Early-Retirement Update • Hacker News Board

Re: Early-Retirement Update

#121

Post by d23 » Mon, Mar 22, 2021, 7:12 PM UTC

I appreciate the author writing this. Cutting this down to its essence, the guy managed to quit working for a significant chunk of time, went through a major health crisis, lost his wife, and still managed to increase his net worth over that period. The emotional aspect is obviously tough, but the fact that he was financially responsible and had a big nest egg gave him a huge cushion to work off of.

Financial independence doesn't have to be a binary thing. I'd like to achieve it not so I can sit around and do nothing but in fact so I can do whatever I want. I appreciate the author's candidness. It's important not to look at any of these things as fixed, and it's important not to oversimplify.

Re: Early-Retirement Update

#122

Post by sokoloff » Mon, Mar 22, 2021, 7:12 PM UTC

hogFeast wrote: post #87

sokoloff wrote: post #48

Earlier quoted context omitted.

Tools like cFireSim get this much more correct than what you describe above and takes literally just a few minutes to do basic modeling. They're still limited by historical returns, which is both good and bad, but certainly model very prominently the risk-of-ruin. https://www.cfiresim.com/ (no connection, other than very occasional user)

From what I can see, that doesn't look too good. There are likely issues with the data, which is not easily solvable given that complete databases are expensive. And there are likely issues with the modelling, it looks like the model is just scenario analysis. This is better than a misspecified parametric model (most advisers don't do scenario analysis either, so it is definitely valuable...although requires market k…

I think there's a reasonable question of whether a Monte-Carlo simulation is better or worse than applying actual sequential returns from all 100+ starting years (which is what cFIREsim does and the data of which is available to all).

For me, I'd rather backtest against all the actuals than to look to a Monte-Carlo sim with a distribution which is the same as the per-year returns, because I don't believe that sequence of returns year to year are entirely independent, but rather have a relationship to each other because of the longer-term business cycles. This is naturally accomplished by using sequential year actuals.

I agree with you on focusing on the low-end/worst-case outcomes. I'm planning our family's retirement based on a 98% success rate as a minimum (and where the 2% cases can be managed by scaling down lifestyle rather than by starving).

Re: Early-Retirement Update

#123

Post by kelnos » Mon, Mar 22, 2021, 7:12 PM UTC

californical wrote: post #31

ericmay wrote: post #13

To me the emphasis on the FIRE community should be on the FI part of the equation. For many people in many countries, there is no concept of "retirement". It seems so silly to me that people would go and say "I'll work really hard and do all this stuff for 40 years so I can sit around and do nothing for another 30 years". What's the point? It's unsustainable. It's like doing a crash diet - it may work for a minute, b…

Yes, this! Having enough money that you don’t need to worry too much about work seems like 95% of the benefit. Spoken as someone fairly early working towards FI. Having a paid off house, no debt, and enough money to survive tragedy unscathed is really the goal. I want to be able to work whatever job makes me happy without feeling the need to be competing for the highest salary. Take a few months off work here and the…

Ok, but just imagine for a moment that working a job doesn't make you happy. Consider that most employment arrangements aren't all that flexible. You can't just suddenly decide to disappear for two months because you feel like it, whenever you want, and expect there to be a job waiting for you when you get back.

This extends all the way down into little things. Maybe I'd like to go for a walk right now, but I can't because I have a work meeting in 10 minutes.

I doubt there is anyone in the world who can say they are 100% happy with their job 100% of the time. While you might not be 100% happy 100% of the time in retirement, that is something you can control and change. You generally can't change many of the things about a job that make you unhappy.

I just feel like most people are so socially conditioned to believe that working a job is The Correct Way To Live Your Life that they simply can't imagine anything different.

> I want to be able to work whatever job makes me happy without feeling the need to be competing for the highest salary.

Why does it have to be a job? Why can't you just do things that make you happy? Why is it necessary that happiness falls into the narrow range of an employer-employee (or freelancer-client) relationship?

Re: Early-Retirement Update

#124

Post by sailingparrot » Mon, Mar 22, 2021, 7:12 PM UTC

nly wrote: post #78

sidlls wrote: post #9

I always get a kick out of people who think they’re financially independent with such a small stash. Outside some regions with relatively extreme living conditions (e.g. undeveloped and underdeveloped countries), the amount he retired with was never going to be enough to sustain even minor shocks and last the rest of his life. He had a minor shock (breakup) and a major shock (health condition) and realized this error…

30K/year on a 950K stash is only a 3% draw-down, which is considered pretty reasonable.

It's assuming you will be fine with 30K/year over the next 40 years that is not reasonable. So many things can change or go wrong and you end up needing more than that (exactly what happened here). If this happens relatively early and you are in an in demand job market, then it's not too bad. But if you haven't been working for the last 10 years and you are in a not super in demand market, you are in for a pretty bad time.

Re: Early-Retirement Update

#125

Post by sokoloff » Mon, Mar 22, 2021, 7:13 PM UTC

TuringNYC wrote: post #119

sokoloff wrote: post #51

Earlier quoted context omitted.

