Most FIRE stories are of men. A lot seem to be of ex-software engineers (on blogs anyway). It’s rare to see profiles of early retired women, especially single women who retired early from ambitious careers.
Also, most FIRE stories focus on strategies for things like accumulating enough assets to FIRE. Investment selection. Portfolio allocation. Safe withdrawal rates. Sequence risk.
These are important topics for sure. I’ve covered many of them on HYW. But they are also very much about the mechanics.
It’s rare to hear how early retirees grapple with stuff like: loss of professional identity, building a new non-career identity, finding purpose, fulfillment, and community as an early retiree; or dating and companionship in early retirement.
This week, I chat with Kim (last name withheld at her request) about her journey from MBA to corporate career to early retirement at 39 and her life and identity now 5 years post-FIRE. We discuss some of these rarely mentioned topics, as well as what it’s been like so far in early retirement as a single woman.
We talk about:
- Kim’s career path before early retirement
- How she came up with her FIRE number
- Her numbers: earning/income trajectory from MBA graduation to early retirement, spending level during her career & now in retirement
- Her asset allocation + tactics she uses for managing, rebalancing, risk mitigation, and withdrawing from her portfolio
- Factors she considered in terms of spouse/family vs. early retirement
- Advice on dating and companionship in early retirement
- What she learned about finding a new non-career identity, purpose, and fulfillment in early retirement
- How Kim spends her days now & how she’s found community as an early retiree
- Her advice for other young women who are interested in FIRE
Know any other interesting unmarried women who are pursuing or achieved FIRE? I’d be interested in potentially interviewing them for the podcast. Let me know by leaving a comment.
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Read this episode as a post:
Andrew Chen 01:22
My guest today is Kim, who I’m going to leave anonymous at her request. She’s not a content creator or YouTuber or blogger. She’s just an MBA early retiree who FIRE’d before she turned 40, after a career working in business operations and planning for some of the largest retailers, including Walmart, Amazon, and Wayfair.
I invited her onto the podcast to share her perspective as a single woman early retiree: how she decided on and achieved financial independence, her numbers to make it work, how she manages her nest egg, and how she handles the “what do you do for a living” question.
We also delve into how – several years into early retirement now – she spends her days, how she finds community, and what’s often not discussed in the FIRE community, namely, how she’s had to shift her sense of personal identity to find a different work purpose and fulfillment in life now that she no longer has a high achieving job title or a work identity.
So, I think it’ll be a good discussion, an enlightening conversation, and…without further ado, let’s jump in!
So, how are you? Thanks so much for taking the time to chat with me.
I’m good. Yeah, thanks for having me.
Andrew Chen 02:26
Are you at home in your hometown right now?
Yes, I’m here in Boston.
Andrew Chen 02:31
Excellent. I’d love to just start by…tell us about you.
You’re based in Boston. What year did you early retire? What was your age at the time of your retirement, that kind of stuff?
I’m coming up on my five-year retirement anniversary this September, and I retired just after my 39th birthday.
Andrew Chen 02:52
So that was 2017?
Andrew Chen 02:56
Tell us about your professional career background before you early retired. What were you doing?
Most of my career was in e-commerce and retail. I worked specifically in inventory management, and spent most of that in e-commerce, so most of it was new and building up, how do you solve these problems, where usually in “brick and mortar,” there’s 20 SKUs, and we have millions of SKUs, so how do you automate all of the things that we’re doing…
…and contributed to software development on that, and worked a lot with supply chain as well to get the inventory in. And then also, some financial planning to make sure that our sales margin and inventory targets lined up with what we were sending out to finance central. So, that actually was a really useful skill when I started thinking about FIRE-ing.
Andrew Chen 03:49
Before our interview, we were chatting over email. You had mentioned that you formed your early retirement plan before you even stumbled across the FIRE community online, and you only found out about the FIRE community when you were at the cusp of early retiring. So, when did you first start thinking about early retirement as something you wanted to do?
Actually, pretty early on in my career. I got my MBA, and I was at a really great company, and the work itself was fantastic, lots of great learning. But I was living in a part of the country that was just not a place where I fit at all.
I was pretty unhappy, didn’t have friends, any of that. So, I thought, “Well, it’s a low cost of living area, and I make a pretty big salary relative to the area. So, how quickly can I wrap up this whole career thing if I keep living here?”
So, that’s when I used my spreadsheet skills and came up with age 42. And I actually planned out my career then as well, and realized, at 39, I thought I’d get pretty bored, which is interesting that that’s when I ended up retiring. But I was like, “I’ll figure out a way to muscle through to 42.”
But that was just a north star. I did not hard stick to that plan. It was just a first basis.
Andrew Chen 05:12
Spreadsheet analysis means you probably had a FIRE number. What was your process for coming up with your FIRE number?
I actually don’t remember how I came up with the first round. But in future rounds, I put almost everything on my credit card.
I’m not one of those people who budgets and then spends. I spend and then come up with a budget that fits that. And I’m not a huge spender, so I’ve always easily lived within my means.
So, I just looked at “What did I put on my credit card last year?” and I took out travel and maybe a few high expense items. But I kept in things like clothes and all of that kind of stuff that I think is hard to plan it, but if you just look at a whole year of your life, you can see it.
So, based on that, I was able to say, “Here’s what I spend per month on average,” and then I used that as a basis to come up with my number.
Andrew Chen 06:09
That was your spend number. I guess what I mean by FIRE number is how much you would need to know confidently that you can leave your job without ever having to come back.
When I was doing all of the prep work before I FIRE’d, I would say my procedure after is quite different, but before I FIRE’d, I used the 4% rule. I used the amount I was going to spend and then used the 4% rule.
And then I actually only assumed for federal taxes. I didn’t even realize I should also account for state taxes at the time I retired. As I was retired, I got a 5% bonus hit.
