Early Retirement Decisions: One More Year

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One More Year….

I used to swear I would never be drawn into one more year.  Its been interesting to read how many people suffer from it.   It made no sense to me why people continued to work once they hit their number!  Well folks, now I’m there.  This isn’t written out to justify whatever decision we make, but outline all of the thoughts that go through your head as you approach that retirement date.

“I’m supposed to be sailing off into the sunset!  You forgot me!”

Lets outline the pretty obvious reasons to retire early!

Achievement of a life-long goal:   I knew at an early age I wanted to “never worry about money”.   I watched both my mom and dad struggle through money problems growing up, I realized money doesn’t buy happiness, but not having money creates unhappiness.   I scribbled “millionaire by 40” in early finance classes and calculated how long it would take on an old TI Financial Calculator.   I remember when an insecure boss threatened my job early in my career for speaking up and I said “I will never tolerate this again”.   Declaring early retirement is an accumulation of those goals.

Time:  We can never get this time back, each year I continue to work I’m giving up one of the healthiest year of my life.  This one is pretty strong.  I enjoy exercise, travelling, cooking, reading, writing, learning, walking, all of which full time work gets in the way of.  I’m looking forward to an empty calendar and limiting appointments to one per day.

Lack of Creativity:  Rules, guidelines, regulations, sales processes get in the way of enjoyment.  This hit home when I heard a speech recently from a less than inspiring member of upper management reminding our group that “We’re the execution team, not the strategy team”.   Not a good vibe for someone that sees things that can be done better.   Recently I had a coworker I trust joke with me that our corporate motto is “Why do today what we can put off until next year?”   I don’t conform well enough and struggle to tolerate people who want to ignore glaring long-term trends in our business.

Vacation Time:  Only having four weeks of vacation plus one unpaid week off a year is just not enough.  I want to stay 2+ weeks at most destinations/trips we take.  I enjoy the act of moving from one location to another, whether its hurling through the air at 600 miles per hour or driving down the highway in a fancy vehicle, but I don’t enjoy it enough to want to dedicate multiple days to traveling within a week or two of each other.  I initially drafted this post as I cringed thinking about a two day drive from the East Coast to the middle of the country.

Geographic Freedom:  We don’t love where we live, the professional environment is incredible but it lacks most of what we enjoy personally, which includes the beach, mountains, fishing, hiking, and reasonable weather.  We’re pretty much perpetual spring/summer/fall people.

Enough is Enough (and then some):  We have a good sum saved and I expect I will likely earn money after leaving the full-time workforce, nullifying the need for the additional income one more year would earn me.  The art of making money has always intrigued me, I will be laying on a beach doing the math in my head about the economics of the paddle board rental business setup next to us.  I endlessly run the numbers on rental properties when I go somewhere.   The brewery business fascinates me when I’m on a tour, even though the big money is probably gone.  There’s an inner entrepreneur that will earn something.

Shorter “Work Week”:  I enjoy the mental stimulation of work, much of what I do is a game, but I would be better suited for part-time consulting work.  The idea of continuing to put in 50-60 hour weeks making hundreds of yes/no decisions, coaching employees, and helping sales has gotten old.   Its possible to enjoy the work, but not enjoy the volume of work.

Reasons to work One More Year.

Additional Cash:  Lets get this out of the way, my employment arrangement is an agreement to trade my time and energy for money.   Based on my tenure, experience, and value to employer, its a nice sum of money.   Money is freedom and money is capital.

Need for Capital:  My inner business nerd will drive me to invest in capitalistic opportunities.  You either invest your time, your money, or both.  If you aren’t willing to work full-time, you better bring some money to the table in addition to expertise.  The final year above the FI number provides that capital to risk.  This can be a slush fund for the mental stimulation and challenge without risking the core funds that allow for financial independence.

Inability to re-enter workforce at the same level:  Much of my value is from current and active relationships, both with employees and clients/prospects, knowledge of current policies/procedures, and being known in the market.  Exiting employment and re-entering after an extended break would cut my earnings by 1/3 to 1/2.   I don’t have the same value even after six plus months out of the market and workforce.

Inflation Diversity:   All of our assets outside of our home are invested in marketable stocks and bonds.   I would be more comfortable after adding one or two inflation protected assets that would provide a decent return.   Today this looks like 1-2 rental properties and I’m also interested in land with timber rights.   All of this requires capital, either in terms of employment to get loans for it or the cash earned by one more year of working.

Family/Charitable Support:  We have a small donor advised fund to support some charities we are passionate about, but also may want to provide some support to family members who have been good to us and/or need assistance.

