Slightly Early Retirement

I’ve been dealing with a fairly minor medical issue but it was one that required a procedure that could not wait for the Corona virus to run its course in the US. So I had to travel across state lines on a six hour road trip and stay in a hotel for four days, not an ideal thing but unavoidable. Also for 14 days prior to the trip I had to self quarantine to protect the health care workers at the hospital. It did not matter that I live in an area that is nearly covid19 free and the hospital is in a Corona hotspot. But I did not mind the extra precautions at all, we owe our health care heroes all the protection we can provide. However what I saw in my four days in and out of various hospital buildings on their campus did surprise me.

And it was all about the masks. Because I knew I’d have to wear a mask when I was being shuttled around the medical facility for four days I took one with me. I happened to have had a couple of the n95 certified masks at home. One I had bought years ago for use in dusty off-road trail rides and another was given to me by a friend who had a suppressed immune system for a few years and had one left over. He found out I was headed out of state and dropped one off with my wife.

If you aren’t up on all the particular ratings of masks the n95 is the Cadillac of masks, it blocks 95% of 0.3 micron and larger particles. That’s good enough to significantly protect you from the droplets of contagion that an infected person is constantly putting into the air around them. It also protects others from you fairly well. The next most common mask you see in medical settings is a surgical mask. It looks a lot like a n95 but it does not filter out small particles nearly as well. It is primarily designed to prevent the person wearing the mask from spraying droplets out and infecting others. It does not do much to protect the person who wears it from infection. It isn’t useless as far as protection goes but it isn’t very effective. The third common masks are the cloth masks, many homemade. These are the least effective in both protecting others from you and in protecting you from others, but they do cut down some on the amount of droplets containing virus that you might otherwise breathe, sneeze or cough out into your neighbor’s airspace.

I have some familiarity with masks and respirators because as a chemical engineer and former plant firefighter I worked with all levels of breathing protection. I used everything from supplied air self contained breathing apparatus gear to n95 masks because we sometimes had to enter areas with unsafe levels of smoke or toxic dust.

What many people do not realize is that all masks are uncomfortable and all of them restrict your ability to breathe to some degree. In the summer they are crazy hot on your face and it feels like you are rebreathing the same air over and over. For people with asthma, like me, some of the more efficient masks, like the supplied air type (where you carry your own air tank on your back) and the n95 are not feasible to wear. Unless you have good lung capacity the extra restriction n95 and higher rated masks impose on your breathing ranges from highly annoying to dangerous.

I did not fully realize that until I walked to my first appointment yesterday wearing the n95. After all it had been decades since I had worn one on the job so I really did not remember much about the experience. The first question the nurse asked me was if I always looked so flushed? The answer is no, in fact I run 15 miles a week and play high level tennis. I do have some breathing difficulties but I’ve offset those with my endurance training. However, add just a little more restriction to my ability to breathe with a n95 mask and I became absolutely miserable.

And maybe you would toss that off to my particular condition but as I walked the medical center campus I noticed that every person in the facility was wearing the same kind of mask. And it wasn’t an n95 like mine. I finally asked a nurse practitioner about it and she said that almost nobody could stand working in an n95 unless they were in direct contact with covid19 patients and had no other choice. Instead they all wore surgical masks as did all the patients they were caring for, like me, that were non-virus cases. They segregated the hospital into covid19 and non-covid19 areas and only the people on shift in the Corona virus areas had to wear the n95’s, which they universally detested due to how annoying they felt. She gave me and my wife a couple of the more comfortable surgical masks, and while I still hate how it feels to wear one, at least I can get enough air to function.

I don’t know the statistics but my guess is that very few medical professionals are wearing n95 masks while they work now. And it may not have much to do with a shortage of masks. Instead it may be due to the huge human factors issue involved in wearing them. I can’t imagine a nurse on a 12 hour shift having one of those things on their face the entire time. I’m claustrophobic anyway and when every breath I take starts with me rebreathing my own hot breath I’m creeped out in a major way. If you wear glasses you also face the fact that the mask fogs up your glasses any time you breathe hard. Oh, and since the masks make you breathe hard that means you are looking at the world in a fog pretty much all the time.

If you’ve got some n95’s stored away you just might want to try to see if you can make it for even three or four hours straight wearing one. I’m guessing there is a fair chance you’ll be climbing the walls after thirty minutes. If that is the case then consider donating the unused ones to those who have to wear them and just get a cloth mask for home use, or make your own. Maybe one positive outcome from this pandemic will be the fact that health officials will realize that having respiratory protection that degrades people’s ability to function at a high level is not satisfactory. There is a need to develop an effective mask or filter system that health workers (like my APN) do not consider highly annoying. Otherwise they are going to opt down to a much less effective level of protection. Which is exactly what I’ve witnessed all week. Because protection that prevents someone from doing their job isn’t much protection at all.

Maybe I’m just crazy, but have you tried an n95 mask or a surgical mask for multiple hours of continuous wear? Could you stand it?

Any medical professionals who will tell what criteria they are using to select the type of mask they are using on the job?

Is anybody working 12 hour shifts wearing an n95 mask? Is it no big deal or are you on the verge of insanity?

After having had almost zero real change in my daily routine due to the virus crisis I’m finally going to have to make a couple of accommodations. While my state has no stay at home rules, the fact that I’ve got an out of state doctor appointment in two weeks does put me under Texas “Stay at Home” rules. I live in Arkansas where there are no such requirements so far, but since it is their state they get to make the rules.

Fortunately, Texas rules are not as limiting as some other states, they allow you to go outside all you want as long as you practice social distancing. My wife and I will still be able to run on the streets and also to play tennis with each other, not with other people though. We can still take the boat to local lakes and fish together. And we could hike, though hiking season is basically over here, unless you love poison ivy, mosquitoes and poisonous snakes, which we don’t.

The things that we can’t do are not much different than before I fell under Texas rules. My board meetings are by phone now. They tried Zoom but it was just too complicated for some of our less tech savvy members. Church is broadcast now, so is Sunday School which works fine on Zoom. Hmm, so my Sunday School class is smarter than my board directors? No pickle ball, you just get too close to your partner at that sport. Basically the main new restriction is that I can’t play tennis with my regular singles opponent and friend, that’s over for now.

And when I drive to Texas I will have to drive out of my way, around Louisiana, because they are stopping cars coming out of that state at the Texas border and forcing them to turn around or to check into a Texas hotel for two weeks and self-quarantine. But if you come in from Arkansas you are just fine. At least for now. Of course my appointment is two weeks off, I would not be surprised if it gets cancelled if things get much worse in either Texas or Arkansas.

It is hard to know how to think about the covid19 epidemic. I’ve seen people call it the most serious crisis of our lifetimes. I’m sorry but I don’t think it is even in the top ten. The latest models show maybe 80,000 predicted US deaths. Cancer deaths this year in the US will be around 600,000. Now that’s a crisis, that’s almost ten times as much grief and it is inflicted on a much younger set of victims.

But the virus has caused more inconvenience to a much larger audience because cancer is not a thing to most people, unless they have it or a family member or close friend does. The covid19 disease has disrupted the lives of many millions of people who will never be infected, and because it is highly contagious, it has created more fear than something like cancer. Cancer generally has no known cause, and isn’t spread by doorknobs and hugs. You could also compare the virus to heart disease. It too dwarfs covid19 in victims claimed.

Accidental deaths, death by car crashes or other accidents, total almost twice the projected Corona toll. In fact the common (non Corona) flu varieties kill 60,000 in the US each year, almost as many as covid19 will likely take from us.

So why is this such a big deal in our lives? It is new for one thing. It is also invisible and unpredictable. And because it is contagious it has caused our national and local governments to react by imposing formerly unthinkable restrictions on our democracy. It may turn out that the economic damage from the restrictions designed to flatten the curve could do more harm than the disaster they are intended to avert. Or maybe they were perfect or maybe they were not nearly enough? We may never know, since there is no way to try it more than one way. I suppose you could compare the way different countries handled things versus their results but there are way too many uncontrolled variables to get much hard science out of that. Or at least it appears that way to me.

There is also plenty of statistical data that proves economic hardship kills people just as dead as any virus. Poverty and stress kill people, they shorten lives. It isn’t arguable, it is factual. So there probably is an optimum response that balances the economic pain to the people with the viral death toll. However, nobody knows exactly what that looks like. Any time you start comparing dollars to death tolls, it becomes a very complex and morally dangerous calculus.

