I’m a fan of the Stoic Philosophers. Stoicism dates back to 300 BC and had 3 ages. Stoic Doctrine covered these notions:
- Nature – Nature is rational.
- Law of Reason – The universe is governed by the law of reason. …
- Virtue – A life led according to rational nature is virtuous.
- Wisdom – Wisdom is the the root virtue. …
- Apathea – Since passion is irrational, life should be waged as a battle against it.
Stoics varied in station from the slave Epictetus to the Emperor Marcus Aurelius and the American experiment owes much to this philosophy. Heraclitus of Ephesus was pre-Socratic and his view was to explore the riddles and paradoxes of humanity the huge unconsciousness of life in it’s relation to the universe. His writings come to us only as fragments so you don’t have majestic volumes to contemplate but you have to make do turning snippets into whole cloth. Heraclitus can perhaps be summed up in one phrase, “the only constant is change”. In some respect he felt change was the cord that connected the future to the past. His famous saying is:
“No man ever steps in the same river twice” which is the basis of the philosophy of “becoming” where as Parmenides stood in contrast with “what is – is”, the basis of the philosophy of being. In these philosophies lives the tension of FI and the FIRE movement. Heraclitus is where I get the notion of “all time travel is forward moving”. If you step in a river, step out and then step back in, in the second step you’re in a different reality than with the first.
Retirement is nothing if not stepping into a different river. It’s a completely different reality than work life. There is all kind of discussion regarding RE and FI, much of it rationalization and marketing, about retirement. One comment is “retirement is squishy” implying retirement doesn’t have a “real” definition but is amorphous and subjective. That’s a pretend reality. The idea is you rebel “against the man” who’s got you enslaved under his boot. Somehow this “man” is your oppressor. He oppresses you by giving you a salary, benefits like paid vacation, health care, a stable environment in which to thrive. He takes on much of the risk you would otherwise suffer. If sales suck for the month YOU STILL GET A PAYCHECK. If the economy is in the dumper YOU STILL HAVE HEALTHCARE. That “man” is a real SOB that’s for sure! Why he expects you to actually “work” for those benefits or at least show up. He needs you to make some money so he can give you a paycheck and manage your risk for you. You want Freedom, you want Independence! No “man” gonna tell you what to do! Why Why I’ll save half and put it in low cost index funds till I get 25 times and then and then RETIRE EARLY! I’ll show that SOB! The drama, the pathos, the sanctimony, it’s all so pedestrian. If you retire at 30, you have 60 years of risk and expense left to cover on your own. Pathos don’t pay the bills.
I recently listened to a Podcast that was hawking RE. Nobody on the podcast was retired. Everybody was still working in some fashion. One had been through the ringer in her life and understood the real danger that looms out there. Under-employed, her husband got a diagnosis and she became “it”. She went into Wonder Woman mode and booted herself into financial security while her husband recovered, plus the kids got raised. It’s an amazing story. She stepped into a different river, but she has been scarred in the process. In her success she saw the bottom approach as she plunged toward the sudden impact. Pull up, pull up, and she did, but as a result she’s not in a big hurry to relinquish her security for “freedom” and “independence” because she lived the risk those words imply. Another just retired at 55. He was a well regarded corporate guy who grew weary of being a road warrior. He had a gig fall in his lap where he is a board member for a corporation and writes a blog, so he no longer fight’s the battle but still is employed. At 55, his portfolio longevity risk is 35 years, a damn sight better than 60 years and he’s spitting distance from SS and Medicare. I read on his site actually 55 is somebody’s boundary between retired and retired early. Either way he’s still working. Another writes a high profile financial blog that makes a lot of money. He sells courses and news letters and podcasts, he owns real estate has a stock portfolio, is a physician and group owner. He’s a natural marketeer. A real every day in every way Tony Robbins type. No problem with that except this guy is as far from retired as Pluto is from Sol. He the one with the notion of retirement is squishy. I guess you have to redefine retirement and make it “squishy” to deal with the cognitive dissonance of the paradox. Another is a real estate guru and is selling his knowledge of real estate investing while owning real estate as his business. His gig is “independence”. He perceives himself as independent. Maybe true but independent is not retired, it merely means you have taken back the risk you gave up when the “man” was “oppressing” you. You’re still working. The last is a physician who has made his life into precisely what he wanted it to be. He came to realize being tied to his phone managing hundreds of severely ill patients 24/7 was not how he wanted to live, so he cut back, started a blog and became a speaker and a podcaster. It’s an expression of freedom, it’s an expression of entrepreneurialism, it’s not retirement. It’s just stepping into a different river.
So what’s the point? People look at FIRE like the participants have 2 heads and 4 mouths. On the one hand they are “retired” on the other hand they clearly are working. On the one hand they are betting their future security on something flimsy like a blog or consulting or what ever. They come up with a “rap” that looks nothing like their reality and try to sell it as “reality”. It comes off phony and it comes off like multi-level marketing. People hear that story and understand it perfectly and say “no thanks, I’m not interested, I don’t do Amway” and the FIRE types just can’t understand the lack of appeal for adopting some “wacky theology” and then betting your life on it. I’m like Heraclitus sitting out here on the perimeter looking in to the unconsciousness of it all. I’m not judging any of it, just contemplating it. Contemplating how there are so many opinions on the state of “being” retired and how to get “to be” retired, while no one actually IS retired. I’ll probably do a post on what actually “being” retired is like from a financial perspective. A post about living in the bulls eye not just aiming at the bulls eye. I stepped into the different river and understanding where “here” is not where “there” was predominates. Can’t wait for 2019 to unfold. I’m a year and a half down the river and I want to know what 2 and a half is going to be like.