Ease of the Job:  Work is not that difficult and I’m entering the fifth year in my current role.  In business and in a career, tenure in a role and with an employer matters.  It takes less time to do tasks and people bring me problems I can usually solve.  Is the work hard and stressful?  Yes!  Is it as difficult and stressful as four years ago?  No.

Mathematical Variables:  Is a 4% withdraw rate right?  What about 3.5%?  3.25%?  (Update:  Big ERN settled on 3.83%)You can drive yourself nuts arguing about the theoretical withdraw rates.  The reality is all of the early retirees will earn *something* after they stop working, so this is less critical to me but still in the background.

Market Variables:   As our friend Big ERN points out, almost no one voluntarily retires at the bottom of a market, unless its a forced exit.  This means as an early retiree, I’m asking “what if I exit at the top and the market drops 40%!?!”

Health Insurance:  Health Care in the United States is basically a disaster.  We have to have a plan with one of the Big 4 for the contracted rates, but due to the prior and current administration’s unwillingness to enforce an individual mandate, I have no clue what health insurance will cost or what providers will be left.  (yes, shoot me for being political, but the last administration struggled here too.  Two thirds of the people who chose not to buy health insurance got a waiver, but still received a tax refund.  The system can’t mathematically function without healthy people purchasing insurance).  In 2017, my employer provided insurance paid out more than $100,000 in claims which should not repeat itself, but it taught me the value of health insurance!

Compensation gains:  For most people, each year results in a higher compensation level.  Personally, the gains start leveling out in 2019 and it makes it difficult to walk away from the rewards of all of the hard work put in to get my compensation to this level.

Pension Variables:  Working the full year in 2018 does wonders for my pension calculation.  The pension calculation is the highest five consecutive years worked and 2018 will be significantly better than 2013, almost 80% higher in eligible compensation.  This also adds an additional year of service, but this incremental benefit is less than the compensation year calculation.  Pensions may be golden handcuffs or a Golden Albatross.  I’m fortunate/unfortunate to have both!

Geographic Arbitrage (ie: Moving is a pain in the rear):  Geographic arbitrage sounds great, it probably is great and we’re going to do it, but you know what?  Moving is a pain in the ass!  Purging stuff, dealing with real estate agents, cranky buyers, cranky sellers, dealing with a mortgage, ugh!   Ideally, it’d be nice to know exactly where we want to go and just buy a house as a 2nd home while I have a nice W-2 income to qualify, but we have no idea where we want to live yet.   Most of our money is tied up in tax deferred accounts and you can’t just get a mortgage on a house without income, so writing a check for a house would be a challenge.  Renting sounds great, but we’re control freaks about our house and didn’t like answering to a landlord the last time we tried it. We love to travel, but also love having a place we call home and a routine.  Would we RV it?  Would we slow-travel for 3-6 months then move? Listening to Brandon over at the Mad Fientist describe his long-travel adventure was enlightening!

Work Friendships:  Work has been the primary outlet for friendships.  Call it a curse of a high achiever, or just the challenge of a natural introverts in roles where they have to talk to strangers all day.  When we come home from work, we are done.  Being around strangers is not comfortable.  Work forces strangers to be together and not be strangers.

Expensive Travel Year:   Yeah, this would be on the list of terrible reasons to keep working.   If we  do, its tempting to sit up front on the plane a few times, especially on a long trip.   Could we do it?  We’ll see.

Wrapping up:

So what does this all mean?  One More Year is real, its real for almost every retiree unless you are fortunate enough to be booted out the door (with or without a golden parachute).   The fear of the unknown is real and it will hit everyone on the journey to early retirement!

2021 Update:  What is my opinion of this when I looked back on the post three and a half years later?  One more year revisited.

Additional Resources:

There is some good work already posted by other authors, you can find most of them through the following posts:

Retirement Manifesto – The One More Year Syndrome

Physician On Fire  – The Power of One More Year

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23 Replies to “Early Retirement Decisions: One More Year”

    1. The ability to change my mind part-way through is comforting, provided we don’t suddenly do something incredibly dumb on the spending front

    1. I enjoyed heading over to your blog…worrying is natural when you’re going from such a high income to nothing. You might have a way to scale back significantly and ease into the career. I also worry about just being an outcast, we have been pretty diligent for just over nine years and didn’t realize how many people were out there like us, I just thought it was one or two people on message boards throughout the country!

  1. I didn’t know it at the time, but I did a few one more years. Maybe, unknowingly was the best way to do them, at least for me.

    That’s come to an end though, and I’m now starting my second year of early retirement (there has to be a better term for this).

