Early Retirement Miscalculations

In 2007, I took early retirement at the age of 49.   Before making the decision, I worked with my financial advisor to determine if we had sufficient funds to retire.   The analysis was positive and I retired early after 27 years of service with my company.

With almost eight years of retirement behind me, I have the benefit of experience in reviewing the analysis that was done in 2007.   Here are some of the miscalculations that I made in 2007.

Growth of company stock.    We used the historical 7% average annual growth that my company stock had experience during my time with the company.   Unfortunately, the actual stock growth did not match the historical growth rates.  From the 2007 high, the stock has only grown about 3% in total, much less than the projected 60% expected growth.

A significant recession occurring immediately.  For the Monte Carlo retirement analysis, we had over a 90% chance of not running out of money.   The 10% chance were most likely due to a significant market drop during the early years of retirement.   Lucky me, the 08/09 bear market started a few months after I retired.

Planning to live until 90.    Our retirement analysis assumed life spans until 90, which seemed reasonable at the time.   Recently, I've been thinking that living to 100 or longer may be a better plan.   After all, running out of money at 90 is a major issue since going back to work is not likely solution.  

With these revised considerations, I've decided to delay taking Social Security until the latest possible date, when I'm 70. Also, I've been asked to consider an executive director position which would have me returning to work as CEO of a non-profit for a few years. Both of these actions should help extend the life of our retirement savings.

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This is not financial advice. Please consult a professional advisor.

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