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Creating a 10-Year Backup Plan For (Post) Early Retirement

My contrarian thought of the day? I feel that the retirement planning industry downplays the role of luck. Life is not a as certain as the smooth exponential curves that they show you. Perhaps the statistically optimal bet is to jump a bit early and hope for the best, while having a backup plan for the worst. You might just win an extra 10 years of freedom.

If you tinker with portfolio survival calculators like FireCalc and cFIREsim that model hundreds of possible paths, you may notice that the “failure” paths usually happen when a bear market occurs soon after you retire. If you keep spending when a portfolio is down, it may never recover.

Even if you have the same portfolio size, same withdrawals, and the same average returns, having the bad years occur upfront can lead to failure while having the bad years at the end can lead to success. This is known as sequence of returns risk.


Retiring in 2000 with a 4% withdrawal rate: Warning! 🚨🚨🚨 In 2021, most people happily accept that the stock market just goes up and up. However, every so often there will be a “lost decade”. If you retired in 2000 with a portfolio invested in the S&P 500 and used a 4% withdrawal rate (increasing each year by 3% for inflation), here’s how that would have looked like (yellow line):

Retiring in 2010 with a 4% withdrawal rate: More money than you started with. 💰💰💰 If you have solid returns upfront, then you gained a decade of priceless freedom! For retirees of the “Class of 2011”, consider that their portfolio is likely larger today in 2021 even after a decade of withdrawals.

Retiring in 2021? Crystal ball is cloudy. If you are in the retirement “Class of 2021”, many predictions call for another lost decade. Yet, even if the next 10 years have poor returns, better times may be right around the corner. From this article by Davis Advisors:

Though frustrating, stretches of disappointing results for the market are not unprecedented. History shows however, that these difficult stretches have been followed by periods of recovery. Why? Because lower prices increase future returns. – Christopher Davis

This article was written in 2012, and it turns out that Davis was right. As of Q2 2021, the trailing 10-year annual return of the S&P 500 is over 12% annualized. Here is a chart showing the subsequent 10-year performance after each past “lost decade of stock returns”.

Surviving the first 10 years of retirement. The lesson here is to avoid taking out big withdrawals during a stock market slump drop during the first 10 years, so that it can benefit from the rebound of the next 10 years. At the same time, you don’t want give up the chance of 10 extra years of freedom. Therefore, perhaps the best bet is to retire when you have a reached your chosen savings target (for example, 25 times annual expenses), but also maintain a detailed backup plan during the first 10 years. Here are some things you might include in that plan:

  • Plan ahead for way that you can temporarily cut back on spending if you need to. Big to small. For example, plan to move to a lower-cost city, country, or housing option.
  • Identify non-essential assets that you will sell if you need to. Vacation property, etc.
  • Maintain employment opportunities in your current career field. Go back to part-time, freelance, consulting, etc.
  • Have alternative employment plans in a different career field to create supplemental income.

(By “plan”, I mean written out on a piece of paper. This improves the clarity of your thinking.)

The most powerful way to counter “sequence of returns risk” is variable withdrawals – a fancy term for the brilliant idea of not taking out as much money from your portfolio when it is getting beaten down. But the first 10 years is the most important, and the first 10 years is probably the easiest to go back to the workforce in a limited capacity.

Bottom line. Deciding when to stop working can be a difficult, personality-driven decision, but one option is to retiring with 95-98% odds of success with a practical backup plan, rather than waiting several more years and reaching 99.5% odds of success. Accept that luck matters (and also that you might have to go back to work). However, you also might gain extra priceless years of freedom. Life is never 100% certain anyway.

PFS Buyers Club: New US Mint Coin Arbitrage Opportunity ($300+ Net Profit, July 2021)

New deal July 29th, 2021. The US Mint regularly releases limited-edition coins to collectors. The coin sets are often limited to one per household, but end up worth more than the initial cost. PFS Buyers Club is a website broker that recruits regular folks to buy their allotted coin set with a set markup amount, with the agreement that they will sell only to PFS Buyers Club. For example, you might pay $300 for a coin and they’ll agree to pay you $350 for it – a fixed profit of $50.

On Thursday, July 29th at 12:00 pm Noon Eastern Time, there is a new guaranteed profit opportunity. A limited edition American Eagle Four-Coin Set will be released then, with a purchase limit of one per household. The cost of the Four-Coin Set should be either $4,962.50 or $5,055.00 (depends on the spot price of Gold on 7/28). Shipping will cost $4.95.

PFS will pay you a fixed commission of $200.05 for each Four-Coin Set, on top of your cost for the set.

You’ll also earn credit card rewards on your ~$5,000 purchase (worth another ~$100 here at 2% cash back), or also possibly satisfying the requirements for some $500+ value credit card bonuses. This makes the total net profit safely over $300.

Note that the eventual value of the set may exceed that elsewhere – you may be able to get more than $200 extra for each coin on eBay, for example – but if you want to make that bet, don’t promise to sell to PFS Buyers Club. Just buy it on your own and try to sell it yourself. Keep in mind that eBay seller fees can be quite high, and you’ll be responsible for other costs like the proper shipping with adequate insurance. PFS Buyers Club will send you a free prepaid mailing label (including insurance) and pay you via eCheck, paper check, or PayPal.

