How to address the “what if” scenarios of early retirement

Published February 29, 2016   Posted in How to Retire

Remember my retirement renaissance article that got picked up by Business Insider a few months ago? I wrote about how fascinating the comments get when early retirement goes mainstream, but even within the finance community, things aren’t always as encouraging as you might expect.

How we manage the what ifs of early retirementFor example, check out this forum post about that article over on the discussion board.

I can easily ignore the “fluff piece” nonsense, but a few of the comments are actually quite reasonable, and one in particular bears some further discussion. It was written by “MetroChick” as the ninth reply to the initial post, and it addresses worst-case scenarios.

A quote from the comment:

More power to them, but I wonder if they’ve run any worst-case scenarios, such as what if one gets diagnosed with a serious illness like cancer, where it’s best to stay in one place to get treatment, living in an RV might not be comfortable for someone, and co-pays and out of pocket costs can be considerable.”

This comment isn’t so much about healthcare as it is a question about what if this doesn’t work? Healthcare or otherwise, what if something happens after we’ve hit the road and we suddenly have huge bills to pay or expenses that we did not anticipate?

It’s a good question, but the number of “what-ifs” are nearly limitless. What if we get cancer and need treatment? What if I fracture my arm on a hike? What if the Airstream trailer breaks an axle and requires expensive repairs? What if one of our dogs gets sick and needs expensive medication?

What if this, what if that.

To the question of “what if”, my answer is simple: We can’t control or anticipate everything. We do the best we can, accumulate at least a year’s worth of living expenses in short-term savings and adjust to life’s demands as we encounter them.

How we approach life’s what if scenarios

ambulance-145368_1280My wife and I are health fanatics. We cook mostly vegan at home and are avid gym goers. We do our very best to keep ourselves happy, healthy and insanely energetic. But you know what? Shit happens.

And we can’t necessarily control all that shit.

I might get hit by a car. I might break my ankle. Virtually anything can happen in this world, and our early retirement philosophy is to do our best to put ourselves in a position to respond to many of life what ifs, but honestly, there is no way that we could possibly cover every what if.

Our view on the what ifs of ER comes down to three basic principles:

  1. We keep at least a year’s worth of expenses in short-term savings
  2. We understand that shit happens and we can’t control everything
  3. We remain flexible enough to adjust when necessary

In fact, I wrote last week about how we are adjusting to the stock market weirdness – and we aren’t even retired yet. In the end, it all comes down to the same basic principle: flexibility. We know anything can happen out there on the road, and if we end up making significant changes to our anticipated lifestyle to make it all work, so be it.

Here are a few examples to consider.

Example: What if we don’t like the RV lifestyle?

My wife and I love to travel and live small, so the chances that we don’t like the RV lifestyle are pretty small. But, we won’t truly know until we get started, and this is one of the most-asked questions of us when people find out that we are retiring to do this. What if we don’t like it?

We sell the RV (Airstreams tend to hold their value very well) and move on. We might look for an apartment or condo somewhere in a beach town and settle down again for a while until we figure out exactly what we want to do next. Our cost of living will likely be a touch higher, so we might reduce our expenses even further or find some part-time work or an online gig to hold us over and keep our minds active. In other words, we aren’t going to be dead-in-the-water if we find out the RV lifestyle just isn’t for us. It happens, but life goes on.

Example: What if one of us contracts a debilitating disease along the way?

Then, well, that would truly suck. Like, hardcore suck. But if it happens, then we survey our options and decide on the best course of action for us at that point in time. We will have at least a year’s worth of expenses already saved in short-term savings to hold us through and pay for out-of-pocket medical costs. And if things get really bad, we might lean on family to provide support if absolutely necessary. Though in truth, if we contract a debilitating disease, a full-time job would probably be the least of our worries at that point.

Example: What if the stock market never recovers / fails to meet expectations?

Throughout our estimated calculations, we budgeted a 6% rate of return on our investments with a planned safe withdrawal rate (SWR) of around 3 to 3.5%. This will give us a little buffer to withstand less-than-steller market conditions, like the latter half of 2015 and the beginning of 2016.