So, that’s how I came up with that number. But I came up with also a bunch of other ways, and I had other people, friends, a number of people who were also doing this analysis separately. And all of us have circulated around $2.7-3.7 million.
And we came up with those numbers quite a few years ago, at least a decade ago, so I don’t know that in today’s terms, since things have changed so much just in the last few years. But I think that is a pretty good basis. And the higher number accounts for primary residency being part of it as well.
Andrew Chen 07:31
What do you mean by primary residency?
Just the equity that you have in your house. I don’t really think about it because I live here, so it’s not a value I really tap into.
Andrew Chen 07:43
So, it sounds like, if I’m understanding correctly, you put all your expenses on credit cards, you tracked it for a year or more, so you understood what your burn was, and then you just divide by 4% to understand what the threshold would be, right?
And 15% for federal taxes was assumed as well.
Andrew Chen 08:05
So, you have an undergrad degree, an MBA. Did you have student debt after finishing undergrad and grad school?
No, I didn’t. I have very generous parents, so they covered both undergrad and grad school for me.
Andrew Chen 08:22
Is it fair to say then that your net worth right after you finished all your schooling was no worse than zero?
I immediately bought a house, so my mortgage. But other than that, yeah. So, I was negative when I first started out.
Andrew Chen 08:41
But it’s mortgage debt only.
Andrew Chen 08:47
Interesting. So, you retired at 39. Is that when you hit financial independence, or did you wait a little bit to buffer?
Actually, I didn’t quite hit my FIRE number by the time I retired. I got to a point where I really hated my last job, and I thought about “What if I moved to this team, or I get promoted?” or all of these different scenarios. And I was like, “No, I just don’t want to work here anymore.”
And I also came to the conclusion that my options were I could go back into really high-grind world, and basically give up my entire life to working, and do interesting work with really brilliant people, or I could do average work, and not be interested, and work not so many hours. But I just wasn’t into that at all, so I feel like I chose door number three.
So, I was a little bit shy, and I actually called a bunch of people to see…not really if they had any opportunities, but I wanted to just sense what was out there, and I had very strong response. Actually, in my second call, I was offered a role to do consulting as many or as few hours as I wanted, so the flexibility sounded great.
I was supposed to call him when I stopped working at my full-time job, but I didn’t. And I said I’ll call him next week, and then I didn’t. And I said I’ll call him at the end of the month, and then I didn’t.
And stocks kept going up, and I was like, “I don’t think I’m going back.” I was pretty close, but I wasn’t at my final destination when I really pulled the trigger.
Andrew Chen 10:38
Am I understanding correctly then that natural trade wind did actually blow you over your FIRE number just naturally?
Andrew Chen 10:48
And Kim, are you single, married, with kids?
I am single and child-free.
Andrew Chen 10:55
Was that a conscious, intentional tradeoff you decided to make in order to retire early? Or what were some of the factors you considered, if any?
For the child thing, I have not wanted children since I was 10 years old.
Andrew Chen 11:09
Everyone is like, “You’ll grow out of it.” I never did. I just never had an interest in that.
In terms of relationships, I would say the longest relationship I had, if I really look back in hindsight, I was truly just married to my job, and he was a backup. And I think I was that to him for other stuff too. So, I don’t think I was ever really open to a proper relationship because I was just totally focused on career.
After FIRE, after I retired, that winter, I looked at what are all of the risks, and one of the things I came up with is getting married was actually a massive financial risk. So, that’s where I came to the decision that, again, I don’t want kids, so I don’t think I’ll ever get married because I don’t think anyone is worth me having to give up 50% and go back to work for.
Who knows? Maybe I’ll meet that person. I can have a long-term relationship, but I just don’t want to have that financial intertwining.
And I also feel like I’ve had so much time where I’ve managed my own finances. I don’t really want to get signoff and collaborate on that. This is my money that I earned on my own, and I have an approach that I follow, and it has worked.
And I’m sure if I met someone who is similarly aged, they would feel the same. So, it’s just not a door I’m willing to go through.
Andrew Chen 12:43
Bluntly, how do you deal with loneliness?
Honestly, I am usually not lonely at all. During COVID, because I’m still pretty COVID-afraid, it’s been a little bit more. But I live in a city where I’m friends with all of my neighbors, both in my building and on my street, so I have plenty of people around me.
So, it’s usually not really an issue, pre COVID. I have a nice full life. I have plenty to do.
And if I were in a relationship, I would want someone who could travel for months at a time, and ideally, he didn’t go to work and have work stress. I just am not interested in hearing about that every day. So, I don’t know who that person would be, because there’s probably five people on the planet that meet that description.
Andrew Chen 13:37
So, is it fair or accurate to say that if it happens, it happens, but you’re not going out of your way to look for any kind of relationship, just given where you are in your life?
Yeah, correct. And I also feel like it was a conscious choice too, where I felt like it was a thing I needed to have, and once I was like, “What if that’s not that important? What if I take that off of my plate as a thing to have?”
And I just feel so much better about my life. My life is awesome. I shouldn’t feel like I’m not complete or not checking all the boxes by not having that partner, when honestly, I already like my life.
I don’t have to fight over TV shows or what I’m going to eat for dinner. There’s a lot of perks to being single.
Andrew Chen 14:26
Yeah, I agree, mostly around the idea that you define happiness for you, not other people define happiness for you. But from the perspective of somebody who is a singleton, who may be following the same path that you are, and they’re thinking about this, because it’s not an unnatural thing to think about, what would you advise, if anything, and be aware of as they’re contemplating this question about relationship, kids, FIRE, intertwining, etc.?
The biggest thing I would think about is if it’s very important to you, try to find that person before you retire, because the conversation after you retire (I’ve dated since I retired), it’s weird. The average person can’t comprehend that you’re retired at this young of an age, and it’s hard to just put your arms around.
