Retiring early is about embracing the unknowns

Retiring early was my dream for many years.  But I didn’t get serious until 2007, when there were a lot of re-shuffles where I worked at as an engineer.  And it got worse and worse as time went on.

The overall moral was very low.  The work load and stress was suffocating.  As a result, I started speeding up my saving and investing, and preparing for my early retirement quietly.

In the next 6 years, I paid off my mortgage, and sent my kid through college.  My investment portfolio had performed very well, thanks to the recovery from the Financial Crisis.

In the spring of 2013, finally I said to myself: “That’s it.  Let me get out of that place in 2 weeks.”  My last day was Tuesday.  Usually people choose Friday as the last day.  I just couldn’t wait for one more single day.  One day seemed like a long year to me.

Though I tried something new for fun later, I wouldn’t call it a serious job.

Leaving the engineering career at the age of 47 was one of the best decisions I ever made.  I’m very proud of what I did.  My life has been absolutely happier and healthier since then.

Did I figure out everything about retirement before giving the 2-week notice?  Not really.  Today, I like to share about the unknowns.

Before retirement, I knew I had enough money in place to cover my basic needs.  I also figured out what I was going to do daily after retirement.

Regarding early retirement, sometimes the news media emphasized too much about obstacles.  You got to factor in this, and that, etc.  Many are really unknowns.  Who knows what’s going to happen tomorrow, 5 years, 10 years, or 20 years down the road?

At the end, those articles scared people away.  People would say: “All right, it’s too hard and complicated, and I’m not going to retire early.  Okay?”

The truth is that, even if you retire at the normal age, like 65 or 67 in US, those unknowns won’t go away either.  That’s just life.

Let’s take a look at some of the unknowns.

Heath Insurance:

Here we go.  We Americans are obsessed with health insurance, because we don’t have a good one in place.

Currently I’m on Obamacare.  Am I worried if Obamacare will survive?  I worried a lot in 2016 and 2017.  This year, I refuse to let it bother me again.

That is not something I could change.  Whatever happens tomorrow, it’s going to impact thousands of people over there.  I’ll face it.

Many people don’t want to retire early because of health insurance.  That’s understandable.  On the other hand, the employer-sponsored health insurance is not sustainable either.  Yeah, the premium is lower, because employers shoulder the big portion.  But, the risks are there, too.

This is an example: what happens if John Doe (he is in his 40s) got terminal illness like stage-4 cancer?  He still has to work in order to keep the insurance, right?  How could a person with stage-4 cancer work like a normal person and follow the 8-5 schedule?  That would be too brutal and inhuman for John.

But, if John quits the job, he would lose the insurance, unless he could get disability and get into MediCare.  Disability is hard to qualify, and nothing is guaranteed.

So my point is that, employer-sponsored insurance helps when people are relatively healthy.  It won’t help much in John’s situation.

Some people might keep working till 65, when MediCare kicks in.  MediCare is not silver bullet either.  Its coverage is limited, and could change over time, too.

Fidelity said that, “A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement”.  Here they are talking about a couple retiring at 65.

If this assumption is true, how much does it cost for a couple retiring at the age of 50?  It would be much higher than $280K.  The numbers are so scary that it pretty much kills the retirement dreams for most of the people.

Social Security:

Some news media recommend people keep working to at least 67.  And 70 would be ideal, in order to maximize the Social Security (SS) benefit.  That’s baloney.  Why?  For the people over 70, how many are healthy enough to travel, and do what they love to do?

SS is a big unknown.  If someone is depending on the SS as the sole retirement income, good luck.  The whole SS system is just horrible.

Take my case as an example.  If I keep being retired in the next 10 years, my monthly SS payment at the age of 62 will be $X (not much).  In 2013, if I were to stay at the engineering job, and keep working for another 15 years at that pay level, my SS benefit at 62 would be $300 higher than the $X.

Do you see the point?  By working another 15 years on that super stressful job, it would only raise my SS benefit by $300 per month, at the age of 62.  Is it worth the effort?  Absolutely not, from the SS benefit point of view.  I would be probably stressed to death long before hitting 62.

Long-term Care:

People’s health in the future is a big unknown.  Some news media say that, when planning for retirement, factor in the long-term care.

But, how?  Should every retiree buy the long-term care insurance?  Even with insurance, it may not cover 100% of the needs.  And the insurance is very costly.

It’s one of those things you simple don’t know what’s going to happen tomorrow.  I’m not going to think about the long-term care.  I’ll focus on what I could do now, like trying to maintain a healthy lifestyle.  For those beyond my control, I’ll let it go.

Aging Parents:

The web site TheStreet says, “Keeping Up With Retirement Planning While Caring for Aging Parents“.  Wow, planning for retirement is really becoming a huge system engineering project.

Just like our health in the future is unpredictable, so is the parents’ health.  In many cases, it’s like rolling the dice, and see what happens.  Life is full of risks.

Summary:

When planning for early retirement, I was mainly focusing on the known items.  For the unknowns, can’t beat them?  Just embrace them.  Life is short, and enjoy it before it’s too late.

Questions to you:  How do you deal with the unknowns when planning for retirement?

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18 Responses

  1. You hit some really good points here Helen, especially health care insurance. It is so expensive and a major health issue can wipe out one’s finances. I guess the risk of getting dropped is less under Obama care, but it’s still a scary thought. I like your approach about focusing on what we control. Let’s eat healthy, exercise and hope for the best. With out our health and safety, nothing else really matters. Tom

    • Retire Early Helen says:

      Hi Tom, thanks a lot. Yeah, health insurance is a big issue, and I don’t see much hope or solution in the near term. I just have to live with it. Right, I understand the lifestyle may have some limited impacts to health. But, the big portion of health is still unknown, or purely luck. I just do what I can, and hope for good luck.

