I am causing my own stress.

Every single day, and I mean every single day, I keep thinking about my number. When will we get there? How much are we saving this month? What does it mean when we get there?

It’s this last one that has me completely wrapped up.

We are on track to hit “the number” in two months or less. You would think that once I hit this milestone, I would be happy. Instead, it’s the actual cause of my anxiety. I haven’t locked down a static, committed plan in my head. If I had it settled and committed to, life would be easier.

But until then, the uncertainty is elevating my stress and killing my mood. Will he or won’t he step back? What is next? What happens when he steps back? How is Padme doing with this? How is her situation? What if she is let go tomorrow?

Any disruption with Padme shakes up the plan and until she crosses her own line in 8 months it causes worry.

These thoughts are never far away. They take over multiple times a day. This is the exact opposite of what should be happening right now. My mood should be bright. I should be ecstatic. Life is changing in the very near future one way or the other, and we have security.

But I am causing my own stress.

So, like a typical engineer, I tried to cure my emotional anxiety with logic and spreadsheets. I decided it was finally time to do the forensics.

Doing the Forensics

A while back, I admitted to not budgeting. I confessed that I had procrastinated on knowing how much we spend each year, and that my nest egg goalposts were just big enough to be conservative. But I knew I needed to do the forensic work to know for sure. To be secure in the plan.

my original budget needed work

Well, the spending analysis is done. We spent about 8% more than I would have guessed, and likely 15% more than I would be happy with.

So what does this mean for the plan? Not much.

Way back, I talked about wanting our nest egg to be 25x our expenses (the 4% rule), viewing Padme’s pension as a bonus.

So where did we end up?

Based on the nest egg alone, we are at about 20x our current spending. If we cut back in a few areas, that gets us to 22x. If we had no other safety nets, this wouldn’t be enough to comfortably retire. However, the nest egg will continue to grow for another 8 months, which is the earliest Padme can get her pension. That should take the nest egg to 21x without cutting any spending.

Once you layer the actual value of Padme’s pension on top of the nest egg, we are good. Our current spending puts us into the mythical low 3% withdrawal rate. Even accounting for big, irregular upcoming expenses, like university tuition for the kids, and Padme’s new kitchen, we are well within the safety zone.

One of our big unknowns is how much we will help our kids as they flee the nest and get into housing. I firmly agree with the Die with Zero concept of helping your kids when they actually need the money, rather than when we die. They could use a helping hand at 30 far more than at 50.

With today’s housing market a house where we live would be roughly 8x the gross salaries of a 30 year old married couple. Compared to the 2x of my youth, the little JEDIs will need help. With 12 years of investment growth before the little JEDIs enter the housing stage, we are good. I still think we can maintain a 4% withdrawal rate even when helping the kids.

Unless we develop Caviar dreams

sorry kids – spent it all

So with that in mind, we are good. Go forth and retire right.

Well, Padme is still 8 months out from the magical pension. This also assumes we have our money invested well for a 40-year time period. We’re not there yet, but working on it. Slowly. As the market looks stupid. We have time. I am limping in.

Never Tell Me the Odds

With all this navel-gazing, I started looking for ways to convince myself it is time. The question always comes down to: What is the risk if I retire?

Unlike the typical logical engineer, I use a lot of emotion when looking at a situation. Even if the math says one thing, my gut can override it. Bad Engineer. Bad.

The gut feel is simply my judgment of risk. My gut has been telling me I’m fine to retire from a numbers standpoint, even without really knowing the exact math.

To date, I have avoided retirement calculators. Until recently, I didn’t know our exact spending or what Padme’s pension actually would be, which kept me from playing with these tools. I decided to finally run our numbers through Firecalc.com to see our actual probability of success over a 40-year horizon.

To start, I ignored the pension entirely and just factored in basic social security.

So what were my odds? Well, depending on how I invested, they were just okay. Be ultra-conservative and we had a 0% chance of success due to inflation when relying solely on the nest egg. Do a traditional 50/50 equity bond split and the odds were 75%.

Vader is not getting the warm and fuzzy feeling on this.

But remember, that was with zero pension income in the calculation. Once I plugged the pension in, the odds of failing dropped to 0%. With the pension, the nest egg becomes a true fortress.

we can dream can’t we

My gut was right all along. It knew the odds. I didn’t need to be told.

Easing Into the Finish Line

But as I quickly realized, math only calms the mind; it doesn’t give you a plan.

To stop the gray cloud from pulling over my life, I needed to figure out an actual transition.

Two thoughts finally helped calm me this morning. I need to nurture them.

The first was the idea to go 4 days a week after I cross my number. I have navel-gazed this before, but this time, I am going to bring it up once we cross the nest egg goal line to my Empress with a concrete plan.

I propose going to 4 days a week, and my replacement will be pulled into senior conversations. Over one year, I will slowly transition my role to him and fully retire in 12 months. My replacement is in the trenches doing the day-to-day work and building great relationships. By the time I leave, he will have 1.5 years under his belt.

The next 8 months gets the nest egg beyond the latest goal, gets me to my bonus in March,  and allows me to ease into retirement. The only problem comes if my Empress says no. Then what? Am I ready to say screw you, then I am done? Because that would be the only option left.

Still, having a plan has helped bring my stress level down. Now it’s just playing out that conversation in my head for the next two months.

The Ultimate Risk

The second thought that made it easier is a simple reality check on risk.

We all obsess about the odds of success. We run the Monte Carlo simulations. We stress-test the portfolio against historic market crashes. We recalculate safe withdrawal rates and stare at spreadsheets until our eyes bleed, trying to engineer a future with a 0% chance of failure.

But in our desperate bid to eliminate financial risk, we completely ignore the much bigger, much more terrifying risk: running out of good years.

We plan for retirement as if our 55-year-old selves and our 75-year-old selves will be capable of the same things. They won’t be. The years between 55 and 65 are premium, high-octane fuel. They are the years where you still have the knees for a steep mountain hike and the energy to wander a foreign city for twelve hours.

That means I have roughly 10 to 11 “good to great” years left. It could always be shorter, because at this age, we are all in the “age casino” where anything can come out of left field.

Ten years does not seem like a long time anymore. It means every year I spend waiting around out of fear means I am actively giving up 10% of my remaining good years. That’s not going to happen.

These two thoughts have made my stress subside. Will it stop the never-ending thought loop? Not likely, until I actually have the conversation with my Empress.

the resemblance to my Empress is uncanny