

We don’t know what we’d choose if we had to make this trade-off, and we’re glad we don’t have to.

What’s Next?

In the next few weeks, we’ll share updates on where we’re netting out for the year and what that means for our retirement timeline. We’re nervous and excited, though until we know more about what health care will look like, we’ll try not to let ourselves get too excited. Stay tuned!

What If You Retired Today?

What would you have to change in your plans if you retired today? Or for those who retired ahead of schedule, what did you end up having to change? Would you focus on spending less or earning more? What would you do that you haven’t included in your plans thus far? Let’s discuss in the comments!