    So I have some experience of both sides, and recognise many of the for and against arguments on your list. It’s a personal choice of course but, from where I sit today, I like the arguments in favour of not one more year the best.

    1. There’s really two huge unknowns that jump out at me, the heathcare debacle, especially knowing that we’ve been and needed to use healthcare, plus not being able to start side hustles due to my current employment. I admire the folks who can have an outside stream of income at $1,000 or $2,000/mo going into retirement, it can make all the difference in the world.

  2. Since you don’t NEED the job any longer, what about negotiating for a month sabbatical? You could spend that month in an area you might like to live / split it into two locations. It sounds like you’re not miserable or chomping at the bit to be done, so this might be a possible option to get to what really seems to interest you now.

    1. I’ve been hesitant to ask for that yet – I have a number of leaders and sponsors inside the company that have me on a path to higher levels of management and part of my high compensation comes from keeping me in the company because of my potential. (Eh, I know that sounds odd). I’m going to have to “come clean” with them about that not being a desire of mine sooner rather than later, probably sometime during Q2.

      There are some other roles I could do and possibly transfer into to scale back and collect out more of the golden handcuffs, but it would involve me coming clean on future desires. I say all that because a Sabbatical contains the same issue, I run a multi-million dollar division of a large public company and that would create quite the pain and show the lack of commitment. I’ve also written a draft proposal on how to lay me off (and let me collect the severance/restricted stock I’d walk away from). Overwealming and terrifying when I have to start telling people.

  3. Congratulations on one more year! That is wonderful. Great points as well about why the additional year gives you some extra security. I also couldn’t agree more on extended vacation time – we took the first 2+ week vacation of our lives this summer and never want to do it any other way!

    1. Thanks for stopping by. The math is tough to argue with on working an additional year, as Big ERN over at Early Retirement Now pointed out to me recently, it’s the last nine month investment of time results in a 10%+ perpetual income stream. The math will always be something like that, but the numbers won’t be as large.

  4. Great post! I’m in the “several more years” category but I can appreciate many of the points you make. Especially the thoughts on vacations. The typical one week getaway never feels like enough. A former coworker, who just retired, has been doing two week stays at his favorite places and he said it makes a world of difference.

    Life goals!

    1. I can not recommend the two week vacation enough, even while working. We took our first one after I had been working for about ten years, it was one of the most refreshing experiences. Also if you rent an AirBNB and live like a local, you experience a post FIRE life but not sitting entirely at a resort, which we were guilty of on early vacations

  5. Hey Stop Ironing,

    Great post, and not simply because you gave my idea of the Golden Albatross a shout out (but thank you)! I am going to book mark this post and revisit in two years’ time when I get closer to pulling the trigger. I see you have a pension coming your way. Let me know if there is anything I can do to help you figure out how that fits into your overall plan.

    Best of luck,


    1. Thanks for reading GM! We have a fantastic pension for a 30+ year employee, but unfortunately there’s no COLA adjustment to it. The best I can figure it out (with some extra help from ERN) it’ll add a few basis points to my safe withdraw rate. The real handcuffs are because I’m in a risk-based business, they take 30% of my compensation and say “we’ll pay this to you four years from now if you didn’t screw stuff up”.

      1. Wow, that’s a new type of Golden Handcuffs to me. Do they withhold 30% every year? Or your final year?

        In any case, there are ways to value your pension if you ever want to do it. Check out ChooseFI Episode 58R for a case study I did for a listener.



        1. I look forward to hearing you on the roundup. ERN did a case study on me recently and referenced your Golden Albatross:

          “OK, I’ve talked to people who hate their work but I’ve never met anyone who’d walk away from a 10% boost to the post-retirement consumption for nine months of work.”

  6. Great Post SIS. I’m still about 10 years from deciding if I should work one more year. Still, all the factors in your decision really come through here. Good luck making the call.

    It’s hard to walk away from the benefits of working. Yet we only have so much time in life. That extra money is not nearly as valuable as the initial sum needed to meet our basic needs.

  7. I feel health care is really a tough one. I’m a few more years away from one more year. I think 4 as I have college bills I feel are my responsibility to take care of for my children. But once that is over, I should having that one more year decision. My wife gets health care while working part time, tough to give that up but on the other hand we can’t move if she continues to work.

    Whenever we do pull the trigger I plan to go part time first and rent so I can make sure we love the area before we buy another home. Best of luck, I feel a year will go by quickly if you stick with that choice.

    1. Thanks for reading, we all have to balance how long we work. Someone recently said “we think about everything that could go wrong, what about everything that could go right”.