Me, I’m a compulsive rule follower and I’ll live by my Texas imposed guidelines until I get my Texas appointment taken care of, then I’ll be free to go back to my state’s rules. I do not profess to know what state policy should be, but I will continue to follow it as it is laid out by our governor and health department.

And at some point in the next few weeks or months the pressure will start to mount, especially in places like my rural area, for a return to normalcy. Our county has a land area of nearly eight times that of New York City yet we have only twelve confirmed cases to date compared to NYC with 65,000 cases. We may see a rapid escalation of infection here, or we may not. There is some efficacy inherent with living in the middle of nowhere when it comes to not catching communicable diseases.

It isn’t unlikely that our curve here would be much flatter than a metro area curve, even if we had not taken a single step to slow the spread of the disease. Maybe we are even hurting our chances because when and if the disease does peak here in the sticks, maybe weeks or months from now, will there even be any medical supplies left over for our sick people?

All those questions are unanswerable right now. There is no shortage of people who will express an opinion but nobody really knows because this is such a new thing. My advice is follow the rules, including utilizing the exceptions they include. That means I’ll still be spending a lot of time outdoors and away from other humans. But for city dwellers it may mean just staying inside, period. Whatever the case, I’d advise following your areas’ requirements because it is the right thing to do. Look for ways to help others, even if it is just a phone call or dropping a hot meal off for older friends, especially if they are living alone. Maybe doing a grocery pick up for them, grocery delivery only exists in cities. We do not have that option in rural America, you have to go to the store at the very least for curbside pickup. Many rural locations do not even have that available.

My concerns are for others. We have months worth of food, we have decades worth of money and we do not have to work to pay our bills, just for entertainment’s sake. We don’t have kids at home to educate or entertain. We don’t have living parents to care for. But many of you, maybe all of you younger than us, do have some or all of those things to be concerned about. My advice, which is worth exactly what it cost you to read, is this. This will pass, and it likely is not as bad as we think it might be. Nobody ever got a page view on the internet or sold a news story by playing down how bad something might be. Good luck and follow the rules and odds are things will work out fine.

What do you think, is shutting down the world to flatten the curve the solution or the creation of an even bigger problem?

What is the biggest change in your own personal world that the virus pandemic has caused.

What is your biggest worry, your family’s health, your finances or your job?

It is surreal how differently this current virus crisis impacts families.  Right now, when most of us do not know a single person who has been diagnosed with convid19, this is a financial and logistics threat, and not yet a personal health issue.

 For people with children it is a daycare crisis.  For people with jobs that have been converted to working from home it’s a very awkward “how do I do my job this way” time.  For people who have been sent home without a work from home option it’s a time of concern over whether their jobs will be reinstated later.  For those whose jobs have been eliminated it is a time of confusion over how to access government bridging benefits. For senior adults, especially those with underlying health issues, it is a time of fear of infection.  For kids it is a scary time when routines have been upended and Mom and Dad seem worried and distracted, and maybe not very adept at home schooling.

For FIRE (financial independence, retire early) aspirants who were nearing or just reaching their FI (financial independence) target of passive income or investments that appeared sufficient to fund their lives indefinitely  it can be a time of great dismay or depression.  For people well into their financial independence journey it is a frightening and disconcerting time watching their assets fall by double digits in a single day.   For people with an excess of wealth beyond their projected needs, even with a 70% stock market crash (not likely but who knows?), it is more of a matter of watching hundreds of thousands or millions of dollars in reduction of their net worth, knowing they’ll still have more than enough to maintain their lifestyle.

Later when there will be plenty of people you know and care about suffering from covid19, maybe even your family, this will become something much different and more frightening.  Obviously this is already the case for hundreds of thousands of people across the globe.  

Personally I’m one of the lucky few on the money side and one of the not so lucky on the other.  I exceeded my FI number years before I retired and when my corporate pay and stock options soared the last three years of my job I saved and invested most of the money.  I also received a large  inheritance a few years ago so my assets were padded greatly due to circumstances I had very little to do with.  I’ve lost some $750,000 in investments over the last six weeks but it is money I can afford to lose and also money I expect to get back some day.  I haven’t sold a thing and haven’t pulled any money out of investments for my living expenses. I know that isn’t most peoples’ experience and I do realize I’m blessed and should use my secure financial position to help others around me in need. 

My day to day life has not changed much.  I only work a day a week and that was largely remote work from my home.  I don’t need the money, its for my entertainment only, and if it does not survive the virus I will not consider it a great loss.  In fact it will be an opportunity to reinvent myself again.  My wife and my hobbies remain unchanged.  We do not have any kind of shelter in place rules here so there are no problems with our morning runs, our outdoor tennis games, hiking, off-roading or fishing.  We never get close to anybody on those adventures, I’d venture it is a safer environment than being indoors at home. As a side benefit we have stocked up the freezer with a whole lot of filets from all the fish we are catching. Not having any kids at home, with ours all grown and gone, means that the school situation is not impacting us. 

As lucky as I am on the financial side I’m in a very precarious position with my health.  First I’m a senior, I’ll turn 65 this year so that alone puts my risk in the elevated category. On the plus side  I’ve always been fairly athletic, I ran 15 marathons in my late forties through my late 50’s and still run fifteen miles a week.  I also am a fairly competitive tennis player, competing on teams and at tournaments, or I did before the virus cancelled them all.  And we are pretty extreme hikers and enjoy pickle ball.  But what may outweigh those positives is the fact that  I do have asthma, one of the high risk factors for covid19. More troubling still, I’ve also got a rare complication that restricts the amount of air I can hold in my lungs.  The combination of these two ended my marathon career and makes all my athletic pursuits more difficult than they would be for a normal person my age.  I still run and play hard because of my determination to not let physical problems or pain rule my life.  As long as I can go, I’m going to go hard even when it hurts. 

Covid19 kills maybe 1% of its victims, I think that number is still in flux since this is pretty new.  But most of what I’ve read shows it kills around 10% of people like me. Actually there are probably not many people like me, with my particular combination of issues, so I’d guess my own personal risk could be even higher. I’m fit and have made a science of obtaining reasonable athletic performance on a limited air supply so maybe that gives me an edge over sedentary types.  Since my health situation is complicated I just do not know what my chances are of surviving the virus if I get it. 

All this tells me we are each fighting different battles in this war against an invisible foe. Some people are running out of money and the pantry shelves are bare.  Some are quarantined in nursing homes with sick people just down the hall.  Some are fighting depression and loneliness in their isolation.  Others are treating the whole thing like a fun family camping adventure. This is one of the most individual existential crises we have faced in most of our lifetimes and our individual circumstances make this unique to each of us.  I’m not worried personally on either the financial or health fronts because I’m not a worrier.  I’ve always had high stress jobs but rarely felt the stress because I was generally able to look at my career as a game, and if it fell apart I could start another game.  As far as health goes, I’m in my sixties, with very active hobbies so like any other older athlete  I could die any time I go for a run or chase down a tennis ball.  Life has been great but nobody lives forever and at my age I realize that I have already lived most of my life, I just accept that fact.  I know that isn’t particularly profound but I’ve never been a deep thinker.  

What about you?  Are you more worried financially or health wise for yourself or your loved ones? 

If you had an office job but are working from home now, how is that going? 

What do you think your kids are feeling about this whole thing?  

It has been interesting reading all the end of the year recaps and end of the decade recaps as bloggers have looked back on the past and have given their thoughts on their progress, improvements and  challenges. In addition to looking back most of them take a look forward and set some goals for the next year, the bravest set goals for the entire new decade. 

Since this is a financial space at its core there are always savings and spending goals.  Maybe a net worth goal as well.  And quite often, though it isn’t directly related to money, there are fitness goals listed.  And that’s what this post is about, sort of.  The more of those goals I read the more disturbed I became that there is something wrong with the way some bloggers are looking at their goals.

To frame this let me tell you where I’m coming from.  I’m a boomer and was never a natural athlete.  I’m not a fast sprinter and my vertical leap doesn’t even justify having the word leap associated with it.  But I’m a runner, consistently running 15-25 miles a week for the last thirty years.  I’ve played tennis for almost fifty years and I’m pretty good at it still.  Plus, I’ve added hiking and pickle ball to those core athletic pursuits over the years.  I’m still not a great athlete but most of my more sedentary boomer buddies think I’m some kind of animal because I’m still doing strenuous sports, while golf is the closest thing to exercise they do.  OK golfers (said with exactly the same tone as “OK boomer”) I’m sorry if I impugned your “game”, but I’m only talking about “sports”.   