2 Replies to “The View”
Listening to these same podcasts, hearing these same guests. I met Wonder Woman, and I can tell you she is remarkable. Sure, there’s the aspect of once-bitten twice shy to her risk aversion, but she’s also a remarkable bootstrapper that loves the intellectual challenge her work provides.
Having been in both the “oppressive man” role employing others who gladly relinquished their risk management to you, and now facing risk dead in the eye in the decumulation phase where you stitch your own parachute gives you an entirely different perspective than the typical FIRE blogger with a handful of personal finance books under their belt and a new convert’s zealotry for the faith.
Being somewhat of a naif, a 46 year old (as of this week!) on a glide path that feels more sustainable than it has in a while, I see the message as less suspect although I can see how the particular messenger can taint it significantly: mainly, it’s okay to take control of your life (and your risk) and choose a more balanced way to work and live.
Sure, you’ll get kids highlighting margaritas on the beach and travel to Thailand as the glamorized version of FIRE, but there’s also the low key living on my terms bloggers that tend to balance them out.
Then there’s the occasionally profoundly sad person whose life was turned around by the concept of financial literacy and questioning orthodoxy – that’s the big save that FIRE can pull off – the removal of constraints, even those that were self-imposed all along.
Enjoy your take as always, my friend (and what a trip to hear voice at long last on said podcast!),
He Dude! HBD. Read my latest!
The people in the podcast are amazing and I take absolutely nothing away from any them. Wonder woman (CMO) truly is wonder woman and her story is most important of all IMHO. She’s actually walked the walk and lived to tell the tail. She stared risk down and beat it to a pulp with her own Human Capital and courage. If I were to emulate anyone it would be her.
The problem in my mind is like looking at clouds. For a little while you might see a fire engine and you focus on the fire engine and cotton onto the fire engine, but it isn’t a fire engine, it’s a cloud. Are you going to plan your life around a cloud? Let’s say you see a star. Polaris, the North star. You can actually plan using Polaris. You can be out in the middle of a big damn ocean and know where you are compared to where you were. Same sky different point of reference.
FIRE starts with an illusion 4 x25. Some hand waving about Trinity study, some hand waving about low cost funds, some hand waving about how you can’t beat the market, some hand waving about how a 90/10 AA is somehow safe. Perversion of what the Trinity actually supposes and it all gets magnified through a game of telephone until it’s a fire engine in the cloud. What is needed is Polaris. A quantitative method to know where you are and where you are going. Polaris starts at the end and works backward. I decided to retire when I was visiting the SS.gov site and reviewing my account. Medicare wages are not capped so I just added up my Medicare wages to see how much my W2 paid me on the average across my life. I lived my life and I knew how it felt so that number was a rational guide to what retirement would be like on the average. It came out to something like 80K/yr over 49 years of W2’s from my first job till the year I chose to retire. (My actual living expenditure in retirement has been about 97K/yr with no economizing and picking up all my own risk like healthcare. My budget was for $120K so I’m under budget. The extra $17K represents the hidden risk premium of being employed that needs to be accounted for in retirement, so the method was remarkably accurate. I’m Roth converting so my expenses haven’t quite stabilized but if anything they will go down post conversion) The excess I made was paid in taxes and funded a retirement portfolio and college. It also bought me a house and some cars and some food and some family life health care etc. Funding college and a retirement portfolio would go away in retirement so that “expense” could be subtracted. Things I wanted like new air handlers for my house could be prepaid and saved in an account. A couple trips to EU prepaid etc. Roth conversion could be prepaid by turning some stock into cash. I bought a new “retirement” car while still working complete with warranty as part of the plan, IE a granular plan of what would be needed for the initial 5 years was pretty easy to make. I could decide if SS was to come sooner or later and plan accordingly. My choice later.
I then looked at my bank/portfolio account and saw it was about 1.5x (from investment growth on top of my savings) what I spent on the first 49 years of my life. I knew I wasn’t living another 49 years and neither was my wife, so every day I went to work I was just incurring risk. I had no more use for making money. Another million was just gilding the lily. I knew what my life felt like and wanted for nothing so I was truly waiting on old age. The point of this is I did NO typical FIRE planning, but worked backward from a position of strength. My future was not leveraged in any way. I was 65 and Medicare eligible and scratched up some health care for my wife and kids and quit. Since my future wasn’t leveraged I didn’t need a job (aka side gig) or any kind of W2. My portfolio was wholly adequate to replace my W2 needs. From that story you see a different way to think about funding retirement. You don’t just pull some numbers out of the air, lever it up with presumed side gig income while leaving the high paying job to rot. You quit on your own terms guided by Polaris and not a cloud. By not being levered or barely levered your chance of success is virtually assured. WR IS the measure of leverage but included in that is longevity. It costs a lot more in interest to fund a 40 year mortgage that a 15 year mortgage, and a mortgage like model is the right model to use for retirement planning. The question is how much house/retirement can you afford. The answer is what it is. The answer is quantitative and mathematically reliable in a Bayesian probabilistic way. It’s not 1:1 correspondence but it’s not hard to get 0.99:1 and likely anything over 90% is good enough. The tools exists to do the calculation and are free for the taking so why base your life on a cloud when you can own a star?
The bigger question is what actually is Financial Independence? Why is everybody Financially Independent but still working? I’m not critical of anybodies choices, and I applaud the initiative, just seems strange for people who are so vocal about independence no one is retired.