The “one more year syndrome” is a debilitating syndrome faced by people who want to retire. Before you know it, the one more year syndrome might turn into five years or even 10 years of still working at the same place.
Since “retiring” in 2012 from finance, I've noticed plenty of people continue to suffer from the one more year syndrome. And the main reason why people continue to work at jobs they dislike is because they fear not having enough money. The second reason is not knowing what to do next.
I faced a number of fears upon graduating from college:
1) Getting stuck in a terrible job
2) Not making enough to comfortably support a family of four
3) Not being able to financially help my parents if they needed assistance
4) Not leading a fulfilling life, and 5) Never realizing my potential
You could say I feared failure the most. It is the one main ingredient necessary to achieve financial independence. Over time, my fear of failure was replaced with the fear of regret as the one more year syndrome took over.
After ten years of working on Wall St., I started feeling comfortably numb in a job that paid a lucrative salary. Although my interest in the financial services business began to wane towards the end, I kept telling myself that all I had to do was gut it out for one more year to bank another six figure bonus.
Start Of The One More Year Syndrome
I discussed the “one more year syndrome” with a number of close colleagues. They all admitted to suffering the same plight. Why do something else when very little else pays as much?
Originally, I had planned to work for 18 years until age 40 and then call it quits. Instead, I only lasted for 13 years right before the age of 35 before going off on my own. Giving up a multiple six figure income in one's 30s sounds ludicrous, I know.
But you have to understand that I had been living way below my means since graduation so I've never really experienced what it's like to live a multiple six figure lifestyle. I didn't anticipate such a collapse in the financial markets nor did I anticipate the X Factor of Financial Samurai. Besides, happiness tops out at $200,000 anyway.
The only monster expense I had post college was for a 20% downpayment on my current house eight years ago. My main rental that was purchased 10 years ago was from stock market funny money, so that didn't count.
70% of my income for the last five years was saved, providing no utility except for financial comfort. I realized one day that I've been content for a very long time already but wasn't really aware.
How To Overcome The One More Year Syndrome Disease
If I worked for five more years I probably could have saved another $1 million dollars or so in cash. The $1 million would be a nice extra cushion in retirement. This is one of my do-overs if I could retire all over again.
I could replace my old car with something new that contains fresh airbags and Bluetooth. I could perhaps feel more comfortable paying for business class plane tickets a couple times a year instead of always slumming it in coach. But other than a new car and more pleasant travel, there's nothing more I want.
I established 529 plans for my unborn children. I owned my primary residence and had more than enough. An extra $1 million dollars wouldn't make a lick of difference to my lifestyle. However, slaving away in a structurally declining industry would make life worse.
The main thing I lacked was time. What's the use of having money if you can't spend it? While we are students we have all the time in the world but no money. While we work, we have money but not enough time.
As a result of this paradox, in 2009 I got to thinking about how to manufacture both time and enough money to lead my current lifestyle. After three years of experimentation and a lot of analysis, I finally pulled the rip chord in 2012.
I'd like to share with you some thoughts on how I finally eliminated “one more year syndrome” from my mind. I know many of you are having the same concerns as I did for so many years. The pandemic has shown us NOT to put our lives on hold!
1) Have a plan with a specific date.
Once you come up with your plan and run the pro forma numbers on how much you need to sustain a lifestyle you enjoy, continue running different scenarios to see how long it will take to get there. Then proceed to select a year, a month, and perhaps even a day to take off on your own. The process is the same thing with managing your 401(k) retirement funds for a more financially secure retirement.
When I started in 2009, I knew there was potential to generate income online, but I wasn't focused on that aspect for the first year at all. All I wanted to do was write and connect with our great community. Only in 2010 did I start getting excited about the potential of one day working for myself. I set a 12 month target to earn a subsistence level wage. My 24 month target was then to earn 1.5X the US per capita income.
I never waited for my 36 month target because by 2012 I had figured out how to get laid off and received all my deferred compensation, vacation days, health care, and a nice severance package after 11 years of working at one firm. The total severance package gave me literally a six year runway to reach my ultimate goal of generating the same amount of money with absolute freedom.
2) Use the regret minimization framework.
Jeff Bezos of Amazon said it best when he was interviewed about why he decided to quit his Wall St. job mid-year, forsaking a juicy year end bonus to start Amazon. Jeff projected himself to age 80 and wanted to minimize the number of regrets in his life. He knew that when he was 80, he wouldn't regret trying his hand at entrepreneurship.
Even if he failed, he wouldn't regret the effort in participating in “this thing called the Internet.” But he felt the one thing that would haunt him forever was if he didn't try. After putting the pieces together in his framework, his decision to leave became very simple.
I firmly believe that we will regret more the things we don't do than the things we do end up doing. One of my favorite ex-colleagues was the receptionist. We shot the shit every day for a few minutes during lunch time. At 54, he told me his biggest regret was not going after his dreams of dealing in Japanese memorabilia.
He's now stuck in this dead end job with not much money to show for. One day I came to work and he was gone. Start imagining the worst case scenario and either get acclimated or make moves to avoid such a scenario. The one more syndrome can entrap you.
3) Test out living on less.
Despite having around 18 years worth of living expenses saved by age 33, I was STILL nervous about losing my income of 13 years. I distinctly remember sitting with a group of folks in a hot tub in Tahoe back in 2010 asking everybody their savings number before they went on their own. The average came out to just two years.