The thing is, I never ran as a means to improve my fitness, I only did it to allow me to be more competitive at tennis. Competition was my primary driver and it still is. Whether it is a board game, a tennis team match or a work project my goal was to win.  In my decades of adult life I have learned one thing about myself.  And that is competition is the best motivator  for me to do something with excellence that I might not otherwise do at all. 

In many of the year end and New Year’s resolution blog posts when exercise was mentioned it was usually “walking the dog”, “going to the gym” or “yoga”.  Sometimes it was, couch to 5K.   And do not get me wrong, nothing wrong with those, but where is the competitive angle?   Where are competitive sports like tennis, volleyball, martial arts, basketball, soccer, etc.?  You know things where someone wins and someone loses?  I’ve yet to see a yoga duel, or a treadmill race.  And the reason that troubles me is that people will normally not do something consistently if there isn’t a big strong WHY involved, and “going to the gym” doesn’t have a why attached, or at least not one strong enough for me. 

It’s a cliché, but it is a true one, that New Year’s resolutions don’t work.  And it is generally recognized that the reason is a lack of real commitment to the goal.  Again, where there is no real WHY in the resolution, there is no strong connection to your identity that strikes passion in you.  And it is easy to see why getting up at 6 AM to go jog on a treadmill for no reason except general fitness is going to require an iron will most of us lack. 

I am lazy.  So incredibly lazy. Yet, I have run tens of thousands of miles over the last few decades in the early morning darkness while not getting any particular thrill out of running.  You might wonder how  that works?  It is simple, I don’t like running but I need to be fit.  And I don’t care about being fit because it is a thing in itself, I like being fit because it makes me a faster and stronger tennis player.  And I care about my tennis skills because I win more when I’m fit.  I have much more passion for winning at tennis than I have for staying under the covers when the alarm goes off at 4:40 AM, like it did this morning.  Basically I have rewired my brain so that it doesn’t see a choice of running or sleeping in , it sees a choice between something I love, winning, and something I hate, losing. And the passion to win simply destroys the desire to sleep in.

And that is what troubles me about many of the goals I’ve seen posted lately.  I don’t see any tie to winning or to anything that is a burning passion. Not just regarding exercise either.  It is just as bad in some of the career goals people are posting.   The day I walked into my first job I already had decided what winning at work looked like for me.  Winning was to be running that company by the time I was 40.  I didn’t care about work life balance, benefits or anything else except being the best, and winning that job.  There was even a specific day I remember when the president of our parent company sat me and my rival frenemy down together in an office and laid out the rules of the game for us.   We would be judged against each other over the next year and the “winner” would run the company and the “loser” would go to the corporate headquarters and be a staffer for the parent company.  And I absolutely loved the concept.  I was working for someone just like me.  And, yes, when the year was up I won.  I was 41, so I missed my goal by a year, but it was close enough. 

I am sure if I had not been able to gamify work, to see it as a competition , I would not have had so much fun, nor done so well.  In spite of having a particularly keen engineering brain, my lack of grit would have kept me from advancing if I had not spurred myself to work hard by leveraging my passion to win.  Thankfully I figured that out about myself early and it has served me well.  But I am not finding so many younger versions of me in this blogging space.  It seems that treading water in their careers, and staying employed are the goals now.  I am beginning to finally understand people seeing work as a hamster wheel because that is truly uninspiring if that is the career plan.  Where is the hunger to win that can make work fun? 

Maybe I come across as some kind of unbalanced freak?  Maybe I am.   But I loved my career because I won at it. I got promoted and paid more with great frequency which felt exactly like winning. Dave Ramsey talks about “killing something and dragging it home” when he talks about high performing individuals.  That’s what my career felt like to me, but I get very little of that vibe from many of today’s younger bloggers.  Work is more of a necessary evil, a means to the end of early retirement.  And I think that’s maybe why their careers don’t progress as fast as mine did, and why they do not like their jobs.   Maybe in some cases it is the same thing regarding their fitness commitment.  Maybe they don’t work out like I did because they haven’t tied their fitness goals to a strong enough why?  My why was competition, and that might not be a very worthy one for others.   But there has to be something that strikes a passion in you to achieve a goal that requires hard work. Otherwise you just see the morning gym crowd thinning out by February and March year after year.

Does anyone care about winning any more? 

Are there better career and fitness goals than winning, how do they work to motivate you?

Is this a generational change, are Gen X and millennials less competition driven, is that good or bad?

As usual click on the title of the post to make a comment if you don’t see a comment box.

It’s kind of surreal watching the market plummet again today.  Nine days ago my net worth was at an all time high.  That was two hundred thirty-three thousand dollars ago.  That means I’ve lost $26,000 a day for nine straight days.  That seems like a lot to me due to my personal history.  I had one of the highest job offers in my engineering class when I graduated, a long time ago, and it was for $18,000 a year!  So in the last nine days I’ve lost thirteen years worth of my starting income.  In nine days!  And that’s with a very diverse portfolio that is less than half invested in stocks and index funds.  Those numbers are kind of staggering to me from the math side of things.  And it is only noon, the market will probably fall another percent or two by the end of the day. 

So what to do?  Panic, sell, make a run on Walmart for Kraft Mac an Cheese?  Or we could cancel our upcoming hiking trip to Switzerland in a few months, the most expensive vacation we’ve ever planned. It is also costing significantly more than a year of my income back in the day for just nine days of travel and hiking.  Seems to be some symmetry around nine days for me.  I remember 2000, and 2008 when losing a few hundred thousand was pretty huge because I did not have as large a portfolio of investments as I do now.  I was also 100% invested in the stock market, no bonds or money markets.  But I was also saving aggressively, living on less than I made and never, ever pulling anything out of savings.  So, while it hurt to see my paper net worth drop like a hot rock I knew that the math was OK. 

It feels a little different this time because I’m no longer earning a large income.  My hobby jobs pay the bills but they just barely pay them and do not make extra to save and invest.  I guess technically I’m still investing because I do not spend the dividends and interest my index and bond funds generate, I just let them reinvest.  But the fact that I’m kind of living paycheck to paycheck now makes seeing my net worth go down feel less theoretical than when I could simply out earn any bad market performance that happened.  So what to do now?  I’d say doing absolutely nothing sounds like the best plan.  Just do nothing different.

 I might shift some cash into the market, circumstances have left me cash heavy and I’ve been needing to do that anyway, and this dip makes this a better than average time to handle that bit of housekeeping.  But I’ll mostly just stay diversely and conservatively invested.  I do not need to make a high rate of return and do not need to take a lot of risk because, once you’ve won the game you really can stop playing.  And you probably should if losing would impact your lifestyle because making more money isn’t going to accomplish anything useful once you’ve got enough.   

That’s an easy perspective for a boomer who made the right choices over the last thirty years.  But what about you?  You are more likely closer to where I was in 2000 or 2008. 

What are you planning to do in response to this falling market?

Have you ever reacted to a falling market in a way you later regretted?

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It is very popular to promote experiences over buying tangible possessions right now.  It seems universal to find bloggers recommending a more minimal lifestyle.  The world almost seems to be divided into two groups.  The smart group is focused on experiences, they are the Marie Kondo, zen minimalists who have one spork per person and wash their only set of clothes nightly.  The materialistic group, on the other hand, comes back from daily shopping trips with their SUV’s piled full of new shoes, clothes, electronics and lawn gnomes.  And it is a given that the smart people are on the minimalist side of the playing field while the other team is hopelessly in debt and unhappy, despite their many under used toys.  

I don’t accept that at all.  That’s just an exercise in seeing who can build the flimsiest straw-man for the opposing view point. Before I jump into what seems wrong with the classic minimalist argument let me put myself in context.  I’m financially independent and I retired early, at least slightly early, four years ago.  My wife was a stay at home mom and our three millennial kids are grown and gone now.  We have no debt, a paid for house and three cars between my wife and myself.  But I also have a Polaris RZR off road vehicle, a bass fishing boat, a country club membership, cable TV and pretty much every streaming service available.  We have nice computers, four iPads and I’ve got a $1,399 smartphone with an unlimited plan.  My wife and I have maybe ten tennis racquets between us, probably 15 fishing rods and reels and a bunch of pickle ball equipment.  We have top of the line hiking equipment and outdoor wear suitable from -20 to 104 deg F.  We have great running shoes, trail running shoes,  tennis shoes and hiking shoes along with all our other day to day shoes.  We have a shop with all kinds of power, garden and hand tools and a $5,000 lawnmower    And we are putting the final details together on an overseas ten day vacation this year that will cost the two of us $20,000.  By my estimation we have a lot of stuff and are also spending a lot of time and money on experiences. 