My past experience. I used PFS back in March for the first time, and everything went smoothly and I was paid my money in full without issue. The amount of communication was great and better than expected; I was kept up-to-date every step of the way. The total time commitment was about 30 minutes for $400+ profit, including the stop at the Fedex store to drop off the box with prepaid label. The eCheck option worked great – I printed the check out at home and deposited immediately via mobile app. PFS has a very solid reputation online, and I referred several blog readers last time and did not receive a single complaint. (Some folks were unable to buy the coins from the US Mint before it went out of stock.)

Here is the product page: American Eagle 2021 Gold Proof Four-Coin Set. Here is a direct quote of the deal text:

On July 29th – at 12:00PM ET, the US Mint will be releasing a limited edition American Eagle Four-Coin Set. The set has a purchase limit of one per household, so you’re able to buy one set.

The cost of the Four-Coin Set should be either $4,962.50 or $5,055.00. (The Mint will only be releasing the exact price for these products on Wednesday the 28th, and it will depend on the spot price of Gold over the day.)

Each purchase will also have a $4.95 shipping charge.

You will have each order shipped to your own house or office and then ship it to PFS Buyers Club with a prepaid shipping label that we will provide for you.

PFS will be offering a commission of $200.05 for each Four-Coin Set.

This is also a great opportunity to earn valuable points/miles on your credit cards, as well as meet any spending thresholds.

If you want to jump on this, you can sign up to join PFS Buyers Club here. Sometimes these deals fill up, so I would sign-up and opt-in sooner rather than later. You can still opt out of the deal until an hour prior to the coins going on sale. They will provide very detailed instructions. Follow them carefully, and it was pretty easy for me as a first-time buyer. If you use that link, I will receive a referral fee the first time you successfully sell your coin for a profit. Thanks for those that use it, and for those that already used it last time! I will be opting in myself as well.

Bank of America Unlimited Cash Rewards Card Review: 1.5% Flat Cash Back (Up to 2.6% With Preferred Rewards)

The new Bank of America Unlimited Cash Rewards Card is the most simple, straightforward, no-annual-fee credit card in the Bank of America line-up. If you are a Preferred Rewards client, you can increase the cash back earned by 25% to 75%. For such … [Read the rest]

529 College Savings Plan Flexibility: My529 Sends Money To All 50 States

My quarterly statement told me that the My529 plan (formerly Utah Educational Savings Plan) has been around for 25 years now, and included the map above which has dots from all the different places that they have directly sent withdrawals. All 50 … [Read the rest]

USDC Stablecoin Reserves Breakdown July 2021

For those following stablecoin, Centre (founded by Circle) has released another breakdown of USDC reserves as of July 16, 2021. The accounting firm Grant Thornton attests that the total fair value of US dollar denominated assets held in segregated … [Read the rest]

Blue Business Plus Card from American Express Review: 2X Points on ALL Purchases Up to $50k/Year (+ New 15,000 MR Points Offer)

New welcome offer. The Blue Business Plus Credit Card from American Express is a business rewards card that features double Membership Rewards points. Therefore, if you can redeem for more than 1 cent per point of value, this card has the potential … [Read the rest]

American Express Blue Business Cash Card: 2% Cash Back on First $50,000 in Purchases, No Annual Fee (+ New $250 Welcome Offer)

New welcome offer. The American Express Blue Business Cash Card is a small business rewards card that earns a solid cash back rate with no complicated categories. Here the highlights: New welcome offer: $250 statement credit after you … [Read the rest]

Summer of Dashpass 2021 Deals + New Chase Co-Branded $10 Doordash Credit

Doordash is running their Summer of Dashpass promotion again this year, with weekly deals from 7/20 through 9/6. First, Dashpass members will get an extra $10 in savings each week during this period. There will be a themed promotion each … [Read the rest]

Kabbage Business Checking Review: 1.10% APY + Targeted $300 Bonus

Kabbage offers financial solutions for small businesses, and was acquired by American Express in late 2020. On top of the very competitive interest rate of 1.10% APY, there is currently a targeted $300 bonus for their business checking account. … [Read the rest]

MMB Portfolio Update July 2021: Dividend and Interest Income

While my July 2021 portfolio asset allocation is designed for total return, I also track the income produced quarterly. Stock dividends are the portion of profits that businesses have decided they don't need to reinvest into their business. The … [Read the rest]

Sam’s Club New Membership Deal for $20 With $20 in Gift Cards

Groupon has two new Sam's Club membership deals, which come around a few times per year. There are two options. The $20 option (up to $75 value) includes: One-year Sam’s Club membership Household member card $9.96 in free … [Read the rest]

MMB Portfolio Update July 2021: Asset Allocation & Performance

Here's my quarterly update on my current investment holdings as of July 2021, including our 401k/403b/IRAs, taxable brokerage accounts, and savings bonds but excluding our house, cash reserves, and a small portfolio of self-directed investments. … [Read the rest]