So, if you can do it when you’re still employed, it’s just a little bit of an easier concept for people to grasp that “I will retire early, but today I am in marketing, or I’m in advertising,” or whatever it is you do. I think that’s an easier way to get into those relationships.
Also, just a personal note: I personally found that it’s really important to find your person by age 32. At least with my age bracket, that was appropriate, because after that, everyone else is off the market, so there just isn’t much left to choose from, quite frankly.
You have to wait for divorces and what have you to be in more mainstream. But literally everyone else goes away and gets paired up. So, find your person before age 32.
Andrew Chen 16:14
That’s good insight. That’s really helpful. I wanted to shift gears.
Help us understand, what was your earning trajectory throughout your career? If you could talk about: what were you earning when you were right out of school, and what were you earning on the eve of your early retirement? Let me just start there.
Right out of school, I was at business school, so undergrad I finished, I worked for a few years. I was just working for a few years. It wasn’t particularly part of my career trajectory.
But right after school, I made 80k base and about 100k total. And I think the part that really shifted for me is when I started getting a good chunk of comp from stock. And that you can do in the tech world.
I know that’s controversial right now because stocks are so far down, but I used to joke with my friends that I should get a sign that says “Will work for equity” because I’m such a believer in it. And it’s also more fun. You want your company to do well because it impacts you as well.
So, I moved on to jobs where 30-40% was equity, but I never touched it, so it just sat and built and built and built. So, my advice there is also find companies that you want to own the stock in. I have a lot of friends who are in those…I just call them more traditional companies.
Their stock prices don’t do much. They don’t grow a ton of fast revenue. Even if stocks weren’t a component, you’re still not going to get big raises, big bonuses, all of that stuff, if your company is rather steadfast.
Be thoughtful, but it’s got to be in a position to grow a lot. So, make sure you pick your companies that way. I think that works better.
And then, also, of course, there’s cultural fit. That’s a tradeoff of what your lifestyle choices are.
Andrew Chen 18:18
When you were at the borderline of retirement, what had your comp grown to, all in?
I’m literally trying to remember because I was only in that job a year. I think that, all in, I was just shy of 200k.
Andrew Chen 18:37
So, basically, 100k to 200k, from beginning to end.
Andrew Chen 18:41
Was the growth over the years more or less a straight line, or a stair-step, or more exponential? How should folks think about it?
I feel like it’s apples and oranges, because for the years that I was in e-commerce, I got so much of stock comp. I got more traditional comp afterwards, but I actually felt poorer, because I really do value equity a lot, and the way I picked my companies, it had such an upward trajectory. So, I think they were just so different in terms of how the comp was structured.
Of course, it went upwards, but I think also just getting promoted. I know a lot of people who are like, “I don’t really want to manage people.” Unless you’re a software engineer or some very specialized skill, you’re really capping off your dollar amount if you don’t manage people.
So, you’ve got to be willing to manage people. And one of the things I did is before I would take a job, I would put it into my résumé, just to see how it looked. And I would always go into that job, thinking, “This is what I want to get out of that opportunity.”
So, it might be “I’m going to make sure I manage one person, and I’m going to learn this additional skill.” And before I leave that job, I have to make sure I’ve achieved those things in my own head, because that was the goal.
Andrew Chen 20:10
That’s very intentional, very thoughtful. I think most people do not do that, but a good tip.
Let’s shift a little bit and talk about spending. What was your spending amount monthly, annually, during the years while you were working?
It’s the same. Well, my mortgage changed a little bit because I just refinanced very well. But typically, my credit card spend, I try to stay within $2000 a month.
And then, on top of that, I had mortgage, which has varied, or rent. And then, of course, there’s like heat, etc, and what have you, but it just goes straight to my bank account, and that I don’t pay a ton of attention to.
So, I only focus on the credit card because that’s the one where I’m really following it, and I can just see it all the time. And I put everything I can on the credit card to get that picture of what I’m spending monthly.
Andrew Chen 21:20
So, you’re spending about $2000 on credit cards, not including your mortgage, not including utilities. If you had to ballpark, what would it have netted out at, all in?
Right now, I’m at about $4250 spend per month. And if I remember, right before I retired, I was at $5500, but I believe that included the mortgage for a second home that I owned, that I rented out, where I got $1000 back. So, in the $4000 zone.
Andrew Chen 21:59
So, it sounds like your spend pre-retirement, during retirement, it’s more or less been steady, like you haven’t changed your spending too much, which is also the point.
The only caveat to that is travel. I didn’t actually travel that much before I retired, and now I use an equation to come up with what money I have each quarter, and that includes a budget for…
I call it my fund money. It’s usually travel, but it could be art or things like that. I also did a renovation a few years ago, where I was budget-less on that.
So, it actually has gone up. But I would say the core, if I’m in Boston, living a life that I enjoy, going out to restaurants, seeing shows, etc., my budget is around $4250.
Andrew Chen 22:59
I’m going to circle back to the fund budget here, and I want to understand that a little bit better. But is it accurate to say that that fund budget is the only real variable that might significantly vary your spend month to month, otherwise it’s just tracking inflation?
Honestly, my spend right now is very low. I am probably $700-1000 below budget right now, because I still don’t go to shows or go to live music. I don’t dine indoors, so I barely dine.
Even before COVID, though, I didn’t dine out that often. I used to eat out when I worked. I ate out every day.
And now, because one of the first things you do when you retire is you get into health, so now I cook almost everything I eat. So, my cost went way down on that end.
I’ll buy more expensive products at the grocery store, because I’m still only buying grocery store food. So, I still only probably went out once every three weeks or so, pre COVID. And then now, it’s really rare.
Andrew Chen 24:15
So, you’ve actually been able to, without sacrificing much perception of quality of life, still manage to shrink your spend pretty significantly.
