Here I am hard charging at 25. I had a boat load of Human Capital, not much risk, a small portfolio, my first house. I was trading commodities at this point in my life, had a steady job as an engineer.
Here I am at 45. Out of med school, out of residency, out of the Navy, Fee for service private practice, Anesthesia main gig, Pain Management side gig 5 days a week. I was Reelin in the years and stowin away the time.
By now I’m working a same day center. My FFSPP turned into a group then our contract was cancelled so we went into competition with the hospital. Did that gig for 7 years plus pain on the side. No call, no weekends, still pretty stressful as the Human Capital was winding down. At 65 I realized what 70 would look like if I continued to work. Human Capital a sliver, Risk through the roof, a tiny bit of reward compared to a big portfolio. Risk and stress dominate this picture. I needed a New Goal!
What I did was go to SS.gov and looked at my life long Medicare earnings. Medicare earnings are not capped. I added them up and divided by the number of years I worked. That was my Human Capital gross and average for my work life. Out of that HC I had funded a retirement portfolio, bought a house, some cars, paid for college for my kids, food, travel, insurance, taxes. all the stuff of life. I looked at my bank account and portfolio and saw I had 1.5 times in the bank what the value of the Human Capital was I had expended over the course of my life. What I had in the bank would easily substitute for my Human Capital and give me and my wife security to the completion of our lives. A few more years or another million meant nothing compared to the growing risk and stress. I knew what my HC had paid for and I was completely satisfied with living at that level. That trip to SS.gov changed my life and was just the tool needed to correctly assess my risk and reward going forward. The rest was merely details, get some health care together, re-jigger some TIRA to Roth pre-RMD, Optimize taxes going forward, Optimize SS, reduce SOR risk by moving to 5 years of cash to live on while Roth converting, details. Nirvana is about moving from being a Human Doing to becoming a Human Being. The portfolio is correctly sized and funded so there is virtually no risk, My time is my own so there is no stress. Nirvana is a place of Zen:
Nirvana is a place of perfect peace and happiness, like heaven. In Hinduism and Buddhism, nirvana is the highest state that someone can attain, a state of enlightenment, meaning a person’s individual desires and suffering go away.
I’m Catholic not Buddhist so I have my guilt to deal with but this is where I’m at today.
Been down one time, Been down 2 times, Never going back again.
This is what it means to win.
This is what the SS.gov calculation provided me. A clear personal picture of where I stood in my life. Displayed in that table was a history of what I did and what I could expect. I knew how it felt to live my life and what that cost. I knew what it took to get where I was and for the first time I saw where I was going, Not some normative projection or a FV calculation or bla bla bla on a forum or article in Forbes. At that point I internalized what enough meant and I had more than enough. At that point return became irrelevant and I realized my life had become ALL RISK and it was time to make a decision. I did risk really well. I was good at risk, but I a needed New Goal. So I gave myself permission. The relative sizes of the triangles are important. My retirement and self insurance out sized what my life had cost. There is no leverage needed in a flush retirement save perhaps enough to cover inflation.
There is a TON of leverage in this retirement. The little purple triangle needs to generate ALL of the green triangle. So when someone is bragging about retiring at 30 what they are bragging about is their stupidity and failure at risk management. Do not be deceived by the shiny object.