“If you could stop working, why haven’t you?”

“If you’re financially independent, then why are you going to work this week?”

Millionaires, but…

Those quotes were posted on ESIMoney’s Millionaire Money Mentors forum. I spend an hour or two there almost every day, because I enjoy the questions and the creative-writing process!

(That link is not a sales pitch and there’s no affiliate revenue. I’ve written this post to help you worry less and feel happier about the 4% Safe Withdrawal Rate, which I’ll clarify below with a classic-rock reference. The links in this post are for the search engines– and in case you want to dive deeper after enjoying the rest of these thoughts.)

I’ve written on that forum for over two years because, well: millionaire mentors. I’m learning a lot for my next book. (Better yet: paid Internet forums do not have trolls, spammers, or haters.) This is the best peer tutoring I’ve experienced in over 25 years.

The forum does not have any secret trading codes for the stock markets, and the real-estate entrepreneurs did not get rich quick. However we have many discussions about safe withdrawal rates and the potential pitfalls of our financial independence lifestyles.

“Pitfalls”…?!?

Yeah, you read that right:  just like everyone else, millionaires are concerned whether we’ll have enough money for the rest of our lives. The Just One More Year syndrome is more pernicious among this wealthy group than my years of experience on Reddit, or MrMoneyMustache, or Bogleheads, or even the Early-Retirement forum.

Some of the Millionaire Money Mentors have been happily financially independent for years, yet they’re not ready to stop working. They fall into two groups.

The first group loves what they do, and this is a very good thing. When you’re financially independent and your work is still challenging & fulfilling, then keep working! Do what you love for as long as you can. I hope we all find our avocations.

The second group of millionaires wants to use their FI to work less and live more. As much as they’d like to do that, they’re skeptical that their assets are sustainable. Before they quit their jobs, they want more safety margin.

I empathize with both groups. It takes months to change a mindset from scarcity to abundance, and we’re all reluctant to live a lifestyle that will Die With Zero.

I have over 20 years of experience with financial independence, yet spending money in retirement was harder than I expected. The skills which enable humans to earn, save, and grow our wealth (before FI) have little relevance to living a financially sustainable life without a paycheck (after FI).

Financial independence means that we might be able to afford the (higher) prices of (more) things, but we still have to perceive the value of every purchase. Does it improve our lives? Does it make us happier?

Millionaires can do math. Most of the forum understands probability & statistics. I thought that every member would embrace the strengths of the 4% Safe Withdrawal Rate while accepting its minimal risks. At age 62 I’m old enough to remember when Bill Bengen published his 1994 SAFEMAX research and started the perpetual debate on the 4% SWR. These days I expected that after three decades of analysis, a bunch of millionaires would agree that it’s become conventional wisdom.

That seems so logical, doesn’t it?

Gosh was I wrong.

At first I was shocked by the number of forum members who feel compelled to work for more years to build more wealth which– by their own math– they do not need. “C’mon, folks, I joined this group to learn the millionaire secrets of how to live with too much money! Whaddya mean, you don’t think you have enough?!?”

Our phrase “safety margin” isn’t fretting about our yacht’s lifeboats or the fuel ranges of our jets. We don’t have yachts or jets. (We’re not even contemplating carbon-fiber longboards.) It turns out that people in the Two-Comma Club are still stressing about mortgages, affordable health insurance, kids’ college tuition, long-term care, and the travel budget.

Well, I did buy a (used) carbon-fiber SUP.

The math & logic behind the 4% SWR isn’t enough reassurance, either. When you’re a millionaire, you’re still vulnerable to the emotions of behavioral financial psychology. You might be awesome at math & logic but you’re still human. Even if you’re way past the tripwire of financial independence, you still have to sleep comfortably at night after quitting paid employment.

Yes, these are millionaire #FirstWorldProblems. You wish you had them too, right?

(If you’re just starting your path to financial independence, please keep reading.  Do not despair while you’re paying off debt or feeling the pressure to sign up for that military retention bonus.  These millionaire examples are only highlighting the surprising fact that more money does not free you from worry. We can still help you reach financial independence on your terms.)

What’s wrong with working for more money?!?

Money is the easier part. As we approach FI, we have more critical resources to worry about sustaining.