Yeah. I have a friend, we always say, “I’d rather work than have to be that cautious with my money.” And that’s just how I feel.
If I ever have to be really conscientious about what I’m spending on groceries or all of that stuff, I’m very aware of it, but if I have to be scrimping, I’d rather go back to work.
Andrew Chen 24:47
I want to talk a little bit about the travel fund budget thing you mentioned. How do you budget for this? It sounds like something formulaic.
And what are the ranges of amounts that you’ve been able to budget in the past?
For the most part, what I do is after quarterly earnings and in the stock market on my biggest stocks, it’s not my net worth (I’ll get back to that in a second), but I calculate how much I have, and then I actually do a 5% rule, and now I also include state and federal taxes.
And based on that, I say, “Okay, here’s how much I could spend next quarter.” I subtract out my $4250 per month for the three months upcoming, and then whatever is left is my fund budget.
I’ve also made some personal rules around that, like if someone has a wedding and it’s in six months, I’m going. I’m not going to see how my budget works out.
But if a girlfriend is like, “Let’s meet up in this place,” I’ll be like, “You wait two weeks, and then I can see what my budget is.”
So, I said I didn’t use net worth. This is where I think most of the spreadsheets that you create when you’re becoming FIRE, you throw out the window once you actually retire.
Your money is in retirement funds, and it’s in different funds that you can use to different degrees. So, I keep my retirement funds as retirement funds, to be used when I’m at proper 65- or 70-year-old retirement age, if then.
And obviously, I don’t think about my home. And what I have in my savings and checking, which is usually around 18 months of cash on hand, I don’t count that either because that’s money that already has a function coming out.
So, all I count is how much I have in my brokerage accounts aside from that. That is the money that I use to base all my calculations off of.
Andrew Chen 26:40
So, when you say you do a 5% number now, and backing out taxes for federal and state as well, the base is just being applied to brokerage account balances, and not to retirement, not anything else?
Andrew Chen 26:55
So, your 4% rule is a 5% rule, but off a much smaller base. So, it seems like you’re well-cushioned. Is that fair to say?
I’m well-cushioned, and I’ve also hit the point where if the market never increased at all, like at 0% for the rest of my life, I’m fine, between all of my accounts. I probably wouldn’t travel, but I would live my nice $4250 life very nicely. So, that’s a nice thing to know because that’s a pretty unrealistic scenario, so it’s good to cover.
Andrew Chen 27:36
How often and how much of the year would you say that you’re traveling typically in post-retirement? I know the last couple of years have been very abnormal due to the pandemic, so as much as you can generalize despite the pandemic.
It’s interesting because when I started, I didn’t plan to travel, so there was no budget for it. And I’ve been retired five years, so I didn’t have a budget at the beginning. I did little trips here and there, but I didn’t have a big travel budget.
And then there’s been times where one of my top stocks, it’s very volatile, so it’s gone down a lot. So, it’s like, “Okay, this quarter, or these nine months, I’m not traveling.”
My hope would probably be to get to about four months per year, which I’m around there now. I’ve tried a bunch of different things. I think the right amount is for me to go for about a month at a time.
Beyond that, I just get exhausted and I don’t feel like I’ve fully processed every… I see a bunch of stuff, but I don’t process it. And then it’s almost like by the time the trip is over, I forget a bunch of stuff from the beginning.
So, I think a month is about right, and then being home for about 2-3 months is right. But I also hope to get to the point where I’m never here in the winter because, again, Boston, so I would love to not do that.
And I don’t like to travel in the summer because everyone else does, prices are high, it’s crowded. No interest in that.
And then there’s certain times where the stock market is most volatile that I’d rather be home for. So, I think that’s probably the game plan at this point.
I do know that typically, when I travel, it’s about $6000 a month. That’s how I plan it out.
Now, that would, of course, vary a lot if I went to very different places. But typically, my spending just happens in line. I just plan a bunch of trips, and every time I plan them, it works out to be about $6000 a month, so I go with that.
$6000 extra, so in addition to my $2000 a month that I can put out for credit cards.
Andrew Chen 29:50
I see. So, your normal, when you’re at home, is $4250. So, is it like $10,000 plus?
Andrew Chen 30:01
And it sounds like, generally, you’re one month out and about, maybe 2-3 months at home. But in the summer, you’re maybe home more. Winter, maybe you’re home less.
Andrew Chen 30:18
Earlier, when we were chatting, pre-interview, I was curious about this. You talked about how you knew you wanted to stay put in your Boston home for the first couple of years after your retirement. I know you did some renovations, so it’s probably pretty nice now, so you might want to stay longer.
Andrew Chen 30:31
But later, you planned to move somewhere quieter but maybe more expensive, after you’re not traveling so much. Can you talk about what you mean by that and your thought process on it?
When I first retired, I figured there’s so much newness socially, and it’s just a weird and different environment. To give you an example, the first few months I was retired, I would go to the gym and I would go past one of my former companies, and when I would see people that knew me who were like, “Why is she running around at 2:00 in the afternoon?” I would hide. I felt like I was playing hooky.
Socially, it’s a very weird situation when you first retire at this age. So, I just wanted to be in a place where I knew people, people have known me a while, they don’t think it’s super weird.
And also, what’s nice is within a year of me retiring, a bunch of people on my street retired as well. They’re in their 50s, but there’s a ton of us, so that’s very comforting.
Eventually, as I’ve traveled, I feel like the places I love the most are where I can just see a really big view of fields or hills or just nature and no buildings. So, that’s what I want to do next. And grow my own vegetables.
I don’t know how much I’m going to do on my own. Quite frankly, I’m a city girl, so all of it would be very new, and I would look at a lot of YouTube videos because I don’t know how to do any of that. I’d like to have a couple of animals.
