What's the best way to begin early retirement? By spending what you'd budgeted for, or by taking a super frugal approach to spending in the first year? We discuss pros and cons of each approach.post-retirement process

The Best Way to Begin Early Retirement? Super Frugal Vs. “Normal” Spending

I’m all of five days into my official early retirement (Mark is a few days deeper in his), so not exactly an expert in what it’s like to be retired, but financially speaking, I’m feeling reminded of this in a big way:

There’s no easing into early retirement. You’re either getting a regular paycheck, or you’re not. 

We got our last paychecks last week, which were larger than usual because of cashed-out vacation time (an appreciating asset!), and it was definitely a strange feeling knowing that could be it. Like possibly forever. (Probably not forever, but still.)

In a perfect world built for financially risk-averse people like me, that last paycheck would stretch forever like the money equivalent of loaves and fishes, we’d never have to sell off shares of our investments, we’d all hold hands and sing campfire songs, and there’d be nothing but world peace. Except, just kidding, we’re talking about reality.

While we have a bigger cash cushion than we probably need (a little more than 2.5 X, or enough to cover at least two and a half years of living expenses) and can ignore reality for a while before we truly need to start selling shares, eventually we’re going to have to suck it up and click sell. But before we even get to that point, there’s a bigger question looming in our minds:

How much should we actually spend this year? 

Of course we have an amount budgeted, an amount that’s padded to allow it to be chopped down should we need to do so in a recession. But just because we can spend that amount, should we? Let’s dig into both sides, and then tell us what you would do in the comments!

What's the best way to begin early retirement? By spending what you'd budgeted for, or by taking a super frugal approach to spending in the first year? We discuss pros and cons of each approach.

Fundamentally, each of us pursuing this path needs to decide what kind of life we want to live, decide what that costs, and then save accordingly. While we have some good friends who are perfectly happy never eating at restaurants, not traveling much, and skipping the expensive hobbies, that’s not us. (Pop quiz: Anyone remember how many pairs of skis we own?) ;-)

And that’s why we saved as much as we did, to allow us to keep skiing and traveling and going to Coachella and living in Tahoe, where the cost-of-living is borderline vomit-inducing.

That’s all good in theory, but we know that we’re unlikely to spend exactly our budgeted amount each year. J.D. Roth wrote a great post about exactly that: how much his spending has varied year to year since he quit his traditional career. It’s nice to get that report back from someone who’s lived in early retirement for some time, because I’ve argued that we can’t assume we’ll have level spending forever in either early retirement or later traditional retirement. (Most especially the latter. Health care, y’all.)

So, thinking about where we are right now, as newbie early retirees trying not to blow our funds too quickly, we have two choices of how we could spend this year:

Spend “normally,” meaning what we planned for, going on all the trips we want to take and doing all the activities we have been excited to start.


Take a much thriftier approach in this first year, spending less than we’d budgeted.

Let’s talk through the merits of each.

The Case for Normal Spending

The biggest argument for spending what we’d allotted is that we’re here! We made it! We worked hard and saved for years, and now it’s time to enjoy the spoils of victory. And also that there’s a decent chance we oversaved a little anyway, so we can afford to spend up to our cap each year without worry.

A different way to think about all of that is a question that I find myself asking frequently, about a wide range of topics: What would make it feel worth it?

What would make our years of hard work feel worth it? Living the fun early retirement, complete with spending, that we’d always envisioned? Or tightening our belts some more and doing less of the fun stuff? (Some of that description is for the sake of argument — there’s tons we can do for free or cheap, and we know that.) If we say no to a lot of things this year, will we end up wondering whether all the saving was even worth it?

The Case for a Super Frugal First Year

The biggest financial argument for going thriftier in year one has everything to do with where we are in this economic cycle, which is overdue for a recession or at least a correction. If we can spend less in the first year or first few years, we can significantly minimize our sequence of returns risk, and that ain’t nothing given the dizzying heights of the markets at this moment.

I wonder, though, if there’s a bigger psychological reason to consider a more modest spending level in year one:

To reset our baseline.

All of our planning for early retirement happened while we were drawing those steady paychecks. And we earned enough that we could save a lot and still make a few sloppy money decisions. We could cash flow a large federal tax bill without really slowing down our accumulation, for example, or overspend a little on a vacation and still be fine. We had a pretty comforting safety net.

That safety net is not entirely gone now, because we do still have the cash buffer, but there’s no new money coming in unless we work to earn more. And so those little overages here and there have become a much bigger deal, and something we need to train ourselves out of.

Going super frugal in year one could help us do that. If we see our total budget as our true budget plus a decent-sized contingency fund that we don’t plan to spend, then we create a new, albeit smaller, safety net to help us through this transition time.

Of course, that would mean saying no to more things this year.

In a Perfect World

In my imaginary, campfire song-singing fantasyland, this wouldn’t even be a question. We’d be naturally disciplined people who love budgets instead of the rebellious anti-budgeters we’ve been up to this point, markets would climb predictably so we wouldn’t worry about sequence of returns risk, we’d feel drawn to an equal mix of free activities and the more expensive hobbies and travel, and our spending would magically be level year to year. Also, entry to all Six Flags parks would be free, the Pillsbury Doughboy would be real and live next door to us so I could squish his little tummy on the daily (best ad of all time), and ice cream and pizza would be the healthiest foods of all. (Just throwing those last few things in there in case anyone reading has the magical power to turn my fantasy into reality.)

But until I hear that telltale Doughboy giggle from across the lawn, I’m accepting that this isn’t that perfect world. We have to choose one approach or the other: spend what we’d planned to spend with the possibility of hanging onto bad habits, or spend less to reset our minds and feel more secure, but at the cost of missing out on some things we’d been looking forward to.

Which Would You Choose?

Given the pros and cons of both approaches, which do you find yourself leaning toward? For those who’ve already retired, what was your approach, and was it intentional or accidental? Any pros and cons that I left out that are worth sharing? Let’s discuss in the comments!

And which path are we choosing? Stay tuned for the follow-up post on January 15!

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173 replies »

  1. I’d probably lean towards the super frugal spending. But it’s hard to say, because you guys have been working so hard towards this big goal, and I have no idea how it would feel to now restrict your spending heavily. But your idea of “resetting your baseline” seems like a good one. Also, we’re the opposite of super frugal, so if we tried to adopt this approach, we’d probably fail! :)

    • I like the idea of resetting your baseline as well. But why but reset the baseline for the first 6 months then go back to regular spending for the second half of the trade? Best of both worlds. And, don’t stress no matter what you choose. Either way will be fine. It will either go as planned or you will be resilient enough to deal with the reality.

      • Interesting idea to treat the year in halves! We may end up traveling more in the first half (the biggest expense by far), so that would throw things off a bit, but it’s worth thinking more about this!

  2. Oof. that’s a tough one. I know I want to say spend normally, but I’d be tempted to play it over cautiously and stay on the frugal side of the equation. The logical side says that you’ve planned for this. You’ve built contingencies into your plans and you’ve oversaved. The emotional side says that the biggest risk to early retirement is sequence of returns risk.

