Eleven Months Into Early Retirement

by jasonlong1212

Model: I wish to maintain a portfolio that began in June 2017 at $1,025,772. My maximum withdrawal rate is 3% of each year’s starting balance, provided that the portfolio remains above $1M. Should the portfolio drop below $1M, I will lock back into a maximum $2500 per month ($30k per year) guardrail withdrawal until the market recovers. I realize that this is not the holy Trinity method, but consider these three factors that give us flexibility: a 3% withdrawal rate is below the 100% historically safe mark of 3.2% for fifty-year portfolio survival, the extended bull market peaked us nearly 20% above the original target amount (meaning that $30k annually is actually 2.5% instead of 3% if restarting from the peak); and our actual withdrawal rate was averaging less than 2% of the original portfolio balance (due to earning additional income) when we received an unexpected $30k windfall (meaning that our current withdrawal rate is actually negative). The budgeted withdrawal amount is $2773 per month for 2018. In 2017, it was $2564 ($2618 adjusted for inflation).

Career: I am a former retail pharmacist who hated his profession for the following reasons: unacceptable amounts of stress, lack of civility from the general public, capitalism gone amok, fundamental disagreement with the overuse of pharmacotherapy as an answer for underlying health issues, and a severe opiate crisis that few have yet to appreciate. I attended college for eight years to earn a bachelors (1997-2001) and a doctorate (2001-2005) before joining the workforce for nearly twelve years (2005-2017, entirely with CVS). $150k in education costs were covered by academic scholarships ($25k), employment during college ($20k), prior savings from high school employment ($5k), revenue from an eBay business while in college ($10k), and massive help from my parents ($90k). My salary plus compensation went from $115k in 2005 to $150k in 2017. My savings rate was about 70%.

Finances: I retired at the age of 38 on June 6, 2017, the day before the twentieth anniversary of my high school graduation. I am married with no kids and generated over 95% of the family income while employed. We live in LCOL rural TN. Our asset allocation goal is approximately 60% VTSAX (total US stock market) / 20% VFWAX (total INTL stock market) / 20% VWLUX (US municipal bonds). We also hold roughly $400k in house, land, and belongings not included in the portfolio. My spending model places no dependence upon supplemental income (future employment?), social security ($10k/yr?), inheritance ($500k?), house equity (no heirs?), universal health care (probable?), or universal basic income (possible?). The final balance will be left to charities and worthy causes.

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Spending: Living expenses for the month came to $3471. This is $698 over the 2018 monthly targeted amount of $2773. Our spending is 25.2% over budget for the month, 18.0% over for the year, and 19.1% over since retirement. We generated $474 of income this month from my wife wanting to work and some of my old book royalties. Our investment withdrawal was $2997 this month, thus our pro-rated, annually-adjusted withdrawal rate is 3.24% for the month, -6.71% for the year, and -1.22% since retirement. Without the additional income stream, our pro-rated, annually-adjusted withdrawal rate would have been 3.47% for the month, 3.54% for the year, and 3.57% since retirement.

Investments: The portfolio went from $1,130,151 to $1,133,244 (a 0.27% increase for the month), which went down to a new total of (drum-roll) $1,130,247 after cashing the checks and paying the bills. This is a 10.19% increase from the original starting balance of $1,025,772. Since retirement, capital income from the investment portfolio has produced the equivalent of a full-time employee generating $45.97/hr of labor income. To sustain the original portfolio balance, $18.14/hr is the pace needed for COL based on spending rate; $-5.68/hr is the pace needed for COL based on withdrawal rate. Dividends included, VTSAX (61% AA) went up 0.45% this month (0.26% down for 2018); VFWAX (20% AA) went up 0.46% (0.25% up for 2018); VWLUX (19% AA) went down 0.29% (down 1.60% for 2018).

Reflections: The overspending this month was due to a collection of vacation related purchases ($500), dentist/optometrist visits ($500), and my professional tax ($500). All of these were planned expenses. The market was all over the place again but ended pretty much flat. I try to avoid viewing daily market results, but they seem to have become ubiquitous in the digital universe. I am eager to see where the annual update next month will have us on spending and investing.

Experiences: I won the Andrew Jackson Marathon on the coldest day in its 46-year history with a 2:59:04, became the oldest person to ever hold the title of RRCA TN state marathon champion, and set a course record on the current three-year-old route. I drove the entire way on an eleven day, 3100 mile vacation through 12 states (TN/MS/AR/OK/KS/NE/IA/MN/WI/IL/MO/KY) to bring my wife’s states visited count even with my own (49, no AK). The planned highlight of our trip, visiting Paisley Park, was cancelled when the blizzard hit. I highly recommend Garvan Woodland Gardens in Hot Springs, AR; Cosmosphere in Hutchinson, KS; Museum of American Speed in Lincoln, NE; Dana-Thomas House in Springfield, IL; and City Museum in St. Louis, MO. There was a message from a pharmacy staffing service on my home phone when we returned, but I did not bother returning the call. I was not able to convince my friend (making $70k/yr) with no savings/retirement and three kids that he shouldn’t spend $40k on a new truck just because he made $80k profit on a house sale. I spent way too much time again this month following the political circus. I cut back weekly running from 40 miles to 36 miles (still five hours but much less intense) and have started allocating three hours each week to swimming, cycling, and weightlifting (one hour each).

Upcoming: My time at the museum has run its course. I no longer find it stimulating. I plan to spend time volunteering as a running coach in some local clubs and as a pacer in some local races. I have a marathon on May 5. It was supposed to be a backup race for my first victory, but after my result last month, I don’t plan on running it at race pace. If history is any indication, I should be able to tackle it at a training pace and still grab the overall win with a new course record (small field). I pushed the three-week Japan trip back to next year. I’d like to get back to more reading, kayaking, bowling, painting, and watching classic films. Perhaps I will also do whatever the fuck I want. Perhaps I should remove “perhaps” from that last sentence.


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