  2. Steveark says:

    I agree that pulling off early retirement is much easier than most writers advise as they major on potential problems that won’t all happen to everyone. I wouldn’t count out social security as not being valuable, it is going to be paying my wife and me $69,000 plus inflation adjustment when we start taking it. And we were a one income family so it will pay others much more than us. That’s not insignificant and while I don’t need it I’m not going to pretend it won’t be there. Even if they trim it or tax it more over time it still will likely provide us half of what we spend.

    • Retire Early Helen says:

      Hi Steveark, thank you for sharing your thought. The media try to put a complete picture there for early retirement, and sometimes it scares people away. Yeah, social security is something nice to have. But as you mentioned, the rules or tax could change over time. We just need to have some other incomes to supplement, as social security is not that dependable.

  3. Joe says:

    I’m with you. There are many unknowns and sometimes you just have to go for it. Personally, the risk of working in a job I dislike outweigh the unknown. I had mental and physical health issues that would continue to worsen if I didn’t quit. Early retirement has been great so far. I’ll deal with problems as it comes up.

    • Retire Early Helen says:

      Hi Joe, right, the unknowns will probably stay unknown during the course of life. It looks your old job was even more stressful than mine. I’m so happy for you that, you walked out of it courageously, and embraced the new and much better life. In my case, the old job was bad, but not too horrible. If I still needed money then, I would probably stay for another 3 years to tolerate those nonsense. Retiring early definitely was a better solution for me.

  4. KeninNZ says:

    Here is NZ we get basic medical care through our taxes. I’ve never bothered with the more expensive private cover (deciding that it didn’t offer value for money) but recently I signed up to a policy that has a $10,000NZ excess. At $200NZD a year as an extra to my life insurance I felt it offered reasonable protection for major problems.

    • Retire Early Helen says:

      KeninNZ, thanks a lot for sharing your story. That’s great your basic health care is covered by your taxes. The extra coverage gives you a peace of mind.

      US is probably one of the few developed countries with horrible health care system. It is a shame. The two parties keep fighting everyday, and couldn’t get anything done. To them, it’s all about votes and partisanship, not about the well beings of the citizens they are supposed to represent.

  5. GYM says:

    Man that must have been a bad job for you to want to leave on a Tuesday instead of Friday. Must have been a great feeling to walk out the door!

    We have basic medical care covered through our taxes too in Canada and Long Term Care is covered too (public) but it takes about 90% of your income in retirement. Caring for aging parents is the more expensive thing. There isn’t much subsidy for that, and it can cost $100K a year to hire a private agency to take care of your parents!

    • Retire Early Helen says:

      Hi GYM, yeah, that was a bad job. Walking out of there was quite a liberation. Just like a prisoner finally released to the free world. I appreciate the gained freedom a lot.

      It looks every system has its flaws. If they take away 90% of the income in retirement for long term care, that’s not pretty. Taking care of aging parents is a huge task. I saw some of my peers in China already stepped up and are gradually taking that role. Tough.

  6. Kay Lynn says:

    I think you misrepresented the working person who gets ill. State disability (in some states) would kick in so they could continue paying their share of premiums. If they have to quit, they have up to 18 months of cobra to continue their health insurance.

    • Retire Early Helen says:

      Thanks a lot for sharing the information. It’s good to know some states have the State disability. Yeah, Cobra’s 18-month coverage is very helpful, as long as the premium is affordable.

  7. Helen:

    This is an excellent article. I really like your shift of attitude about the unknown. Whether working or retired, embracing uncertainty definitely takes us a long way…

    Thanks for sharing your thoughts…

  8. In the end, it comes down to a personal decision. We can do spreadsheets and “what if” analysis all day long but every decision in life involves some risk (hence fear). Most people (if not all) who reach FI are financially responsible but have made some critical decisions along the way involving more risk financially than they are used to but it worked out more times than not. The positive side of retiring early (early is also defined differently for different people) is that if you do find you don’t have enough passive income and/or savings to live the lifestyle you want in retirement, you can also go back to work part time or start a side hustle to close the gap.

    • Retire Early Helen says:

      Thank you for sharing your thought. Right, it is a very personal decision. What we know is limited, and it’s hard to eliminate all the unknowns. Everyone’s risk tolerance level is different. With enough knowledge and information, we just have to make an educated decision at some points, and accept the consequences.

  9. Dragon Guy says:

    I’ve got a chronic illness and although we have reached FI, I haven’t retired because I am still concerned about the health insurance. However, you are right that there are no guarantees even with employer provided health insurance. My wife has been early retired for over a year now and it’s definitely bringing me closer to retiring myself. I always think of myself as someone that just goes with the flow, but for some reason I am struggling with embracing the unknowns on early retirement (perhaps it’s the finance nerd in me wanting to analyze and over analyze everything). Thanks for putting into perspective how we need to embrace the unknowns and just go with it.

    • Retire Early Helen says:

      Thank you for sharing your story, Dragon Guy. Yeah, health insurance is a big obstacle for early retirees. Hopefully, one day in the future, the insurance will become really affordable with decent coverage, no matter of the employment status. That would make it easier to retire early.

      Embracing the unknowns is still a working in progress for me. Writing about this topic is also a reminder for myself what I should focus on every day. It’s great to hear you and your wife have reached FI, and your wife already retired. FI gives you the choices. Not many people could achieve that, due to various reasons. Congratulations!

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