So what about the arguments for extreme minimalism? The concept that removing clutter simplifies your life is one of the main ones.  Yet with all our things, everything is in its place in our home.  There is zero clutter.  We are both very neat, we do not lay things around.  When we gather up our stuff to go play tennis or go fishing it is all in one place and not in the way.  After all we have fifteen rooms for two people, there is lots of room to put things so they are not in the way. When we get home we put it right back where we got it.

Why so many tennis racquets? I think I said we had ten.  That sounds excessive, right?  Its not.  Like most activities there is more to tennis than you would guess if you aren’t a player or if you only play at a light recreational level.  My wife and I are good players who compete annually in leagues that can lead all the way up to national championships, though we haven’t gotten that far yet.   Maintaining proficiency at that level requires changing your equipment as new technology comes around and as you grow older. You simply have to adjust your game play and equipment to match your changing physical condition.  At any one time I need three or four racquets that are identical because my topspin breaks the strings after a few sets and so I can keep a dry handle on the racquet in the summer.  Generally we are also trying out something newer to offset tennis elbow and other ailments. You could go all Kondo for tennis and play with just one racquet but you’d be sitting at home most of the time waiting for it to be restrung, and you’d pretty much lose most of your matches.  So you tell me, are all those tennis racquets possessions, or just the price of admission to be able to generate all the experiences of winning and losing tournaments and fellowship time with our tennis buddies?  Are they things or experiences? It isn’t clear to me.

And that points out the central flaw in the experience vs things debate.   There is no bright line between experiences and things.  Let me use another example, say you want to have what is arguably a very elite experience.  Climbing Mount Everest would be a great experience for some people.  It is risky, it is rewarding and it puts you in a very small group of people.  It must be a pretty good experience to attract as many as it does, especially considering a fairly high percentage of them die from the attempt.   And it will cost you four months and at least $40,000.  Very few people would throw that in the frugal or minimalist corner.  But it is clearly an experience and not a material thing.  You could rent everything you need for that experience so that there wasn’t a single possession involved.  But did you buy an experience or was it really a “thing” to climb that mountain? 

Maybe you want to start running.   The very first thing you need to do is to buy a pair of running shoes.  Those range from around $50 to $175 in most cases.  You have to get lucky and find last year’s discontinued models to get decent shoes for $50, but it is possible.  Lets just say you find a comfortable pair for $65.  Well, what is that expense categorized as?  Shoes are possessions, but running is an experience.  And a dirt cheap one at that.  Same kind of problem, no clear line of demarcation. 

But to be fair let me serve up what sounds like the ultimate softball pitch.  How about buying a Rolex wristwatch?  That’s a thing right?  A time keeping device that is less accurate than a thirty dollar Timex but that can easily cost $20,000.  Is that a thing or an experience?  It is a thing if you could care less about fancy watches but what if living that Rolex lifestyle was your lifetime dream, as it is for some?  Then aren’t they really just buying a lifestyle, or trying to?  And a lifestyle is experience.  

I suppose the only person who matters in deciding what something is,  a piece of stuff, or a tool to build an experience, is you.  What does that thing mean to you?  Why is it important?  I think we are all pretty judgy when it comes to what others decide to spend money on.  I have wealthy friends with houses at the lake or at resort locations.  Since I could care less about having a second house to take care of I tend to judge that as wasteful.  But they have large extended families with lots of kids and grandkids and those attractive locations draw those people together and give them, guess what?  Great experiences together.  Why should I judge that as wasteful?  

I could go through the same exercise with our off road vehicle, our fishing equipment and our electronics but it would turn out the same. There are experiential reasons for having those things.  In fact the only reason we have any of those possessions is to leverage them to have great experiences together. But a $1,399 smartphone, what about that? Well that’s for my profitable side gigs, not to show off. It is my internet hot spot when I travel and my electronic note taking device.  Having paid side gigs is an experience that adds to my life in retirement a great deal and one that adds to our retirement income.

As for me, this thought exercise has made me feel a little bit guilty about judging others for spending on things that look like they are just wasteful or are excessive possessions.  Perhaps they make possible life changing experiences for that person, something I do not understand from the outside looking in.  But something that is very real to them.  I’m going to try not to do that going forward.  

How about you, do you think possessions and experiences are totally separate and easy to define?  

Or do you think what looks like a material thing to you might represent a treasured experience for someone else?  

If you aren’t cluttered should you still declutter?  

Are hobbies that don’t require a lot of equipment, like yoga, better than hobbies that do, like skiing? 

As usual if you do not see a comment box just click on the title of the post!

“One million dollars…” says Dr. Evil in one of the classic comedy lines of all time.  So full of irony because in his original timeline, prior to his hibernation for decades, one million dollars was an unimaginably large sum.  But in today’s dollars, even though its big money, it is a laughably tiny  ransom for saving the world.  In a world where student loan debt is in the trillions and a single stealth bomber costs over a billion, a million dollars is chump change in comparison. 

But strangely, not in the world of personal finance.  In this space one million dollars is still treated as a sacred cow.  It is considered enough, even more than enough, by most people to finance a rich life free from the requirement of ever having to work again. And what is so strange about that is that it has been a fixed quantity for decades, with no sign of being replaced.  In engineering we have a set of constants referred to as dimensionless numbers.  They are constants by definition, held in place by the very forces of nature and you can trust they will always have the exact same value in every equation in which they appear.  In the world of personal finance one million dollars has become this kind of constant. 

Why is this?  What’s the magic in a million?  The obvious explanation is we live in a numerical base 10 world and one million written numerically is very impressive.  $1,000,000 is an impressive number just to look at.  All those zeros and multiple commas!  Compare it to the other numbers we use most commonly.  A gallon of gasoline in Arkansas is $2.19, it probably costs more where you are but I’m sitting on top of an oil field.  A postage stamp costs $0.55, not that anyone writes letters any more.  A new Toyota Avalon costs $42,497 locally for the loaded, limited model.   The median house price in the US is only $200,000 by comparison.  So another possible explanation for the attraction to seven figures is that a million is much larger than the amount of money we ever handle in a single transaction.  I mean who buys five houses at one time? 

At my former job, prior to retirement I paid invoices over a million dollars every month.  Both the monthly electricity bill and the natural gas bills were over one million dollars.  When we added some new equipment to the plant it typically cost from twenty to one hundred and fifty million dollars to build.  I became a little numb to just what a million dollars meant because it was small change in the chemical plant world.

When I retired I was one of those  401K millionaires that everyone thinks are mythical.   I was in my 401K for about thirty years and often wasn’t allowed to contribute the legal maximum due to some federal back testing of our plan. I still accumulated quite a bit more than one million dollars due to my contributions and the growth of the mutual funds I invested in.  It made me feel like I was rich when I first saw on paper that I was a millionaire. 

After I retired slightly early and moved that money to Vanguard it became even more real.  Because of an idiosyncrasy in our retirement system, Wells Fargo had to write a check in Vanguard’s name and mail it to me for the entire balance of my account.  Then I had to mail the check on to Vanguard myself.  I don’t know if Wells Fargo and Vanguard just didn’t know how to play together nicely but whatever the reason that is what I had to do.  As a note of caution, that’s not the right way to do things.  You should go with a direct transfer from your 401K to an IRA when you retire.  If you accept the money yourself and do not reinvest it immediately you could become responsible for paying income tax on the entire amount.  That would be bad! 

 As long as I live I will never forget when I opened the envelope and held that check that represented thirty years of contributions and growth in my hands.  It was for the amount of one million four hundred thousand dollars!  It was hard to describe what that feels like, holding a million dollars in your hands, that you own.   I just stood there and stared at it for a few minutes.  I already knew I was a millionaire, I already knew exactly what the check would have written on it, but I was overwhelmed with the magic of holding a million dollars in my hands.  I almost let out a Dr. Evil sinister chuckle myself.

So I get the attraction of that number.  I felt it as I held that much of my own money in my two hands. And even though I had routinely signed off on much larger amounts at work this was different, this was my money!  It has been very real to me ever since that day four years ago.  In fact it started even earlier than that when my dad’s assets transferred to my brother and me.  That was also roughly a million dollars given tax free to each of us.  There is no joy in inheriting money from wonderful parents like mine.  But there is an awesome sense of responsibility when it comes to using that money wisely. Money that a strictly middle class couple saved and invested wisely throughout their frugal lives.  