Selling OTM covered calls is not a trade that's going to blow up your account. The worst case is that you suffer a drawdown in your account (which is a risk of all investing). The second worst case is that you miss a massive, short-term rally.

>> Selling OTM covered calls is not a trade that's going to blow up your account. The worst case is that you suffer a drawdown in your account (which is a risk of all investing). The second worst case is that you miss a massive, short-term rally. Depends on whether youre fully cash secured or not. If you are fully cash secured, you barely make $. If you're not, now you're leveraged and a steep draw-down can wipe you…

True, but that is the case by virtue of the underlying investments, not because of the decision to sell OTM covered calls.

Re: Early-Retirement Update

#126

Post by Zelphyr » Mon, Mar 22, 2021, 7:14 PM UTC

As a somewhat aside; the author points to something about finding therapy that I think most people don't understand which is: you need to find a therapist you connect with and usually you have to see a few before you will find one. It's not like you're finding a life partner, by any means. Just someone who you feel like you can make a connection with, who understands what you're going through, and can speak to you in a way that you can understand.

I, for example, found a great therapist on my second try. He helped me tremendously but then happened to decide to retire right around when I felt like I didn't need to see him as much anymore. However, he recommended a colleague who he thought I would do well with who I have seen a couple of times since and it has worked out very well.

Re: Early-Retirement Update

#127

Post by kelnos » Mon, Mar 22, 2021, 7:14 PM UTC

sidlls wrote: post #64

neogodless wrote: post #26

Earlier quoted context omitted.

Even with the minor and major shocks in his life, he ended up with 20% more money than he started with. The main reason he wants more money now is that he wants to share it with his new partner, and enjoy some lifestyle inflation. So I don't think it makes sense to extrapolate "leanFIRE cannot sustain minor shocks" from his circumstances." It certainly cannot sustain a certain level of lifestyle inflation, or (more g…

He barely kept up with historical inflation rates (3%/year). Given the free availability of money in the last 2-3 years, it's hard to say a 20% appreciation on his capital is a success. In terms of real dollar value, he likely is losing year-over-year.

No, he says he has 20% more after adjusting for inflation. He has gained 20% in real dollar value. Even if that's only ~3% per year, that's fantastic on no (traditional) income, after accounting for expenses.

Regardless, even if he was break-even or negative, that might be ok; most people don't expect their retirement savings to last forever, just until they die.

Re: Early-Retirement Update

#128

Post by psychiatrist24 » Mon, Mar 22, 2021, 7:14 PM UTC

dimmke wrote: post #102

PragmaticPulp wrote: post #68

I had to quit reading any FIRE (financial independence, early retirement) blogs because they were full of people headed down this same path: Extreme frugality, bare minimum savings, assuming their lifestyle would never change and nothing would ever go wrong. Retiring at 30 sounds great, but no one's life goes exactly to plan for next the 30-40 years until traditional retirement age. People change, expectations evolve…

I've had friends with trust funds, who just seem to dither around in life. "Making music" they never release. Picking up little "pass the time" jobs. And these are people that aren't living "leanFIRE" It seems like such a nihilistic way to live. You're just floating along the stream of life. Things worked out for you, but you have no further passion or inclination to improve the world? No problems you could set yours…

I find it quite different to find a meaningful occupation, it may not simply be a choice by those people.

Re: Early-Retirement Update

#129

Post by pbuzbee » Mon, Mar 22, 2021, 7:16 PM UTC

eric_b wrote: post #46

I really struggled with the author's tone. It dripped of condescension towards those who live a "normal" lifestyle. I enjoy working. I find purpose and meaning it. I do not let it dominate my life, but without it I would feel incomplete. I run my own business now, and that is very satisfying - but even when I was a corporate consultant I found a lot of enjoyment from spending time with my coworkers, solving problems,…

It is a little condescending, but I think it serves the purpose of illustrating the divide the author feels between himself and his peers. It's hard to relate when one side sees work as time spent purely for money, and another sees work as a source of satisfaction.

Re: Early-Retirement Update

#130

Post by psychiatrist24 » Mon, Mar 22, 2021, 7:16 PM UTC

AlwaysRock wrote: post #108

dimmke wrote: post #102

Earlier quoted context omitted.

I've had friends with trust funds, who just seem to dither around in life. "Making music" they never release. Picking up little "pass the time" jobs. And these are people that aren't living "leanFIRE" It seems like such a nihilistic way to live. You're just floating along the stream of life. Things worked out for you, but you have no further passion or inclination to improve the world? No problems you could set yours…

I don't know. I'd love to have a basic level of income and then be able to dither around with random jobs. I'd love to be a bartender for 6 months, work in a bookstore for 6 months, become a carpenter for a year or two. I'd probably feel differently if I actually had a trust fund since my upbringing would be different but it does feel stifling that in order to have a financially rewarding career one has to stay on a…

I regret that I never worked as a waiter in a cafe, and now it looks as if I can't afford it anymore. Or if I could afford it, I would be taking away the job from people who have a more urgent need for it than me.