    I guess what I’m saying is that my answer would be spend normally, but I don’t know that I would have the courage of my convictions if it were my money on the line.

  3. That’s an emotional roller coaster if ever I saw one! In an ideal world, we’d have our dream home and not need to spend that much buuuuut…

    In the real world, I would probably feel a bit panicky in the first couple of months until life started to feel somewhat normal again. By the end of the first year (maybe) my spending habits would probably be back to normal. Maybe!

  4. I went with normal spending so, of course, that’s what I’d recommend for you. Like me, you have fallback plans for your fallback plans, you don’t just have 25x you have 45x and if you’re super honest with yourselves, you know you’ll be making some money. Do what you want to do so it all feels worth it–and if that means splurging a bit here and there, go for it! When that recession and/or market drop arrives, you can pivot . . . or not.

    Enjoy your transition to ER and celebrate your accomplishment!

    • I agree! And I am naturally frugal! But life has no guarantees, so I think you should enjoy this time and this age in your lives!

    • I do think knowing that we’ll make money is THE thing that lets me sleep at night given where the markets are. As a person who carries the scars from 2008, I definitely walk around assuming we could lose 40% of our equities values in short order, regardless of how likely that is or not. And if that were to happen this year, we would have to do some BIG reassessing. We could manage, but a 40% loss would hurt everyone. So yeah, extra income is good!

  5. I have track our expenses very closely over the last five years. First let me say our budget was set at 30% more than what I actually thought we would need (our cushion)

    Actual expenses have come in well below budget and we are not living frugally nor would I say we are living extravagantly…..we are living….you could say we might be living better than before achieving financial independence.

    The interesting thing looking back on the last five years is how the total spending has varied little within a 10% range, but there has been variances in where we spent it….one year more on travel, one year more on home repairs but the total change not that great.

    I think subconsciously we thought we were more frugal the first year but that turns out to be our second highest spending year.

    Like you we have a significant cash position to allow us not to have to sell assets in a down market and the annual cushion in our budget gives us plenty of flexibility. Additionally, we have benefitted from a good sequence of returns the past five years.

    So based on our experience I would say enjoy now. Best wishes for 2018!

    • Great reply. We’re still 3 – 4 years out from retiring, but I’ve also tracked our living expenses carefully, and like you, 4% of our magic number will give us a VERY healthy 30%+ cushion. That said, I’m sure we’ll be able to live more “comfortably = do/see more” post-retirement and still be under our budget. And keeping my spreadsheets up to date is too much fun to give up… so I’m always gonna have my pulse on our finances and be able to adjust as needed.

      Tanja… I’ve been reading your post religiously for the better part of this past year, so I know how (over) prepared you are :). My guess is you’ve reached this same conclusion. Enjoy your first year. Stay within your budget, but don’t deny yourselves an experience you want just so you can live below. You have today… tomorrow is not guaranteed. You’ll have plenty of opportunities to micro-adjust in the MANY upcoming years so you can keep that peace of mind cushion. So happy for you and Mark.

      • The thing that will change for you, though, as it now has for us, is that you’ll have a lot more time on your hands, and if you fill that time with travel, your expenses will go up. How much to let them go up is now the question we’re wrestling with. Thanks for reading for so long and for being so in tune with where our heads are! ;-)

  6. Our approach is a staggered one. I retired on 12/29/17 but my wife will retire in another 8 months, with an option to extend if things go south. In the mean time we will stick to the original budget and see how it goes. Our budget has been basically the same over the past 4 years and we have always come in under budget. Our strategy for addressing the sequence of returns risk was to build into our budget a discretionary amount (mad money) which is 40% over and above our non-discretionary budget. The mad money budget is for travelling and gifts, in the good years and will be the means for pulling back in the not so good years.

    • Remind me why you guys decided to retire at different times? It’s not drastically different, but different enough that you aren’t celebrating the moment together. (Speaking of, CONGRATS!!!)

  7. Such an interesting dilemma. We are retiring at the ‘normal’ age (in our 60’s)…and the question changes some. We never know how much longer we have to live, but the older you get the more you realize that. If we live very frugally at the beginning of our retirement, there may not be time to take the trips later. Whew..it is mind-bending.

    I’d vote for ‘normal’ spending — realizing you are NOT going to over-spend and lose everything. But do enjoy it, because life is short.

  8. Normal and here is why.

    Presumably you have assets that are set aside to last you 50 years if you need them to. Over the next 50 years we could / might have 5 or more recessions of which there will be resultant recoveries and periods of beyond average growth.

    If making an adjustment in your first year were to have ANY material effect on your 50 year asset plan then you haven’t saved enough. I am sure you have saved enough given your intentions (and I detect given the emotions in this post that you are much more focused on what point you have to actually sell shares which is to some degree that point at which you begin consuming the assets that have potential for growth and it is more real than spending cash)

    I start my early retirement in 28 days. My budget is set for years one and two. If I am 10% on either side of the two year then we will have transitioned into our next life, done the things we wanted to do to mark the milestone and reset ourselves and never worried about it.

    I encourage you to not to start your retirement worrying about the money or you will ALWAYs worry about the money. Don’t let that worry spoil the fun (remember I am not a fan of the shelter in place mentality that tends to befall quite a few of the FIRE folks who see early retirement as achievable only if they become super thrifty & frugal

    Congratulations again on getting there


    • Thanks for weighing in, Phil! Conceptually I agree with everything you said, and I think the concern is really more timing-specific, seeing where the markets are currently and knowing how overdue they are for at least a correction.

  9. I too would vote for normal/planned spending. You have prepared well grasshopper (showing my age and tv viewing habits a bit) and you can adjust on the fly if/when the economy turns. My parents and my in-laws have been retired for almost 20 years. Periodically I ask them this simple question – are you spending or are you saving? (Meaning are you having to spend principle or are you living off interest/gains alone). For 20 years, albeit a great 20 years for the market, they have never touched their principle. Their lives are not extravagent but they are extremely healthy and happy.

  10. My advice to you is in year one, take the trips, ski everyday possible but also do more free stuff. This is what you worked so hard for. Health can be fleeting. Personal experience. Keep on eye on the numbers. After year one, see what expenses vs. budget looks like. I found that retirement is less expensive than you think. You have time to cook, clean, mow, shovel. The only thing that throws us into an oops! moment is home repairs.

    • Nearly everything we like to do IS free or inexpensive as you noted (not counting the gear, of course, but now we can maintain it ourselves). Travel is really the big X factor, and that can get expensive quickly, even with budget accommodations. Good food for thought!

  11. How about splitting the difference? There must be a middle ground between super frugal and doing all the things. Find that middle that allows you to say yest to some experiences, but not anxious that you are spending too much.

    I find myself struggling with this now, as we continue to save. Spending a little more on a few luxuries feels indulgent, but in the end it really makes very little impact on overall savings rate. Trying to find that balance, the moderation, is the hard part!

    • I like this idea Lucky Girl.