Recently one of the forum’s more prolific posters, Millionaire73, explained his perspective:

… something I have been thinking about recently and might be relevant for the ‘One more year folks’ who have the means to retire but are worried about running out of money [is] how much thought they are giving to ‘running out of health.’
We always talk about SWR but never about SHR (Safe Health Rate)…
You may want to ask yourself why you have that fear around money but not around health as for all too many they are trading money not only for time but for health as they don’t have the time or energy to take care of their physical or mental health and ‘will get to it later.’
I have to think that less stress, more sleep, more time to exercise, and self-care increases the odds of staying healthier for longer. Are you only worried about the money odds?
For each person, there are the opportunity costs of making money at the expense of time and portions of life/experiences (worth way more than money) that you can never get back if you miss as well.

Then he wrote:

Three years ago I was planning on working for another 5-10 years so my perspective has done a complete 180 and I’m sure glad it did.

That’s the issue, coming straight out of the book “Your Money Or Your Life”:  trading life energy (that you might not have) for more money (that you won’t need).

It’s fascinating to learn about the fallacies and biases of behavioral finance, but we hardly ever discuss the fallacies and biases of our life energy. What’s the safety margin on our health? Maybe we feel personally invulnerable and darn near immortal, but the universe has a few surprises waiting for us. We can all figure out how much money we have– but none of us know how much time we have left.

Worrying about money might be the wrong approach. Maybe we should worry about our quality of life.

Feelings and choices, not just math & logic

I’ve spent decades explaining financial freedom with math & logic, but I’ve learned that our human emotions are more important. I’m finally beginning to understand how to explain FI with more attention to how we’ll feel, and not just more pontificating on exponential compounding.

The deeper I dive into the math & logic of personal finance, the more I appreciate that the emotions of behavioral financial psychology are far more difficult to handle. The size of your spreadsheet only matters if you feel confident about it. If you (and your family) aren’t happy with reaching the 4% SWR’s tripwire of FI, then the math & logic is irrelevant.

I should stop relying on math & logic to assuage our fears about the 4% SWR.

Financial independence gives us the freedom to make more choices. It’s our chance to completely redesign our lives.  We should feel happy about that freedom of choice!

Unfortunately there’s a paradox in all of those choices, and we’re overwhelmed like hyper-sugared toddlers in a candy store.

What do we do with too many choices? We want everything. We flounder with indecision. We procrastinate. Instead of thoughtfully and rationally identifying what we really want, we try to discard most of the other choices so that we can pick something from whatever’s left.

Then our self-confidence withers and we second-guess the choices we’ve already made. We start all over again and end up running around in circles.

Every parent has seen this toddler story before, and we all know what eventually happens. First, there’s an epic meltdown… and then someone else makes the choices for them.

“Golly, maybe it’s easier to stop tasting all the candy. We’ll circle back to these decisions in… oh, Just One More Year!”

As we grow older, eventually most of us learn to make our own choices. (Some of us take longer than others to learn that.) However the longer we flail around in the candy store of life, the more likely it becomes that someone else is going to make our choices for us.

Let’s make that fear work for you. If you’re worried about Just One More Year syndrome and hesitant to make the choices for a better life, then I’m going to help you worry constructively.

“What, me worry?”

Worry? Highly illogical.

So you’re too worried about the 4% Safe Withdrawal Rate to feel that you can stop working, and you’re going to try Just One More Year?

Maybe you should worry that you’ve defaulted to spending more time at work instead of choosing to:

• sleep well almost every night
• eat a leisurely healthy breakfast (and lunch, and dinner), and not snack on the run
• exercise regularly
• spend more time with loved ones
• enjoy nature during long walks with friends, family, podcasts, or your own thoughts
• travel the world at your own pace instead of in between work
• explore new interests as deeply as you want.

If you’re committing yourself to Just One More Year (with only two weeks of vacation), maybe you should worry how you’ll feel about missing the opportunities to:

• reconnect with your spouse and family
• focus on parenting after bringing home your next baby
• volunteer more at your kids’ school
• cheer on your kids at their school & sports events
• travel with family for months at any time of year instead of two weeks in summer
• experiment with long-term slow travel and expatriate living
• drop everything to help family or friends with a crisis
• be there for your loved ones.

