In September 2016 after reviewing our financial plan with our adviser we were given the go-ahead, assuming that the numbers in the plan were correct, to hit retirement a year earlier than originally intended. It took all of two nano-seconds to make the decision to go for it.
And so it was that we sold our home in the Pacific North West and moved to the south west coast of Florida. We spent time by the pool, went on walks and bike rides. We de-stressed.
And yet a year on I returned to full-time employment. What happened?
The first problem is that there were serious issues with the financial plan we’d developed with our financial adviser. It was, in a word, pants. There were several large items missing that had a significant effect on the budget, and which we should have recognized as such. e.g. Whilst we had included the income from the sale of our home in the plan we hadn’t included agent’s fees in the sale, so our cash flow income was greatly exaggerated. That was a $24,000 miss by itself. The second big item was that we hadn’t allowed anything for moving to or setting up the new place. It takes time to change a house into a home, whether it be new furnishings or other lifestyle items that make it the way you want it. Either way it meant that we didn’t have the reserves that we thought we had..
The second problem is that we weren’t controlling our expenditure. Whilst I was pretty spot-on in my budgets for the basics (food, utilities, etc.) we were quite uncontrolled on our discretionary expenditure. Partly this was because we just weren’t used to capturing expenses and tracking them against a budget, so we didn’t have a good handle on how much we were spending and partly we just overspent, mostly in the ‘setting up home’ category mentioned before. Looking at the spreadsheets there is a definite tightening of expenditure in that calendar year as we got better at controlling expenditure and tracking to a budget.
When we redid our financial plan with our adviser one year after the retirement decision she was aghast at the deterioration in our financial situation. Whilst it wasn’t a disaster, it certainly posed a significant risk of running out of funds in our retirement if we continued at that pace. However, we’ve learned a lot in the past year and things have turned around, but that’s a story for another blog post.