Newsletter For November 17, 2024: It’s OK To Retire By 55

Dear Financial Samurais,

I recently had a fascinating discussion with Bill Bengen, the creator of the 4% Rule. 

My biggest takeaway? It's OK to consider lowering the traditional retirement age from 65 to 55. If you’ve been feeling burned out or uncertain about your future, know that one of the foremost experts on retirement planning is giving you permission to ease off the gas earlier.

For those unfamiliar, the 4% Rule was developed in the 1990s. It suggests that traditional retirees (age 65) can safely withdraw 4% of their retirement portfolio in the first year—adjusted for inflation annually—without running out of money over a 30-year period.

It's Just Not That Easy To Walk Away

The challenge with retiring early is that stepping away from society entirely can feel nearly impossible. Even after leaving my full-time career in 2012, I’ve stayed engaged by working 15–20 hours a week on Financial Samurai and consulting part-time for several years. Staying plugged in has been rewarding—it’s fun, keeps me connected, and generates supplemental retirement income.

Regardless of your age, boredom is inevitable if you don’t have a plan for life after retirement. I was reminded of this when I ran into the former owner of a private post office business. He sold his company at age 67 and, five years later, had fixed up a Corvette and started dating again. But when I asked him if he was enjoying retirement, he said, “Well, it was fun for a while, but I just got too bored. I’m now the Chief Operating Officer of a startup.”

Good for him! It’s hard to do nothing, no matter how much good TV there is to help you do nothing. 

Another key takeaway from my chat with Bill Bengen: if you do retire earlier than the traditional age, plan for more physical activities in your golden years. Folks in their 50s are generally healthier than those in their 60s, so consider tackling adventures like the 26-mile Inca Trail hike to Machu Picchu while you still can.

Check out my latest post, Clarifying Misconceptions About the 4% Rule With Bill Bengen, where I share more insights from our conversation. After reading the post and listening to the podcast, let me know—do you agree that we can now consider lowering the retirement age?

We Anchor to Moments in Time, Sometimes to Our Own Detriment

One reason to job hop is that your boss's perception of you may never evolve. In their eyes, you might always be that fresh college grad who struggled with Excel and fumbled a presentation. As a result, no matter how much value you generate for the company, your career growth may stall.

Similarly, anchoring to specific moments in your life can distort your risk tolerance. For me, two pivotal moments stand out: early 2012, when I prepared to leave my job, and early 2017, when my son was born. Both events put my finances at risk, leading me to believe I’ve always been a moderate-to-conservative investor.

But after revisiting my 2013 financial consultation, I took another deep dive into my investment history last week. To my surprise, I discovered I wasn’t conservative at all. Instead, I’m a risk-loving, go-all-in investor willing to take intense punishment in pursuit of riches!

With the odds of a December Fed rate cut falling from 82% to 65% since Trump's election, there’s been lingering uncertainty in the stock market. Yet, I continue to buy the dip, fully aware that hardline policies may rattle the markets in the coming months.

If you haven’t reviewed your finances in the past year, I highly recommend you do so. There’s a good chance your actual investment behavior differs from how you perceive it. A deep-dive analysis might also reveal underlying psychological factors influencing your financial decisions and risk-taking tendencies.

Check out: Your True Investment Risk Profile Is Not What You Think

Get Used to Losing If You Want To Eventually Win

Are you feeling drained? I know I am—likely due to the emotional rollercoaster of the local and national elections. My latest post explores the hidden power of losing and how it can ultimately make you a winner if you choose to learn.

In his 2024 Dartmouth commencement speech, Roger Federer said, “I won almost 80% of singles matches. But I only won 54% of the points. Even top-ranked tennis players win barely more than half the points they play.”

To lose nearly half of all points but still become one of the top five tennis players of all time is remarkable. The lesson? Losing is part of the game, and learning to accept it is key to success.

Today, writers face an existential crisis as AI steals our content without proper attribution. We’re losing ground in the battle, but through persistence and adaptation, we’ll find a way to thrive. That's life! We have no choice but to fight on.

To Your Financial Freedom,

Sam

Here’s a fun snapshot of the signed books I sent out last week—looking forward to sending more! 

Financial Samurai newsletter for November 17, 2024 - Buy This Not That promotion books