Advice for a fresh, early retiree
Navigating life’s journeys on your own without the vessels of work or school
With the retirement announcement of 94-year-old Warren Buffett as CEO from Berkshire Hathaway, I’m sure that the world of Substack will be filled with Warren Buffett quotations between now and the end of the year. Still, this quotation above about changing vessels being better than “patching leaks” felt particularly apropos. Coincident with Warren Buffett’s retirement news was an announcement by a close friend that he has decided the timing is right to stop “patching leaks” in the vessel of full-time work and embark on his own retirement journey. This post is a response to his request for advice for a fresh, early retiree, so I thought I’d share it here!
An iMessage request for advice
My retiring friend hosted a Zoom call to share his decision and then followed up with an iMessage thread asking for advice. I pasted a portion of this thread below. On the practical side, my immediate response was to get health insurance (in line with this advice I wrote about previously). A couple of friends followed with some good advice about consulting with both financial planners and tax advisors. Given that I had both financial planners and tax advisors in place before retiring, I didn’t think of these things myself as changes, per se. However, for those that don’t have these advisors, these points are relevant.
Financial points
Beyond the healthcare topic I covered previously, I did have some additional points on the ideas my friends contributed to the thread.
“Safe and secure”. I’ve written about my own portfolio allocation in retirement. In our own portfolio, we have three buckets — core, growth, and alternates. The core bucket contains a 40% allocation into what one friend calls “safe and secure” assets which include cash and fixed income. To one friend’s point, we generally fund our lifestyles from this core bucket so that we aren’t forced to sell growth stocks during market downturns. (The alternates aren’t generally liquid enough to sell anyway!)
Estimated tax payments. As this friend mentioned, my estimated tax payments have been pretty variable because I haven’t been that regular with respect to both consulting and direct private lending deals. These income sources have ebbed and flowed a bit in the seven years since I retired, so I find that I still do quarterly estimates with our accountant.
ROTH IRA conversions. One advantage to having less consulting and interest income in “down years” is the opportunity to take advantage of lower income tax brackets to do some ROTH IRA conversions. Our tax accountant is pretty good at making these recommendations as appropriate.
Consulting. Another friend did talk about it being nice to offset expenses and provide some mental challenges through consulting, and I agree with him. I wrote about both the mechanics of setting up a retirement business, as well as some of the retirement consulting gigs I’ve done. (I even did a deeper dive on how I do executive coaching.)
All that said, this particular friend who is retiring is better off financially than I happen to be, so my primary advice to him would not be financial.
The psychological journey
Beyond the financial and practical mechanics of retiring are really a set of bigger issues in new beginnings. The Warren Buffett quotation above is really about changing the vessel in which we’re taking a life journey of ups and downs, wins and losses, and overall growth. Like many of us, my retiring friend is a graduate of an elite college and spent his career working at leading Silicon Valley technology companies. In these vessels of school and work, it’s easy to embark on a very fulfilling journey. It’s not hard to see why many friends the same age have chosen to journey on in the work world — even when they no longer have to!
There are others of us who (like me and my retiring friend!) realize when it’s time to continue life’s journey another way, but the formula to do so is less clear. Sometimes, we don’t know where we want to go. Sometimes we don’t know how to get there without a vessel of school or work to ride in. We can question the meaning of life. We can also reflect back and look to repair some damage we might have done to relationships earlier in life. Most of this Substack has been about my own personal reflections in this regard. It may be hard to see by reading one of my posts here and there, but I actually love retirement. Retirement just doesn’t come with a vessel equipped with an ADAS (advanced driver automation system) or even an automatic transmission for that matter. In retirement, I have to often shift gears myself!
So what’s the biggest piece of advice?
If I had one piece of advice, it would be that no matter what we do as retirees, we must stay engaged. One value of going to work every day is seeing people on a regular basis. A Harvard study revealed that the No. 1 challenge people faced in retirement was not being able to replace the social connections that had sustained them for so long at work. (Robert Waldinger, the author of that linked article, is also on Substack!)
Consulting is one path to seeing people, but even volunteering or joining other community groups (I joined an angel investing group) can keep social connections alive. I also do regular outings with friends. (DM me if you’d like a “friend link” to read this paid Medium article).
I’ve written before about navigating the friendship recession. Particularly for us guys, there’s a male loneliness problem. I love that Scott Galloway mentioned in his podcast that his cures for male loneliness are regular text messaging and guy’s trips!
The good news is that my retiring friend was using text messaging to start his retirement journey, and the members of this iMessage group are all going on a guy’s trip together very soon! So, my retiring friend is off to a good start!
Do you have other advice for my retiring friend?