But I think the switching point will be when I’m emotionally ready for that. Because right now, I have a condo that’s in the middle of the building, so if I’m not here for a year, no one would notice.
I don’t have a car because I live right downtown in the city. I don’t have plants or pets or anything. So, my life is very free.
But when I’m like, “Okay, it’s time to have more of a home,” then I think that would be the type of environment I’d look for. So, that’s where I’m going.
Andrew Chen 32:38
So, country living. That’s interesting. U.S. still, right?
Well, I’m not sure, not necessarily. I haven’t decided, but I’d want to be like an hour from a major airport. Not super far away, but most people would not pass by my house on a daily basis.
Andrew Chen 33:00
I’d love to shift and talk a little bit about nest egg. What is your nest egg comprised of in terms of proportion allocated to stocks, bonds, real estate, cash, alternative investments, etc.?
Most of my money is in stocks, so I think about cash management, and then overall, wealth management. As I mentioned before, I’d like to have about 18 months of cash on hand in the savings/checking combined world.
And I came up with that number by looking at how long the average downturn lasts in the market, and then I also have friends who have financial advisors who gave them the same number. So, overall, it felt like a good number to stick with: to have 18 months on hand.
Everything else is pretty much in stocks. I actually just bought bonds for the first time ever a month ago, but only a few thousand, and I’ll probably get out of them.
I do have a few “riskier” investments. Literally the week I retired, I was contacted by a former colleague about a private company he was thinking about starting. And then, also, through the course of time, there’s been Bitcoin, and I briefly was in pot stocks and other things that I would consider risky assets.
So, the way I thought about it was I allocated a certain percentage of my portfolio, just the non-retirement funds portfolio, to risky investments that if they go to zero, it’s not a problem. And I changed that number even. When I started, I did 1.5%, and I moved it to 2.5%.
But it’s still a very small, conservative number, because I don’t assume these could be cut in half. I assume these could go to zero, and I still have to feel totally comfortable with losing that money just outright. So, that’s how I’ve done that.
Andrew Chen 34:54
At least in terms of your stocks and bonds portfolio, what kind of holdings do you keep? Individual stocks, index funds, treasury bonds, corporate bonds, etc.?
I’m actually in the process of switching. I have been doing all individual stocks.
And I feel like my background, having been at some of the companies I’ve been at, has really helped me be able to pick really good stocks. I feel like I have a good ear of listening to CEOs and figuring out who knows their business in and out, and who doesn’t, and who has good growth plans, and who doesn’t. So, I’ve historically done all individual stocks.
Twice now, I’ve gone to Europe, and while I’m on vacation, the stock market has blown up. And quite frankly, it’s the last thing I want to deal with when I’m there. So, I decided, over this past winter, unrelated to the events going on, that I’m going to move to an ETF strategy afterwards, just so I’m not managing it as much as I am today.
Andrew Chen 35:54
So, if you do that, I assume there’s going to be a big-ass tax hit. How are you going to deal with this?
This downturn has created an opportunity for me to move over more quickly than I had expected. It was just a rough plan, but maybe over the course of five years. It wasn’t going to be a quick fix.
But I use stop-losses on my orders. So, as the market went down, I actually sold out of a bunch of stocks, so I’m sitting in a nice amount of cash now.
There’s some where I’m still holding pretty large positions. And there’s some where I’m emotionally attached, and it will emotionally be hard for me to sell those stocks because I’ve had them a long time. That’s where I’m trying to get toward, but it doesn’t have to happen all at once.
Tax-wise, I didn’t learn until a few years ago about moving money from your 401(k) to your Roth IRA, so I have a lot of room I need to make up on that end as well. So, I have to balance those two objectives in the next few years: how to sell off and move into this new allocation plan.
Andrew Chen 37:12
I totally get the current downturn has created some rebalancing opportunities that can maybe sidestep some crushing tax liabilities. Are you in a net loss position when you sell, or are you just in not as severe of a tax liability position, broadly speaking?
At this point, actually, my portfolio right now is not what I’m pleased with. But because I had really good stop-loss coverage on my better stocks, because I had had them a lot longer, so those are the ones that sold off. Those are the ones that are now holding cash.
And the ones where I didn’t have that opportunity, the Zooms, the ARKKs, I’m not in either of those specifically, but those of the world. So, those I am holding in a negative position. I guess I’m optimistic that maybe they’ll double or triple from their current value, and I still may end up selling them at a loss.
But if they make it through financially, cash flow-wise, I think they have an opportunity for more of an immediate pop. And then I can sell them, and then move over to the ETFs.
Andrew Chen 38:24
That’s interesting. I’m not going to give you financial advice, but also, I’m just wondering: if you have stuff in that loss position, and there’s other stuff you want to unload that’s in a net positive, you can offset those and still come out relatively neutral and move everything over. It’s something that I have personally thought about.
And it’s possible that that may all happen inside of this year. I don’t know. I have a theory of how the year will play out, but in my theory, I would have moved over throughout the course of this year, so I would realize those losses.
But I don’t want to miss the opportunity to potentially have a double or something like that before moving it over, even though it’s still in a loss. But it’s really when I have given up for sure on those stocks, and then I’m ready to move over. But if not, I will use that tax money to move over money to my Roth IRA.
Andrew Chen 39:27
So, you self-manage your portfolio? Do you ever use financial advisors? It sounds like you’re probably more of a self-manager.
I am a self-manager. I briefly met with some financial advisors 15 years ago or so, and I left that meeting thinking, “I think I’m smarter than these guys.”
I think I’m the product of ’08. I don’t really trust financial institutions. I don’t really know why.
Basically, no one can ever beat the index, which, by the way, I usually do beat the index. But if you can’t beat the index, then why wouldn’t everyone just put into an index?
I don’t know why I’d go to a financial advisor who I don’t believe can beat it consistently, and they’re going to charge me. So, I don’t see the upside to using them.
