Better Things to Do

Kathy Wilhelm

I NEVER PLANNED TO retire at age 53. I wasn’t an early adopter of the FIRE, or financial independence-retire early, philosophy. In fact, I didn’t start saving seriously until my late 30s, when I left my first husband and finally realized that—unlike pensions in my native U.K.—my U.S. pension didn’t come with an annual cost-of-living adjustment.

Instead, three developments in the late 1990s led me to consider quitting. First, I was no longer enjoying my job. I had been a happy techie for most of my career, but in the early 1990s a major corporate reorganization had miscast me as a project manager for a couple of years. My division was then sold to a competitor and two-thirds of my colleagues in the division were laid off. Although I was back working as a techie, the job seemed less interesting and I didn’t think I was as good at it as I had been. I started to think about reinventing myself as a technology writer.

Second, I was hearing too many stories of people who had retired at 65, only to drop dead or become sick. I was developing an interest in travel, and I wanted to start while I still had good health and good mobility.

Finally, my employer started on its long road of rolling back promised provisions for retirees. I was old enough to be grandfathered under the existing pension plan, but my pension wouldn’t increase after I reached 30 years of service—and that was only a couple of years away.

But could I afford to quit? My pension would only be 40% of my final year’s salary. While corporate apparently wanted me out, my local management didn’t, so I had no hope of a package. I had been fully funding my 401(k), and saving in my taxable account as well, but my nest egg hadn’t yet reached my personal “magic number.” Still, that number was in sight, and I wasn’t planning to stop earning altogether, at least not then.

Looking at cash flow, the picture was brighter. I was living on less than my income and my expenses would drop considerably when I quit. I had refinanced my mortgage to 15 years, and had also been making extra-principal payments. I could easily pay off the remaining loan. If I stopped working, I’d stop saving for retirement, and instead leave it to the market to increase my nest egg’s size, and I’d also save a bundle in taxes.

I discovered that a local university offered a “certificate in professional writing.” I took the first required class while I was still working fulltime. I told my managers that I was planning to retire. They offered to switch me to permanent part-time, but I thought that would confuse the benefit situation. Instead, I retired on Oct. 1, 2000, the day I reached 30 years. On Oct. 2, I went back to work as a part-time contractor, while also taking the remaining writing courses, which proved more fun than useful.

Of course, with stocks mired in a two-and-a-half-year bear market, October 2000 wasn’t the best time to retire from a sequence-of-returns perspective. It was fortunate that I didn’t need to tap my nest egg. Instead, I followed a policy of benign neglect, neither buying nor selling. Over time, my portfolio recovered and kept growing, which meant I had no problem following the same policy in 2008 and 2020. Indeed, in 2008-09, I was too busy planning trips and traveling to worry about my market losses.

I finally quit my techie job in August 2001, when I left on my first long trip, China to Chennai. I’d had thoughts of selling travel articles. But when I returned in January 2002, nobody wanted articles about travel in Asia. Instead, I got a job as a part-time tech writer at a local start-up that was mostly staffed by former colleagues. It paid a good bit less, but was also a lot less stress. I kept it—between trips—until April 2004, when I started a 10-month trip around the world.

Back home in early 2005, I found three jobs I qualified for on, but then realized I didn’t actually want any of them. I was ready to quit work once and for all, and find out if I could live on my pension.

I began using Quicken in 1999, so I could run reports to see how I was doing and where my money was going, and I have records for the whole of my retirement. I started with a healthy balance in my Vanguard Group money market fund. I include interest from that account in my income, but not interest and dividends from my other taxable funds.

The money market fund paid for my house renovation in 2013, the cost of which is excluded from the income-and-expense analysis that follows, although maintenance costs—such as a new roof, new HVAC and so on—are included. My much-loved Mazda MX-6 was totaled in an accident in 2007. But since the insurance settlement covered almost all the cost of my current Camry Hybrid, my new car fund is still untouched.

The key question: Has my retirement income—my pension, Social Security and the income from my money market fund—proved sufficient to cover my expenses? The years from 2001 through 2021 break down into four phases. From 2001 through 2004, when I was both working part-time and traveling, my income was ahead of expenses. From 2005 through 2009, when I was traveling but not working, I basically broke even.

From 2010 through 2016, despite starting spousal Social Security benefits in 2013, my expenses were well ahead of income. About a third of the amount over and above my income was for work on my house, and the rest went to travel expenses. Finally, since 2017, when I started my own Social Security benefit, and was later grounded by rheumatoid arthritis and then the pandemic, my income has significantly exceeded my expenses and has more than made up for the shortfall in phase three.

The money market fund, which I used as a kind of overflow tank, reached a low point in 2013—the year of my big home renovation—but has since recovered, although it’s down about 45% in inflation-adjusted dollars since I retired.

Last year, I sold my home and moved to an apartment, ahead of my planned move to a continuing care retirement community (CCRC). In the 23 years since I retired, I haven’t touched my retirement or taxable accounts—except for the money market fund—but I expect to finally start the dreaded decumulation phase when I enter the CCRC.

Do I regret my early retirement? Absolutely not. It’s true that I would have more money and a bigger Social Security payment if I’d continued to work. But when I was grounded by rheumatoid arthritis in 2017, I was profoundly thankful for those years of travel. Carpe diem, dear reader, carpe diem.

Kathy Wilhelm, who comments on HumbleDollar as mytimetotravel, is a former software engineer. She took early retirement so she could travel extensively. Some of Kathy’s trips are chronicled on her blog. Born and educated in England, she has lived in North Carolina since 1975. Check out Kathy’s previous articles.

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