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Mrs. Groovy and I have now been retired for three years. And I must say that we are kicking this retirement thing’s ass. Here’s the skinny on our retirement thus far:
- Since retiring, our net worth has increased by $190,000. That works out to an average increase of $63,000 per year.
- Between my pension and our portfolio’s interest and dividends, Mrs. Groovy and I bring in $45,000 a year.
- Over the past three years, our annual spending has averaged $38,500.
- We sold our house outside of Charlotte for a modest profit and built our dream house outside of Wake Forest so we could be closer to our family.
- We’re doing everything we want to do. If we want to go to a restaurant, we go to a restaurant. If we want to buy a piece of furniture, we buy a piece of furniture. If we want to travel, we travel. Not once have we had to temper our consumerism or do without. Earlier this year we spent 35 days in Australia. More recently, we retired Lucy (a 2004 Camry) and bought Penny (a 2016 CR-V) with cash.
Why You Should Be Wary of Our Experience
On the surface, Mrs. Groovy and I are textbook FIRE. We lived modestly, saved nearly 60 percent of our household income for ten years, and quit our jobs once our net worth comfortably exceeded 25 times our annual living expenses. Now, three years into retirement, we’re richer and as happy as we’ve ever been.
The system works! Just do what we did and you’ll have a kick-ass retirement too!
Well, not so fast. We have some built-in advantages that need to be considered. Let’s review.
Mrs. Groovy and I Are in Great Health
Mrs. Groovy and I are on the cusp of 60 and everything works. We can still walk, climb, bend, and lift without any issues. Our hearing is fine. Our eyesight is fine too. Neither of us takes medication to control our respective cholesterol, blood sugar, or blood pressure. In short, we are in fantastic health. And because of that, practically none of our budgeted money is used for actual healthcare. The vast bulk of our budgeted money is used for everyday expenses and fun.
We Own Our House Outright
There is no mortgage on Groovy Ranch. Mrs. Groovy and I own it outright. And if I said it once, I’ve said it a thousand times: The cheapest housing you’ll ever have is the housing you own outright.
Mrs. Groovy and I Live in a Low-Cost State
The property tax for Groovy Ranch is $1,800 annually. That property tax bill is just 33 percent of what our property tax bill was on our 600 square foot Long Island condo back in 2006 ($1,800 vs. $5,400).
So far this year, Mrs. Groovy and I have spent $36,300.* Take away $11,642 for travel and that amount drops to $24,658. Take away the anomaly of $4,485 in dental expenses and that amount drops further to $20,173. Divide $20,173 by 9.33 and you get an average monthly expense of $2,162.
Mrs. Groovy and I could live quite comfortably on less than $2,200 a month. We wouldn’t be able to travel the world, of course, but we’d have plenty of money for necessities, fun, and the occasional weekend getaway. And this is only possible because North Carolina doesn’t zing you on taxes and utilities. Heck, our electric bill for August was $96.
* Note: This spending doesn’t include capital improvements to Groovy Ranch (e.g., storm doors and a concrete driveway) and the cost of capital goods (e.g., furniture and a new-to-us car).
My Pension Covers More than Half of Our Annual Living Expenses
Because I provided somewhat stellar labor to a Long Island municipality for 21 years, I’m entitled to an annual pension of $19,750. That isn’t a lot of money, of course. But because we live in a low-cost state, that pension covers more than half of our annual living expenses. This, in turn, makes things a lot easier on our portfolio. It doesn’t have to cover 100 percent of our annual living expenses. It only has to cover 50 percent of them.
We Get Essentially Free Healthcare because of Obamacare
Finally, because Mrs. Groovy and I are income poor but asset rich, Obamacare entitles us to a hefty healthcare subsidy. This year, our monthly healthcare premium is $1,780.73. But we only pay $24.73 per month. The taxpayers pay the balance. Would we be having such a kick-ass retirement if we had to pay the entire annual premium of $21,368.76?
Is FIRE Legit?
I firmly believe that the tenets of the FIRE movement are incredibly sound. You abide by them and you will not only build wealth but you will also enjoy a very fulfilling life. But when it comes to the paramount question regarding the FIRE movement—the validity of the four percent rule—I can only offer conjecture. Yes, I think the four percent rule is valid. If my pension went away and the taxpayers stopped paying for our healthcare insurance, Mrs. Groovy and I would still be enjoying retirement. Our portfolio is theoretically large enough to handle those financial hits. But I don’t know for sure. And I never will. My pension isn’t going away and by the time Congress stops giving Obamacare subsidies to rich people, Mrs. Groovy and I will be eligible for Medicare.
Bottom line: You can’t go wrong following the tenets of FIRE. But when it comes to actually retiring, you better do your due diligence. Just because retiring has worked for me and Mrs. Groovy doesn’t mean it will work for you.
Final Thoughts
Okay, groovy freedomist, that’s all I got. What say you? Are Mrs. Groovy and I good ambassadors of the FIRE movement? Or are we total frauds? Let me know what you think when you get a chance. Peace.
Love the context here. I think it’s wise of you to point out that what worked for you can work for others, but it just has to consider some of the unique advantages that you have right now and calculate accordingly.
I’m a believer that everyone can create their own unique advantages through side-hustles, smart investing and due diligence, and continual education.
Thanks for the content!
“I’m a believer that everyone can create their own unique advantages through side-hustles, smart investing and due diligence, and continual education.”
Agreed. I couldn’t have said it better myself.
Awesome post!!!
Thank you, my friend.
