The Money Panic

The other day for no apparent reason I sudden had a shock of fear go down my spine that I didn’t have enough money for my retirement.  I worried that I had made a horrible mistake and that I should have worked longer  and saved more money before quitting. There was no particularly logical trigger for the feeling of mild panic that passed through me and the feeling left me shortly afterwards.  Yet it did make me double check a few numbers to prove to myself (again) that we had enough money for years.

So as I looked at my account balances and faced the fact that I am in fact fine for the next few years then I relaxed back to my usual state of calm.  In reality nothing had changed about our situation during this episode, it was merely a bit of doubt stuck in my brain and likely the result of me adjusting to our changing sources of income.

Previously with my old job, I knew there was risks with a job as your major source of income.  I knew you could get laid off, shifted to another job, or have a rollback in wages or cut in benefits (I honestly had experienced all of those during my career at some point).  Yet I understood those risks because I had been living with them for a long time.  So oddly comfortable with those risks.

Now that we are mostly living off our investments I have a different set of risks.  We could see a stock market correction, cuts in dividends from companies we own or drops in our bond portion of our investment portfolio.  These aren’t new risks but I honestly didn’t pay as much attention to them in the past because with my old job we had other sources of income to cover expense when those events occurred.  Now I’m feeling those risks more acutely than in the past.

The reality is you don’t have less risk once you retire.  You just changed which risks you are managing.  Yet oddly some of the same principles  you learned getting to retirement still apply such as it is better to have multiple sources of income (not just investments or  just a job).  Which is why partly my wife continues to run her daycare from our home and I continue to run my little publishing business.  Neither produces much income but it does help balance out the risks of sudden investment swings.  Also both businesses give us something to do and provide options for socialization with others.  We do them because we like to and less because of the income they produce.

One other things that hit me during my little panic feeling was I asked myself the following question: what is the worst thing that could happen?  This is a great question to force yourself to face what you are fearing.  And in my case the answer was simple: get a job.  Notice the word ‘job’.  I don’t have to go back to my old career or employer begging for a job.  I can find something, somewhere that I might enjoy a bit and brings in some money.  Honestly with our relatively low expenses making even $10 to $15K a year makes a huge difference to balancing out our spending.  And if that truly became required it isn’t really the horrible of a fate…hell it’s sort of normal for most people my age (including myself until recently).

In the end, I’ve come to realize these little flares of panic or worry are just me adjusting to my new normal.  Nothing on a fundamental level has changed in my situation other than my thoughts and luckily those can be changed rather easily.

So do you think you would have problems living just off your investments?  What would you do to help balance your risks?

10 thoughts on “The Money Panic”

  1. Great post . The transition to ER is a leap of faith , albeit not random because the preparation and execution follows a well researched and thought out plan . And with the risks come stresses and it is this that I wanted to ask you about so the timing of this post is perfect . I wanted to ask you how you feel inside now . You know that feeling of calm and inner peace you have the first morning of a two week vacation ? It eventually goes away and the stress levels begin to build again the last weekend before returning to work of course . I want to know if that feeling stays with you all day everyday. Or are the stresses that come with being gainfully employed replaced by ER stresses , like constantly worrying about having enough ? What if the market collapses , what if the economy tanks , blah blah .That is what I do not want to happen , trade one stress for another . But I don’t want to work forever to build up the cushion ! I had a roommate in university tell me tell myself to trust my mind before an exam . Your question of what is the worst thing that can happen in a time of worry or stress is definitely something that I will use now and in the future . My wife tells me worry and stress means a lack of faith so if you make that leap , I guess one better have it . Being all philosophical here but just wanted to know how you are feeling in general now Tim . Thanks !

  2. In my case no panic because my two day a week side gigs that I do mostly for entertainment are paying me 100% of my and wife’s lifestyle expenses. When you never take anything out of your accounts then money worries are alleviated. There are some mild stresses associated with the side gigs but I believe that occasional mild stress is necessary and good for me in the same way that a life free of work or discomfort is not a full life. Same reason I rolled out of bed and struggled to keep up with speedy runner wife for five brisk miles at 5 AM this very cold morning. It wasn’t exciting or much fun at the time but I’m glad I did it.

