Both FIRE and traditional retirement involve uncertainty and finding purpose

By Chris Mamula





A few years ago, I left my career as a physical therapist at age 41. I decided to pursue a completely different financially independent, retired early (FIRE) lifestyle. Around the same time, my parents asked me to go over their finances with them. They were preparing for traditional retirement in their 60s.

After years of working with a financial advisor, they realized that they were paying far more than necessary for financial advice that was questionable at best. They asked me to help manage their finances as they transitioned into retirement.

I initiated our transition into early retirement. Simultaneously I was intimately involved in navigating my parents’ transition into traditional retirement. The experience provided unique insights.

I’ll explore a few common themes I came across despite our vastly different situations. Lessons I learned will assist your retirement planning, wherever you are in your journey to financial independence and whatever type of retirement you desire.

Dealing with uncertainty

The biggest challenge to retirement planning is dealing with uncertainty. Financial markets, interest rates and inflation are all difficult to predict and completely out of our control. Health-care costs are a massive unknown. We all have unique personal situations that will affect our tolerance for risk and need for security. And none of us know how long we’ll live.

This is all true for both traditional and early retirement. However, to me it feels more manageable with traditional retirement.

Uncertainty in early vs. traditional retirement

Anyone reliant on an investment portfolio to produce income deals with uncertainty in financial markets. This is manageable for those who’ve achieved a stable traditional retirement. Social security provides an income floor. You can annuitize a portion of assets if more of a floor is needed. You could also consider a reverse mortgage.

Read more here

Originally posted by:

Chris Mamula

January 25th, 2020

www.marketwatch.com