“Just One More Year”: is your life on hold, or are you holding back your life?

You should worry that instead of making choices for a better quality of life, the side effects of the stress could be working you to death. JOMY syndrome also means that you might be raising your stress levels with:

• business attire, workplace clothing, and occupational safety gear
• repetitive stress injuries and other service-related conditions
• rush-hour commutes
• corporate travel (in coach, not in business class!)
• meetings you don’t want to have with people you don’t want to deal with
• deadlines
• reorganizations
• watching out for your team
• new bosses
• “mandatory” events of training, team building, and socializing
• frequent interruptions all workday
• assessing every life opportunity within the constraint of the work calendar
• checking e-mail every evening
• a 24/7 corporate culture, including nights & weekends
• having to lay off some of your team… or even
• being laid off.

Considering that list, maybe you should worry about your health. Meanwhile there are literally thousands of posts on personal-finance forums describing how FI people are enjoying their freedom while getting into the best shape of their lives.

While you’re contemplating those Safe Health Rate issues, here’s two more thought experiments.

First, worry about how you’d feel if you were working under the self-inflicted duress of JOMY syndrome when:

• you’re overweight, your blood pressure is higher, you have stress headaches from chronic fatigue, and your doctor’s writing prescriptions
• you’re hospitalized with a health crisis
• a loved one has a severe disease or injury needing prolonged care & therapy
• a family elder needs your help with their home, their activities of daily living, or even dementia.

Is it better to have to untangle yourself from work to take care of these situations, or would you rather already be living your freedom in financial independence?

And finally, think about Taking Stock of your life if:

• your co-workers are dying on the job from strokes or heart attacks, or
• even worse: you realize (before it’s too late) that you’re at risk of dying on the job from a work-related stroke or heart attack.

If you die at work then you don’t have to worry about your feelings– you’re dead. But before that happens, maybe you should worry about how your family, friends, & neighbors will feel. When you’re in the military, you already know how it feels.

That’s a lot of life events to worry about.

Are you still worried about your money and the 4% Safe Withdrawal Rate?

Or would you be less concerned if you had a better Safe Health Rate and the life energy to help you worry about more important issues?

“You Never Know Your Last Day”

Here’s a quote from another Millionaire Money Mentor:

It has struck me lately that we never know the last day we’ll do anything.
For example, I have two friends who looked like they were going to play pickleball for years to come, but have recently had injuries/situations come up.
Now it looks like their last day ever playing pickleball is behind them, not ahead of them.
Things still could turn for them, but I’m even thinking of this issue for myself…I may not be able to do _____. In fact I probably won’t be able to do lots of (fill in the blanks) in 1 year, 5 years, 10 years, etc. So I don’t want to put those off saying, ‘I can do them in the future.’ Maybe I can, maybe I can’t. One simple event could make it the last time I do X, Y, and Z.
Anyway, trying not to be a downer today, but also want to be realistic. So get out there and do what you want NOW – so your last day of doing X is not behind you…as it appears to be for my friends.

 

The Classic-Rock Reference

Welp, that got awfully dark.

I think you can figure out this post’s Call To Action, so now I’ll try for a more upbeat conclusion.

Let’s reach back to those paragraphs about making life choices for your Safe Health Rate.

The world’s greatest drummer in progressive rock, Neil Peart, wrote the world’s best lyric about Free Will in his chorus:

“If you choose not to decide, you still have made a choice!”

Go ahead, click through that link and enjoy the music while you read those lyrics.  We’re here to help you feel better, and that anthem has helped me get through four decades of life.

Now worry constructively: and make good life choices.  The 4% Safe Withdrawal Rate will take care of your money, and you can take care of your life.

In a future blog post I’ll share more ways to get comfortable with the 4% SWR.

(This post was written in memory of Jim Nelson– BigMoneyJim–  who reached financial independence on a high savings rate and became a digital nomad for two years before unexpectedly passing away. Even as his health deteriorated, Jim was happy that he’d had the flexibility to explore his new life.)

Related articles:
Tim Urban’s “The Tail End”
Four Thousand Weeks
After financial independence: Rich, Broke, or Dead?