As a result, I did some careful calculations of my passive income generation ability and typed it up in a post entitled, “Achieving Financial Freedom One Income Slice At A Time.”
Until this post, I actually did not know how much passive income was being generated from my rental properties, CD accounts, and dividend stocks because everything was always just reinvested. Although I spend more than my passive income production, I found comfort knowing that I wasn't going to starve if I was an absolute failure online.
Before taking the leap, I suggest everybody try and live on 50% less income than normal for three months and see how you do. Another good exercise if you are married is for both of you to live of your spouse's income and draw down your savings if necessary to see how it feels to go in reverse.
You won't know the pain of living off savings until you actually do it, so don't cheat. Really cut down your extraneous expenses such as eating out, going on vacation, driving on the weekends, and buying wants you don't need. I'm pretty sure everybody has fat to cut from their budget.
Track your net worth using all the free financial tools there are online. The more you stay on top of your finances, the better.
4) Calculate your upside.
Everybody just thinks about the downside if they leave their jobs. Mine was roughly $1 million in cash over the next five years. Once I knew my downside, it was much easier to calculate my potential upside. To save a similar amount, I'd have to generate $300,000-$500,000 a year depending on how much I save and how much revenue I can shield from taxes. The figure sounds like a lot until I realized there's another way to cover a $1 million dollar loss.
If you create a viable business you will inevitably have others who will want to pay a multiple for your income stream. If I am able to generate $250,000 in annual operating profit and someone pays me a 6X multiple, I should be able to bank $1 million after taxes.
There have been numerous multi-million dollar blog sales in the personal finance space over the years, and I have the confidence and the knowledge to join the crew in time if I want to exit. I'm very bullish on blogging because of the proliferation of the internet. Consumers no longer want to read the news, they want to participate in the news and interact.
5) Remind yourself that you aren't getting any younger.
The easiest way to overcome the one more year syndrome is to remind yourself that you will die one day. Death is a finality. There is no rewind button in life! My 20s flew by and now my 30s are going by even faster. Pretty soon I'll be 40 years old and gray hair will start popping up everywhere.
Life speed accelerates because every year we live is a greater portion of the time we have left. I think about death and the brevity of life every time I hear some celebrity die too soon. James Gandolfini of The Sopranos dying at age 51 is the latest example.
If you knew you were going to die at 50, I'm absolutely sure you would treat life differently. If you are older than 50 and knew you were to die in 10 years, I'm sure some of your most stubborn habits would change.
Although somewhat morbid, I have a mental note of dying at age 60 which helps spur me to stop being so lazy and continuously try new things. If I live past 60, then great! If I die at 60, then that's what I've been expecting all along.
I believe the best age to enter the decumulation phase is between 40 – 60 years old. After 20 – 40 years of saving and investing, you should have enough money to spend more freely. Further, you're still pretty healthy between 40 – 60 years old. Therefore, at age 45, I'm planning on spending and giving away a lot more of my money.
Don't Get Caught Up With The Money
Making a lot of money is nice. But having a lot of time to do what you want is even nicer. Some of my happiest moments were as a broke college student or a young grunt working craptastic jobs. There are some people on the path to making a top 1% income at places Goldman Sachs, Google, and McKinsey who are miserable!
Now that I've worked for myself for the past nine years, there's no way I'm going to regret not having worked five more years on Wall St even if I stop making a single dollar tomorrow. The experience of trying to create a location independent business has been exhilarating!
I don't recommend anybody take a blind leap of faith. If you don't thoroughly test your business model through multiple difficult scenarios there's a good chance you will fail.
Again, it took me three years since I launched this site to finally say goodbye to Corporate America. Even after I said goodbye, a part of me longed to go back due to the camaraderie and the comfort of a steady paycheck.
Stress test your income streams. Be absolutely analytical and face the reality that your net worth may stall or even decline for a while. Even if you fail, you can always go back to work or live in your parent's basement to replenish funds. After the third year of “one more year” in your mind, it's time to get off the pot and make your move.
Recommendation If You Want To Move On From A Job
If you want to leave a job you no longer enjoy, I recommend you negotiate a severance instead of quit. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training.
When you get laid off, you're also eligible for up to roughly 27 weeks of unemployment benefits. Having a financial runway is huge during your transition period.
Conversely, if you quit your job you get nothing. Check out How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye.
It's the only book that teaches you how to negotiate a severance. In addition, it was recently updated and expanded thanks to tremendous reader feedback and successful case studies.
Money Management Recommendation
The best thing you can do to grow your net worth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place. This way, you can better optimize your finances.
Before Personal Capital, I had to log into eight different systems to track 28 different accounts. Now, I can just log into Personal Capital to see how my stock accounts are doing. I can monitor my net worth and see where my spending is going.
Their 401K Fee Analyzer tool is saving me over $1,000 a year in fees I had no idea I was paying. There is no better free platform out there that is helping me manage my money as I live a free life post Corporate America. The entire sign-up process takes less than a minute.
Photo: A idyllic lakeside house on Lake Lucerne, Switzerland.
Update. It's funny, but I wrote this article about the one more year syndrome back in 2014. So much good has happened since. Today, I'm 45 and believe even more about the tips I've written to overcome the one more year syndrome. Time is the absolute most valuable asset. Sign up for my free newsletter here if you enjoyed this post.