Don’t Panic – Retire by 40

Whew! Another crazy week in the USA is over; only 197 left to go. Student visa revoked. ICE tracking down and detaining international students. Legal resident deported. Inflation up. Social Security offices closing and official messaging only on X. Probationary government workers reinstated. Nope, they’re still fired. Tariffs increased by an insane percentage. The stock market crashed. Tariffs paused. (Every country 10% tariffs except China at 145%.) Stocks shot up. US bonds sell off. Consumer confidence cratered. Tariffs exemption on chips and electronics. Nope, there will be semiconductor tariffs. The dollar slides in value. Who the heck can keep up with all the craziness? All I know is my portfolio took a big dive since Liberation Day. On the other hand, I’m pretty sure the Grifter-in-Chief’s family and cronies made billions of dollars from insider trading.

If you support the current administration, I hope you’re richer too. Because if you’re poorer than last year, you’re just a sucker like the rest of us. At least I know I’m getting scammed. Hold on to your butts because your retirement fund will get hammered in the coming weeks.  

Don’t Panic

Don’t Panic. Grab your towel and keep it with you at all times. Heh, that’s from The Hitchhiker’s Guide to the Galaxy. That was a fun book. It’s probably time to reread it and distract myself from the fascistization of the United States.

Seriously now, Don’t Panic. If you’re young and have a good job, keep saving and investing. A bear market is the best time to accumulate more shares. The stock market will be volatile again next week, but you have to keep investing. Average in a portion of every paycheck and your portfolio will look awesome in 20 years. America will recover from this like we recovered from many other disasters in the past. This time won’t be any different.

That’s what I tell young people, but what about older folks closer to retirement? If you plan to retire anytime soon, your Sequence of Returns Risk has arrived. Basically, you’ll start withdrawing from your retirement portfolio at the worst time. That is not good. You can read more about SRR here – How to Eliminate Sequence of Return Risk. You have to be more conservative when you’re close to retirement.

Earlier this year, I shifted our investment to be much more conservative to prepare for a recession. I also worked out a 5-year cash flow plan because Mrs. RB40’s job was looking a little iffy… Our investment won’t grow as much, but we’ll be ready when TSHTF.  

5 years cash flow

Here is my cash flow plan for the next 5 years. We will be able to maintain our standard of living and continue to enjoy life without selling any stocks.

• 2025: FIRE income + rental condo sale
• 2026: FIRE income + Mrs. RB40’s pension + Joe’s pension lump sum
• 2027: FIRE income + Mrs. RB40’s pension + VFMXX (money market fund at Vanguard)
• 2028: FIRE income + Mrs. RB40’s pension + VFMXX (money market fund at Vanguard)
• 2029: FIRE income + Mrs. RB40’s pension + ibonds + 529 for college

I feel much calmer with a 5-year cash flow plan. We will be okay even if the stock market stagnates for 5 years. I hope not, but we’re prepared. If your anxiety is off the chart, shore up your cash and bond position. It’ll help you sleep at night.

Wrap Up

Alright, let’s wrap this up. The message of this post is Don’t Panic. We can outlast Trump.

• If you’re young, keep investing. The stock market will recover from this disaster. This is a great opportunity to accumulate more shares.
• If you’re near retirement, you need to be more conservative and hold more cash and bonds. This is not the time to gamble on the stock market. The game is blatantly fixed and regular investors can’t make an informed decision. The best thing you can do is to figure out your risk tolerance and stick with your asset allocation.

Good luck, everyone. Let’s hope ICE doesn’t start deporting U.S. citizens next week. Hold on a minute, I hear knocking at the door…

Please follow and like us:

The following two tabs change content below.

Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.