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Saturday, February 25, 2017

The FI Irony

Posted by Tim Stobbs on December 19, 2016

After the long hard work to get to Financial Independence (FI) I’ve realized something fairly ironic about it.  You see I just spent the last ten years of my life working on saving, investing and planning so that in the future after FI I can spend less time on saving, investing and planning.  What the?!?!

In the beginning when you start on your path to FI there seems to be a million decisions to be made.  You have to decide on ways you want to save money like do you take your lunch each day or do you buy it up to one day a week?  You have to decide what investment strategy is best for me?  Can I choose more than one strategy?  Then you have to come up with the retirement plan?  How much do you need to save?  When do I want to leave work and then what do the numbers tell me about leaving work?

I’m starting to realize that once you actually get here to FI that it’s a lot less work.  After all you have already made all your investment decisions now you only have to spend a minor amount of time on maintaining them.  So of course there is a bit of planning on how you will take out the money from your investments but once that is done again you done the work all you have to is keep up the process and make the odd adjustment.  All the saving I’ve done is also largely completed, now I’m actually just saving the last cash reserves for my plan so in fact there is very little to think about other than moving money from chequing to the savings account once a month or so.

If effect, once you reach FI you are resting because of all your previous work on your decisions.  You life is now highly optimized to your priorities so your spending is more of a habit than an effort.  Your investments make money without you doing much of anything.  And you make minor tweaks to your plan because you already gone over it at least a hundred times by now.

Perhaps this is why so many personal finance bloggers upon getting to FI drop off in their frequency of posts, they feel they don’t have anything left to say.  The decisions are all done, the results are in, so what more is there to talk about.  Aren’t you all lucky I’m obsessed with psychology? I plan to keep writing for a while on the entire mental transition in my semi-retirement.  After all getting here to FI is one thing, adjusting to the early retirement side of the world is entirely a different thing.

Comments

2 Responses to “The FI Irony”
  1. deegee says:

    While it was 8 or 9 years ago, I do remember the planning I had to do to get ready for my ER. I had to project a monthly and annual budget. I had to find a bond fund which would generate enough income to cover my expenses with a decent cushion built into it because one condition of ER I set for myself was that there would be no changes to my day-to-day lifestyle.

    I had to find a decent individual health insurance plan (this is in the USA before Obamacare). I had to figure out the tax impact of cashing out the company stock in my retirement plan. Then, I had to wait until the company stock hit a certain value (my magic “number”) before I could pull the trigger.

    That took a lot of planning. After I pulled the trigger, I still have a lot of maintenance to do. Because my income is now monthly instead of biweekly (paycheck), I have to plan my cash inflows and expenses a little more carefully than before. Some of my expenses are “lumpier”, such as car insurance and income taxes, so I have to make sure I carry forward surpluses in other months to cover those in costlier months.

    I have had to tweak my ER plans in the last 8 years. The income from the bond fund has declined a little, so I implemented Plan B to supplement the income using another dividend source I had been reinvesting. Now I take it as cash.

    I also pay attention to rebalancing the two parts of my portfolio but according to different investment objectives. The current portfolio is more income oriented while the IRA is more balanced.

    As a fellow early retiree, Tim, you should know that your work on this is never done. But it’s a lot more fun after ER than before it!

  2. HAHAH! So true. It’s why I decided to just keep writing about whatever I feel like so I don’t get pigeonholed into this FI hole.

    Not that I consider myself an FI blogger

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