  3. @diharv – Thanks for the excellent comment. I appreciate the thoughtfulness of the question. As to how I’m feeling now. Keep in mind that keeps changing. I wrote this post (and many of the others) to try and show both sides of the early retirement world. I have read too many ER blogs where it is all sunshine and rainbows where they forget to talk about the occasional storm cloud that happens. But on the other hand I shouldn’t be overly negative. So I’m trying to balance things out in what I write here.

    So how do I feel now? Well mainly peaceful and content. That’s my baseline and yes there are waves of stress about all the normal things in life but in general those waves pass you by and I return to the calm state again. But on other side there are those little moments of joy too. Like seeing sun on new fallen snow sparkling like a field of diamonds on a walk and you can take just a moment to enjoy it without feeling guilty or rushed. That is what I love the most about early retirement being able to take the time to just enjoy the simple things.

    @Steveark – Oh I agree you shouldn’t try to remove all stress. Pushing yourself to new things brings its own happiness that all the relaxation in the world can’t match. I’m just bringing my side gig up a level right now and I know that will take a few years prior to seeing much of a return, but I’ve got time.

  4. Tim, I had some of your fears when I began my retirement back in late 2008. That was when the markets were crashing, something which initially helped me in my ER planning. But the markets didn’t bottom out around here (in the US) until March of 2009. In those first few months of 2009, I was becoming a little nervous but as long as I didn’t have to sell any shares of the depressed stock fund I owned, I knew I’d be okay. I surely wasn’t going to go back to my old place and beg for my job back, I hated the commute so much. But I could get something local even if it paid little. If it were part-time, I doubt I could get health insurance (no Obamacare, yet).

    But none of those doomsday scenarios came true, and all has been quite well in the last 9 years.

  5. Man I like your blog very authentic and true.

    Shows the reality of the goal we are looking to reach. Thanks, much appreciated, and please keep us updated, it’s very interesting

  6. Tim: I think a short spike of anxiety around income is perfectly normal. Actually, it’s normal for a new retiree to feel this at any age. You have done your due diligence, plus you’re a smart guy that not only assures the likely hood of your retirement success due to your careful planning, but also enables you to pick up additional income through your writing etc. And, as you mentioned, worst case you can always get a “job” – it could be a “fun” part time job even, and you’re set. The stock market with all its fluctuations is a safe bet, there are real businesses with real employees creating real value backing it up – as long as we can weather a crash until it recovers, all is good.
    There are lots of ways “smart” early retirees can weather through if a crash were to happen near the beginning of a long early retirement, until the inevitable recovery happens.

  7. For years, my goal was to reach FI, stop working and pursue what I like. I didn’t fancy my job at all. Then I quit my job as I was really sick of it and I didn’t work for a few months. I was bored stiff. Now, I am back to the same job but part time. I am much happier, as I have more time to myself. With the part time work, I reckon I can work for many more years as it’s a more relaxed pace. It also gives me a purpose to leave the house on some days.

  8. Sorry, weighing in a bit late here… Myself, being a numbers-wonk and somewhat over-analytical at times, I totally get your mindset Tim. I took the ‘middle road’ and do work I enjoy for much less. I’m not confident we could do a full on ‘ER’ at this point but personally, I wouldn’t have it any other way. I can see myself doing what I’m doing to some capacity until my body gives out and wrap it all up with a smile on my face. Whenever I get that self-doubt about whether I’m earning enough, I also remind myself that in a worst case scenario (extremely unlikely to happen) I could do something else to make more again. Ultimately, it’s all very good and we’re so ridiculously fortunate to have choices.

    btw, I really liked dlharv’s response and allusion to ‘faith’ as part of rationalizing our logical concerns – so true!

  9. Hi Tim,

    I would like to commend you for having the internal fortitude to pull the trigger and actually stop working. As I get closer to my own magical retirement number I get more and more uncertain and keep raising the bar.

    congrats,
    FI3000

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