I had two jobs in the last 11 years: one full-time job at my employer and one part-time job in writing this blog, and more recently, helping people find Advice-Only financial advisors. As of yesterday I’m left with only one job. Although the full-time job paid very well and I don’t hate it, it still takes hours in the day I’d like to spend on my own initiatives. So I resigned.
If I sensationalize it I would yell I RETIRED! Nowadays in order to be inspirational you have to be willing to say something untrue. As Andrew said to me on Twitter, the bar for the untruth also moved higher and higher.
Flat abs in 28 days might have sold better years ago. Now it's 18 days. Much like attaining FIRE at 40 gets a yawn now since we got FIRE bloggers in their 20s!
— Andrew (@LiveRichCheaply) March 21, 2018
But seriously, I don’t see going from two jobs to one as retirement. Neither do I see going from working for an employer to self-employment as retirement.
I will still work on this blog. I will still work on helping people find Advice-Only financial advisors. I started writing another book a few years ago but I just didn’t have the time to finish it. Now maybe I will. As Jonathan Clements wrote in his blog post Second Childhood, people in self-employment often work harder for less money than when they worked as an employee.
I didn’t retire. I pivoted to self-employment. More than 9 million people in the U.S. are self-employed. It’s not that unusual.
The opportunity cost of leaving a job is huge. Every day I don’t go to the office I lose $1,000, after tax. Saying no to a good salary is a luxury lifestyle, the opposite of being frugal.
One change in this pivot is in how we will support ourselves. After our first pivot when my wife quit her job in 2015, my salary still covered our expenses. We still had health insurance through my employer. Starting in 2019, we expect the income from self-employment will cover some but not all of our living expenses. We will have to withdraw from our investments to make up the difference. For the first time in many years, we will have to go by a budget.
Because the stock market valuation is high and the bond yields are still low, we will have the risk of lower returns in the future. Vanguard said the rate of return for a 60/40 globally balanced portfolio will only average 4-5% in the next 10 years. That number is before inflation. This is far lower than the historical return of 5%+ after inflation.
On top of lower returns, we will also have the risk of poor sequence of returns. The current bull market has been going for quite long. The tide may turn soon. Maybe the tide has already turned and we just don’t know it yet. If returns are especially bad in the early years of taking money out of our investments, it will further reduce the amount we can safely withdraw from our investments.
Because we will buy health insurance on our own now, we will have the risk of adverse changes to the Affordable Care Act and adverse changes to the health insurance market in general. The health insurance we buy has a $9,600 deductible (I will have a detailed post on this next week). Practically speaking we will be paying 100% of our day-to-day healthcare expenses. We will be subject to the higher inflation in healthcare costs.
Our goal is to increase the self-employment income to once again cover 100% of our expenses, including healthcare. This will mitigate our risks. However, this goal itself is also a risk. We may not be able to achieve it.
Because this blog has always been about sharing what I learned about personal finance along the way, I will continue to write about what I run across. To those who already retired, I will finally write more about taking withdrawals, whereas previously it was mostly about putting more money away. To those who are still working, you will get a preview of what happens when you start taking withdrawals.
Our income will be much lower. So the topics will also shift, from backdoor Roth when your income is too high to the Saver’s Credit when your income is so low that you get extra help.
Because I value quality over quantity, I never committed to any preset schedule of publishing new blog posts. It was about once a week recently. Now I can’t say whether I will post more frequently because I will have more time or I will post less frequently because I will have other pursuits. If you haven’t done so already, please subscribe by email or RSS feed. When a new post comes out you will get it automatically. When I go silent you know that’s because I’m busy with something else. I intend to still send out the weekly digest email on Fridays but I can’t promise it either. So please don’t be surprised when you don’t get one. You are still on the list. You will get it when I send an update.
I will also experiment with opening the blog for guest posts from subscribers. If you have something to share and you don’t want to bother setting up a blog of your own, you can send it to me, as Steve did last week on maintaining and executing an estate plan.
Thank you for staying with me along on this journey. The journey continues. Let the second childhood begin.