Early Retirement Check-Up With Financial Planner

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This past Friday was our annual “check up” with our Financial Planner.  Mr. Fire Station has worked with him over the last 10 years, when an early retirement was just a dream.  

I’ve estimated that only 2% of people retire by fifty years old, so it is no surprise that he has always taken a cautious tone to getting us ready for early retirement.  He was good to point out early on that the biggest challenge people have with retiring early isn’t financial – it’s lifestyle.  

Here are some quotes from our meetings over the years – I went through our old reports from him last week, where I usually write notes in the margins.  We discussed the possibility of retiring at 50 the first time we met.

  • 2005: “Your % savings level probably puts you in the top 1% of all savers.”
  • 2006: “With good luck & strong saving, a retirement at 55 is possible, not many people retire before then.”
  • 2007: “It’s a challenge to get to early retirement, but your savings have more than doubled in the last year”
  • 2008: “Oh, trust me, [Mrs.FireStation] – you don’t need to clip coupons anymore”
  • 2009: “Despite the decline in the stock market, with your strong saving, you’ve been able to maintain your overall net worth.” [big promotion the year before]
  • 2010: “Put it this way, you’ve won the money game” [my favorite comment]
  • 2011: “There’s a good possibility you could retire at 50.”
  • 2012: “To what you need to retire at 50, you are basically there already”
  • 2013: “The question you need to ask is not financial – will you be happy without a high-powered job?”
  • 2014: “I feel very confident that you have saved enough to retire at 50.”
  • 2015: “You made It – now don’t do anything highly speculative that messes it up”

In terms of conversation, we also followed up on some of the items I mentioned in my Stock Market Moves for Summer blog post from a couple of weeks ago.  We discussed and decided …

  • To put more, not less in equities – given my age and some JP Morgan charts that show the market in a relatively “average” valuation looking at the S&P 500’s forward price to earnings ratio (@ 16.4 vs historical 15.7 average).
  • To not put more focus on International stocks, given that about half of the S&P 500’s revenues come from foreign markets, and we have a strong S&P 500 position now.
  • To maintain a short-term cash position equal to about 3 years of expected early retirement spending.  We have about that much cash today, and it will (hopefully) float us through any downturns.  We’ve had 7 good years of stock market growth – a 10% correction or pullback is historically common over the course of a decade.
  • Keep our current mix of index funds and actively managed funds.  We don’t see eye to eye on this, because he has always leaned more toward actively managed funds, while I prefer low-cost index funds.  He felt that over a 10 year period, they likely would settle out similarly (despite the added cost of a fund manager).
  • To not look at “stop limit” activities.  His POV was that they often cause more hurt than help.  They can take you quickly out of a market downturn, but could you leave you sitting on the sidelines during a quick, successive upturn.
  • To manage spending in early retirement in concert with market returns.  Flexibility will be the key as not every year will be good, and not every year will be bad.  A lot of our spending is discretionary, so if we need to delay a car purchase, an overseas trip, or a house upgrade, so be it.
  • Not getting goofy and investing in a speculative business, becoming a restaurant partner, or doing anything “cute” with the money we’ve been able to nest egg.

Overall, it was a satisfying meeting and fun to look back on the 10 years we have been working together.

Image Credit: Pixabay

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