I suppose you could say I have had two different million dollar encounters over the last ten years and they have taken something that is hypothetical for many people and made it quite concrete for me and my wife.  Maybe I should say three encounters because we also had significant after tax investments that amount to another seven figure plus account in addition to those two, as well as sizable Roth’s and regular IRA’s.  So in my position, unlike many, I don’t see one million dollars as a tremendous amount of money. Certainly inheriting that much did nothing to change my lifestyle or my financial independence which had already been adequately funded.  

To the lean FIRE crowd, those who can live on $2,000 a month, a portfolio of as little as $600,000 can safely fund their retirement, others feel comfortable with as little as $400,000 or even $250,000.  If they plan on earning some money after retirement, like me, then they can get by, perhaps, with even less.  In their economic value system one million dollars is huge. It is much more than they could conceive of spending unless they drastically inflated their lifestyle.  For a fat FIRE devotee who might perceive needing an annual income of $300,000 (I’m talking about you Financial Sam) a safe withdrawal rate would indicate that they need seven or eight million dollars, maybe even more if the stock market hits a prolonged cooling off period and bond rates stay low.  Those would gladly accept one million dollars but it would not impact their financial lives much at all.

All that is to say one million dollars is a very subjective concept. In today’s dollars it is significant, its even more than enough for many people.  But it is just a fraction of the goal for others.  However, there is another entirely different aspect to this fascination with this specific amount of money.  And that is time.  I’m an older guy, hate to admit that but it is true.  I’m the guy millennials think of when they say “OK boomer”.   I started my career decades ago, before cell phones or the internet.  You can imagine the changes I’ve lived through .  But one thing that hasn’t changed is that one million dollars was the touchstone for being rich back then, and it still is.

Think about that.  One million dollars holds exactly the same fascination for people today as it did fifty years ago.  And that is just plain weird.   Earlier I mentioned gasoline is selling for $2.19.  When I started my career it was selling for $0.65 a gallon.  Postage stamps cost $0.13 versus $0.55 today.  Today’s median house price of $200,000 was only $55,700 then.  Yet with those obvious changes in the cost of living from then to now how has the notion of being rich changed?  Nada, zero, zilch… It is still one million dollars.  We all seem to be like Dr. Evil in that respect, stuck in a time warp when it comes to what one million dollars is worth. 

 I think the writers of Dr. E’s line may have been very sly in hiding a nuanced joke inside of a joke.  The audience knows instantly that in the macroeconomic world, one million dollars isn’t all that and a bag of chips.  In fact it is laughable, hilarious to think of it as being an inconceivable amount of money.   But at the same time in our own microeconomic lives we think just that, one million dollars is infinitely capable of satisfying our every financial desire for the rest of our lives.  We can’t help it, it seems we have a mental block that prevents our minds from understanding an amount of money as large as one million dollars.  

We clearly get that inflation destroys value because we personal finance people are all about the time value of money, yet we don’t get it at all on an emotional level.  I was there back in those old days and I can assure you that one million dollars held exactly the same place in popular culture then that it does now.  And how crazy is that?  If gasoline and cars and houses all cost three to four times as much now as they did then, then why do we still hang on to one million dollars as the touch stone of prosperity?  Especially when you look at the value of one million dollars the year I left college and started my career.  One million dollars back then was worth four million dollars of today’s money.  But nobody uses four million as the magic money goal now, instead of one million.

I think it mirrors a lot of other societal changes.  Take grade inflation in our school system.  Kids are not smarter now, at least there is no evidence to say that babies are born with appreciably higher IQ’s now than in the past.  Yet in four year colleges approximately 15% of all class grades were A’s in the 1960’s.  By 2013 almost 45% of all grades awarded were A’s.  How do the number of A’s increase when the level of college preparedness drastically declined over the same period.  In the 60’s only the privileged and well prepared attended college while now, scholarships and financial aid have made college available to a much broader group of students, including many whose high school experience did not leave them well prepared.  Yet they are still making three times as many A grades?  Few would argue that the improved performance is real, instead most experts concede that what is real is grade inflation.  The reason seems to be due to a variety of social pressures on the teachers and institutions, which started as an effort to help Vietnam era male students avoid the draft,  and which have continued to erode the standards of excellence in higher education. 

In education it is easy to conceive of many reasons why teachers and universities might ease their standards over time.  “The customer is always right” is a truism for all business and higher education is a business.  The customers are the parents, and to a lesser extent the students who are paying for college.  And they want A’s, they want high grade points so they can attain good employment.  In fact it starts well before college.  High school parents and kids demand better grades to get into the college of their choice.  There is enormous social pressure to ease standards, as evidenced by the recent celebrity indictments over bribing officials to get into good schools. 

You might ask what does grade inflation have to do with real economic inflation?   Nothing really, that isn’t my point at all.  My point is that the attitude that drives grade inflation has everything to do with why one million dollars is still a thing.  The attitude that important goals have to be easier to achieve.  Because hard stuff is, well it is too hard.  Hard stuff leaves most people out, it makes more losers than winners and that just isn’t very nice.   It is why they do not keep score at T ball for little kids and  why something called a participation trophy even exists.  And don’t think I’m judging, I got a participation medallion for every marathon I ran, but only once did I receive a trophy for placing in my age class. So I’m not immune to the lure of easy goals.  I was proud of finishing all of those races even if I was never in contention for winning.  

So what does a million dollars really mean?   More than enough for many, just enough for others and nowhere near enough for the rest?  It is basically $250,000 to someone of my age because inflation has eaten away 75% of every dollar’s buying power during my adult life.  Yet it endures as a symbol of affluence and success.  A very interesting thought question is at what point will it dawn on enough of us that $1,000,000  can not continue to hold its place in popular culture?  Will it be when the median house price exceeds one million dollars?  That’s already close to happening in a few of the most expensive cities in the world. At some point, well into our future, one million dollars will not be remotely enough for even the most frugal person to retire with. Will that be the day that being a millionaire stops meaning anything?  And what will take its place then?

As usual I do not have any answers, I just like asking questions. I do think the million dollar standard has endured in part because almost anyone really could retire with much less than that fifty years ago, so it was a way oversized landmark back then.  Over time we’ve sort of grown into it as being a realistic amount to represent affluence.  Even today it is more than enough for most people, which is good because it is also way more than most people will ever have.  The concept had strong legs.  It is only recently when it has started to show its age and has begun to wobble a little.  I think it is a given that in another fifty years it will not hold the same place in our culture as it does today.    But for now, being a millionaire still represents a milestone of financial success.

What do you think about one million dollars?  Has it outlived its place in our culture as THE economic number?  

Have you ever projected what one million dollars will buy when you reach your planned retirement age? 

How can a standard that has dropped in value by 75% still be the standard? 

As always, if you do not see a comment box just click on the title of the post.

    

Call it inspiration, as I read a half dozen or so other bloggers accounts of their last ten years I realized that my own story over that time period encompassed perhaps as many changes as theirs.  So I thought, why not join the parade and review those years in my life?

Ten years ago it was 2009 turning into 2010.  In 2009 AIG lost record amounts of money, Bernie Madoff confessed one of the largest Ponzi schemes ever and Sully landed his stricken jet in the Hudson River with no loss of life.  Michael Jackson died, General Motors filed for bankruptcy and medical marijuana became effectively legal as the federal government announced it would no longer prosecute those cases.  Alabama won the college football national championship, again.  

I was in my early fifties and was working as the lobbyist/government affairs VP for the same family owned company I had filled various rolls at for 24 years.  I had recovered from a brief funk when I had been moved from running the company’s operations to what I viewed as a less important regulatory role, with no change in pay.  But I was finding I enjoyed commuting from Arkansas to the state capital and the nations capital in DC to work for better regulations for my industry.  I was already beginning to appreciate that the lobbyist lifestyle was very easy compared to running a large chemical complex where I was on call 24x7x365 and always tethered to my phone.   I was financially independent but had not yet recognized it.  Both my mother and my father were still alive and living in assisted living quarters.  My son was out of college working as an engineer, my middle daughter was in engineering classes at the state university and the youngest was graduating from high school. 