      I’m also wondering whether this is a serious consideration or an academic question for the blog? But it feels a little like the “one more year” syndrome. Now you’ve got what you want and worked so hard for, there are little monkeys in the background running round shouting “OMG what did we do? What do we do now?!” 😀
      I don’t think you have to deliberately plan to use the whole budget, but I don’t think you should spend your first month finding ways to save money. You’ve worked too hard and are too sensible to go nuts and spend all your money in a week (do we all remember that first pay check and that first student loan? 😉), so I don’t think you need to worry too much. Also, it’s ski season, why are you home blogging?! Head to the slopes and enjoy the fruits of your labours 😀

      I was using smiley faces so my words didn’t come across badly but now I can’t decide if they’re lame and creepy so heh, perils of interacting on the internet…

      • There’s value in academic questions, right? ;-) For those who are curious, we retired 4 years earlier than we’d planned originally, not later, so this is not a one more year syndrome question. It’s a question specifically related to current market positions and the likelihood of bad sequences.

        I love all the smiley faces, by the way! :-) :-D ;-)

    • Oh for sure! We’re definitely talking degrees here. I don’t think we have it in us to be SUPER frugal anyway. ;-) And it’s definitely true that if you earn a good income, those questions don’t hugely impact your savings rate. But the exact same questions can have a very large impact on a retirement budget!

  12. Well we ended up with a locked in government employee type pension income and a combination of Canada Pension Plan and Social Security and not a lot of big savings. (Divorce, health issues act.) The way we manage is we try to spend less than our income each month. The rest (which is less than $1000 a month) goes into a regular savings account that pays interest but which we can access whenever. Big expenses like an unexpected truck break down or a computer replacement come from that fund. We also absolutely avoid all debt except for a short-term loan we used to get our house which is almost paid off. That little extra each month acts as a cushion and give me mental security. We lack for nothing we really want. For example, last year my husband spent $450 on a perfect pool cue for his regular weekly pool game. That is extravagant but he uses it and loves it and the cheap one was taking his enjoyment away. That’s how we roll.

    • That all seems super reasonable! (And I’m glad to hear you splurge occasionally, given how modestly you live most of the time.) It’s an interesting difference with your pensions and Social Security and such vs. our situation because we have zero money coming in (not counting tiny side hustle type income) most months, and dividend payouts only a few times a year. So there’s no “income” to live on and subdivide. It’s all getting pulled out of savings. That, to me, feels important psychologically.

  13. I want to say frugal. In fact, I’ve said as much to my parents. Granted, they are considerably older than you two are. But I think it’s always a balancing act. You have the time, the money, and the health now. I hope you’ll have that for another century, but none of us know what the future holds. Plus, my hunch is that your normal spending is akin to what the vast majority of non FIRE people would consider frugal (or at least purposeful!). Can’t wait for more updates!

    • (Have you noted the gender breakdown on the answers?) ;-) I think comparing us to non-FIRE people is the only way to make us seem frugal… I’m sure our spending is extravagant by most FIRE standards! Hahaha. But yeah, balancing the health and physical ability stuff vs. sequence of returns risk is an interesting mind-twister.

  14. I suspect your expenses will drop more than you expect. Working costs a surprising amount of money. On the leisure side, you can only ski and travel so much before it gets boring. You’ll find better uses for your time and they will be less costly than you expect. I’ll be shocked if you don’t spend some of your time on things that you enjoy and that make you some money too!

    • It will be interesting to see! Though our case is a bit different because we have both telecommuted for years. So no regular commuting, clothing or drycleaning expenses. ;-) And any mileage got reimbursed. And if you think skiing gets boring, you haven’t met us! Hahahahaha. But it’s an interesting point, and we’ll have to wait and see how we end up operating.

  15. It’s cool you cruised the first week of retirement life. It must be very exciting and relaxing.

    I retired early at the age of 49 in 2015. My spending was a little bit lower after the retirement. In the ballpark, they stayed the same. I didn’t spend much even when working, and kind of got used to this simple life style. During my first year of retirement, I took a two-month vacation in China, splurged some, and attended my college 30-year reunion. That was cool.

    My biggest uncertainty is the health care cost. The inflation is not a big issue to me for now. Market volatility might worry me some, but I got a good cash cushion to ride the wave. That’s why I take a more conservative approach. After 5 to 10 years, definitely I plan to spend and enjoy more.

  16. We went frugal. Sort of. We spent our first year in Panama, which dropped our costs by 50%. It also took away most temptations. Most of what we wanted to do for fun was free or cheap. Groceries were cheap. Fresh produce was $5 for a 10 lb bag that was more than we could eat in a week. It was a great time to regroup and decide what was important.

    We learned from that year where we wanted to spend, and what we could skip. When we came back to HCOL Tahoe, it helped us set priorities in our budget.

    • That sounds so different from what we pay for food in Tahoe! :-) (As you know!) The question really comes down to how much we travel, and given that that’s been our big motivation all along, we could theoretically spend an unlimited amount. So just trying to calibrate that!

    • Lauuren, how does one live in Panama a full year? you have to get a special visa right? or do you come and go from the country extending your visa?

  17. Great topic (as usual) and one I’m considering too, as I plan to FIRE in 6 months.

    Instead of “super frugal” vs “normal”, you should consider a 3rd option. You are impressively introspective and I would guess your biggest anxiety is really about trying to let go of the worry about which is the right way to go. In other words, you want to decide either frugal or spendy and feel, “whew! Decision made and off my mind…. bring on the next issue.” But instead, it is difficult not to constantly agonize (dramatic word!) over which one has the better pros/cons balance. Especially when you have such excellent (and very insightful) points to consider like resetting your baseline spending.

    So option 3 (similar to a couple comments above) is don’t sweat it. Recognize you will always be re-analyzing your situation and don’t bother worrying about making a “final” decision. Your constant optimization mindset won’t go away. It’s who you are, like many of the FIRE veterans. So do what you know you REALLY want to do. Go with “normal-slightly spendy” since you worked hard for it and have plenty of buffer and contingencies BUT knowing you will always be right on top of spending/market issues that threaten to trigger a contingency plan! Enjoy the fruits of your labor knowing you’re not going to suddenly become a careless, over extravagant spender.

    • Thanks! And I love your last line: “knowing you’re not going to suddenly become a careless, over extravagant spender.” I think we’re probably different from a lot of FIRE folks in having been those spenders in the past, so it’s not such an impossibility. ;-) But you’re right that we have our priorities and habits straight now, and that’s different from the baller years.

  18. Unsurprisingly, I’m going to suggesting going somewhere in the middle. I feel you covered some of this previously when you wrote about skiing in off-season or grocery shopping for the best deals. I’m sure skiing on a Tuesday feels “worth it”, right?

    I’d use the first few months to explore what types of things are like that… fun and perhaps frugal because you have the freedom to do things off-peak. This past week I learned about MasterClass, a set of online classes taught by famous people. For $180, you could take a week and learn comedy from Steve Martin. Or learn to cook from Wolfgang Puck and Gordon Ramsey. I don’t know if you are into movies, but with MoviePass you could go to the cinema every day for around $180 a year (for the two of you). I’m not saying that you should, but you could ;-).

