Three years ago this very day, I blasted out of MegaCorp and into the sunshine of early retirement. I had the Beatles’ Revolution on the car stereo and I’m sure many colleagues thought it was more an April Fool’s Day prank than one of the most epic decisions of my life. That night, as a family we toasted the future with a bottle of Dom Perignon (not that great) and enjoyed a wonderful dinner out with my parents at my favorite restaurant & table (which has since closed).
At the time, I told people that it was either the “smartest or stupidest thing I had ever done”. Some – including my MegaCorp boss – assured me it was probably the smartest, but only time would tell. Now a full three years into this mystery novel, we couldn’t be happier with the way that things have turned out. Our FIRE escape led us to a completely new lifestyle that has been anything but BORING.
Over the next few posts I will try to answer the question of “did it turn out the way that you expected?” There are a lot of dimensions to a lifestyle change this dramatic, so it is best expressed in pieces. As I’ve done in the past, I’ll do this by exploring the pieces of the ‘Life Wheel’ concept that I planned our initial early retirement activities around.
Related: Life After FIRE Anniversary Posts
The Life Wheel has proved to be a good way of framing the different aspects of our life of FIRE (financial independent & retired early) and I’ve been pleased to see a number of other websites pick up & share the concept …
I’ll start the discussion today by focusing on WORK & MONEY – the place on the Life Wheel that most people begin thinking about their journey to FIRE.
- WORK – A lifestyle of FIRE is not about work and mine has been pretty minimal since leaving MegaCorp. I’ve done a some consulting and board work, but probably less than I expected that I would be doing. Many people find that doing even part-time work in early retirement kind of drags the whole lifestyle change down and I would say that the less I’ve worked, the more I enjoy not working.
That doesn’t mean I don’t keep busy. My wife and I are serving as the Event Chairs for our Metro Zoo’s summer fundraiser gala, I just got back from a two days at the Big Ten MBA program I’m involved in, and I head to Michigan four times a year for corporate board meetings. Combined with a few consulting or advisory gigs that seem to come my way each year, I’m not too busy with ‘work’, even if I’m not really earning much.
- MONEY – Our retirement nest egg is about exactly what it was when we retired three years ago. It’s about 1% higher than it was then, despite the incredibly strong performance of the stock market over that time (+36% S&P 500). I had expected to be ahead of where we are are at this point, but in terms of annual spending, we are only about 6 months behind our goal. Over a (hopefully) forty year investment horizon, that’s not a major ‘miss’ on the financial front.
The big drag on our portfolio has been the performance of our MegaCorp stock options, which we need exercise each year. MegaCorp soared early – shooting up +25% in our first 6 months of FIRE – before dropping -50% before the end of 2018. Thankfully, the stock has started to recover from that precipitous drop and the stock is up +35% this year. As a historically stable, defensive stock, this level of volatility has been completely unexpected. At this point, the stock is still down -17% from the day I retired in 2016.
We haven’t made any significant changes to our investment mix over the last three years and we continue to keep about 3 years spending in cash as ‘insurance’ against a market downturn.
- SPENDING – I’m sad to say that I haven’t done a great job tracking our spending as well as I have our investments. I inadvertently ‘crashed’ my Mint.com account (my fault) in 2017 and haven’t taken the time to manually rebuild our spending history. Everything was square by the start of 2018, so going forward we’ll be good in our tracking.
If I had to guess, I would say that we are roughly on-track to our expected annual spending so far. Health insurance has been much higher than expected (although down this year), but it has been offset by slightly lower spending on everyday items, home improvements, and vacations.
- GIVING – Our ‘One More Year’ Fund has been fun to work with over the last three years. As I reported in our last update, much of it has been invested in small start-up companies that are doing work that supports the sixteen UN Sustainable Development Goals to continue to make the world a safer, richer, and more equal place.
Our portfolio of 5 companies (#6 on the way) is starting to see some successes. Two of the companies have grown dramatically and are now valued at 2-3x the market cap they had when we invested. While another one of the companies may be heading to bankruptcy, I would say that our portfolio today is up about 30% from where we started.
Since today is my three year anniversary, I won’t be spending my day looking too closely at our finances. Instead, I’ll be enjoying the fun of the day and continuing to be confident that financially, we are fully “on track” for where we want to be. Three years in, that is exactly where I would want us to be!
Image Credit: Pixabay