That’s a completely different world than my current reality.   Now my youngest child not only completed her bachelor and masters degrees but has had four different jobs at four different universities working as an academic specialist in their athletic departments.  My middle daughter has two engineering degrees and has worked for years as a state regulator.  My son left engineering, went to medical school and is now a medical doctor.  We are now totally empty nesters and all three kids are off our payroll!  And I retired slightly early four years ago.  I’m a blogger now too, for most of the last four years.  

Ten years ago I was a faster runner and was running two marathons each year.  In fact my personal best marathon finish time was in my fifties.  Now my knees are not in favor of runs longer than ten miles.  My slightly older than me wife is training for her next marathon right now though, so one of us is still in the game. Ten years ago we were hiking to our first waterfall on my wife’s birthday, this year we hiked to number 120, the final falls in our state exactly ten birthdays later. In that time we lost both my parents and my wife’s.  We inherited a million dollars which we invested, because we were already debt free multimillionaires and already had a paid for house.  

At work I got to experience the second time our company would sell, this time to a large Fortune 500 corporation.  The new  management team had known me for a long time and they put me back in charge of the company operations again, which I have to admit was a lot of fun, at first.  I was awarded Fortune 500 sized stock awards and bonuses for the first time in my career and it began to become clear to me that unless I was just working for fun there was no longer any reason to work for money. 

After a couple of years I felt like there wasn’t anything new to do at work that I hadn’t done or wanted to learn about.  So for the first time in my life I stopped loving my job and decided I should go.  And so I retired four years ago.  I did engineer my retirement enough to get a significant amount of extra cash on my way out the door.  Nowhere near as much as Financial Samurai, but I’m not nearly as clever as he is so I think I did pretty well considering.  Plus I maintained a friendly relationship with my former employer which has helped earn me another $500K over the last four years as a consultant for them and others.  Since I’ve only worked one and sometimes two days a week that’s pretty decent income.  

My net worth, well I wasn’t recording it ten years ago.  I was a multimillionaire before I inherited the extra million and my net worth has gone up about $350K in the last year but I still am reluctant to publish exactly what I’m worth.  A couple of friends have figured out who I am and I’m afraid eventually more will and I’m just not wanting that information widely known by locals.  I think about half the people I know would be shocked that I am worth as much as I am and the other half would be shocked because they think I have much more than I do. But my friends come from wide ranging economic environments, from paycheck to paycheck types to honest to goodness real billionaires with jets and islands and all the stuff you see on reality TV.  

My daily life consists of running, tennis, pickle ball, fishing, consulting, running a college board and a charity board, travel, church, blogging, family and friends.  With new work hours of only about eight per week and volunteer work taking about another eight to ten hours I now have about four or five free days a week worth of time.  So far it hasn’t been hard to fill up with things I enjoy.  

So how is life now versus ten years ago?  I’ve got much more time that I control, and much more money. As a contractor I do not answer to anyone directly and set my own work schedule.  Every year at this time I decide if I want to sign up my clients for one more year of my services.  I haven’t decided that yet for 2020, but probably I will.  But there is no stress over the decision, it is kind of a coin toss because I do not need the money. 

 Today the morning four mile run was the same as ten years ago, except for being slower. After that though its all a new rhythm. I cooked breakfast for my wife and myself and I started blogging while she drove to a neighboring city to play tennis. It is almost noon and I’m still in my robe after my shower! Ten years ago I’d have been at work dealing with so many problems. Now, not so much.

I’m older now, and I can feel it in my bones.  I don’t care how much you work out, when you hit sixty you can literally feel your system starting to fail.  Joints, muscles, even reaction time is slowing down and while you can fight a strategic retreat there is no winning over aging, it is inexorable.  I can still do anything I could do in my younger years, from tearing down extreme ski slopes to pulling myself up cliff-like hillsides by tree roots.  But I can see the day coming when I won’t be able to.  A day when a flight of stairs may seem insurmountable.  I’m not there yet, not even close,  and I will not go there without a fight. But nobody wins in the battle against time. 

Ten years ago I had been married 31 years, now it is 41.  I think our strong marriage is nothing but stronger now.  We have so many shared hobbies and also ones we do apart with other friends. It is a good balance and I think you had better have a lot of fun together if you plan to stay married for life.  There are plenty of stressful things in marriage and family and without shared fun times I’m not sure how people could make it.  

Ten years from now I hope I’ll be posting something like this again.  I’ll be in my seventies and I currently play tennis with guys older than that, guys who still hike and fish.  I am pretty sure I’ll be like them and will still be doing most of what I do now, a little slower and more carefully.  But it is sobering to think that ten years after that I might not even be alive.  Or if I am alive in my eighties I might be severely limited in what I can do physically or mentally.  And ten years after that?  I don’t really even want to go there in my mind.  But who knows?I saw a local guy died this week who was 110 years old.  I’d have to live another fifty years nearly to survive to his age, so anything is possible.  

What has changed over the last ten years for you?  

Are you satisfied with your job or your retirement over the last ten years or do you feel a need to make a change? 

Can you project out to a day ten years from now?  How old will your kids be?  Will you still be working? 

As usual if you don’t see a comment box just click on the title of the post.  

That’s right, when my wife and I start drawing Social Security it will be worth $92,430 a year.  That’s almost the same amount as my one day a week consulting gig earns me now in 1099 income.  Think about that, Social Security alone, with no other sources of income, no dividends, no interest, no pension and no withdrawal from my investments will be equivalent to $92,430! I’m guessing you think I’m using some clever trick to inflate that number, but trust me, I’m going to be transparent in showing you how $92,430 is an absolutely accurate determination of what Social Security will “pay” me when I start drawing it. 

Like any blogger I love opening with a counterintuitive challenge to conventional wisdom, because it begs the reader to hang around a little longer just to see how in the world I came to such a ridiculous premise as this.  There are not many topics on which there is universal agreement in the personal finance, FIRE and financial independence communities.  But if there is something on which nearly everyone agrees it might be that Social Security isn’t anyone’s answer to a rich retirement.  I hate universal agreement by the way, it almost always means people are drinking the same Kool-Aid, or as another blogger put it recently, it is hive mind thinking.  Let me take this opportunity to disturb the hive.   

Convention wisdom places Social Security somewhere on the spectrum that ranges from “won’t even exist in the future” to “benefits are too small to matter”.  This is probably due to the fact that the consequences of getting retirement planning wrong are so severe, and outside of this community a staggering number of people are not saving enough for retirement.  Finding yourself in your senior years with insufficient funds to live a life you enjoy may not leave you with many options.  Your work skills may no longer be marketable, your health might be declining making employment problematic or the jobs available may be unrewarding or even intolerable. The prospect of such a bleak outcome has led many pundits to write Social Security off as a false hope because placing too much faith in it undermines the incentive to save now for retirement.  There are also legitimate concerns that the program is underfunded and will have to find ways to reduce benefits to stay solvent.  I’ll steer clear of that debate, I’m talking about the current Social Security program which has ample funds to make no changes until at least  2035.

So I do admit there are good reasons to not pin all or even most of your hopes on your social security benefits.  However, I would like to propose the idea that Social Security is not an insignificant source of income in retirement.  And to do that I will use the only family I have total data access to, and that’s me and my absolutely awesome wife.   After careful analysis it appears to me Social Security will provide nearly 100% of my retirement income needs and I’m living a six figure expense lifestyle.  

“How?” you might ask.  Because you’ve seen over and over again that the average retired worker only draws $1,471 per month.  That’s equivalent to $17,652 per year.  That’s less than the cheapest of the frugalista’s spend?  Mr. Money Mustache didn’t even try to live on that little.  The very idea that the real number for you might be closer to $92,430 sounds preposterous.  But think about it, the average retired household has two wage earners so it should get twice what one retired worker gets, that brings the income up to over $35K which is still on the skinny side but starts to sound like a significant amount.  Still, it is a long way from equalling $92,430.

Here is how I came to that number for my future family income from Social Security.  In my case I have a 40 plus year working history counting my post retirement side gigs and for 35 of those years I made wages higher than the Social Security maximum.  But before you categorize me as a one percenter,  realize that the maximum was much lower when I started working in the Triassic Era.  My starting pay back then was only $18,000 but that was over the $17,700 maximum amount to which Social Security taxes were charged.  If you convert my starting wage from back then to today’s dollars it would be about $70K.  So that was very good money way back then but it wasn’t huge money.  And oddly because Social Security taxes only applied to the first $17,700 of income, I put just as much money into Social Security that year as Warren Buffet did.  And as time went on and the Social Security maximum taxable amount changed (it is $132,900 now!) I continued to earn above the maximum for my highest 35 years of income.  35 years is important because Social Security only considers your top 35 years of income when it comes to determining your benefits.   And because Warren Buffet and I both put the maximum amount into Social Security for all those years my benefits (and his) are going to be much higher than that $1,471 a month that the press likes to quote to scare people.  