I also think it’s really important to have your hands in your money and know what’s happening. We’ve all heard those stories about very wealthy celebrities who handed their money over some advisor, and then they have no idea what happened, and all of a sudden, they’re broke.
You need to know everything with your money. I just don’t have that ability to lose control enough to give it to a financial advisor.
Andrew Chen 40:48
Can you talk a little bit about how you manage your portfolio in retirement now, in terms of how you time things like spending withdrawals? Is there a cadence that you have, like annually, quarterly, or whatever? How do you do rebalancing, things of that nature?
I have some unique thoughts on this. I don’t do rebalancing. I don’t do a lot of the traditional stuff.
I have one stock where I have a ton of stock in it because it was one of my past companies. It’s more than I would like, and it’s a highly volatile stock, so when it goes up by 2%, I still have 1%. So, it’s really based on that.
And then I make sure that I have 18 months of cash on hand. I only once, so far in five years, have gotten to the point where I’m like, “Maybe I should sell a different stock to make sure I get to the 18 months.” But only one time has that ever happened.
But typically, I use that. And I feel like there is some emotion tied to that, which is, because I worked there, I have a hard time letting go of that stock, and I still want to follow the trade upwards. I feel like I earned the ups and downs of that stock.
So, that’s primarily what I try to live off of. It totally has worked so far. And then if I already have 18 months of cash on hand, I’ll still sell, but then I’ll invest it in something else.
Andrew Chen 42:18
So, if I’m understanding correctly, your 18-month spending cash, you’re topping up using exactly one stock. And if you’re already topped up, you’ll just rebalance to a different stock?
Andrew Chen 42:32
For now anyway. Is that correct?
Yeah. I think of it as like I’m trying to grow a garden of other stocks. This is what I’ve been doing until I decided to move to ETFs.
So, I have a ton of stocks, but I actually don’t have a lot of money in any of those stocks, and I slowly grow those positions. I had about 10 stocks that I had gotten to pretty big, healthy positions, pre this downturn. All the rest were really small.
So, my thought was I don’t like to invest in any stock a huge amount in any given time. So, for me, it’s a big thing to put $3000 into one stock in one month. I want to slowly grow those positions and find those winners.
But then, as I mentioned, I have stop-losses, so if those stocks don’t perform and they sell off, I may not buy back into them. So, it is an ever-changing garden, “survival of the fittest” competition going on.
Andrew Chen 43:41
So, it sounds like then, you don’t have a regular cadence of time when you’re sitting down and saying, “Okay, now it’s time to top up.”
You are actively monitoring and saying, “Is it now up to 2% (or whatever the thresholds are)? It is? Okay, let me sell some and do a little bit of top up.”
It’s basically continuous. Is that right?
Yeah, that’s right. Now, there have been times where the stock has not gone up for nine months at a time, and it’s okay because I have cash from either other stop-losses went through or through other ways. And that keeps me at 18 months.
So, there’s only been one time where I was like, “Maybe I should touch another one.” But other than that, it has pretty well worked.
Andrew Chen 44:30
When we were earlier talking, you had mentioned that you have some particular risk management strategies, or at least downcycle management strategies. Maybe the stop-loss thing is it, for times when markets are really volatile, like now.
If there’s more to that beyond the stop-loss strategy you discussed, can you explain what you mean by that? What are some of those strategies or tools?
Actually, one analysis I did was right before I retired, which I pulled the data from 2008. I pretended, “What if I retired today, and tomorrow the ’08 financial crisis kicked in? How would that play out?”
So, I had a certain set of rules. And I don’t recall what they were, but it was something similar to “up by 2%, sell 1%.” I think it was along that.
And I needed to always have a min and a max in my savings account. Even if it was at the min, I had to sell. So, I ran through that entire scenario as if it was ’08.
And that is the most comforting analysis I’ve ever done, because prior to this go-around, anytime the markets weren’t doing particularly well, or something was going on, I’m like, “This is definitely not financial crisis level,” and I know I stand up to financial crisis level, so I can feel very comfortable and very safe. So, I would recommend doing that to anyone.
A little more on how I use stop-losses, which has changed throughout the course of the pandemic. If I buy a stock at $25, when it goes to $26, I’ll put in a stop-loss at $25.10, because it doesn’t necessarily sell at $25.10, so that gives it a little buffer.
Early on, one of the people I was following mentioned, “Don’t worry so much about getting the most gains. Make sure you don’t have huge losses.” So, this is something I’ve applied since then.
Now, sometimes I’ll buy that stock at $25, and then it goes to $24, $23, $22, so those don’t have stop-losses. But what happened in the beginning of the pandemic, I had one stock I had had for several years, it went from something like $35 to $125, and I had my stop-loss back at $35, and it literally went to the penny of the stop-loss and sold off. So, I got none of that profit that I had lived through and invested through.
So, I’m now looking at “If I had it for a while, let’s say $25 becomes $50, do I put in a stop-loss at $40 or $45?” So, I use the chart to help make decisions off of that. And it’s been cool to see that play out during this downturn, because one of the other perks of it is I build up cash when I should feel the most vulnerable.
So, in terms of financial freedom, I feel safe. I feel comfortable. I’m not making a decision from being afraid.
I have over six years of cash on hand right now, so if this whole thing lasts for five years, if the stock market gets me to the same position in five years, I’m totally fine. So, it’s been fun to see that play out.
The other thing I learned about in January that I wish I had known sooner is I feel like almost every brokerage, everywhere you look, the max view they show you is five years of a given stock. But on macrotrends.net, I found a 45-year Nasdaq, and I think it’s a 95-year S&P. And it had such a clear trendline, it’s insane.