If we find that we are spending more than our estimated 3 to 3.5% SWR, or that the market isn’t performing up to our conservative expectations, then we make adjustments to our lifestyle. We reduce our expenses by eating out and moving the RV around less. Or, we find odd jobs or work camp more. The truth is when you’re flexible and mobile, your ability to adjust and make shit happen gets so much easier. After all, we can move anywhere for the right opportunity.

Shit happens - but you do your best to pick yourself up and move on

Shit happens – but you do your best to pick yourself up and move on

It’s interesting. I find that the what ifs in life only seem to matter when early retirement is the subject. Most people don’t possess a fraction of the emergency savings that my wife and I do, but yet, it seems to be early retirees like us who get the majority of the what if questions.

It is only natural, I get it. We no longer have a consistent income. Our expenses suddenly matter much more than they once had. But let’s face it – the majority of early retirees have a firm enough grasp on money and risk management to have established reasonable measures to confront unforeseen expenses and changes in the demands of life.

Truthfully, a successful early retiree is the last person that I’d worry about.

If everything fails and we need a ton of cash, we get a job again and work for another couple years and then try our post-retirement mission once more. If one of us gets diagnosed with cancer and the RV is no longer the best place for us to live, then we sell the RV and live somewhere else.

In other words, we would do what anyone else would do. Humans are incredibly flexible and adapting people.

RV living will likely make it easier

Our ability and willingness to do whatever we have to do in the face of a worst-case scenario is not compromised by the fact that we don’t have full-time jobs and live in a 200 sqft RV. If anything, our ability to appropriately respond is arguably enhanced due to the absence of an expensive mortgage, property taxes, cars and utilities.

Our footprint is much smaller and our needs are significantly less than the majority. As far as I am concerned, this puts us in a better position to make potentially tough choices for our future. It means we can go anywhere and do anything at the drop of a hat.

Truthfully, if we had a significant medical issue to deal with, the last thing that we’d want is a big house to maintain or a full-time job to commute to. We would certainly get a job if needed, but honestly, that is our worst-case scenario.

And at the very least, my wife and I will have the last five, 10, 15 or more years of travel to reflect on without regret. If a medical problem befalls us in 10 years, neither of us wants to work the next 10 years in a cold and dreary office waiting for the inevitable.

We are choosing the fun route, the route of adventure and excitement – where stress is the exception rather than the rule. Things should work out. But if they don’t, we adjust by spending less, work camp more or find part-time work here and there to bring in some additional cash.

The bottom line: We keep a year’s worth of emergency spending in short-term savings and do the very best we can to make it work. If life throws us a curve-ball, then we do our best once again to confront the challenge and move on.

We can’t live life worrying about the what ifs. We won’t.

Have fun. Be adventurous. At the end, no regrets.

We track our net worth using Personal Capital


39 responses to “How to address the “what if” scenarios of early retirement”

  1. You are so much better planned than 99% of Americans, I agree with your choice to “choose the fun route.” An early retiree’s planning horizon is many decades. Things will change – for the better and the worse. You can’t think about the whole timeline now. As you say, flexibility is key. For our part, we are employing a “three buckets” approach: 1) three years cash for the short term; 2) five years 50/50 mix of conservative stocks & bonds; and, 3) the rest in a 70/30 mix of growth stocks & some bonds mixed in. In addition to some real estate & a pension – we feel like our overall portfolio will give us the flexibility we need.

    • Steve says:

      Sounds like you guys have an excellent approach to your cash situation. You keep a little more cash than we do – nothing wrong with that at all. A little cash and a lot of flexibility puts you in the position to do just about anything necessary to make this whole thing work, and work well. 🙂

  2. As you said, it is impossible to ever plan for all the what ifs in life. What ifs are nothing more than a crutch that people use to explain why they shouldn’t do something, especially if it goes against the grain.

    If you are able to be flexible, you can react and adjust for anything that comes up. I believe both of you have taken more time to plan than most people and I have no doubts that if something were to come up (fingers crossed they don’t!) that you will be able to adjust to what you need to do.