The other huge factor is when you choose to take your Social Security benefits. Most people in this space already know this, but for every year you delay taking your benefit your monthly payment will go up 8%.  I could have drawn Social Security at age 62 but because I’ll defer until age 70 my benefit will increase from $2,271 (at 62)  to $4,010 per month (at 70).  Since my consulting hobby is bringing in all the money we need to live a rich life I feel good about waiting until 70 to bump up the size of that check!  And since my wife was a stay at home mom and doesn’t have a large benefit from her shorter earning record she can elect to receive half of my full retirement age benefit instead of hers, and that will add another $1,538 to the pot.  That will bring the total to $66,576 a year just from our two Social Security checks. 

Now you are probably wondering how I got from $66,576 to the $92,430 I claimed in the title of this post?  Let me show you, there are no tricks in how it works.  First gross income means nothing, it is what you have left after taxes that matters.  My 1099 consulting income has FICA and income taxes withdrawn so a lot of it disappears before I ever get to spend it.  That will change significantly once I’m on Social Security because only 85% of Social Security is Federally taxed and none of it is taxed by Arkansas.  Also no FICA taxes (Social Security, Medicare taxes) so if you adjust the $66,576 up to the equivalent taxable amount of a 1099 wage then it is the same as $78,564.  But wait, there’s more!  Right now as a private contractor, too young for Medicare, I’m paying $17,745.72 in private health insurance premiums and about another $3,000 in actual out of pocket medical costs that don’t reach our $6,500 per person deductible.    By the time we start taking Social Security benefits we will also be covered by Medicare and that plan only costs $7,891 annually.  The supplemental medical insurance will also reduce our prescription costs by $100 per month.  In addition the new deductible under Medicare will be $185.  The impact of all those things raises our Social Security income into equivalent 1099 (contractor) wages of $92,430.  

To be very clear I’ll only get checks for $66,576, but I’ll have exactly the same lifestyle as I have now earning $92,430 as a contractor. And I’m living extremely well on that amount, traveling world wide and all across America, paying country club, health club memberships plus five streaming service subscriptions and many hobbies that require fairly expensive equipment (a boat, an off road vehicle, etc.). For the last four years I’ve left our substantial investment portfolio and the income it generates untouched and lived on almost exactly that amount and lived quite well. 

So in spite of the myth that Social Security is not worth considering in retirement it certainly looks like I can live a multimillionaire lifestyle on just my monthly benefits.  I feel confident in saying that because using the 4% rule to estimate the value of a portfolio that could produce a taxable income of $92,430 would require $2.3 Million in investments.  Most people would consider that a fat FIRE portfolio and yet that’s what Social Security alone will produce for us.

 Now in the interest of full disclosure I can live a multimillionaire lifestyle without my Social Security benefits because, well, I’m a multimillionaire. However, the fact is I could have spent all of that portfolio by now and once I started receiving Social Security I could continue to spend as much as I desire without any other source of income.  My point is that if you contributed a lot in Social Security taxes you might get back more than you’ve have ever dreamed of in buying power in retirement.  

You might well ask why my wife and I don’t spend more, using the 4% rule we could spend multiples of what we currently do.  Even if we took a conservative approach we could double our spending easily.  But the fact is we spend all we want now, with no self imposed limits.  The house is paid for, we have no debts, our children are grown and support themselves.  We spend our time doing outdoor sports, consulting and volunteer work. We feel like our lives are pretty much wrapped in luxury when it comes to being able to spend our time doing what we value.  We do not desire more stuff than we have.  The fact is we will live quite comfortably, once we start drawing Social Security, on that alone even if I decide to stop consulting.

All that is to say, if you enjoy your job and plan to work for 35 years and if you earn at or near the maximum Social Security income ($132,900) then you are probably going to receive Social Security benefits much higher than you would expect, based on all the negative media coverage.  And if, in addition, you are a high earner living in a low cost of living area with a frugal mindset then you may find that big nest egg you’ve got for retirement will be an insurance policy  you’ll never need.  Instead of spending it for your own expenses you will get to give it away some day to your family, people in need and causes you believe in.  

A word of caution, this post is not meant to encourage anyone to rely just on Social Security.  In my retirement planning I ignored it completely and we saved at a rate that insured we would have a rich retirement without Social Security because it was the conservative way to go.  Plus over time the maximum income limits have increased at a rate that exceeded inflation so the program has a better payout for Boomers than it does for younger generations.  When I started work it wasn’t highly unusual for college graduates to earn at or above the maximum income of $17,700 but now it is a rarer situation for college graduates to start at over $132,900. So your results will not match mine unless you are a high earner and unless Uncle Sam finds a way to keep the program going without cutting your future benefits.

Another disclaimer is that the $92,430 value I use for the value of my Social Security annual benefit is in 2026 dollars.  To be precise it should be discounted to 2020 dollars which would make it equal to $86,046 in today’s money using the last five years inflation rate.  But that doesn’t change much, $86,046 is still very close to what my expenses are now, pre-tax.  Plus $92,430 made a better post title!

So what do you think, will Social Security still be here for you?

Do you think there is any chance you can get by on Social Security alone?  

Does it surprise you that Social Security alone can provide a fat FIRE lifestyle for some people?

Or do you see a gaping hole in my logic plus some dumb math mistakes, wouldn’t be the first time!

As usual, if you do not see a comments window then just click on the title of the post.  

I had a dream job, one I enjoyed for most of the thirty plus years I worked a 9 to 5.  I was the weird guy who started getting excited about going in to work the next day on Sunday evenings.  But eventually that changed and I pulled the plug on my career earlier than I thought I would, four years ago. My job was unusual in that I was both a corporate officer and a plant manager of a large chemical complex.  Usually those are two different people, but at our company it was just me doing two jobs.  And as the plant manager I was literally on call seven days a week and twenty-four hours a day, all year long.

 Seriously, my Fortune 500 CEO expected me to be able to respond in person to anything that happened, and in facility with a billion dollars worth of high tech equipment something was always happening.  That meant I would get a call on Christmas morning and have to leave my family and go to the plant, or we’d ready to leave for a family vacation and the phone would ring and I would have to work through some crisis while my family vacationed without me.  That probably sounds awful to you but it did not happen every day and the adrenaline junky in me kind of enjoyed managing emergencies, I did mention I was a weird guy didn’t I? 

After I retired to nothing more than part time consulting and volunteer work I instantly had a lot of free time.  That might be a scary thing to many former business people who were constantly on call, because they never had time to build much of a life apart from their careers.  Fortunately that was not me, I had developed many hobbies while I was working and my wife was my best friend and companion for most of my favorite outdoor adventures.  And with more time on my hands I found that we could take some of them to another level.  My wife and I were able to travel overseas with friends, knowing I wouldn’t be called to respond to some dire situation at the plant.  We went to  tennis camp together where we immersed ourselves in lessons and matches.  I was able to go off on baseball and football weekends with my guy friends and not worry about being back for work on Monday.  And we could take multi-week road trips with no real planned itinerary and no firm return date.  And this year we decided to take our hiking to another level.

 If you’ve followed my blog for very long you know my wife and I are avid hikers.  Some might even call us extreme for doing things like going rim to rim on the Grand Canyon in one day and bushwhacking to every listed waterfall in Arkansas, a ten year saga that included some truly dangerous terrain.  But for all the hundreds, maybe thousands of miles of hikes we’ve done from Italy to New Mexico to Colorado to Virginia, and of course Arkansas, we had never once backpacked.  And by back packing I’m talking about carrying a tent, sleeping bags, water filter, food, etc. on our backs and spending the night in the middle of nowhere with no conveniences except what we carried in. We had strictly been day hikers and that left us feeling a little inferior to the rugged backpacking tribe. 

There is a lot more that goes into an overnight backpacking trip than I realized.  You have to pick a route, you have to take a second car or arrange a shuttle since you will end up many miles from where you started.  You have to have a lot of gear that most people do not own, and it has to be very light weight or you are going to have a bad day on the trail. In our case we had no light gear at all so we were starting from scratch.  For our day hikes we had small day packs just big enough to carry essentials for a few hours on the trail. But to do a muti-day hike the logistics and the gear get pretty complex.

