This is Why Early Retirement Goes Wrong!

I was watching one of my favorite ‘Retire Early and Travel the World’ couples the other day and found that they have been struggling. After watching the 1 hour and 23 minutes YouTube vlog, it was clear that they weren’t ready for retirement. To be fair, no one is ever truly ready to retire. Even the Financial Samurai blogger had regrets.

In April 2024, they sold everything, and for the first few months, Gean and Kristine (Fire We Go) were locked in. Typically, people will downsize and even trade in their bigger homes for something smaller. In addition to this, this couple set out to see the world and take us along for the ride. Before their big escape, their retirement goal was 2028.

Being a fan of this kind of content, I was on board.

They completed the Camino de Santiago, which was a welcome surprise. It’s a long commitment that is akin to hiking like a pro for days. Something that my wife and I are considering. And they globe-hopped here and there. Gean is Brazilian, so that’s an easy language win when they jetted to Brazil. All was fun and good times, then they disappeared for a few months. And now we know why.

They were stressed out.

Even in Retirement, You Can Have Anxiety and Stress

My wife and I are planning to retire early. I’ll be 50 and she will be 43. That’s a lot of time to spend in retirement, considering our friends won’t be out of the game until the ripe old age of 64 (at the earliest). With prices climbing, savings being tapped out, and investments being non-existent, most Americans are going to have a hard time.

Gean and Kristine ran into problem number 1 of many, a low million-dollar balance. This may sound insane, but it turns out that $1M is not a great retirement net worth. The reason is that the first year impacts your average annualized capital output. Years 1-3 will drain your balance. Say you have $1M to live off for 25 years, in a straight-line calculation, you would have $40,000 to spend annually. Let’s now say that you spend $100,000 to renovate, or even buy a new car in retirement. You would have $36,000 to spend. That’s not too bad, but let’s say year 2 hits you with a $50,000 emergency, you would be looking at $33,917. Math aside, those initial years are murder on your finances if you didn’t plan accurately.

This also leads to problem number two, Sequence of Return Risk (SRR).

The Problem that the Casual Early Retiree isn’t Aware Of

SRR is a problem when the market goes down. If you held more risky assets, your balance is subject to more market whims. This is why most retirees lower their rate of return to avoid unnecessary risks. If you have $1M in investments and the market does well in year 1, let’s say 20%, you are up $200,000. The inverse is bad, let’s say you are down 15%, that $1M evaporates to $850,000. You will have to hope and pray that the market rebound gives you 17.65% to go back to flush.

Making calculations off on 8% average annualized rate of return is great when taking 4% annual withdrawals, but it can have its drawbacks. This can easily generate financial anxiety. Check out the Harvard Business Review tips on Coping with the stress of retirement.

What’s Enough Money?

This goes back to not having “enough money.” Part of their strategy was to launch the YouTube channel, which would help pay for their travel as well as other medical insurance costs. Unfortunately, although they have great content, the algorithm is doing algorithmic things.

While some channels pop off, others don’t despite having better content. This creates both a task in retirement, dread of quality, a sense of failure, and even more need to have content. It’s a vicious cycle, and by my guess, it would be frustrating.

The pressure to perform in a content-driven era will drive a lot of people crazy in the short and long run. Even those who are famous today will have issues long term when the attention eventually fades or gives way to another content creator.

This is why having a more robust financial plan with various sources of income makes more sense. As inflation heats up, $1M or 1 million subs won’t be able to pay for $1M+ retirement expenses. The millennial retirement savings need to exceed $2.7M and I already did the math for that.

The idea of Barista FIRE and Coast FIRE won’t work; damn near regular FIRE won’t work unless you are cooking with monthly positive cashflow. If not, the cost of retirement and traveling will get tiring.

It’s Not Always the Money

Come to think of it, we must look ridiculous to locals when we are hitting 2 countries in 14 days. Beyond the current issues of over tourism, there are only so many hotels, Airbnb stays, and restaurants you can go to until you are tired of it. No matter how many great sites you see and unique activities you do, there’s nothing better than stability. Human beings crave it. It’s an innate desire that stems from our need for predictability and security. Both are essential for psychological and physical well-being. Your brain can’t even process the data fast enough.

For me, by two weeks into traveling, I can’t keep up with languages anymore. I’m not even counting the massive increase from less than 5,000 steps to an average of 10,000 per day. Between your body, your mind, or your spirit, I’m not sure which will break.

Gean and Kristine found that out the hard way.

My takeaway: Pre-Early Retirement?

I must go back to the drawing board to check the math and consider my options. Their experience provided some aha moments that we can all learn from. In the first few years, my wife and I will likely do some hybrid travel. It will also help if we start with cash reserves of $240,000 (for Years 1-5). Check out our initial strategy in the How to Retire by 50 post.

Year 1 will have us move back to Florida to be closer to family and help where needed. Followed by quarterly, longer travel stays.

Beyond that, I figured in year 2, we will go for the Camino trip while we can still make it physically.

In Year 3, I want to do the full year of travel, going from one location to another. We will have to anchor this with language classes, as well as other forms of education. Additionally, we will be coordinating an endowment for our alma mater or other scholarship ventures.

Finally, in year 4, we will consider buying something overseas. While all plans are iterative, I can see how this could work for us. I’ll continue to watch Gean and Kristine. This is just my take on their early retirement journey. I might be completely off, however, I’m still learning a lot due to their transparency.

Genuine people are hard to find, so I’m happy I stumbled on them. And for you, if you are interested in early retirement, don’t jump into the water if you can’t gauge the bottom. I have a friend who got paralyzed doing that. You don’t want to go through unretirement to pay bills.

Feel free to check Gean and Kristine’s FIRE We Go vlog below.

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