10 Year Review

I had been blithely living my semi-retirement life now since 2001, and my book, first published in late 2005, has become a pleasant but not-often considered bit of my past.  So it came as a jolt when Robert Brokamp of the Motley Fool contacted me last week to say it had now been 10 years since the book's first edition and could I give him an update on how the portfolios had been doing, or any other insight as to how this semi-retirement thing looked a decade later.

I dug up some of the old data, reached out to Tom Orecchio at Modera Asset Management for some of the new asset class returns numbers, and spent an enjoyable few days re-immersing myself in financial models and the like.  I was pleased to see that the two Work Less Live More portfolios had acquitted themselves well in the official statistics, (I knew more or less how they were doing since I've followed them for my personal investing all along)

The numbers:  The Rational Investing Portfolio (RIP) with its full slicer-dicer 16 asset classes, slightly underperformed the simpler Sandwich Portfolio (8 mutual funds and a money market account) but both did well,  supporting 4% annual withdrawals, standing up to inflation and still leaving retirees better off in real terms than when the decade started.

RIP:  5.4% annual compounded return 2006-2015.  After 4% annual withdrawals (5.1% in 2009 because of the 95% Rule kicking in) and after adjusting for inflation, annual compounded return of 1.2%.  So you gained over 1% a year, in real terms, while still taking out 4% (or more) to live on each year.

Sandwich Portfolio:  6.2% annual compounded return 2006-2015.  After 4% annual withdrawals (5.0% in 2009 because of the 95% Rule kicking in) and after adjusting for inflation, annual compounded return of 2.1%.  Even better than RIP, mostly due it appears to its higher equity allocation and the lack of exposure to commodities and oil/gas.

Either way, we have been living our dreams, investing in a simple, hands-off and generally non-stressed manner, taking out annual withdrawals, and having even larger nest-eggs, in real terms, than when we started.  What's not to like?


One other area I emphasized with Robert Brokamp was the need to have an immersive set of experiences and challenges in semi-retirement:  you have left a high-stakes career, you have a good mind and good health, and if you don't have anything to do that excites you, then you won't be happy and you might as well have stayed at work.  It gives even more credence to the calls and strategies in the books for developing your interests and ensuring you look after the mental health side of your life.  For me it has been art- that all-consuming, life-enhancing field that provides endless puzzles (and frustration) as I work to move my second career forward, get my work to a quality that will be of interest to museums, sell enough of it to make it a viable business, etc.  For you it will likely be something else, but my strong advice 10 years after the book's publication is don't assume early retirement is one long vacation.  It needs more, so be sure to spend time building new challenges and activities for yourself.  This is especially true as you see your friends moving forward into bigger roles, big jobs, big paydays.  In 10 years or so they'll be retired, too, and wondering what hit them, but for now you're the one who might be feeling a little underwhelmed in the self-esteem department. Be proactive and you'll be fine, but you need to tackle this head-on. 

Finally, I wanted to share a funny nickname my book has acquired among the local Moms here in our town:  "More Husband, Less Money".  You've been warned. :-)