      As for the renting vs. buying, that’s a constant debate I run in my head. I used to be in the payoff your mortgage crowd, but strategically using sub 4% debt for 15 years post-working is tough to turn down if I know something is worth buying. We also just need to find a good landlord, every time we’ve recently rented has come with its own annoyances

  8. Hey there! I found your blog via your Millionaire Interview on ESI. I commented there about how I’m a 30-something banker in TX too and really appreciated your story. My husband and I also have no kids, and we just hit $2M net worth last month – so we are in a really similar mindset wrestling with these ideas.

    This post is a great overview of some benefits to continuing to work and pad the net worth (although the non-financial ones I worry about most – family changes like births, deaths, divorce, remarriage which could overhaul my values and lifestyle desires – aren’t really addressed). My husband and I have been having this conversation pretty much since we got married. But as we’ve approached FI, “how long do we have to work?” turned into “how long do we want to keep working?” which is starting to morph into “what kind of work do I want to do for the rest of my life?” The realization that I probably will never stop working in some form or another has made me look at my career in a different light.

    If I’m going to work anyway, why throw away the career I’ve spent so many years building? I’ve put in the harder years and moved up the totem pole and comp scale into a role where I’m valued and respected by my team/employer. So has my husband (also a banker). He’s also a key member of his team and is expected to lead it when his boss retires in the next year or so. They’ve invested a lot in him, and he’s in a specialty group where talent is hard to find especially at the managerial level, so I know he would not be very likely to just bail because we hit a net worth target. We like most of our colleagues and clients, our commutes are 10-15 minutes, and we rarely work more than 45 hours a week. Plus our savings rate is 40% and our net worth is growing at over $300k per year.

    It’s the ultimate irony for early retiree aspirants: if you’re high achieving enough to make enough money to be able to consider retiring early, you’re probably also the type who will not be happy not earning and building and growing something. And you’re likely to be considering pulling the trigger right as your career income is ramping up and your expertise (which hopefully lowers stress and hours somewhat) is firmly settling into place.

    Sure we wish we had more vacation time. I think about starting or buying a business, charitable endeavors, and blogging while traveling the world. But I have the rest of my life to do those things. We could retire now and downsize our home and live comfortably on $70Kish indefinitely. But we currently spend more like $100K and are happy to work a few more years to support that. Plus an extra year of work means not having to downsize from the town home/neighborhood we love, paying for college for our nephews, or paying cash for a second home. So unless our jobs really start to suck, we are planning on another 5 years in our careers (target $4M net worth). The reality is that I like my life now. And it’s really screwing up my FIRE plans!

    1. Elizabeth – You are spot on about this being an overlooked career path. It really isn’t a bad quality of life once someone has spent the 5-7 years to master the job. Interestingly enough, I train and lead commercial bankers and internal candidates always approach me about getting into this, but they only see the fun side of the business and not the grinding of learning the trade. I tell many of my newer folks this is just like a physicians residency, even though you’ll be paid a bit better. What you don’t know from experience you have to make up for with more time working.

      My only recommendation is the two of you should get approval to take a 1+ month vacation and see what you think of it. Life can change in an instant, be sure you’re not investing your time which is limited for money that you may never need. You’ll also probably make more money in retirement with your business connections, Texas is a great market to participate in some private investments and helping the folks place private capital.

      1. That’s a great analogy about physician residency. There is definitely a lot of hustle and study required on the front end to develop the technical and interpersonal skills needed to be effective – much like any professional career path. However the hours and stress just seem to increase for many other professionals, even top performers in other fields. This goes on indefinitely for docs and can persist even once consultants and attorneys make partner – which can take a decade.

        By contrast, talented bankers and investment professionals can build a book of business in a matter of 5 years or so and often have quite a lot of flexibility 10 years in, relatively speaking. Plus it doesn’t take a pricey grad degree to enter the field.

        It would be interesting to take a month sabbatical; I have a colleague who is doing that this spring, so I know my employer would entertain the idea. It’s definitely something my husband should do before he becomes a manager. I like my job but definitely do not plan on working once we reach FI. On the flip side though, my budget and therefore my FI target is a lot higher than it would be if I truly disliked my job.

        Thanks for the response; I’ll be interested to read about your journey on the blog! I had to shut mine down when I started a new job last year so now I’m just a lowly follower. 🙂

  9. I read the Big Ern analysis for your case study and 1MY is the way to go. We have a similar situation in that 3 more years for DW is dirt cheap healthcare for life. To set that and avoid HC inflation is a powerful cliff. We should be able to go our own on HC but GD only knows WTF will happen in that area in the next 50 years in the USA. I have struggled with this question for some time, we are FI but pulling the trigger is a huge step for hard working folks who have worked hard all their lives. Time flies though.

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