I’ve debated whether or not to share our net worth as part of the blog. There are some excellent writers in this space and some of them don’t disclose their net worth. This isn’t a competition, although I love the Net Worth Tracker on Rockstar Finance. Ultimately if I’m going to blog about how to increase your income, career advancement, and early retirement, there’s credibility that comes from someone who’s done it. The combination of age and net worth IS a scorecard. It represents our performance involving earnings, spending, investments, and time.
Frequently Asked Questions:
What was your Financial Independence Number?
- In college, I viewed financial independence as becoming a millionaire by 40.
- This was further refined in 2012 when I found Mr. Money Mustache and decided I needed that $40,000/year plus a free and clear house would achieve financial independence. At the time, $200,000 would buy us a nice house in the mountains in the Southeast so $1,200,000 was our goal.
- The stretch goal in my mind was $1,800,000, which would fund the same lifestyle but with the housing cost of a single family home in Hawaii.
- Today I view our family as financially independent, but not yet in financial abundance.
Why are you still working?
- Health Care Expenses: Sometimes life delivers uncertainty. We were very limited consumers of health care until my wife suffered a rare injury in 2016 while exercising at the gym. Since then, we’ve been significant consumers of health care, reaching the maximum out of pocket expenses on our plan in 2017. When I run the numbers on exchange traded plans, it would cost up to $18,000/year between premiums and out of pocket expenses if we’re high consumers of health care. I’ve appreciated the quality healthcare coverage provide through my employer. They’ve also been gracious with work flexibility while we’ve battled this.
- Lower Returns: None of us can predict the future, but I believe we are in a “lower for longer” environment for returns. I believe interest rates will stay lower for longer and there is excess capital in the markets seeking return. Uncertainty in the global economy has caused the 50 year Swiss Bond to return a whopping 0.50%. The October 2017 S&P 500 PE ratio is 25x, which means public equity capital only returns 4%. The growth rate of the world’s population is declining and developed economies are becoming more protectionist, especially when it comes to immigration. My personal belief is all of these factors are going to cause returns to be lower in the future.
- Charitable Causes: We were not overly charitable people, believing saving and taking care of our own financial affairs came first. We’ve now had our life temporarily derailed by a rare injury/condition and lost months of our lives due to a delayed diagnosis. I can’t go out and get a medical degree tomorrow to contribute to research, but I do have significant earnings in my current job and can contribute to help increase awareness and speed diagnosis.
- Compensation Structure: There are only two points in the year it makes sense to retire, March and June. Bonuses and restricted stock are paid in March and I vest an additional year in pension at 1000 hours worked, which equates to June of each year. These are a significant portion of my compensation.
- Holding out for a layoff/restructure: This is a long-shot, but I have been pondering how to receive a layoff package. A layoff package would equate to a parachute of two years of earnings which I can’t otherwise receive until I turn 55. I work in an industry being disrupted, but unfortunately lead a top revenue producing team. Expense centers are being disrupted constantly, but my position is unlikely to be reduced.
- Uncertainty: There is fear in the unknown. What will I do every day with my time once I leave my job? What about the personal and social fulfillment I receive by getting up every day and spending time with people who are generally my friends? How much will I miss the impact I have on people’s careers? How will my ego tolerate giving up a prominent position/title? All of these thoughts are real!
What is your target retirement date?
- June 2018 or March of 2019