    I’m curious to read what you come up with.

    • Skiing on a Tuesday is the most worth it. ;-) And if we lived anywhere near a movie theater, we would totally do that movie thing. But we’d spend a fortune in gas, which would negate the value. Fundamentally this question comes down to how many trips to take. We’re good on our free/cheap habits at home and don’t need any new stuff. But we could take endless trips and blow all our money, so it’s a question of calibrating that. ;-)

  19. Hi Tanja!

    First, love your blog! It’s my favorite early retirement blog!

    One thing I think is missing from the discussion so far is your original reason for retiring early: that you were worried your health may deteriorate early, like your dad’s did, and you wanted to make sure you got to enjoy life fully before then.

    I sense that, right now, you’re leaning towards the second option you presented, because you’re focused on the financial risk, and it is indeed safer from that perspective. However, I think there is actually risk in both options, just different kinds of risk. In the first case, there is indeed the chance of running into sequence of returns trouble early on and potentially having to correct a little later. But in the second case, there is the chance that your health really does deteriorate as early as you feared, and you miss out on opportunities to enjoy life to the fullest now while your health is still good.

    It seems like you’re prepared, perhaps even over-prepared, for whatever comes financially, so given what you’ve told us on the blog, I’d be more worried about the health risk.

    • Tanja, I agree with Shannon. I was thinking about your dad’s health as I read your post and the comments up to here. My family moved to the USA from England, and my grandmother always wanted to go back for a visit. When she died, we found six suitcases packed with brand-new clothes that she’d designed and made–to be worn on her trip to England. I made a vow right then that I would always have fun each day.

      Best wishes to you and Mark in this amazing time of your life.

      • Oh my gosh, what a heartbreaking story! I’m completely with you, though — we have no interest in deferring fun or dreams until later. It’s just a question of which dreams to go after first, and some of them are more expensive than others! ;-) Thanks so much for the kind thoughts and well wishes!

    • Thanks so much, Shannon! :-) Made my day. :-D

      I appreciate your comment so much, and you’re absolutely right. I’m already seeing my body start to fail me in small ways, and I will likely not have full use of it forever. The question that’s harder to answer is whether, then, we should focus on the really outdoorsy stuff, which is cheaper or free, or the world travel, which is NOT free, but which is equally aided by an able body. I’d of course love to do both, but given the cost of travel, even with our mileage stash, it’s a question of how much to spend there perhaps more than anything.

      Thanks again for the thoughtful comment — such a good reminder. :-) xo

  20. I think somebody has quite a few contingency plans already in place that would warrant spending at the “normal” level :) With that said, I agree that the frugal method is a great starting place, deciphering how to maximize happiness and enjoyment with more thrifty experiences and making a game out of it. We all love games here right?! I’d also consider bridging the gap. As you’ll likely be presented with very lucrative projects, could you take on the highest paying opportunity, that would also satisfy you personally, and provide some “fun” money with the sole purpose of using that for the discretionary spend?

    • Remember, though: we don’t want to USE our contingency plans! ;-) It would be a big freaking deal to have to sell our house because we’d overspent in the early years and hit a bad sequence of returns. ;-) And to answer your question, YES, absolutely we could use side gig type income to fund the fun stuff.

  21. Ah, I know myself and I would be in the frugal camp. But that’d also be a little easier to achieve since I’d want to get all cozy and detox from work/do some projects around my house. All that inevitably leads to pretty low spending. I’d probably focus a lot of my travel on lower cost destinations, but that’s just a guess. I build up a few too many contingency plans, so I don’t think those habits would die quickly in early retirement, it would take 2 years-never to overcome that cautious planning side of my brain.

    • It’s good to know yourself! In our case, we’re booking flights left and right and figuring out how many places we can get to in year 1, so kind of the opposite immediate reaction. ;-)

  22. As someone who hopes to FIRE right behind you, I think this is a whole new world. It would be prudent to play it a little safe the 1st year, and see if the math works in reality, not just on paper. It is not an all or nothing choice. I am shooting for my basic budget to be 4% WR, and spend another 1% if the market gives me 10% or better. If you find yourselves swimming in excess cash in June, kick in the afterburners.

    What kind of risk takers are you? Do you go for broke when you try a double diamond for the 1st time, or do you go a little easy, and set a speed record on the 2nd run? Kind of the same question your are positing about finances.

    • I’m sure you’ve done the math for yourself, but the tricky thing about sequence of returns is that you can’t know early on whether they’ll affect you. It’s only evident in hindsight. And amping up your withdrawal rate early on puts you right in the crosshairs of that SOR risk. Which, to your point, isn’t as big of a deal if you embrace risk and are fine adapting later. But “later” might be when it’s also harder to adapt or earn more. As for your skiing question, the answer is different for each of us, and I bet you can instantly guess which of us fits which category. ;-)

  23. let it flow. you’ll know when something feels right and feels worth it. we’re about 10 years older than y’all and i think we’re gotten naturally more frugal over that time (like wanting to go back to the west coast for a wine trip but not wanting any airport experience). it hasn’t felt like missing out. but when a certain can’t miss experience presents itself i’m betting you will recognize it.

    and maybe learn to master that gluten free pizza you have flown in! it can’t be that hard and it’s satisfying to fail and fail and then…..eureka, you nail it.

  24. I retired early, but my husband did not (he loves his work – go figure). We found that we spend less than we ever did when I was working. You’ve heard of stress eating? This was stress spending. Since hubs still works, we didn’t make any effort to change our spending from the accumulation phase, in fact we’re still accumulating, but it happened naturally. As an example: we used to eat out regularly, mostly because I didn’t have the mental bandwidth to decide what to fix, make sure the ingredients were available, and plan for unexpected long work days. I now find I enjoy preparing our meals at home; it’s not one more thing I have to squeeze into my day, it’s a pleasure! Vacations are more laid back, too. We don’t feel like we have to prove how relaxing everything is and can just enjoy our time together.

    Don’t worry about adjusting… it will happen naturally as you live your new life. You got yourself here, now you can trust yourself to handle the finances in less stressful circumstances.

    • It will be interesting to see! We already had a lot of that work stress spending dialed back because we work from home and it’s harder to go out to eat in our little town (no one delivers!) than to just cook something. I’m sure we’ll make more from scratch (excited about that!), but we don’t have the same natural areas to scale back. As you said, though, it will be interesting to see how we naturally adjust!

  25. Given where the stock market is today, I wonder if pulling out 5 years’ of spending would allow you to navigate any ups and downs over that period. Then if the market continues to climb you can follow your slow sell strategy while maintaining the 5 year buffer or burn through your buffer if the market goes south dramatically. An alternative would be some long term puts on some of your stock portfolio covering 1 or 2 years’ of spending.

  26. My recommendation: Spend as originally budgeted.

    You’ve already prepared and planned for this (including contingencies) and it’s time to enjoy the fruits of your labor.

    If there is a market downturn or some other calamity, you can go to plan B then; but you’ll kick yourself later at the missed opportunities. Analysis paralysis sucks!