    • Steve says:

      Absolutely spot-on, Thias. Many do use what ifs as a crutch for why they “can’t” do something, but at some point, if we want it bad enough, we need to take the plunge. Setup reasonable countermeasures if things don’t go right, but in the end, it’s my view that you just gotta do it. Life is way too short to spend it working even an extra DAY in an office for some nameless corporation. It’s just too short…

  3. I agree that the person with the ability to retire early isn’t someone who will likely be devastated by an unexpected bump in the road. The way I see it for us, “worst case” is that someone, at some point, has to go back to work for a while. If you’ve already experienced tons of travel, freedom, and fun before some highly unlikely string of events leads you to need a job again…so what? You just had the sabbatical of a lifetime. You obviously have marketable skills if you can retire early!

    I don’t see this happening. But it would certainly be preferable to working nonstop for the next 30 years!

    • Steve says:

      Hey Kalie – yup, going back to full-time work is definitely our worst-case scenario as well, and we will do everything in our power to make sure that doesn’t happen. But like you said, if it does happen, at least I spent the last X years/decades doing what we love. 🙂

  4. John says:

    As a worrier by nature, this is something I battle every once in a while (the idea that something may go wrong). But then I take a step back – and maybe a deep breath – and remember the ways we can counteract the negative event:

    1. Two years cash available
    2. Ample emergency fund on top of two years cash
    3. Return to work (full- or part-time). I’d hate to do it, but ya gotta do what ya gotta do!
    4. Reduce expenses
    5. Downsize (planned on it anyway….may accelerate if necessary).
    6. Etc, etc.

    The point is you probably have more options than you think to balance out the black swan events. Plus the only option is to work full-time for (many??) more years to see IF something bad happens. I don’t know – seems kind of depressing to sit around anticipating the worst all the time.

    Build some reserves and contingency plans and then live your life!


    • Steve says:

      Amen to that, John – build a reasonable contingency plan and then go out there and do whatever makes you happy. The truth is things will happen regardless of what our contingency plan is, and it is funny what opportunities our circumstances tend to open up for us. 🙂

  5. Mrs SSC says:

    The whole “What If” scenarios pop into my mind more often than I like. But I have been able to fairly quickly remove them just by thinking – if I was to get cancer, I would rather have had a couple years to spend more time with my family, then to continue working full time and have my kids only know the busy, stressed-out version of me. Or if something happens like a huge market crash – I know I am not too good and think too highly of myself to work a cashier job somewhere for a year or two. I just hope none of these bad scenarios happen in the first 2 years – just so I can have a taste of freedom!

    I also plan on creating a super-duper emergency fund… maybe in a CD or something. But just maybe 6 month expenses that we hopefully never have to touch. That will be my security blanket 🙂

    • Steve says:

      I agree, Mrs SSC – if something does befall us, I’d much rather have years and years of FUN to look back on rather than having regrets that we didn’t do it sooner. That would be truly awful.

  6. We can never totally guard against what ifs, but you’ve done such an incredible job anticipating some possible curveballs. As a highly anxious person by nature, it’s really easy to let what-ifs hold me back. Sometimes I think the most powerful what if we can ask is, “What if this actually goes according to plan? What am I missing out on by worrying about things not working?”

    • Steve says:

      Thanks Penny. I think when we realize that “life happens”, it gets easier to manage these what ifs. And truthfully, the answer is almost always the same with me. “I’ll fix it”. We aren’t robots, here! 🙂

  7. I spend a lot of time thinking about what could go wrongs. In reality, everything can go wrong. But the probability of something going wrong should be taken into consideration, as well as mitigating factors associated with it.

    A positive attitude will help you persevere no matter what happens however.

    If markets go nowhere for a decade, and you eat 1/3 of your money by 2027, you can always find some P/T temp work. Even if you spent your entire nest egg in 25 – 30 years because none of your investments provide you with any returns for 25 – 30 years (this is a ridiculous example I know), you will be able to claim some SS at the end of this period and you will be fine.

    You can also move to a lower cost of living area since you are more mobile (or will be in less than one year). There are so many places in the world where you can live pretty well, and spend much less than what you spend in the US. I think that many people forget how lucky they are – anyone earning over $30K/year is in the 1% of the world. There are places in the US (like small university towns in the MW) where cost of living is not that high either – and there is a lot to do too.

    If you have a rare and expensive disease, you have health insurance/ACA to cover a big chunk of it. If ACA is not going to pay for it, then chances are that you would have been in a bad place even if you continued with your current work lifestyle, so this should not be put into the comparison for work vs retire early. I wonder how hard working people who work minimum wage jobs survive if they get sick? People need to be addressing that real issue, rather than your situation in my opinion.