In our case this is what we decided we needed to carry: a ground cloth, two person tent, a rain fly for the tent, two sleeping bags, two sleeping pads, headlights, flashlights, waterproof matches, dehydrated food, energy bars, breakfast bars, cheese and crackers, beef jerky, salmon in foil pouches, candy for energy, a propane stove, stand and cooking pot, four bottled waters, a water filter with a squeeze bag, a foldable water cup, a multi tool, a lighter, four hiking poles, hiking clothes, two rain suits, hiking boots and socks, inflatable pillow and a couple of large backpacks to haul all of that.  Because we did not own many of those items we bought a few of the less expensive things, borrowed one pack from a friend and rented everything else.  I don’t do affiliate links or ads on my blog but we had great success renting from an outfit called trailtogo.com so I’ll give them that free plug. They shipped everything for free, both ways, and their equipment was state of the art, meaning it was all extremely light weight, yet durable.  

Because the trail we chose is over a hundred miles from where we live we rented the downstairs rooms of someone’s house on VRBO for one night so we could have a short drive to start out the hike. Being a rural state there are vast areas of Arkansas where there are no hotels of any kind, and this was one of those places.  We also dropped one of our cars at the far end of the trail the night before we started.  One downside to renting equipment was we had to do that several days before the trip so that we could be sure it got to our house before we needed it. That was complicated in that we were planning to hike the day after Thanksgiving because we’d be in the general area seeing family.  So that pushed the day we had to commit on the rental to about eight days prior to the hike.  And that meant we had no reliable estimate of what kind of weather we were signing up for.  And since we had spent the money in advance on renting the gear we pretty much had to do it no matter how cold or wet or stormy it might be on the actual days of the hike.  

And wouldn’t you know, the weather did indeed turn out to be challenging.  As we watched the long range forecast the chances of rain just kept on increasing until it hit and held at 90% rain and thunderstorms, awesome!  The first day of the hike it was cool and threatened to rain, but for the most part it just misted until late afternoon. We never even donned our full rain gear, just the jackets a couple of times.  I was amazed at how light the packs felt on our backs.  If you picked one up it felt very heavy but when you got it on your shoulders and attached the straps across your hips and chest it did not feel like it weighed much at all.   At least that is how it felt when we started the hike.  We pushed pretty hard and had seven miles behind us by lunch time.  We dropped our packs and ate our smoked salmon and some cheese and crackers sitting on some convenient big rocks.  After lunch we reached the  halfway point where there was a log shelter.  We debated stopping there since we felt it was going to rain all night but decided that we had time to do a few more miles and kept going.  

At that point I really started to feel the weight of the pack.  The next few miles were straight up the mountain and I started looking for a place to pitch the tent.  Of course the trail did not cooperate, that section was steeply sloped above and below the trail.  The only flat spots were on the trail and while we considered camping there, we knew that animals use the trail, as well as people, and if we blocked the trail with our tent a bear or deer might run over us in the middle of the night.   About the time my legs were calling a strike we found a flat spot just off the trail, hallelujah!  We had made it 13 miles up and down some steep elevations and I could feel every one of them in my legs.  So now we were ready for the true outdoors experience of setting up our little home in the woods with nothing except what we had in our packs. 

We stopped at about 3:15 in the afternoon which sounds early but it gets dark around 5PM in the mountains and it was already feeling like the predicted rain was upon us.  We set up the tent without issue, we had practiced that in our living room.  Talk about a miracle of modern technology, this little tent weighed less than two pounds yet you could fit two people into it and stay dry in a driving rainstorm, or at least we hoped we could.  Next I fired up the propane stove to boil water to add to the dehydrated Beef Stroganoff.  It wasn’t exactly like mom used to make but considering all you did was boil water and then stir it into a bag of dried noodles, it turned out pretty good.  We shared that for a meal and then tried to build a campfire.

Building a fire sounds easy enough, right?  Well try building a fire when it has rained two out of the last three days and every single branch and limb in the woods is just soaking wet.  My wife is a good fire builder and she found some large dead pine limbs that she broke open and found semi-dry wood inside.  We worked and worked to get the fire going because by this time it was pretty cold and we were pretty wet.   And wouldn’t you know it, just as she got the fire blazing the rain decided we did not need a fire at all and the skies opened up on us.  We beat a hasty retreat into the tent, it was pitch dark by then, and it was only 5PM.

 We did tent yoga, or at least that’s how it felt, getting two people into two mummy style skin tight sleeping bags inside a tent that just barely allowed two bodies to wedge into.  The fact that we could not move once we were in our little cocoons wasn’t really a problem because we couldn’t have moved anyway in that casket of a tent.   That’s when it occurred to me that if you go to bed at 5PM and it doesn’t get light enough to hike until 6:30AM the next morning that you are going to be laying flat on your back on the ground for thirteen and a half hours.  I’m not sure I’ve ever been in bed that long in my life.  The next great thought I had was that I was surely going to have to take a bio break at some point in that long night and how much fun that was going to be in the woods, in the pouring rain, in the pitch dark.  

Bears, I almost forgot about the bears.  Up until now we had seen almost no wildlife on the hike.  One deer, a few squirrels and only a very few birds.  I was mildly surprised because were walking on a trail covered with wet leaves so we were very quiet.  But we were deep in black bear country and even though we had not seen them, we knew they were there.  And unlike northern bears, southern black bears break their hibernation and come out to find something to eat whenever there was warm weather.  As it happened, the day before our hike had hit seventy degrees.  So we had taken the precaution to set our packs with the food in them fifty yards away from our tent so that the bears could enjoy a nice meal before they killed us and ate us for dessert.  

Every little sound we heard during that extremely long night sounded very beary to us.  Fortunately the rain, wind and thunder drowned out most of the forest noises.  The thunderstorm, I almost forgot about that too.  Oddly, we did have a cell signal in our tent, presumably because we were camped near the highest elevation of the entire hike.  That let me check the weather radar which showed lots and lots of rain, and not only rain,  we were also in a severe thunderstorm warning zone.  But that was OK because we had almost thirty ounces of gossamer nylon between us and the tennis ball sized hail they were predicting.  Yikes!  

In a stroke of good fortune the storm just barely missed us and the tent stood up to the wind and rain fairly well, though my wife said she got wet on her side of the tent, which she said was much smaller than my side.  Apparently in my sleep I became very territorial and exiled her to a narrow strip that included the wet sidewall, hence her getting wet.  I maintain that I am not responsible for what my body does when I am sleeping, something we’ve agreed to disagree about for the first 41 years we’ve been married. An ancillary benefit of the foul weather was it apparently dissuaded the bears from going out for a midnight snack because our packs were untouched when we finally got up and struck camp.  

We learned two very important things about backpacking that next morning.  One is that even if you lay flat on your back for thirteen hours your legs will have not forgotten the abuse you exposed them to the day before.  The first steps I took when I hoisted my pack on my back that morning felt just as unpleasant as the last ones I had taken the day before.  The second useful factoid is that wet tents, sleeping bags and assorted gear weigh twice as much as when dry.  And everything we had on our persons and on our backs was soaked.  Fortunately we were over halfway and only had nine miles left to go.  Admittedly, nine miles on weary legs is still a long way to walk and today we were hiking in constant rain.  It did not help much that I had misfigured the remaining distance to only be seven miles instead of nine.   After what seemed like hours we finally finished the first two miles of the day.  That is when I realized we still had seven more miles to hike.   It is pretty depressing to miscalculate your progress like that, especially when you’ve got all the geolocation and trail apps I have on my phone.  Eventually we did finally reach our car at the end of the hike.  Our first stop was the Jessieville dairy diner where we had a cheeseburger and milkshakes.  And it was so good!

In spite of the weather it was an enjoyable experience together.  And it did give us an idea of what backpacking is like at its worst, which was at least tolerable.   Our consensus is that we’ll probably stick to day hiking unless we find somewhere to go that requires overnight camping on the trail.  But we know how to do it now so it is at least an option for the future and it is something we can check off our list.  It is something I would have had trouble doing in my 9 to 5 days but our new retired life is all about experimenting. We aren’t surprised that some of the experiments may not turn out perfectly.  That’s actually part of the fun.  I think we get a lot more stories to tell out of a wet and exhausting hike than we might from a sunny walk in the woods where everything was perfect.  Now what next?  

What about you, do you have some future plans that your job or finances make difficult right now?  

Do you love backpacking or are you more of a day hiker, like us? 

As usual, if you don’t see a comment box then clicking on the title of the post should get you there.