    • Hahaha — it may not sound like this here on the blog, because I tend to share all the details of the decision-making process, but we are not analysis paralysis people at all. We just try to be thoughtful in our decision-making, but once we’ve made a decision, we’re good to go and don’t waste mental energy second-guessing it. ;-)

  27. I think I’d choose a balance between both. Most likely you worked very hard and lived frugally to get to where you are, so now that you’ve accomplished your goal, give yourself a few expenditures to reward that hard work.

    If you have opportunities to stay super frugal while doing the things you really want, then I say do it.

    The balance between the two will keep your spending down and let you be very celebratory of achieving such an awesome goal! Great post!

    • Thanks! The interesting wrinkle is that we haven’t been especially frugal or denied ourselves some rewards along the way… so rewarding ourselves now feels different than it might for someone who felt they’d sacrificed more. (Plus isn’t the time itself the reward?) These are questions we think about! :-) The good thing is that our life when we’re home is pretty cheap, and it’s really just a question of how much to travel internationally.

  28. I mean YOLO is tempting, but as an anxious over-thinker? Ahhhhh frugal the shit out of everything!

    But that’s no way to live :) I’d tend towards the frugal side but not stress out about money because after all, you sure as hell deserve it after all the work you put in! I do like the idea of resetting your baseline though.

    • Hahahaahahaha. Of course, the third solution is just to earn enough to cover our expenses this year so we don’t have to touch the investments or savings, which feels like maybe the best option for the overthinky part of me. ;-)

  29. I have been early retired for exactly 2 years and I chose a 4th option. I side gig 2 days a week and spend 100% of my pre-retired budget and stay right at a zero percent withdrawal. The gig work is fun and gives me some structure I like. I could spend twice what I am and be completely safe but I am doing everything I want to do so why would I? I’ll be interested in watching your first years, they really are kind of adjustment. But a really fun one!

    • I think that is a PERFECT solution if you’re cool with that kind of a schedule. We’ve talked about doing something similar, but want more schedule freedom (plus also just want to travel a lot of the time, which makes a gig like that hard to keep). I could see doing something like what you’re doing in a few years, though, after we’ve gotten some of the travel bug out of our systems. ;-)

  30. That’s a rough one. I think our FI assumptions numbers are based on semi-frugal. I don’t think I’d go super frugal just to achieve FIRE. That goes against my philosophy of finding the right personal balance between spending now and saving for the future.

    I could definitely see why someone might try to go super frugal in the first few years for safety reason.

    Since we are already pretty frugal for the most part, I would stick with “normal” spending. But to some ppl our normal spending might look like super frugal. :)

    • So true that it’s all relative! And I don’t think I’d even be considering super frugal at all if the markets weren’t behaving as they have these past few years. If they’d corrected, say, two years ago, we’d feel a lot more relaxed about it all.

  31. The choice, spend normally, document the difference, ascertain if it worked for you in hindsight.
    First, congrats on going into your last day of work in a mouse outfit and making a great statement into the new phase of freedom.

    I retired about 6 months ago to a new state, new budget, new set of income streams. I spent normally as I worked out what this new Cost of Living (CoL)” would look like. Guess what, it looks like the last CoL I lived for 30years of FIRE’d life. Habits that work are great habits for reasons!

    Let the new set of surroundings settle, see if your plans are an actual reality you want into this first 6 to 12 months. No matter what you choose, the blog never did allow for the “spend more” option – that is a mindset of being FIRE’D!

    • Hahahaha. I recommend everyone work their last day in an animal onesie. (Even if it’s working from home, as my last day was.) ;-) And that’s such a great point that “spend more” wasn’t an option — given where the markets are, we wouldn’t dream of that, but it’s a point well taken about our mindsets. Thanks for sharing your experience thus far in FIREd life!

  32. We started out year 1 pretty frugal and then ramped the spending up. We have almost a million dollars more now than what we started with 5 years ago (a small slice, maybe $125k of that is due to Mrs. Root of Good continuing to work a little longer than planned). I think the super frugal first year is a natural inclination to ease into the whole “spending down your assets” thing. Especially when you’re as young as you and I are (hoping for another 4-5 decades at least, right? :) ).

    After a cheap first year we ramped up spending. Some was home improvement – I had tons more time to find the right contractor and oversee a big major renovation at our house and save big $$ along the way with careful management and buying some materials myself.

    We still don’t spend a ton more than in year 1 but we’re trying :)

    • I wonder how different it is when you have kids as you guys do vs. not (like us). I know you put tons of thought and planning into your big trip each summer… and we hope to take a bunch of trips that will get less planning time, and which might even be spontaneous if we have the chance to follow the snow. And that’s where I could definitely see all the money going — money that we need to last a looooong time if we’re lucky! ;-)

  33. I’d probably split the difference and go a little more cautious than “normal” – but since you have more time on your hands now, I expect some expenses will be less regardless (though no more free food/travel through work). But sequence of returns, man. You can never get that first year back (well, without earning money to replace it).

    • I’m passing through SFO this week and I will weep a little when I either can’t buy my favorite sushi there or have to spend $16 on five little slices of sashimi. Goodbye, work-paid meals! (sniff, sniff) ;-) The SOR piece is really the entire question here, and I do think earning more from other sources is key to solving this puzzle, given our timing re: the markets.

  34. Way to leave us with a cliffhanger. I’m sure there is a happy medium between the two options that will be a great life with lower risk. I do like your perfect world scenario. Where can I sign up for that one? No sequence of return risk. Knowing exactly what you future spending will be? That would be nice.

  35. I vote take the middle road between a frugal and normal spending year! You didn’t do all this hard work to deprive yourselves, but you’re certainly smart to be aware and be cautious. Split the difference.

  36. Another way to think about this problem is to imagine that the markets took a 50-75% haircut back to “normal” levels. Then, spend 3% or 4% of that number.

    I thought I was retiring at the top of the market back in 2015, but it just keeps going… so these days we’re spending less than 2.5% of our net worth.

    • You mean after I stop vomiting? ;-) I don’t know how many early retirees could easily rejigger their plans around a 75% loss of value. Our current budget would let us trim back as far as 50% and not have to trigger contingencies… but we could do much at that level, and that’s not what we retired for. ;-) So ideally I’d like to spend more than that!

  37. I don’t get it. If the plan was to set yourself to be without these types of worries, y
    ou either did not plan properly (which I think you did) or you are having cold feet about plan execution… This seems to me like the mirror image (post-retirement) of the one-more-year syndrome…

  38. This is a problem I’d like to have. But it is also similar to a problem I have had: decreasing the budget substantially after a long period where we could be off a little here and there, and less disciplined than we had planned to be, without any serious consequences. I sympathize, in other words.

    It’s a balance. Based upon experience, I would go the frugal route at first, expanding more as you go along. Or I would compromise and do expected spending in some areas, especially in ones that you’re good at sticking to already. (I assume you already projected for areas where your spending will probably drop, like driving and work attire.) I like to leave a little cushion because even the best plans do not always work out as expected. (And apparently, man cannot live on a blog alone.)

