Well, the day has come! I have finally announced at work that I will be retiring! We have talked to family and friends about our plans. No turning back now! One way I ensured that I’m not going to get cold feet was to do the ChooseFI podcast that I knew will broadcast on March 12. Since I spilled the beans there I might as well do so here on the blog as well!
Who is the ERN family?
I hope I don’t disappoint anyone by revealing that my real name isn’t Ern. But I am a big guy, at 6’6″ (just under 2 meters), which explains why the name “Big Ern” stuck! My real name is Karsten. I am originally from Germany but came to the U.S. in 1995. Initially as an exchange student at Purdue University and then for my Master’s and Ph.D. in economics at the University of Minnesota. After graduating, I got my first “real” job at the Federal Reserve Bank of Atlanta and I also did a number of side gigs/hustles: teaching both undergraduate and Ph.D.-level economics at Emory University in Atlanta.
In 2008, I moved to San Francisco to join the research department of a large investment manager. I prefer to not mention my employer’s name out of an abundance of caution; nothing I write here is endorsed by them and blogging is purely a hobby of mine! But if you really want to know where I work, you’ll find everything you always wanted to know on Google.
I am married to my beautiful wife Kristal who is also an immigrant. She’s from the Philippines originally, and just like me, she’s become a U.S. citizen after spending many years in this country by now. Our four-year-old daughter Kati is the sunshine of our lives and definitely one big motivator for us to retire early and spend more time with each other. So, my wife has also just quit her job as a nurse and she will join me on this journey.
Why the secrecy?
Quite amazingly, I was able to keep my identity a secret for almost two years now. Nobody ever recognized my voice on the ChooseFI podcast. And nobody in my personal and professional network ever noticed that my views on index investing, options trading, safe withdrawal rates, etc. sound a heck-of-a-lot like Big Ern’s. Of course, a better explanation is that they never heard of Big Ern! In any case, I preferred to keep our identities a secret until now because that’s the reality of working in Corporate America; companies don’t like employees who are not in it for the long-run. In the finance industry, in particular, we’re talking about bonuses and other perks that might have been a bit less generous had everybody known what I was planning. Why mess with the gravy train? But with the calendar year 2017 bonus in the bank on February 28, we can finally come out of the closet!
Quitting the gravy train
Leaving my job isn’t easy! To use a quote from the other Big Ern McCracken (Bill Murray) in the movie Kingpin, I have been “on a gravy train with biscuit wheels” for the last ten years! Nice salary, great benefits, a window office on the 39th floor overlooking San Francisco. One promotion away from a corner office! High enough in the corporate hierarchy that nobody would mess with me. But also low enough that I still wouldn’t have to deal with some of the boring corporate B.S. Add to that very smart and hard-working colleagues and bosses! So, I have actually thoroughly enjoyed my career at my current firm!
But, of course, I’m not married to my job. It all boils down to opportunity cost. When I was young, opportunity cost fit the economics textbook definition: Fun activities have the additional cost of lost wage income. Now, money is more abundant and time is becoming scarce. Opportunity cost now works the other way around; the corporate rat race has the steep price of time away from my wife and daughter, time away from other loved ones. Makes me think of the Dietrich Bonhoeffer quote “Time is the most precious gift in our possession, for it is the most irrevocable. This is what makes it so disturbing to look back upon the time which we have lost. Time lost is time when we have not lived a full human life, time unenriched by experience, creative endeavor, enjoyment, and suffering. Time lost is time not filled, time left empty.”
How did the talk with management go?
While recording the podcast in late February I hadn’t given notice. In fact, as I mentioned above, doing the podcast and revealing my identity and my picture there was my way to “handcuff” me to the idea of early retirement and cure any last minute episode of “cold-foot-itis,” otherwise known as One-More-Year-Syndrome. So, in late February I broke the news to the bosses. I had the suspicion that leaving will be more complicated than just giving notice, using left-over vacation days and walking out of the office that same day. So, in the end, my employer and I agreed to do a more gradual transition. I am still involved with some projects that I like to finish before I leave and I also prefer to do a proper and thorough transition of my duties. So I can enjoy retirement knowing that people from the office won’t keep bugging me about some Matlab code I wrote ten years ago while I’m retired and trying to relax at a beach somewhere! But there’s no turning back now – I will be out in mid-June, for sure! Around the same time as Fritz from The Retirement Manifesto. We might even use the same countdown clock as Fritz! How cool is that?!
How did people react?
Not one single person so far has questioned the decision. Family, friends and colleagues all responded pretty much the same: “That’s awesome, we’re happy for you, good luck!” There were no haters, no doubters, no trolls. Is that good news or bad? Sometimes it’s almost considered a rite of passage to write a blog post about dealing with the doubters. Clearly, in the finance industry, it’s much more common for folks to retire early, which may explain that everybody got over their initial surprise pretty quickly.
Where to now?
It’s hard to beat the quality of life in San Francisco! Beautiful scenery close by; think Redwood Trees, Highway One, the Sierra Nevada mountains in general and Lake Tahoe and Yosemite in particular! Nice climate, never too hot, never too cold. People are so friendly and laid-back! But we still like to leave the Bay Area and live in a place with lower cost of living to put our retirement finances on a better footing! Geographic Arbitrage!
We just finished packing our belongings and moved them to a storage room. During the next few weeks, we will fit in some more late-season skiing in Tahoe. We will also visit relatives on the East Coast and combine that with the North Atlantic CampFI in Virginia in April. In between, some couch-surfing with friends and relatives in the Bay Area as homeless millionaire-vagabonds while I head to work for another week here and there! Between April and June, I am still going to the office every day, so we will likely do a short-term rental.
Between June and December, we will have a pretty ambitious travel schedule: A family cruise in the Caribbean with Kristal’s parents and siblings and their families, then spend about two months in Europe, go back to Florida to attend the FinCon in September. After the FinCon in Orlando, we’ll visit Asia, Australia, New Zealand and the South Pacific. We should land in San Francisco again in late December. 20 countries in a little over six months! Stay tuned for more details on our travel plans!
And then? The outrageously expensive Bay Area is out of the question as a long-term home base but we won’t move that far away. Very high on our list is the area around Reno and Carson City in Northern Nevada. Proximity to the mountains around Lake Tahoe, no state taxes and relatively low cost of living all sound really attractive. But California isn’t completely out of the race either. Our Next Life recently made a good case for staying in California: Relatively affordable health insurance and some other advantages could make it worthwhile paying a little bit in state income taxes. If one stays away from the overpriced coastal areas then California can be a very affordable (early) retirement destination! In one of the safe withdrawal rate case studies, I confirmed that when you keep your taxable income low enough, California’s tax burden isn’t even that bad. The really high marginal tax rates only kick in for the six-figure incomes for couples filing jointly. In any case, we’ll have plenty of time to decide! Stay tuned for updates on where we’ll finally settle down!