Retirement planning

In spite of the coronavirus pandemic, how to continue on course towards early retirement

Due of the unprecedented pandemic and efforts to contain it, the Standard & Poor’s index has decreased by 12.49% since reaching a peak on February 16. This has caused a tumultuous ride for FIRE movement supporters.

Market changes resulting from the coronavirus may have delayed retirement milestones for people who had substantial investments in index funds.

The owner of the personal finance blog Money Hacking Mama and a supporter of FIRE, Rachel Jones, stated, “I know our net worth has gone down by $50,000 the previous few of weeks.” However, “you congratulate yourself when you’re on the winning side and see exponential growth.”

Despite this setback, Jones and other movement veterans are upbeat about their plans for an early retirement and offer guidance to newer members of the movement on how to persevere in the face of a catastrophic global health disaster.

With the help of an emergency fund, cover costs

Jones, who has $650,000 in investments and savings accounts between her and her husband, nonetheless advises having a traditional emergency fund to fall back on in difficult times.

Jones, who claimed that 90% of her portfolio is made up of equities, stated, “We’re still in the workforce, but we have quite an amount of cash, around three to six months’ worth.”

She sent a warning to FIRE supporters who may have reduced their spending but still don’t have an emergency fund.

If you’ve gotten down to the bare essentials and are unable to make any more cuts, Jones added, “You [probably] don’t have much money.” “I want to live comfortably, so having a sizable emergency fund helps.”

Tanja Hester, the matriarch of FIRE, warned that during a pandemic, even routine tasks like grocery shopping can have an unforeseen cost.

Hester, the author of “Work Optional: Retire Early the Non-Penny-Penching Way,” stated, “The younger you are, the more invincible you feel, yet suddenly you can have enormous bills that you can’t cheap yourself out of.”

“Perhaps you have to have food delivered right now, making it difficult to maximize a sale on your shopping budget.”

Hester also pointed out how difficult it is to save money when food costs are rising at an alarming rate.

When you have to spend $20 on a pack of toilet paper, Hester added, “this assumption in real time that you can hack your spending fails.” We can see that people who have extra money in their budgets will have some wriggle room.

Take advantage of market lows to buy

Along with saving money for emergencies, new FIRE adherents can view market declines as buying opportunities.

Set your investments on autobuy, whether it’s $100 per month or $200 every other week, advised Jillian Johnsrud, a FIRE member who retired at 32. “The chances are good that the ups and downs won’t matter in 20 years if this is a retirement account.”

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But Sam Dogen, a former FIRE patriarch, and Johnsrud both agreed that putting all of your money in S&P index funds might not be the best course of action.

“99% of FIRE movement adherents are under the age of 40, and they constantly brag about their Vanguard total stock market index fund, yet don’t worry about a downturn,” I’ve been blogging about FIRE since 2009. Dogen, a local of San Francisco said. “In the meantime, I was considering what would happen if the stock market drops 20%. I’ll have to get ready in case something horrible occurs.

Spread out your sources of revenue

Diversifying your sources of income is another way to stay on track for retirement.

We prepared for a year with unstable market conditions. According to Johnsrud, she receives money from investments, her husband’s pension, and rental properties.

FIRE activist Jillian Johnsrud retired at the age of 32. (Image courtesy of Jillian Johnsrud)

Since February 16, Johnsrud has lost as much as $44,600, but her other two sources of income have helped her protect herself from further losses. She also has a cash reserve of one year.

However, she is sympathetic to others who, particularly at this time, are having difficulty beginning their FIRE journey.

Young FIRE participants will likely experience stress because many people before them made mistakes in 2008 and throughout the tech boom, according to Jonsrud. We had many market ups and downs and had a lot of time to study because it probably took us 13 years to achieve financial independence.

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