    You can always reevaluate and readjust, and plus you have a long horizon, so maybe the best answer is to not fret either way and reevaluate things in a few months, once you’ve had a chance to relax some, refocus, and get a better idea of retirement spending.

    • You are so right that this is a great problem to have! ;-) And all great thoughts here. We likely will see our budget shift around a bit naturally as we see what we’re actually drawn to spend on in this brave new world.

  39. Personally, I would think about it for both short term and long term learning experiences. I find trying things works out better for us by choosing what to do, doing it, rather than just thinking about them. In other words, choose what to do and do it. Spend normally – how does that feel? Be frugal – how does that feel?

    Hobbies and sports are obviously big, and so is travel. But, what are the sports and hobbies, and how much do you expect to spend? Travel, too. Are you bored, so do you spend? That might be a bit of a challenge after the newness of all this free time wears off. Do you need new skis or want new skis? Do you need to eat out every night? Do you cook? Do you want to learn to cook? That kind of stuff.

    I expect your blog will reflect some of your own experiences as you move into that big unknown! It’s so exciting for you and us, your readers.

    • This will definitely be exactly that — doing one thing and then seeing how that goes. That is how we operate, but of course the blog can only reflect the thinky part. ;-) And travel is truly what I’m talking about here. We’re good on the other spending and not worried about it. But how many trips to take? Somewhere between zero and infinity. ;-)

  40. I’m choosing “a little less than normal spending” for the first year of my semi-retirment. Mainly becaue I saved massively and was super-frugal in my last year of full time work. I was shoveling the money into the market. Combine that with the 20% market-rocket,and it was a great year:)

  41. Personally I would do the thriftier approach and hold off on spending normally. I’d probably just chill at home and read and write instead of traveling/eating out. But I might not have as much of a cash cushion when I reach FI as you do!

  42. I think setting an agenda of 6 or 7 trips will seem like work when you look back. I would opt for Semi-Super frugal with 1-2 special trips. A reset year with a couple of breaks. Kick the tires. See how it feels. Doing nothing is doing something. That is just me.

    • Good to know yourself! I already find myself missing travel, and I’ve been home for like 2 weeks. ;-) Having more time to travel has been THE biggest motivator in wanting to retire early, so that’s just going to be a thing we always do a lot of. The question of how much to spend dictates where all we can go, though! ;-)

  43. Disclaimer: This is free advice and worth ever cent. 😃

    Past History:

    We have analyzed and noodled this subject extensively looking for magic retirement numbers like the Golden Fleece. We spent many years over-thinking retirement but not having financial balance. This coupled with a dual income and an over-consumption lifestyle led us through a long lesson that we needed to learn in order to see the errors of our way.

    The Lesson:

    We believe balance in ones life is the key to having inner calm. Everyone finds their inner calm in different ways. We discovered our equilibrium with the outdoors through hiking and camping. Some of our biggest financial realizations about life happened sitting around a campfire miles away from civilization with nothing but a hot cup of coffee and each other for company. (Plus the pups)

    Present Day:

    We are comfortably frugal and low impact by nature these days and choose this as a way of life. On the flip side of our life’s coin we planned alot of head space in our cushion fund to mitigate risk if we need to spend more as life unfolds.

    I say all this with respect for everyone reading this post as our views are unique to us and not meant as a one size fits all. 🤟

  44. Given your cautious nature I’d say go super frugal. It’s easier to adjust up than down.

    1. You’ll know how far is too far in gauging how frugal to go in future years
    2. You’ll get a sense of your non-negotiables / when the frugality doesn’t feel worth it.
    3. You might discover some halfway house between super frugal and your budget that makes you happier

    • If only I was cautious AND frugal! ;-) I think your points are super good ones, and getting even more clear than we already are on our non-negotiables would be a worthwhile exercise.

  45. I would say super frugal for a month a two while you figure out more what you will be doing, I believe you already have ski passes so that is covered and you plan to rest a lot. In winter it is great to read, do boar games, art… whatever your cheaper indoor hobbies are. I feel more than a few trips a year gets to be a lot, I went on three since March and I have another one coming up, I kind of wish I didn’t have the next one planned but I know it will be great (first time to Palm Springs/ Joshua tree are) I wanted to travel drastically more and now see not what I envisioned, it is always an experiment

    • And puzzles! :-) The travel bug is really the X factor in all of this, and that many trips doesn’t sound like too many to me. (But remember — I’m used to 50ish trips a year! So even 10 or 12 sounds quite leisurely by comparison! Not that I think we’ll take that many.) Have a wonderful time in the desert — it’s beautiful there! Joshue Tree is one of our favorite places. <3

  46. My recommendation would be to have a frugal year. That would really boost your confidence in your ability to live off your savings in early retirement. Then you’d know you can always cut spending back in the case of a recession or something similar.

    There’s already so much new in your lives, that it will be a blast without having to spend more.

  47. I think you’ll figure this out as you go, way too much to think/worry about on day one. I spooked Mrs. Shirts just this week when I recommended we buy a duplex in our retirement place. Shared walls were not her idea of early retirement

  48. You mentioned that you have approximately 2.5 years worth saved in cash so out of curiosity, when did you start building that bucket of money? We are about 2-3 years out from our goal and I keep wondering at what point we should be diverting more towards cash instead of investments.

    • We’ve had 1x in an emergency fund (Ally “high interest” — ha! savings account) for many years, along with .5x in a life happens fund. So we really just added another 1x, which we did in the last year of work. If we hadn’t already had that cash there, I might have focused on it for the last 18 months or so, but not longer, because we would have wanted to get as much of our money into the markets ASAP.

  49. Regarding your 2.5X cash cushion, where do you stash it? Most bank rates are like hiding it under a mattress. Some “evil” big banks pay 1.3%. I guess this doubles as an emergency fund as well, right? I should be accumulating more in that bucket personally. One thing I can do is not let dividends automatically reinvest (in taxable brokerage), but keep it in cash.

    • We have 1.5X at Ally in a supposedly high interest rate account. (LOLOLOLOLOLOL. “High interest.” Snort laugh.) And another 1X at USAA, which is just our regular bank. Theoretically the 1X at USAA is what we’ll spend this year, which is why we’re keeping it in an essentially 0% interest account. And yes, it all definitely doubles as e-fund. And we’ll have dividends kick out now, which is a change we made, given that we’re paying taxes on them anyway, but it’s an interesting idea to do that in accumulation to build up a cash cushion.

  50. I think your spending will be a perfect combination of the two. Of course you should splurge on some moments/trips/experiences that you have been saving for for years! Life is about collecting experiences, and you want to do these things while you are young and have health. On the other hand, your nature will prevent you from spending stupidly! ~ Lynn

  51. I’m going to go against the majority and say GO CRAZY! You are right. You took all that time and energy to get to where you are now, so enjoy it! Doing the super-frugal spending in your first year of early retirement is equivalent to one-more-year syndrome. You said it yourself, you have all the necessary precautions in place if something does happen. IF something happens, you are covered. Have fun and worry about the things you need to worry about only if they actually happen.

