I’ve been promising to write about what it’s like to start “de-accumulating” the funds you’ve invested and saved over the years as it’s a fairly massive part of everyone’s retirement plan. I’ve already drafted a few posts talking about the subject but, to be honest, they’re almost too depressing even for me to read! That’s how painful I found the process of cashing in investments on a monthly basis as opposed to salting them away.
Why though? It’s not as if I hadn’t knew this day was coming. It’s not as if I hadn’t planned for it and it’s not as if I didn’t have countless spreadsheets predicting what my future funds might look like under various financial scenarios. From that point of view, and depending on my mood, things did actually look quite comfortable. On a rational and logical level, my financial situation seemed to be relatively secure.
The trouble is that money is an emotional subject. You can have a rational and logical approach to it for sure, but we’re not Vulcans. We have “feelings” about money that aren’t necessarily connected to any rational or logical part of the brain.
One of the hardest things I had to handle about cashing in investments was something that I didn’t see as either rational or logical on one level but, on the other hand, really felt on an emotional level. I called it “financial swing”. Let’s say I had to pay myself an income of three grand a month to cover all my expenses. In order to do that, I had to sell a portion of my index funds every month, regardless of where the markers actually were. I needed to “cash them in” – just to live! This was hard enough, but let’s also say I used to earn the same amount and was used to having three grand a month coming in. When I put both these facts together, it felt like I was six grand a month worse off!
Now, I know that the reality was actually that my if my total monthly outgoings were three grand, then that’s the sum that I was “worse off” by. And that three grand was actually buying me freedom from work – from that perspective surely it was money well spent? Unfortunately that perspective was lot less intense than my “financial swing” one. (I’m not quoting the actual figures here of what my monthly budget was, and I know that monthly income is probably  top end for retirement, but it serves to illustrate a point. Whatever your working income now, it’s unlikely you’ll want to totally slash that when you step off the working life treadmill. I know I didn’t.)

So, this figure became stuck in my head and I couldn’t shake it: my retirement, my non-working, non-earning lifestyle, was actually costing me six grand a month. Net. What kind of salary would I have to be earning to compensate that?
I’m back to work now and I sometimes compare my current “pay day” to the same one I’d marked up in my Google Calendar with the same notation last year – at that point, “pay day” was the day on which I’d have to sell a portion of my investments to see them appear in my bank account the following week. I came to dread that day each month. I’d open up my Fidelity account and scan the various funds that I could sell to release some cash – should I shave a portion from the fund that was returning great growth, or just dump that underperforming one instead? Past performance is no indication of future, after all, and what if that Emerging Markets fund suddenly emerges? Should I continue to ride the wave of my best performing fund or take profits from it? Were the markets peaking, and should I take six months income before it crashes? Or are we at the start of a boom time that I need to benefit from? As ever, there was no answer to these questions. I had to make up my mind and take action.
“Had to”. That’s another key phrase when it comes to deaccumulation. When you can choose to sell, or not sell, your funds in a given period then these financial projections are quite a nice, comfortable piece of speculation. “Wow! If I sold that fund today it will have returned me over thirty percent on my investment! Fantastic. On the other hand, that dog that’s losing me ten percent, maybe I should just shoot it? Oh well, I’ll go and have a cup of tea instead and check again next month”. Not when you’re in deaccumulation you won’t. You have to choose, and if not today then definitely tomorrow. You still have bills to pay. You haven’t quite escaped that rat race yet.

I’m a bit late with my blog post this week: pressure of work. I must admit, I now doff my hat in admiration to the regular posters who have held down a job while maintaining their blogs. When I was “retired” blogging was a task I looked forward to, with all the time in the world to write a post. I now find it’s quite a commitment to fit in with the working life, as it’s often very easy to find something easier to do at the end of the working day than sit down and write!

One of the things I “struggle” with, however, is that I’m a morning person. I’m generally up and about by the back of six and my routine is: shave (get that over with), make some breakfast, read The Times on my iPad, check the BBC, Facebook and maybe do any bank transactions that need doing. Following that, I write up my daily journal (or diary, as it seems increasingly unfashionable to call it.) And that’s if I don’t head to the gym: if I do, my routine is shave, head to gym, have post-workout coffee while writing up my diary.

You can see that my daily jotting in my journal is a fixture, and it often gets in the way of blogging. Sometimes I write a few paragraphs, sometimes I write the equivalent of a page of A4, but I very seldom miss it. I’d be surprised if I ever miss two days win any month. I’ve kept this routine going since March 1994 and I almost cannot imagine my life without including this aspect of it.

And what a tonic it is. Recently I’ve been reading back through my experiences of “early retirement” as I lived it day to day last year. From this it’s easy to confirm that my year out broke into four distinct phases:

Quarter One: sheer euphoria, loving every day of freedom and worrying not one whit about finances or anything else. Several headhunters call with prospective leads and possible interviews, but I’m not ready for that because I’m just not sure I’ll be going back to work. Ever.

Quarter Two: I begin to look for constructive ways to fill my day, joining some Voluntary groups, proactively picking up with my old work colleagues and friends and speaking to headhunters about what might be out there. I start to think about maybe doing something for myself, starting my own business and looking at franchising.

Quarter Three – increasingly I’m writing about boredom and a lack of fulfilment in the days and beginning to wonder why, with almost nine months unemployment, I haven’t had even one interview with any company for any work whatsoever. A possible franchise I was looking at falls through due to the required six figure investment and ten year tie-in, but I was seriously considering it by this time.

Quarter Four – I begin to look for work in earnest, calling headhunters, networking, searching Linkedin on a daily basis, making direct approaches to local firms and generally putting my shoulder to the wheel in an effort to return to work. Because, by this time, the endless days were beginning to drive me a bit nuts! As my diary tells me they were.

Then, across those four quarters, there was the financial situation. I’m going to write soon about the reality of financial de-accumulation after a lifetime of saving and investing. I’ve already had half a dozen attempts at this, but so far I haven’t quite captured what it felt like. Let’s just say it wasn’t easy.

I’m not yet regretting my decision to return to full time employment in what is turning out to be quite a demanding role. Perhaps my recent trawl through of last year’s entries reflects the growing pressure of work – did I make the right decision? If I only read the entries from those first three months I’d have to conclude that I was mad to rejoin the fray of employment and management, but when I read the turmoil of the final three months – when I wanted to get back to work and found it much more difficult than I expected – it puts my mind at rest. I wasn’t ready for retirement and, overall, the 365 entires I made last year build a convincing picture for me that I’ve made the right decision.