    I haven’t even talked that you can earn side income if you monetize your site for example or if you write a book or if you write for some publications or if you decide you want to advise people on how to achieve retirement goals etc. ( and I came up with those after one second of intense brainstorming)

    So I think the odds of success in your plan are in your favor…Either way, that RV looks cozy. So I will be checking up on your adventure plans as they unfold.

    • Steve says:

      Thanks DGI – you hit on an important element. If things get bad, we can move abroad to save some serious cash. We’ve already discussed places like Thailand and Costa Rica as possible destination spots. We’d like to visit those areas anyway even if our investments skyrocket.

      It’s true – we should never ignore the what ifs, but we also can’t be held back by them, either. We do what we feel is reasonable, then jump in. 🙂

  8. Tawcan says:

    It’s not possible to cover all the what if’s in life. All you can do is prepare and open to the different scenarios. If you’re worried about all the what if’s, then you’ll probably never go outside of your home. Low expenses and have some money set aside will allow for many different options.

    • Steve says:

      Yup, being too worried over what ifs will seriously affect your life, and probably not in a good way. Do what you can do and don’t sweat the rest. 🙂

  9. Jack says:

    As the wise con said:

    You either get busy living, or get busy dying…

    Life is full of what if’s. It’s a conscious choice whether you focus on the negative or the positive. I’d rather focus on the positive. It’s more fun, and makes the negative that much easier to deal with when it happens.

    • Steve says:

      Exactly right, Jack – I always like to think positively in every situation that I can. Even when things go wrong, there is generally something that you can take from it and apply elsewhere in your life. Experience is one of those things! As we know, we don’t learn by succeeding. We learn by failing.

  10. Fantastic post, Steve! It’s easy to ask all the “what ifs” about our non-traditional life plans, but no one ever seems to ask them about working full-time until traditional retirement age.

    What if one of the health disaster scenarios (hit by a car, cancer, whatever) happens while I’m working full-time, and I never got to live out some of my dreams?

    What if by the time I reach traditional retirement age, I’m not capable of pursuing some of my more physically active dreams? What if my eagerness to explore unfamiliar places and eat weird foods and sleep in uncomfortable places has faded, and I can no longer comfortably and affordably explore those parts of the world?

    To me, those are the much more depressing questions. And if the financial markets collapse and we can’t afford FIRE life anymore, there’s still no scenario in which I’d be happier having lived with the status quo.

    • Steve says:

      Very well said, Matt – this is fodder for another post. To me (and you as well), there is more “what if” risk in keeping a traditional lifestyle and potentially missing out on the things that you truly want to do. What if you get cancer at 40 or 45? What if you get paralyzed? The last thing that I’d want is to have spent my entire productive adult life in an office before that happens!

  11. Kate says:

    I agree with you in how you look at any unexpected health problems. Part of the reason why I want the option to retire early is in case I end up with health problems in my 50’s. The last thing I’d want to do is work and I’d rather focus on getting better. FIRE puts you in the position to better handle something like that.

    • Steve says:

      Completely true, Kate! Sometimes, the “what if” scenarios end up happening, and the last thing that I’d want is to have regrets if those things do. I want many years of adventuring under my belt to look back on, damn it! Life is too short for decades of office work.

  12. Liz says:

    Great article. Early retirees truthfully are the last people who folks should worry about. Hoping to be there not long after you all, though will be living in our modest and nearly paid offhouse close to the water in San Diego.

    • Steve says:

      That sounds like an awesome place to live, Liz – San Diego is beautiful. It ain’t cheap, but it sure is nice. I would love to spend some time out there once we start traveling. 🙂

  13. Huh, funny that people bring up so many what-ifs inre: disease and disability. Because my between the two of us, my husband and I have about 7 chronic health conditions, two of which are pretty debilitating. And I’ve never wondered whether someone going for early retirement has thought those contingencies through.

    Why? Because if you’re in a position to retire early, then you have financial backups in place. A number of them. Otherwise, you wouldn’t have felt safe retiring so soon.