    • Hahahaha — My version of Go Crazy *might* involve adopting every shelter dog, buying a huge ranch to house them all, writing a million dollar check to the Sierra Club, and renting out a Six Flags for my friends a few times a year. So that’s probably not in the budget. ;-) But otherwise all excellent points!

  52. “Better to have love and lost than never to have loved at all” as they say – go for it.

    That being said, if it makes you uncomfortable, don’t :) At the end of the day there are pros and cons to both.

    considering you guys saved more than ‘needed’, are both capable humans, and expect more income to come in from something…I think it sounds like your financial situation is in a good spot. I wouldn’t be overly worried, if I were in your shoes, of spending too much for fear of a recession. Besides, with all your cash on hand, you can ride it out if need be and adjust halfway through the year.

    I’d hate to think back on the first year of early retirement and realize I didn’t do what I wanted because I was scared, and then not have those opportunities later for whatever reason.

    • Aw dude, arguing with Shakespeare. Not cool! ;-) I think the additional earnings point is the strongest argument in favor of staying the course. We know we’ll make other money this year, so that lessens the pressure on our portfolio even more.

  53. From my perspective, this is a hard call, given the current the valuations of the equity market, and the length of the current economic cycle. We retired in early 2014, and were both 10 years older than you and Mark (our savings split was 50% taxable and 50% tax deferred). I was a little more confident (at the time), that the economy had a bit more room to grow, and that the equity markets could also expand. We spent at the budgeted annual rates. Today, I am a bit lit less confident about the levels of the market, and future economic and corporate profit growth. If I were in your place, I would take a look at your taxable savings/investments, and think about how you would feel about your spending if the market value by 15% to 20%, for say three to five years (or perhaps longer). However, as others have commented, you should do at least one overseas trip during the next year (in which you splurge a little), as a way to celebrate your accomplishment! I might think about your non-essential spending during the next two years, in terms of smaller increments…. Be careful about making many long term spending commitments that you cannot cancel (with minimal penalty). In real time, this would mean monitoring the stock market (and economic conditions) on a quarterly basis, and then spending above the super frugal level for the next quarter, based upon your comfort with actual market returns (in the previous quarter), and your expectations of the next quarter. If the market (and economy) contracts below your comfort level, reduce your spending. We monitor our spending monthly, and think about what is essential vs non-essential, and what we could reduce, if the economy and the stock markets contract.

    • I would assume you guys have benefited enough from the run-up in the last few years since you retired and are well insulated against SOR risk at this point. Which is awesome! Us? I doubt we’ll be so lucky, but who knows… maybe the run will continue for another three years, and then losing 30-40% of our value will be NBD. A drop of 15-20% for 3-5 would years would be fine in our plan, especially if we earn extra income this year and next, but a bigger drop for longer would get tough. Not impossible, just less fun. And yes, we are going to Taiwan this winter, and have at least one other international trip planned this year, so lots happening regardless. ;-)

  54. This is an interesting discussion but at its heart it appears to be a variation of an ongoing issue. the spend normally camp seems to be standard “the plan works so trust the plan and all our existing contingencies” while the frugal first year appears to be a variation on the fear-based “but we might run out of money” camp due to sequencing risks or too high baseline spending or market expectations or future cash needs or whatever.

    Personally I thought we were due for a market correction last January so I didn’t put my 2017 Ira contribution in immediately even though I had the funds to do so. You’ve all seen what has happened in the past 12 months and now I’m kicking myself for trying to time the markets!

    Our plan is to handle this dilemma is with earning enough part time income to not touch the principal until we are closer to social security age. Part of the reason for this is teaching our kids work ethic in a do as I do way that doesn’t apply to you. There is so much whining about why they have to go to school on days when we are not going to work that I imagine would be so much worse if we were both fully retired.

    • That’s an astute observation! (I also think answers are trending along gender lines, though there are for sure exceptions.) I love your reasoning for continuing to work part-time, and how dedicated you are to instilling a good work ethic in your kids. I wonder sometimes how much of our desire to retire early was because we both saw our dads retire early, so therefore felt entitled to not work forever.

  55. This is NOT such a difficult dilemma. If you’re asking the question (you are) odds are you’ve been frugal all along to get here. Meaning the spending habits of those that can retire early are more frugal than the mainstream so you’re way ahead of the game. That said, I err on the side of frugality though that’s within the budget and anticipated, conservative, returns. With a 2.5 yr cash reserved, you’re going to get through most market turn downs and, in the event, can be more frugal during such a turn down bearing in mind that prices of ‘things — from stocks to cars to house etc — will be cheaper during that period. Keep the powder dry.

    I agree with those worried about a 2018 stock market correction. I’ve spent 30 yrs on Wall Street as an interest-rate strategist — economic forecaster — and have seen many times people holding out for the last leg of a rally, panic when he turns around, and play emotions. Presuming we’ve been in stocks for a while, we’ve done well by any standards and it’s time to reap at least some of that and rebalance.

    • No one said it’s difficult, just that it’s a question worth asking. ;-) And I think if you read deeper, you’ll see that we’re not the frugal norm in the FI community, so I think assuming we have perfect frugal habits we can fall back on is giving us too much credit. Hahahaha. Appreciate your comments about the markets. Of course none of us know what will happen when, but we can afford to sacrifice some potential gains at this point for a little security, so feel good about that choice.

  56. You’re going to have way more money than you know what to do with. In the vast majority of historical time periods (varies depending on the exact mix of stocks/bonds), those adhering to a Safe Withdrawal Rate of 4% end a 30 year period with MORE MONEY THAN THEY STARTED WITH. And those studies doesn’t take into account any additional income sources such as blog or podcast income or even social security. I work with lots of retirees of all ages, and the vast majority of them end up giving away most of their wealth, either to charities or heirs. Many never even touch their principal (easy to do when average yields ave 2-3% plus you have side income). Don’t rob yourselves of any adventures or experiences just for the sake of frugality.

    • Most likely, yes, but it’s far from guaranteed. And a bad sequence of returns could harm our early retirement at least in ways that could be hard to recover from. (We feel much better about our “real retirement,” which now has another 18.5 years to grow without us touching it.) Those who don’t consider that as a real possibility are falling prey to recency bias. We for sure hope that everything you say here works out to be true — we’d LOVE to leave behind some massive charitable bequest when we’re done with the money. And not to worry — we never do *anything* just for the sake of frugality. Other bloggers might, but that’s not us. ;-)

  57. I’m conflicted between What Would Make The Sacrifice Worth It versus Resetting the Baseline. Can you do both? I imagine that after a few months of rest, you’d like to do something really fun with your renewed energy. If the rest time was frugal time, and the fun thing was a short-term spending bonanza that took stock of where the market is, could you then get the best of all worlds? A short re-set and a short splurge. Then see what works.

    Being able to sleep well at night throughout your retirement is my biggest goal for you, as a fellow worrier. I also like to break things down into shorter time-periods. Easier for my brain to think in quarterly junks rather than The YEAR of Frugality!

