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Riding Out the Storm

James Kerr

THEY SAY TIMING IS everything. That’s something I should know—because I’ve never been very good at it. The motto of Scotland’s Kerr clan is Sero Sed Serio, or Late, but in Earnest. That’s been my reputation since I was young.

In high school, my basketball game blossomed at the end of my senior year, just in time to have one good game of double-digit scoring before I graduated. I’ve missed every fashion trend that’s come along. Anybody want an unworn pair of bell-bottom jeans? I didn’t publish my first book until I was age 62. And as for investing? Well, let’s just say I didn’t buy shares of Apple or Amazon before they took off for the moon.

So, when it came to saving for retirement during my working career, I automated the process as much as possible. In addition to making monthly pretax payroll contributions to my 401(k) to take advantage of the company match, I had additional money pulled out of my bank account every month and invested in mutual funds held in a taxable account. Over time, the power of dollar-cost averaging made up for my own lack of investing prowess and enabled me to build a decent-sized nest egg.

Alas, my miserable sense of timing came back to bite me when picking the date of my “retirement” from the corporate world. I opted for September 2021. Back then, all was blue skies in the financial markets. My portfolio was appropriately diversified for someone of my age, or so said my account advisor at Vanguard Group. As long as I didn’t change my spending levels or long-term income expectations, he was confident I could leave the workforce at 61 and be fine for the next few years, until I started taking Social Security and Medicare.

Then came 2022, soaring inflation and interest rates, and a brutal year for stock and bond investors. Who could have predicted that in my first year without a steady paycheck, I’d be looking at double-digit losses on both the stock and bond sides of my portfolio? So much for the power of diversification in reducing portfolio risk.

Even worse, right before interest rates took off, I rolled over my 401(k) balance from my former employer, which had been invested in small-cap funds, and put the money mostly into the bond side of my portfolio, with the goal of maintaining my targeted 60% stock-40% bond mix. Needless to say, those funds have gotten hammered in the bond selloff.

Sero Sed Serio.

But here I am, still standing. I haven’t (as yet) had to go back to fulltime work or draw on my retirement accounts. How am I riding out the storm? Four things have been key to staying afloat:

1. Low expenses, plus avoiding debt like the plague. Proper preparation goes a long way toward making up for lousy timing. For years before I stepped away from the corporate workplace, I was ruthlessly lowering my expenses. I downsized, paid off my credit cards and got rid of all debt except the loan on my new Keystone travel trailer.

If I had a big mortgage to pay every month, there’s no way I could have ridden out this storm in the financial markets without going back to work. I own free and clear my mountain cabin and the land it sits on. My biggest monthly expense is buying my own medical insurance. That isn’t cheap, but I consider it the price of freedom.

Unlike when I was working, I know I can’t buy anything I want. I have a budget and I work hard to stick to it. Every potential purchase gets weighed on a scale of what I would have to give up to buy it. The one exception is travel. This phase of my life is about experiences and adventures, so—if I can afford a trip—I’ll take it. For instance, the weekend before Thanksgiving, I went on a spur-of-the-moment trip to Breckenridge, Colorado, to see my son and his fiancée.

2. A sizable emergency fund and health savings account. Life is unpredictable. While budgets are great, they can’t take all contingencies into account.

That’s why, before I stepped away from the corporate world, I made sure I had a substantial emergency fund to pull from when necessary. I tapped into it recently to help my son with a legal problem he was facing. I also used the fund to pay for a new set of tires for my truck. Without a rainy-day fund, I would be pulling out the credit card or going to the bank for a loan—and that would spell the end of my freedom.

Before I retired, I also made sure I had a health savings account fund to draw on for out-of-pocket medical expenses. I built up the fund with pretax contributions while I was working, and have been pulling from it over the past 18 months to cover deductibles and insurance copayments. Having this fund was critical in paying the cost of my replacement left hip earlier this year.

3. A side gig to bring in extra income. Even with all my preparations, I knew going into early retirement that I’d have to continue making money to replenish my emergency fund, and to pay for travel and other adventures.

Fortunately, I have a skill—writing—that I can make some money at without being chained to a corporation. In addition to writing freelance articles like this one, I’ve launched my own communications business, Boy Blue Communications, to take on select writing and communications projects for my former employer and other corporate clients.

The beauty of having my own firm is that I can choose the clients and projects I take on and how many hours I want to work. My specialty is high-level financial and executive communications, speechwriting, and client case studies—all areas that interest me and that I can charge a healthy premium for. I enjoy keeping my finger in the corporate world. It keeps me mentally sharp, while bringing in a decent amount of income.

4. The power of dividends. When the market was crashing at the beginning of the pandemic, I took advantage by picking up a bunch of quality dividend-paying stocks in my taxable account.

A few of these stocks, such as Exxon, AbbVie and Blackstone, have more than doubled since I bought them. Only one, AT&T, has been a dud. But all of them have continued to pay dividends over the past few years, and a few of them have increased their payouts. The dividend stream isn’t much—less than $5,000 a year—but it has helped keep my savings account from dwindling and paid for a few trips over the past year and a half.

The stock market will come back and eventually return to record highs. In the meantime, I’m holding my ground in the storm, while enjoying my newfound freedom to pursue my passions. Sero Sed Serio.

James Kerr led global communications, public relations and social media for a number of Fortune 500 technology firms before leaving the corporate world to pursue his passion for writing and storytelling. His debut book, “The Long Walk Home: How I Lost My Job as a Corporate Remora Fish and Rediscovered My Life’s Purpose,” was published in 2022 by Blydyn Square Books. Jim blogs at PeaceableMan.com. Follow him on Twitter @JamesBKerr and check out his previous articles.

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