Well, it is finally upon us: The inevitable recession that comes after every expansion and the corresponding stock market downturn. And oh boy is it a doozy.

Is this the end of early retirement?

First Things First

First and most importantly, thank you to all of the world’s first responders and front liners – those working to stop the spread of this pandemic and minimize the damage, the doctors and nurses and hospital staff, the heroes keeping the grocery stores functioning, the entrepreneurs converting factories to produce medical gear and supplies, the researchers looking for a vaccine and cure, and everyone staying at home when they would rather be anywhere else. Thank you. And stay safe.

The Stock Market & The Economy

At the time of writing (before stock market opens on Monday, March 23rd futures are limit down (-5%.) This puts the SP500 at ~2200, down 35% from the peak of ~3386 just a month ago.

Which means it needs to go up ~50% to return to the previous highs. This was the fastest decline in history.

And with much of the country in lockdown, it could get worse. Much worse.

20% of the US works in the restaurant industry and tourism.

Dining in restaurants in the US is down 98%. Many won’t survive and unemployment is expected to skyrocket – Goldman Sachs estimates over 2 million people to file for unemployment this week (the highest of all time.) We could see unemployment rates of 30% plus (vs 24% in the Great Depression.)

Who knows how long it will takes things to return to “normal.”

Early Retirement At Risk

We are in the middle of our 8th full year of early retirement.

Generally speaking, with years of strong investment return behind us our retirement should be extremely robust and largely immune to stock market volatility.

But that is not the case. We’ve inflated our lifestyle, grown our family from 2 to (soon) 4, eliminated flexibility options (we have a long-term lease), and the coronavirus has reduced other options (can’t just move to somewhere cheaper.)

Add all that up, and we have the same risk as anybody else retiring into this economic environment… I wouldn’t wish retiring into an economic meltdown on anybody, and yet here we are.

Where is that exactly?

Knowing the stock market is down 35% is pretty scary. What else do we know?

S&P500 total return index (SPXTR)

Including reinvested dividends the SP500 is currently valued at a level similar to 3 years ago, February 2017.

Coronavirus Course Correction

Was our retirement about to crash and burn 3 years ago? I didn’t seem to think so at the time, as that is really when we started to ramp up our spending – bigger house, more wagyu, etc…

The difference, of course, is in 2017 economic projections were positive and optimistic.

With the change in prevailing winds we are correcting our course.

At present, we are sitting on 4-5 years of cash and another 2-3 years of bonds. This cash came from a combination of:

  • a stock sale in March 2019, which I used to buy bonds – much of which I have now sold (some in late February, the rest in early-mid March.)
  • a stock sale in January 2019, which I used to bump our cash position for the planned expenses of childbirth and post-natal care (like we did in 2014/2015.)

Our 6-8 year runway assumes:

  • no change in spending,
  • dividends are cut in half (similar to the Great Depression)
  • blog income goes to zero
    • zero travel means nobody is interested in travel hacking
    • zero capital gains means nobody is interested in tax minimization

If any of these assumptions prove to be inaccurate, then our runway will be shorter/longer.

If the stock market and economy continue to deteriorate, we will course correct further.

Some things will happen automatically:

  • Jr starts to go to public school in 1st grade (saving ~$1,000/month) – timeline 1.5 years

Other options include:

  • move into lower-cost housing – just a few years ago we were spending $1,000/month vs our current $2,700
    • lease ends Dec 2020
  • delay planned purchases
    • this was the year I was going to get a new laptop. I’ll probably wait. (I typed this on the old laptop just fine)
  • tighten the belt
    • we have lots of fluff in our budget, especially in the food department. One example:
      – 2 weeks ago, date night was ~$100 on steak and Parisian pastries
      – last week, as an experiment, date night was a great hole-in-the-wall Korean restaurant for ~$15 (delicious!)
  • earn some income
    • every little bit helps – no shame in getting a short or long term job

For the sake of clarity:

I have sold only bonds to hold cash. I have been buying stock. I will buy more stock if prices go lower.

Our course correction summarized: have some cash, be mentally prepared to reduce spending, wash your hands.

What I’m Doing Financially Through the Crisis

Moving Cash from the US to Taiwan, from USD to TWD – the US Dollar is going to behave erratically as various governments turn on the printing presses and economies struggle. A year of rent payments in local currency helps to sleep at night. (I’m doing it via the ATM.)

Buying stock – I’ve been buying stock on the way down

  • sold some bonds to buy stock
  • invested the cash in my Roth IRA (2018 contribution from April 2019) and our HSA (transferred in cash in Spring 2019)
  • just transferred cash to Winnie’s Roth IRA (2019 income) and Jr’s Roth IRA (2019 income)

Capital loss harvesting – thanks to years of capital gain harvesting, we have stock that is still UP from when I bought it originally (circa 2009), but DOWN for tax purposes. I’m harvesting “losses.”

Massive Roth Conversion – When I think the time is right(*), I’ll do a massive Roth conversion, filling the 0% and 10% tax brackets, and possibly more. This will move the recovery to tax-free accounts.

* I’m certain to miss the bottom by a significant margin.

Getting ready to backup the money truck

There may be a point where (reduced) S&P500 dividends will yield more than our (reduced) expenses. If/when that happens (or thereabouts), I’ll go all in.

Continuing to spend less than 4%

Even if 2020 spending is equivalent to 2019, which was the plan as of 2 months ago, we will still spend less than 4% of the current value of our portfolio.

What I’m Doing for Physical and Mental Health

This is an emotionally challenging time – my Mom, sister, and brother are all nurses. My grandmother probably still thinks this is a hoax. I hope they remain safe.

The exponential growth of this virus in numerous parts of the world show that the worst is yet to come. I fear for that near-term future.

To cope with that anxiety, I have done what I can to control what I can.

  • I built a cash flow spreadsheet and plotted the next few years (anxiety becomes confidence)
  • We bought a 100L chest freezer and stocked it with a Costco run in case there is a resurgence in Taiwan.
  • I turn off the television and computer and ignore the day-to-day behavior of the stock market.
  • Regular biking (150 km this week.)
  • Writing – analyzing and writing brings me inner peace
  • Regular hand washing

I measure my own level of anxiety by my food cravings. When I want to eat a pint of Ben-n-Jerry’s before bed, I’m stressed. When I don’t want to eat anything, I’m overwhelmed.

At present, I still want to eat the numerous full pints of Ben-n-Jerry’s ice cream in the chest freezer, but am doing so only in moderation.

Now with our own house in order, it is time to turn my attention towards helping others. (Suggestions welcome.)

If my Ben-n-Jerry’s situation changes at any time, I’ll let everyone know on Twitter. (super critical)


Things are bad out there. As such, we are course correcting.

I have sold some bonds and we now hold ~7 years of cash and bonds. We have the option to extend that via reduced spending and downsizing and/or increasing income.

What actions, if any, are you taking?