    • I love your idea in theory. I think the challenge is that that’s not really how we spend. When we’re home, we’ll live cheaply no problem. It’s really a question of how many trips to take, and while those can be done somewhat frugally, all trips cost money. And totally with you on thinking in quarters and halves of years vs. the whole year.

  58. We like to be frugal on the stuff that isn’t important to us (cars, clothes, our slightly crappy house) so we can be less frugal on the stuff that matters to us (like travel). I’d probably use the same strategy here!

    • That sounds exactly like our life. :-) Most of our furniture was bought used, we drive our cars until they die and our house is slightly crappy, too. (Hahaha — love that description!) But yeah, travel is really what we’re talking about here, because that’s where all our money goes. ;-)

      • I keep a little list of words people have used to describe our house (they include ‘cute’, ‘retro’, ‘vintage’ (especially the kitchen) and my almost-favourite, ‘cottage-like’. (My favourite of course is ‘paid off’, although we only say that to each other!!).

  59. I think that those of us who have retired extremely early, know what to do. We do what we always have done. We kick butt when it comes to finances. That’s how we got here. So of course you r going to spend money on a few awesome trips. I hope you turn up the heat, but I’m thinking you will want to challenge yourselves to months where u r bare bones. We r a weird bunch. January always seems to be a challenge month, to see how little we can live off. That being said we also love the months living according to our planned budget, it feels soooo luxurious. Each month will be different but you will enjoy figuring it out.

    • I think my inspiration for asking this question is that we don’t count ourselves as frugal, and have succeeded largely by putting systems in place that don’t let savings be optional, not by being especially financially virtuous. And I know there are others out there like us. I’m a bit envious that you find it so easy to come in under budget, but we have yet to see if that’s something that will happen for us. ;-)

  60. First, thanks for continuing to share your experiences. I love that I can relate more to your story than many other FIers who have seemingly been retired for some time now. I’m more of a natural frugal saver. When I do get to FI, I think I am going to be freaking out about the loss of a regular paycheck. So, I’m expecting that I will double-down on the frugality. I promise to try not to go Early Retirement Extreme crazy! ;-) Congrats again! Are you guys going to any FI conferences this year?

    • You’re welcome, Lane! :-) Yeah, don’t go ERE crazy — Jacob’s spending levels seem more than a little extreme to us. ;-) As for events, I’m speaking at CampFI Midwest and maybe others, and will likely be at FinCon. As other things come up, I’ll share them here!

  61. Finally squaring away some time to read your last few blog posts. I am in early retirement right now and have spent my days helping the wife ensure that her (our) business stays successful. It is the last bit of retirement planning we have left as we will eventually liquidate or sell the shop to put the last bit into savings. I am in month 7 of retirement and have been playing it safe but have a constant nagging feeling I should be acting super frugal right now. For 2018 I think I’m going to really pull in the reigns and preserve as much cash as possible.Personally for you guys if you can stretch that cash out as long as possible it gives your investments that much more time to exponentially grow. Knowing you guys there are so many ultra cheap activities you could do this year (hike sections of JMT) that you would enjoy and give you time to really slow down and disconnect.

    • I definitely understand the desire to stretch that cash! I think when we’re home, it will be no trouble to live cheaply. It’s really all about travel! But we spent very little in Taiwan and had a marvelous time, so I know traveling for peanuts is totally possible. Still, we splurged on a few things and could have splurged on more, and those are the things that raise the big questions for us. Like, “We’re here now. Shouldn’t we experience this thing that happens to cost money?” ;-)

  62. No need to reinvent the wheel. It’s not “super frugal” it’s 80%. If your used to an unbudgeted 100K while you’re stuffing your 401K your “frugal” withdrawal level is 80K. If you go much lower you’ll start to feel resentful. I’ve found this rule to be true. I’ve budgeted precisely 80% and so far have made the nut on the average every month. In the above example every four years you live on 80K you get one year free compared to 100K The new tax law will probably buy an extra couple grand to boot. I asked my wife how she’s doing with 80% and she said she barely notices a difference. One thing I did was to plan big expenses as a separate line item Next summer I will need new air handles and Christmas my wife and daughter spent 3 weeks in Italy so for things like that I have sequestered funds outside of the normal cash flow. At 5 years in it will be time to re-evaluate the sequester.

    Pick 80% and worry about being retired

  63. Perhaps you could opt to just live without thinking much about it at all? Check in after 6 months but try to hold on very loosely to it all until then. That would provide an opportunity to retool your focus away from the financial aspect (which has served you well but you might enjoy a break from?) Also, it would give you an idea of your real baseline “just-another-day-not-really-thinking-too-much-about-it” spending tendencies now that you’ve been hard core for so many years. And if you pleasantly surprise yourselves after 3-6 months, then you may feel the freedom to mentally loosen the reigns a bit. Trust your natural tendencies (I know you don’t lean frugally) and see. Rather than wondering “would we be this good if we weren’t trying? Can we ever let go or do we always need to be in “try” mode?” Hopefully that makes at least a bit of sense- I’m jet lagged and have been up for an ungodly number of hours now. And have 2 toddlers screaming and running circles around me at the moment!

    • I think if we trusted our natural tendencies more, that would be a no-brainer, absolutely. But if we did that, there’s more than a passing chance we’d overspend. ;-) I love your idea, though, and I want to think about how we can try to think about it all less for a while, and see what we learn. Good luck recovering from jet lag! It is taking me a WHILE to bounce back from Taiwan time!

  64. We’re glad to have discovered this blog since we seem to share many interests and values (as well as wanting a good value, yes, as you point out in your most recent post).

    In essence, we would have agreed with what you say in your case for “normal” speding:
    “The biggest argument for spending what we’d allotted is that we’re here! We made it! We worked hard and saved for years, and now it’s time to enjoy the spoils of victory. And also that there’s a decent chance we oversaved a little anyway, so we can afford to spend up to our cap each year without worry.”

    To our chagrin (though we did plan for it…basically), we ran with that philosophy and we ended up spending way way more last year (our official sabbatical/gap year) than we had done in the years leading up to the time off! A coast-to-coast bike trip, 4 months living in Montreal and taking French language classes, driving across the country twice, etc. It was a fun year!

    Thanks for the reminder that it might be time to get back to at least “normal,” if not exactly “frugal,” spending for us.

    • Hi Julie and Will! So glad you found your way here. :-) I could totally see us following a similar path to what you guys did, and we definitely have to remind ourselves to keep finding ways to do trips cheaply or to consider whether we need to take EVERY trip. (Fortunately we do have that points stockpile, so that’s helping a ton!) But yeah, I think it’s normal to need some trial and error to find the right balance. I’m sure that new normal spending level will reveal itself to you guys. :-)

  65. Hi,

    My take is that I will go for super frugal lifestyle in the first year of my retirement.


  66. “Also, entry to all Six Flags parks would be free”- Ok sure, but you need to include free entry to Cedar Point (one of the best IMO) as well, then I’m on-board.
    I would’ve said go for normal spending at the time too, and with benefit of hindsight to this point it seems you two would be doing just fine with a still-growing portfolio. But again it’s easy for me to say, but we’ll see what our choice is in a few years.