    The stock market argument, by the way, is ridiculous. It’s been around for more than a century, and it’s always recovered. Eventually. It also always dips. Eventually. As long as you have plans for and a realistic outlook on both scenarios, you’re fine.

    Yes, anyone can get sick. But speaking as someone with a disability, that’s nothing you can plan for, and it’s certainly nothing to keep you from your dreams. The best thing you can do to guard against the kind of stuff the comment was referring to is to have good insurance and try to stay as healthy as you can. Beyond that, it’s a crap shoot. So you have contingencies in place like where you’d live if severe disease struck. (Arguably, the RV living would come in very handy there because you could move to wherever offered the best treatment and/or support network of friends and family.)

    • Steve says:

      Thanks Abigail for your comment – yeah, the ability to move around whenever it’s required is a huge benefit, I think. But in the end, like you said, a realistic outlook on life and a reasonable lifestyle is all that’s required to get started. And we are flexible people, so if things don’t go quite as expected, we fix things, even if that means some part time work every now and again.

  14. I love your comment about how early retirees are the last people you’d worry about–so insightful. We’re looking forward to hearing more about how you plan to customize the Airstream! 🙂

  15. Agree with the sentiment in the comments – at least if something dire were to happen, you’ve enjoyed yourselves. I personally think an RV would be pretty nice place to spend my last days anyway.

    • Steve says:

      Thanks PE, me too. I have a feeling that in those situations, have a full time job and a big house is the last thing that I’d be concerned over. 🙂

  16. Steven says:

    “It’s interesting. I find that the what ifs in life only seem to matter when early retirement is the subject. Most people don’t possess a fraction of the emergency savings that my wife and I do, but yet, it seems to be early retirees like us who get the majority of the what if questions.”

    This is the nail on the head for me. Getting questions about “what ifs” and all of these can be applied right back to the person asking the question. I mean the point in search of FI, is we find ourselves in very what ifs and more status normal as the savings and wealth increase.

    • Steve says:

      Thanks Steven. It is an interested phenomenon, probably because most people assume that if you don’t have INCOME, then you don’t have money. Of course, that isn’t true. 🙂

  17. […] into my life, reminding us to maintain a big picture perspective while we mind the pennies, too.  Steve at Think Save Retire also had to deal with questions about “what ifs” post-retirement.  What if […]

  18. It is SO TRUE that early retirees do seem to get a rather ridiculous amount of scrutiny, especially considering how much most of us have over-planned and over-accounted for things. (Sure, we might have different interest rate assumptions and different levels of risk tolerance, but how many people in the general population have even projected these things out? How many people actually know how much they need to save every year to reach their goals?) You don’t mention insurance, but I assume you plan to have lots of that, which counts for a ton, too. And with your status of “professional blogger,” you won’t even have a resume gap, so you can always work again if you must. 🙂

    • Steve says:

      Thanks for your comment, ONL, and good point about using “professional blogger” as my status. The resume gap won’t be there anyway! Or, “Photographer” would work the same way.

      “How many people in the general population have even projected these things out?” – my thoughts exactly.

  19. Matt Spillar says:


    Man, some of those comments on that forum post are brutal. It always boggles my mind why people feel the need to tear down others and their goals. Like you mentioned, it feels like people are so quick to jump on the “what if’s” of early retirement, yet 76% of America lives paycheck-to-paycheck with no emergency fund. Makes no sense.

    I think your response to all those comments is fantastic though, taking it with a grain of salt and letting them help you re-analyze your situation. Always great to take an opportunity to learn and consider other possibilities that we may not have originally seen. Even if some various “what if’s” happen, you guys have a lot of savings and tons of options! Congrats on the recent Airsteam purchase!

    • Steve says:

      Thanks Matt. You hit the nail on the head regarding paycheck-to-paycheck living. I am much more interested in their what if scenarios rather than an early retirees. They know how to manage their own money. What about those who don’t?

      Appreciate the comment!

  20. […] do if faced with the same situation – deal with it the best that I can and move on. Like I wrote about before, my escape from full-time work only enhances my ability to confront life’s challenges. […]

  21. […] “If I work just one more year, I could have X amount more money”. Just like the “What Ifs” in life, these scenarios are virtually limitless. Why stop at one year? If I work another […]

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