So, almost all of these big downturns that we talk about, the dot-com bust, this current one we’re experiencing, there’s a major upcycle ahead of time, so you should be able to know this thing is coming. So, I actually knew, not super early because I found this pretty late, but I was like, “I think the market is going to go down by 40%.”
I knew that back in January, just based off of the cycle. And only one time, which was the ’08 crisis, did it go from trendline down. Every other time, you should be able to see, “We’re above.”
“I should stop putting money into stocks. I should start getting into a more defensive mode, and I can prepare.” So, I thought that was really interesting to find.
Another thing to share is if you’re going to be off, so you’ve done all of your planning and you’re like, “What if I’m off by $200?” Most of the times, you run the numbers and you’re a little worried you might be off. It’s by a teeny-tiny amount.
So, let’s say it turns out all of your numbers are off. You could get a holiday Christmastime job to cover off. It’s not “I have to go back to my full-time career.”
If you’re off, you’re probably off by just a small amount, so there’s really easy ways that you could cover that off. Maybe consulting for a month or something. I have not experienced that, but I feel like that has actually given comfort to a lot of people who are a lot closer to the line, and they’re managing the numbers a lot more closely than I am.
Andrew Chen 49:42
Interesting. The stop-loss strategy you talked about, do you buy and then set the stop-loss…it doesn’t sound like you do it right away, right? You wait for it to actually cross…
It’s pretty close.
Andrew Chen 49:55
Oh, you do?
It is pretty close. And it depends on when the stock goes up, if it goes up.
Andrew Chen 50:02
But if you buy on Monday for $35, and then you set your stop-loss on Tuesday, on Wednesday you could easily hit that again, because it’s just the natural movement, right?
Yeah, it can be a really annoying process. But yes, I will sell in and out. I feel like I’m walking in a really good entry price when I do that.
And sometimes I miss out, but I would say that’s rare. And I do try to do enough of a buffer, but I am trying to catch it when it’s down, and then get out.
Andrew Chen 50:42
What do you do for healthcare?
For us, it’s called Mass Health Care, but it’s the ACA or Obamacare for Massachusetts.
Andrew Chen 50:54
Do you have an HAS, do you have a high deductible plan, or do you just buy normal, regular healthcare?
I buy normal insurance. It’s the cheapest one out there. There is an opportunity that if you make under a certain amount, you can play that game of getting it.
I ethically don’t feel comfortable, or think the cheaper insurance for people who can’t afford it is there for me. In addition to that, I also don’t have visibility. For us, you have to say in advance, “Hey, I need my healthcare to be covered this coming year.”
I don’t know at the beginning of any given year what my revenues will be. I could, on paper, make $200,000. I could make $40,000.
I don’t know because of how I sell my stocks. So, I wouldn’t be able to, but I also ethically don’t feel comfortable doing that.
Andrew Chen 51:51
So, that gives some pretty clear picture about how you think about portfolio management, etc. I wanted to shift now to non-money things. We talked a lot about numbers and the prep behind how you got to early retirement, but we were talking before the show about how blogs and podcasts spend not much time talking about the non-financial aspects of life after retirement: what happens, how do you find purpose and fulfillment, and things like that.
To start off, a lot of people inevitably start to interweave their identity into their work, especially if they’re ambitious and motivated, which is what people who are serious about early retirement usually are. And they may not really be thinking through what the stark transition is going to be like when they finally achieve FIRE.
They wake up the next morning, they don’t have work identity anymore, they don’t have their law practice dependent on them, their corporate team don’t need them anymore, or whatever. And that can be scary.
So, can you talk about what that crossover was like for you, and any withdrawal issues or PTSD you had to grapple with before you settled into a new post-retirement routine?
I was lucky in that, at one point in my career, I tried to start my own website selling goods in e-commerce. My goal was just make $100,000 and live on the beach. I wasn’t trying to become a big entrepreneur or anything like that.
It was a year where I did that full time, and I was in my apartment by myself, doing not particularly interesting work because there’s a lot of tedious, boring work that you do at the beginning stages. So, I was like, “Why am I here? I’m super lonely, I’m unhappy, the work isn’t interesting, and I miss all the social interaction.”
I definitely had that exposure first. So, before I retired, I really thought about how to plan around that. At first, pre COVID, but I made the gym a part of my life, like “This will be my water cooler conversation.”
Like “Hey, how are you? Good. Nice to see you.”
I didn’t have a ton of interaction, but it was enough. And I also typically work out in classes. So, even if I didn’t talk to anyone, I was around people.
I also scheduled my day. At the beginning of the day and at the end of the day, I used the stock market. I watched the opening and closing bell on CNBC.
So, those became my work colleagues, and it gave a lot of structure to my day. That was really helpful in terms of just tactics of calendaring. And every day, I put in my calendar what I’m going to do the next day.
I would say I don’t do 80% of it when I say I’m going to do it, but I have a plan for the day, and I get the big stuff done. And then I decide how I feel about the other stuff.
In terms of total identity, I realized I was introducing myself as “I used to be in e-commerce inventory management.” And I thought, “Wow, how sad that’s going to be in 20 years when I’m still introducing myself as ‘I used to be this 20 years ago.’”
What am I now? What am I today? I am no longer an e-commerce person.
I did do that, but I am a different human being today. So, when I wake up today, what is my objective? How do I describe myself?
And what helped me also is putting it on LinkedIn, because we use LinkedIn as a tool of describing who we are, and our accomplishments, and all of that stuff. So, I just put my past company.
And I could have just died. It’s as if I didn’t exist on LinkedIn, and all these people I’ve met over the course of my whole career would have been like, “Whatever happened to that girl?” So, for me, it was important to just be able to articulate it as it’s a new job.
And you do have to think about it as a new job. My goal is to be the best retiree I can possibly be. I need to be good at it.
There’s going to be some ups, and there’s going to be some downs, but that is my job now. And some things I learned before carry over; other things don’t. But I need that to be my identity.
