A few weeks ago, I wrote that the most common question we’ve been getting lately, now that nearly everyone in our lives knows that we’ve retired early, is whether we own Bitcoin. But we’ve also been getting a very different kind of question, a lot:
Aren’t you scared?
It’s a reasonable question. We were high earners who walked away from all that (and maybe closed the door on going back to something similar, because it’s often not easy to “just go back to work”), and instead decided to roll the dice that future market returns will look at least a little like past market returns. We’re also gambling on future health care expenses, future food and gas prices, and nearly everything else that costs money. We can analyze inflation projections and read expert opinions all we want, but the truth is that none of us knows what will happen in the future.
Very smart, rational, brave people would be forgiven for finding this kinda scary.
In some ways, I’m fearless. I’m not easily intimidated, I can speak in front of hundreds of people without cracking a sweat, and I’ve climbed up and skied down some things that my parents would not be so happy to know about. But when it comes to money, fear is an intimate companion.
Part of my motivation in starting this blog, in fact, was the idea that I could master my fear of giving up a steady income forever by analyzing every aspect of early retirement. That by having to come up with things to write, I’d be forced to scrutinize our plan so thoroughly that it would become airtight, waterproof and impervious to failure.
And then my fear would dissipate.
But what I learned along the way was quite different.
Fear and Early Retirement
One of my favorite books, a must-read for any writer, is The War of Art by Steven Pressfield. In it is the perfect description of what my experience of early retirement fear has been:
The amateur believes he must first overcome his fear; then he can do his work. The professional knows that fear can never be overcome. He knows there is no such thing as a fearless warrior or a dread-free artist.
What Henry Fonda does, after puking into the toilet in his dressing room, is to clean up and march out onstage. He’s still terrified but he forces himself forward in spite of his terror. He knows that once he gets out into the action, his fear will recede and he’ll be okay.
— Steven Pressfield, The War of Art
Get Out Into the Action
I’ve already spoiled this story because you know how it ends: I retired early despite my fear. But that quote above so closely matches what I eventually realized. There was no overcoming the fear that bad economic things might befall us and we might run out of money one day. No amount of analysis or research or planning would free me of that fear, at least not entirely.
I’m still scared that we might fail at this.
Maybe not quite terrified, as Pressfield suggests Henry Fonda was. But the fear is absolutely still present in my life. That’s not actually important, though.
What’s important is that we acted anyway. That we managed to hold that fear, see it for what it is, listen to what it has to teach us and then get on with our plans. Because I learned that both can be true:
I can be scared and trust that we’ll be okay.
The Problem with the Narrative of Overcoming
We didn’t let that fear stop us from realizing our big life dream, which probably sounds a lot like your typical movie narrative. Have some challenge. Overcome it. Succeed. The popular narrative of this kind of thing is so much about overcoming. The underdog who overcame some challenge to win the big game. The person who went through something and overcame it to achieve the great feat.
Those stories can be inspiring, but they’re often not accurate. Sometimes the thing standing in your way can’t be overcome at all, it can only be managed. And what matters is not beating it, but acting anyway, in spite of it.
When we say things like, “Don’t be scared,” or “Trust the math,” we might mean well. But we’re subtly signaling to those who are afraid that they must not be ready, because you’re only ready to make the leap when you’re not scared anymore.
And that’s ridiculous. It’s like the saying, “If you’re not outraged, you’re not paying attention.” If you’re not at least a little bit scared when you make the leap to early retirement, you almost certainly aren’t taking it seriously enough.
Big decisions in life are like that. We can be excited and optimistic and scared. Maybe that’s exactly how we should feel.
Understanding Risk to Manage the Fear
Pulling the ripcord to early retirement isn’t the first big scary financial thing I’ve done, though it’s for sure bigger and scarier than the others.
Starting to invest my money – money I could now theoretically lose! – felt scary. Buying our first place – but what if the markets crashed more?! – felt scary.
And what helped me do both of those things was not overcoming any fear, but rather learning that risk is almost never on just one side. I saw investing as risky because I mistakenly believed saving in a savings account to be safe. But once I came to understand inflationary risk and realized I was guaranteeing I’d lose money in a savings account, investing seemed much less risky by comparison, and I was able to act in spite of that fear. Same with buying our first place – sure, the markets could dip more, but rents in LA were rising, and we could have easily ended up financially worse off not buying. It was scary to write that down payment check and to take on that big debt, but we didn’t let that fear hold us back.
Every once in a while, learning something actually did remove the fear entirely. Like with dollar-cost averaging, a very fear-driven approach to investing. We used to fear socking lump sums into the markets, but got over that after we learned the math on it. That’s not the norm, though. For the most part, the fear stays with me, but knowing more about whatever it is helps me act anyway, in spite of that fear.
With early retirement, realizing that it’s not about a secure, income-earning life vs. an insecure, non-earning life was pivotal. Rather it’s between a life in which you might have more financial security but you also trade so much of your precious time for that versus a life in which you trade a little financial security for the gift of more time. (Or, as I prefer to put it, “We didn’t want to risk spending all our good years at the office.”) Not risky vs. safe, but one risk vs. a different risk.
And so we chose the latter, and we leapt.
But Listen to What the Fear Has to Teach You
I’m actually grateful for the fear that I’ve felt all throughout this journey, because I know it has made our plan better and more solid. Without that fear, I would not have done so much research or baked in so many contingencies. I wouldn’t have educated myself so much about the pitfalls of different drawdown strategies and the finer points of sequence of returns risk. We might have blindly followed 25X without building out a better-for-us two-phase approach that gives us a built-in safety valve of a whole second pool of funds to provide for our traditional retirement, whether or not we succeed at early retirement.
I credit fear with that. If I’d overcome the fear of what this leap means, I might not have put all that thought into it.
So it’s truly worth examining whatever fear you feel, and listen to what it has to teach you. “I’m afraid” isn’t specific enough. Go deeper.
“I’m scared that the markets might not return enough, and I’ll run out of money,” means you might need a larger margin of safety.
“I’m scared of bad returns early in our retirement wiping us out,” means you need to have a plan to manage sequence risk, and likely a bigger cash cushion.
“I’m scared that I might spend too much early on in early retirement and run out of money too soon,” means you need accountability structures built in that will help you manage your spending.
“I’m scared of how it will feel not to get any sort of paycheck,” means you probably want some kind of side hustle in place well before you leave your career so you’ll still have a small paycheck coming in.
Sometimes that fear points us to strengthen our plans in financial ways, and other times, it’s all about emotional comfort. Both are equally important and equally worth listening to, because both help you sleep at night. And if you can’t sleep well at night in early retirement, you’re doing it wrong.
Don’t ignore that fear or try to trick yourself into believing you can push it away entirely. Instead, listen to it, learn from it and then act anyway. There’s no reason why you have to let it hold you back!
Let’s Talk About Fear
Let’s get into it! What do you fear in early retirement, or did you once fear? How do you manage that or act in spite of it? Sometimes – when fear stems from truly not understanding something – it IS possible to overcome it by gaining that understanding, like us with dollar cost averaging. Any good examples of that you can share? Or any examples of fear you still carry around, but which you’ve managed by learning a ton about your options? Any fear that still holds you back a bit that folks in the community can help you act in spite of? Let’s chat in the comments!
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Categories: we've learned