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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.
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