And there are downtimes. You even miss getting emails that are just like “Thanks for sending that” or very little things.
I remember early on, one of the people who used to work for me was like, “Hey, I need to talk to you about this,” and I was like, “Someone needs me. Someone finally needs me,” and I was so excited.
But the alternative to that can’t only be work. There are other ways to find fulfillment in the places where you’re missing it. I’ll sometimes mentor people.
There’s different things I do. Like I said with the scheduling of the stock market calendar, what are you missing?
I’m missing the “going to work” and “coming home from work” activities. So then, come up with something. It’s up to you to be creative.
But I just can’t imagine that the best thing I can be doing on this planet when I don’t need to is inventory management. As much as I loved it, that can’t be the main objective for me being on this planet.
And I don’t know what it is, but I know it’s probably not that. So, I need to, bit by bit, figure out what it is.
Andrew Chen 57:25
On LinkedIn, what is your current role?
Traveler and investor.
Andrew Chen 57:32
And when people ask you, “What do you do for a living?” is that how you introduce yourself?
You have to have a story. You have to have a plan of how you’re going to get in and out of that conversation, and back to a normal conversation as quickly as possible.
I fortunately had a friend who was a writer at a nonprofit, so a very different world from what I live in, in tech world. So, she would describe me to her colleagues, and they were so confused, like “How do you have a friend that’s retired?”
And she tried a couple of different things, and eventually, she said, “She worked in tech.” And all of them were like, “Oh, I totally get it.”
So, that’s the script I chose: “What do you do?” “I used to work in tech.”
“I made a lot in stocks. I was lucky to get in early, so now I’m retired and I manage my stock portfolio.”
And then quickly turn it to any other topic, like “Hey, how are the Red Sox doing?” Anything where you don’t become the focus and it doesn’t get bogged down in some 20-minute session, every time you meet anyone, about “How did you retire?”
Often, there’s a question or two, but if you navigate it out, they’ll stop going into it.
Andrew Chen 58:44
In early retirement, as you’ve alluded, you’re on a totally different schedule than your peers who are still working business hours. You generally can’t hang out in the middle of the day.
So, how have you found community as an early retiree? How have you found your tribe?
As I mentioned, a number of people on my street are also retired. But I think the biggest thing is to really make your circle bigger.
I took a writing class, for example, and it was during the day. I wanted to take it because it was a writing class, but it also attracted people who were free during the day. So, I met some friends through there.
But most of my friends are 15-20 years older than I am, or stay-at-home moms, which is a different background career-wise for me. But you have to just broaden your circle. Gym instructors, when I went to the gym.
But there’s a ton of people that are out there. So, just figure that out.
Andrew Chen 59:51
How often do you find other single women retirees in the communities you’re a part of?
Close to never. It’s very rare.
Andrew Chen 1:00:04
Help us understand. So, it’s mostly couples, empty nesters, or single men? Who is it?
I do find it’s mostly single men or couples. I don’t find that there’s often that many women.
I have found some Facebook groups that I’m a part of that have actually also helped me with community, where it’s like I have an outlet to talk about this part, so when I’m with my other friends, I don’t have that to talk about. I can talk about regular people things instead of like “Hey, this investment…”
And I see more women there, but I think maybe women aren’t as “Let’s have the blog and get on the articles” and all of that kind of stuff. I think it’s a relatively small percent, and then I think it’s an even smaller percent that put themselves out there.
Because I read articles often where it’s only men and only couples, and I’m like, “Hey, there are single women who can do this too.”
Andrew Chen 1:01:12
Do you reckon that there are single women early retirees, but they’re just not as visible, or there’s just not even parity between single men and single women?
I think it’s both: that there aren’t as many single women doing it, and that they’re just not as vocal.
Andrew Chen 1:01:33
Why do you think that is – the first part?
The first part, I think, could stem from not being in STEM. To me, the easiest way to retire early is to be in a STEM career. Fortunately, it sounds at least like that’s a big pipeline in schools now for girls, so hopefully, that will change a good chunk there.
But when you’re in a brick-and-mortar or smaller business, one mom-and-pop shop, and you make a change, that could be a change that impacts a dollar. But if you are at a major retailer, $3000. If you’re at an e-commerce site, that impact could be $300,000.
So, there’s more money there because the tiny changes have much bigger ripple effects. And so, it’s really important to get girls and women in these STEM careers because that’s where the biggest impact is had: when you’re in these places where your impact, while it may be similar work to the person who’s doing it for one store, is just felt so much larger.
Andrew Chen 1:02:49
What else, if anything, would you say to young women and girls out there who may have a desire to achieve financial independence, whether they want to early retire or not? What advice would you offer them?
I’ve talked to a number of people, not girls specifically, but it’s always important to plan for your retirement. All of the activities, all of the spreadsheets of people who are trying to retire early, should also be things that anyone who’s not going to retire early are doing. You need to know your money.
I have too many friends my age who are like, “Well, I’m never going to be able to retire anyway,” so they don’t even pay attention. You need to have a plan. You need to know where you are on the plan.
If that plan gets you to 65 or 70, so be it. But you need to at least really know where you are, and understand what leverage you can tweak.
And be empowered and in control of what your finances are. Don’t let them happen to you. Control those.
Andrew Chen 1:03:51
All right, Kim. I really enjoyed chatting with you. Where can listeners find out more about you and what you’re up to?
I do have an Instagram. It’s called @fatfiregirl. I sometimes post stories there about finances, but I often just list my travels.
Andrew Chen 1:04:10
Awesome. We’ll definitely link to that in the show notes. Thanks so much for taking the time to chat with me, and I hope our listeners get a lot out of this as much as I did.
Yeah. It was nice to meet you as well.
Andrew Chen 1:04:21
Cheers. Take care. Bye!