One way or another, the final year of employment hurts.
I know because I’m going through it myself. My mind shifts between two positions. I alternately think I should a) work another five years and b) hand in my notice tomorrow.
And I know because when I delve into online retirement forums, everyone who is very close to the end appears to be experiencing the same thing.
And I know because it’s human nature to start second guessing yourself right before you make a decision that feels irrevocable.
The Sources of Uncertainty: Fear and Change
It makes perfect sense that I’m feeling this way. I’ve been working in my industry for fourteen years now. It’s the longest I’ve been doing anything in my life, by far. By now, being locked into this weekly office-home routine seems like all I know how to do.
The truth is that part of me is scared to leave my job, even though I recognize that I don’t enjoy it and I’ll absolutely be happier without it. Although this sounds illogical, it actually makes perfect sense: All humans fear change, including shifts in lifestyle that are obviously going to be huge positives.
And this is a big shift. Leaving a day-job and an industry that I’ve been engaged in for a decade and a half is a BFD.
In a single instant I’m going to lose the following:
- Coworkers: the good, the bad, and the clinically insane.
- Rigid, scheduled structure five out of seven days a week.
- A monthly paycheck and a cadillac health-care plan.
- Any sense of being tied to an organization and their mission statement.
- The sense that every month that goes by I’m continuing to throw money on the pile — financial momentum. This feeling (which I think of as massive tailwinds) will be arrested as I begin to live off of my savings and investments. Sure, that stash will probably continue to grow even after I quit, but it will do so at a greatly reduced pace. I think everyone on the FIRE track becomes addicted to watching their pool of assets rapidly increase, so there is a mental adjustment that needs to be made here.
- The feeling of satisfaction that comes from completing job-related tasks.
The above list doesn’t even include perhaps the biggest loss of all. The goal has been obtained. Target acquired: FI reached. You’ll likely need to replace this goal with something else in your post 9/5 life.
Bottom line: It hardly matters how perfect you know your life is going to be in the next phase. Your brain is still going to register some of the transitional losses and it will take time to make the adjustment.
Financial Uncertainty: Have I saved enough?
This is the number one question that people confront when they hit their retirement number. And, not surprisingly, for many people, the answer is no, because of any number of reasons, including but not limited to:
- The 4% Safe Withdrawal Rate
- Some folks don’t understand why this is considered safe.
- Or they misunderstood an aspect of it.
- Example: Your spend rate should include taxes as an expense.
- Others do understand, but still don’t trust it. They think: This era is different from any era that came before, due to <fill in your reason here> and therefore I can’t expect growth in line with historical levels. I’ll list a few off of the top of my head:
- Climate change
- Physical Resource Shortages
- Probability of Nuclear Disasters, Contagion, or other Global-Economy-Killing Disasters and Doomer scenarios
- Miscalculated Costs of Living.
- Maybe when you first came up with your FIRE number you lowballed yourself. Didn’t realize you’d want to travel. Didn’t realize you’d absolutely need to live in a particular city for whatever reason.
- Levels of required ‘comfort’ go up for some people because they’ve succumbed to some form of lifestyle inflation
- Financial goals may have changed somewhat. Perhaps you suddenly feel a need to tithe or support a child who can’t find a job after college. Or you’ve realized that you’ll need more money for health-care than you anticipated.
- Succumbing to the Temptation to be Rich
- When people start to feel the power of compounded earnings go to work on a sizeable pile of assets, watching the money grow occasionally distorts desires. Some folks realize that if they can work a few more years they can considerably increase their net worth, and upsize their lifestyle
- Others see benefits (perks) at work kick up a notch. Maybe your guaranteed pension goes up by a certain non-linear amount every year, making each successive year seem even more beneficial than the last.
- This is a slippery slope. Once you start dreaming about lifestyle inflation, it will never seem as though you never have enough saved.
On the flip side, it can also be difficult to work that last year. Once you know you’re a short-timer, it’s hard to care.
You’ll be in meetings where people are talking about projects and your brain will float off to never-never land as you struggle to give a shit about anything.
Maybe the quality of your work will suffer. Maybe you’ll take an uncharacteristic number of sick days or just refuse to work on things that don’t interest you. Maybe nothing interests you at all, resulting in very, very little work getting done.
You’ll become hyper-aware of all of the people and things in your workplace that bother you and there will be days where you feel like you just can’t stand another second of it. Like you’ve had an itch for way too long and now you’ve really got to give it a good scratching with your nails — but the only way to relieve this particular itch is to turn in your notice.
Also, by the time you hit your number and you’re ready to leave, you’re older and you’ve become increasingly aware that your time on this planet isn’t going to last forever. Continuing to voluntarily spend your time inside work-a-day prison starts to seem insane. There will be entire weeks where it seems like half of every day you’re thinking about walking out the door and just not coming back.
Resolving the Conflict
So you want to quit immediately. But you also want to work five more years and continue to grow your nest egg.
Which is it? How do you come to any decisions about all of this?
Easy. Since you’ve made it to your last year of working prior to early retirement, you must be the sort of person who enjoys planning. The key is to be mindful and review your previous plans. If you created a FIRE number and you’ve exceeded it, why does it suddenly seem insufficient? If you think you suddenly love your job, why? What’s changed? Is it possible that you’ve simply become institutionalized?
Maybe you’ve set a date to quit working but in the meantime have surpassed the amount you need to FIRE. Could you consider quitting early to make your short time even shorter? Is there any real reason to stay with your employer?
It’s also OK to be honest with yourself about your FIRE number. If you have legitimate reasons why you must have a higher level of assets than previously calculated, then generate a new number and work toward it. But you should also be aware that no matter how much money you have, you’ll always want more. It’s very difficult to feel like you have enough because the concept of enough has an emotional basis. And your emotions don’t care about facts, like the 4% safe withrdawal rate or your charts which prove that you are financially ready. Your emotional core is probably more fearful about the change itself than the numbers. So if you feel like you don’t have enough, try sitting in a quiet spot without the internet or other distractions and poke around your feelings. Ask yourself what your real concerns and goals are and then work on them.
But also acknowledge that many of these fears have their roots in peoples’ natural (and irrational) resistance to change. Once recognized for what they are, these concerns can be overcome, allowing you to finally quit your job and move on. It’s also important to remember that even the best retirement plans do have risk. Risk is a part of life, and we all live with it. No retirement plan will be resistant to hyper-inflation or a cockroach plague that wipes out 90% of the world population. You can’t fight these risks by increasing your stash.
It’s also helpful to continue to be mindful of reasons you want to leave.
When you have all of this straight, and you hold everything in your head at once, the plan of action will be crystal clear and your emotions will settle. It is at this point that you’ll walk through the door to the next phase of your life.
That’s my own plan anyway. Barring a catastrophic market failure which puts me below my FIRE number, I’m leaving my employer in Feb 2015.