Great doing, Groovys!! I think “income poor, asset rich” is key as long as the system continues to be set up to favor that picture. There was an article in the local news here not too long ago about a multi-millionaire who went down to his county social services dept and got himself on welfare–just to prove how effed up the system can be. He’s asset rich and income poor. I’m not in favor of taking advantage of the system like this guy succeeded in showing can be done. However, the income poor discipline is optimal for FIRE success, I think. With this new chapter in life, I’m watching folks like you carefully in order to determine my next moves. Thanks for the awesome example!
“There was an article in the local news here not too long ago about a multi-millionaire who went down to his county social services dept and got himself on welfare–just to prove how effed up the system can be.”
Ouch! When you get a chance, can you send me a link to this story? I’d love to read about it. And you are so right about how being income poor and asset rich is so pivotal to FIRE success. You not only don’t get taxed but you also get a lot of free stuff. Amazing. Great freakin’ comment, Mrs. B!
Here it is, Mr. G. https://www.google.com/amp/s/www.foxbusiness.com/personal-finance/how-this-minnesota-millionaire-receives-hundreds-of-dollars-of-food-stamps.amp
You’re the best, Laurie. Thank you.
Good update, and some key points for all of us to remember. I think the health portion is a critical one as well.
Mrs. 39 Months is still very “conservative” in regards to this (see our latest workings with a financial planner re: this) so my bet is, once we pull the trigger, our experience will be just like yours.
Thanks for the info!
Mr. 39 Months recently posted…Financial Advisor meeting #2
My pleasure, Mr 39 Months. And thanks for the heads up on the financial advisor post. Looking forward to reading it. Cheers.
This is the type of post I was looking for when trying to make my own early retirement decision, which was at about the same time that you were making yours.
Back then, what I wanted to see was how other people, who weren’t too dissimilar to me, were doing. How they approached early retirement, their attitude to spending, how much it cost etc. Nothing too scientific or highfalutin (first time I’ve ever typed that word!), just some real first hand experience that would give me comfort and confidence with my own decision making. I’m sure this post will be helpful for many others looking for something similar.
David @iretiredyoung recently posted…Early retirement travels – week 3 Costa Rica
Glad I could help, David. And your use of the word “highfalutin” warmed the cockles of my heart. Bravo, my friend.
sounds legit to me, although you’re right to caution a younger generation. folks just 10 years older than me (about your age) at my job stand to cash out a couple of grand of pension a month. mine will be a few hundred. the young person hired last year it will be zero. we all do the same job and it’s very different.
i just wrote about the boomers eating my lunch. as soon as they were done with a benefit, they changed the game. i’m not crying about it but am aware of it. or am i a victim? ha.
freddy smidlap recently posted…It Turns Out They Don’t Get a Vote on Your Life
“I just wrote about the boomers eating my lunch. As soon as they were done with a benefit, they changed the game.”
I think a large part of that has to do with the emergence of Japan, Korea, Mexico, China, and India after 1970. Our businesses had a lot easier time providing pensions when their only real competition was the Soviet Bloc. But your point is still valid. The boomers have a lot of explaining to do.
Looks to me like you are rocking it. I’m 50 and about a year into the FI movement. Still working on paying off debt. Should be done with the non-mortgage debt within a year and about 4 more years after that for the mortgage. I know many say to not pay off the mortgage, but my mental peace will need that. My goal was 57 to be completely debt free and start looking at retirement but I think I can be debt-free at 55 if I stay focused. Our expenses look similar to yours. LOVE reading your experiences!
“My goal was 57 to be completely debt free and start looking at retirement but I think I can be debt-free at 55 if I stay focused.”
I’m rooting for you, Tami. May the financial gods continue to smile upon you!
You guys are legit ambassadors. The pension helps a ton. Living in a low-cost location is huge too.
Portland is getting pretty expensive. The cost of housing pushes our annual expense up to about $55,000. Someday, we’ll move to a cheaper location.
We need you in the Raleigh area, Joe. Get your butt over here.
I agree with your bottom line, and it sure sounds like you and Mrs. G are living an optimal FIRE life.
The mortgage question is a puzzle. As you said, a paid off house is the cheapest living expenses you can get. The Mad Fientist
posted a guest article (link below) where the author decided to experiment by paying half of his mortgage off and investing that amount in an index fund. The premise being that money is incredibly cheap to borrow and he could potentially earn enough in the fund to more than offset his PITI. It’s an interesting idea, and one we are entertaining as we leap back into the housing market. What are your thoughts about that?
As far as Obamacare- your monthly premiums are sweet. Another advantage of geo arbitrage! We’re paying $151, which is still ridiculously good. The idea that taxpayers are funding this subsidy doesn’t make me feel guilty. Employer-provided health insurance has been subsidized in much the same way for over 50 years. IMO, the ACA is just more transparent and obvious in that respect.
Great post, Mr. G.
https://www.madfientist.com/mortgage-payoff-experiment/
Hey, Mr. G. Thanks for the link below. It’s on my reading list for this week. I’ve long suspected that a half mortgage, giving the ridiculously low interest environment we’re in, might actually mean cheaper housing than outright homeownership. Awesome food for thought.
This was a very helpful and open post. Thank you!
It sounds very much like any surprises since you have made the FIRE move have been positive ones. Do you have any significant negative ones to share? Not trying to be a downer but it would help to hear of any gaps that you are seeing in your plans.
Thanks!
“Do you have any significant negative ones to share?”
Great question. Mrs. Groovy and I pondered that question for a little last night. The only thing we could come up with was that we entered retirement with a super conservative asset allocation. Forty percent of our portfolio was in stocks and 60 percent was in bonds. If it were the reverse, our net worth would probably be $250,000 to $275,000 higher rather than $190,000 higher. But that’s okay. We valued safety more than gains. Didn’t want to get knocked out of retirement by a 2008-like collapse.