One benefit of blogging is having a written record of my mindset at various points in time. It is helpful for me to periodically reflect back. How can I grow, improve, and make better decisions moving forward?
This past week marked the one year anniversary of the world substantially changing as the impact of the COVID-19 pandemic became real and immediate for most of us. In the same week our world was figuratively shaken, my world was literally shaking from a nearby earthquake and ensuing aftershocks.
So I reread the blog post I wrote at this time a year ago. It was a good time to reflect on my state of mind at that tumultuous time. What did I get right? Where was I wrong?
Here’s what I’m taking away from the past year that will improve my personal planning and impact what I write about going forward…
Be Prepared For the Long Term
A year ago, many people thought the pandemic would lead to the end of a decade plus bull market. This, in turn, would be the beginning of the end of the FIRE movement that was a by-product of this prosperity. Or so that story went.
After an initial shock to the system, the performance of the economy in general and the stock markets in particular have exceeded expectations. Things could have been far worse. Regardless, I firmly believe this community put ourselves in far better positions to sustain inevitable economic downturns than average Americans following the standard path through life.
My years of saving and planning enabled me to negotiate the trials and tribulations of the past year from a position of strength. Still, I learned a lot about my blind spots and erroneous assumptions.
Be Prepared For Short Term Disruptions
Until the past year, I focused on the big picture and long-term planning. However, I placed too much trust in assumptions that the world would always work in ways I was used to. I overlooked important day-to-day details.
I knew we had decades of living expenses in investment accounts. We had over a year’s worth of savings in cash in the bank. But we held insufficient physical cash, assuming we could easily access our accounts at any time. I didn’t prepare for even a short term disruption of the financial system.
Despite having ample storage, we held few reserves. I assumed we could always just go to a store and buy more food, paper products, cleaning supplies, etc. It never crossed my mind that having money and stores all around us was meaningless if supply chains broke down and I couldn’t buy what I needed.
As avid campers and outdoors people, we had most everything we would need to survive for extended periods in harsh conditions. However, we had no organization or system to quickly access these things when we may need them most in an emergency.
This past year hasn’t turned me into a full-blown “doomsday prepper.” But I have taken a number of simple, low-cost, and practical actions that will make us more resilient to future disruptions. They include:
- Keeping more cash on hand.
- Putting together a basic survival kit of items, most of which we already owned. We now store them in one centralized and easy to access location.
- Talking with neighbors about larger resources, such as generators, that could be shared in the event of a longer-term disruption.
- Stocking up bottled drinking water and having ways to purify more water if needed.
- Filling a pantry with several weeks of non-perishable food.
Retirement planning requires making predictions about what will happen decades into the future with investment returns, interest rates, inflation, health care costs, your life span, and the political climate that impacts factors including tax rates and Social Security benefits.
Many people place great confidence in their assumptions. This past year should serve as a powerful reminder to be humble in our ability to predict the future.
Consider, a year ago markets were in free fall. Virtually no one was predicting they would be at new all time highs now. Major portions of the economy were shut down or at least slowed. Over a half-million people died due to COVID related causes. On top of that, we endured a summer of social unrest and a contentious fall election season culminating with a January uprising at the Capitol. Yet here we are.
There is merit to the idea that making predictions over longer time periods is actually easier. Things tend to revert to the mean. But that doesn’t matter if you are unable to remain solvent to ride out short to intermediate-term anomalies.
We should remain humble in our ability to predict the future. Never place too much of our future at risk when it relies on a particular outcome coming to fruition.
One thing that has given me hope over the past year is seeing how adaptable and resilient people can be. Everything from how we work, educate our kids, socialize, entertain ourselves, shop, worship, etc. essentially changed overnight. Yet remarkably, life continues.
This is a lesson that should not be lost on us. With something as important as the retirement decision, it’s easy to obsess about having a perfect plan that considers every possibility. But the past twelve months have proven that’s impossible.
I recently wrote about the importance of having the courage to change the things under your control. But among this crowd, that’s mostly preaching to the choir.
The corollary to that is having the serenity to accept the many things we can’t control. That is much harder for many of us. I’m guilty of this.
The best plan is the one that works even if things don’t go the way you hope and predict. That requires being flexible and adaptable to conditions as they present themselves.
Reflecting back on my mindset a year ago, there were many things I got wrong. But there was one thing I absolutely got right.
My opening and closing thoughts centered around the need to think about and help others. When I hit my lowest points, it was because I focused my attention on myself, what I lost, and expectations that were not met. Finding happiness and fulfillment only happened when I was able to stop focusing on myself and focus on loving, helping, and serving others.
Retirement planning focuses a lot on getting the financial aspects right. We also focus on escaping careers that dominate our time and don’t fulfill us. We need to focus more on what will fulfill our souls after financial independence and early retirement.
A year where isolation was the norm and genuine connection was hard, if not impossible, was a major challenge for most of us. Let’s all use this opportunity to focus our attention on the importance of relationships and service to one another.
As the world settles into a new normal, I challenge you, as I am challenging myself, not to fall into old routines and habits. How can we live more robust lives than we did before? How can we use our fortunate positions of being on the path to or having achieved financial independence and early retirement to make the world a better place?
* * *
* * *
[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. Now he draws on his experience to write about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. You can reach him at firstname.lastname@example.org.]
* * *
Disclosure: Can I Retire Yet? has partnered with CardRatings for our coverage of credit card products. Can I Retire Yet? and CardRatings may receive a commission from card issuers. Other links on this site, like the Amazon, NewRetirement, Pralana, and Personal Capital links are also affiliate links. As an affiliate we earn from qualifying purchases. If you click on one of these links and buy from the affiliated company, then we receive some compensation. The income helps to keep this blog going. Affiliate links do not increase your cost, and we only use them for products or services that we're familiar with and that we feel may deliver value to you. By contrast, we have limited control over most of the display ads on this site. Though we do attempt to block objectionable content. Buyer beware.