More Than a Prenup, You Need a Pre-FIRE Agreement

Mr. ONL and I got married at a point in our financial lives when we didn’t have a whole lot to lose, and as a result, we didn’t even consider doing a prenup. I think my net worth had only recently crossed over from negative to positive, and while he had a little head start in his 401(k), neither of us had any sizable assets to protect, no business interests, and no expectation of some massive inheritance down the line. We don’t regret not doing a prenup, especially considering our belief that completely combined finances have helped us get to early retirement faster.

If we were only now getting married, with our assets where they are (a kind of ridiculous hypothetical to even pretend to consider, given that it’s our work together as a couple that’s gotten us where we are), we might consider doing a prenup to protect our separate funds in the event of divorce, but that’s neither here nor there.

We’re now at a very different type of precipice, though, one with its own set of enormous risks, as we embark on our early retirement. And it’s a good time to take a big step back, just as we might if we were considering merging our finances now, to decide what terms we may wish to set.

If you know us, you may already know a few key beliefs that we have:

1. We see our marriage as our most important investment, both as the thing that has allowed us to save like crazy and as the support structure that has allowed us to even consider choosing this alternative life path. Note we say investment (something that needs tending), not asset (something we take for granted).
2. We think it’s a bad idea to assume we can “just go back to work” if our finances get super tight in early retirement. (We’d tend to need more money when the markets are doing poorly, and that’s exactly when unemployment rises, lots of people need work, and companies are less interested in spending money on consultants and freelancers to boot.)
3. We know we can live more efficiently (read: more cheaply) as a couple than we could if we lived separately. Economies of scale and all.

All of this adds up to one pretty clear conclusion in our minds:

Once we quit our jobs, we can’t afford to get divorced

That might sound like an overly dramatic statement, but in our minds, it’s the absolute truth. Or at the very least, we need to act as though it’s true, because it very well could be.

Consider this scenario:

We quit our jobs, a few years pass during which we become obsolete in our fields and have a sizable resume gap on top of that, and now all of a sudden we decide we want to split up, here’s what we’d each have:

• Equity equal to one half of a paid-off house, which is not enough to buy a house half as big, or likely even a condo, in our area.
• Assets able to cover half of our collective spending, but probably only two-thirds of what it would cost each of us to live separately. (Goodbye, economy of scale.)
• A really hard time finding employment anything like what we left behind years earlier.

Our only options at that point would be to:

Move away from the mountains (separately) to areas with dramatically lower cost of living.

Cut out a big chunk of spending (separately) — in other words, all the fun stuff — to make the assets cover the essentials.

Hustle like crazy to earn income (separately) to make up some of that budget gap, probably equating to more than full-time work.

OR

Choose not to get divorced.

Deciding What’s Worth It to You

We’ve always said that we’d rather work just a little longer in stressful jobs than risk being likely to need to work later at a far lower rate. That’s why we didn’t retire at the end of last year, or retire even sooner into some kind of part-time work. We still think it’s likely we’ll earn some money in retirement, but we don’t want to have to rely on that. And to put it even more bluntly, here’s what we truly think:

Needing to work in retirement would be a failure of planning.

Whether that’s true or not, it feels true for us. And the same is true in a way with regard to our relationship. We’d rather suck it up through tough times but find a way to make it work than find ourselves needing to work in retirement, especially in menial or low-paid jobs, so that we could go our separate ways. To us, the latter isn’t worth it, but the former is. For other couples, it might be a totally different calculus or conclusion, and that’s something we all get to decide for ourselves.

Consider Making Partnership a Stated Goal

We feel super grateful to have a strong marriage, and to know that we have worked through rough patches together and come out better for it. We’ve built up good communication skills along the way, thanks in large part to counseling before we got married (we think it’s a mistake to think of counseling as being only for relationships on the brink of failure). While we are each far from perfect as human beings, we’re mostly compatible in our flaws. And, we believe that most of the stress in our marriage thus far has been work-related, which will disappear soon. Not that we expect only rainbows and powder days after we quit, but we do think we’ll have fewer external stressors intruding on things.

All of that is to say: We think we have the potential to go the distance, if we stay committed to making it work.

So instead of just assuming that we’ll always be married and will always want to be married to each other, we’re making it an explicit, stated goal, just like any other major life goal:

We will stay married.

That makes our master goal list look something like this:

• We will retire early.
• We will manage our finances conservatively so that we never run out of money.
• We will not try to spend down our money, and will be happy if we get to the end of life and still have assets leftover to leave a charitable legacy.
• We will stay married, happily married for as much of our time as possible.
• We will seek adventure at every stage of life.

Our pre-FIRE agreement is based on that goal.

Our Pre-FIRE Agreement

The idea of taking something based on love, and making it purely rational is deeply unromantic, we know. I’m sure that thinking was in part why we didn’t even consider a prenup, because who needs to get lawyers involved when you’re in love? But the stakes are too high not to make sure we agree on our goals and possible plans of action. If we decide several years down the road that we don’t want to stay together, we’d each be looking at possible financial ruin. No thanks.

So with that stated goal — stay married! — we’ve made the following agreement with each other in advance of retiring early later this year. This isn’t a binding legal document, and of course if things truly got that bad that we felt we couldn’t stay together, we’d figure it out. But we’re putting every intention into following this agreement:

We both agree to:

Remember whenever things get tough that we both intend to stay married and work things out.

Commit to getting relationship counseling every few years as “preventive maintenance,” whether it feels necessary at that time or not.

Commit to seeking out counseling in tough times if we aren’t making headway on our own, before things feel unsalvageable.

Commit to listening more whenever it’s clear that we aren’t seeing eye to eye.

Accept that there will be times that are tougher than others, and think long term rather than giving up on each other or the marriage.

Do everything possible to reach our goal together of staying married.

The Other Option: Don’t Retire Early

As unromantic as our agreement may seem, we think it’s far romantic than our other option: Keep working to allow the possibility of splitting up in the future.

Because if we didn’t have this agreement — fundamentally an agreement that we won’t get divorced after we pull the plug on our careers — we’d both feel the need to keep that option available, which would mean working longer to create a bigger cushion. Again, no thanks. But that’s just us, and others might decide that they want to keep that option open.

Either way, it’s essential to talk this stuff through at length and many times to ensure that both partners are in total agreement. The worst choice would be build a financial plan that assumes you’ll always be with a partner (and which essentially excludes the possibility of splitting up) but not commit explicitly to making the partnership a goal on equal par with other major life and financial goals.

Do You Have a Pre-FIRE Agreement?

As always, we’d love to hear from you guys: Have any of you done something similar, and agreed that by leaving your careers, you’re also agreeing not to split up from your partner? Anyone considering doing this? Swayed to do it by this post? Anyone think this is unromantic overkill? Or take your pre-FIRE agreement in a totally different direction, to talk about distribution of assets and all that other legal/financial stuff? Let’s talk about all of it in the comments!