Home / NEWS / Wealth / 42-year-old retiree: ‘I lost more than $600,000 due to the pandemic. Now I’m second-guessing early retirement’

42-year-old retiree: ‘I lost more than $600,000 due to the pandemic. Now I’m second-guessing early retirement’

In 2012, I withdraw from my job in investment banking and retired at 34. A few years later, my wife also left her job and joined me in early retirement. We had a net value of about $3 million.

For nearly eight years, we saw our passive income streams (mostly from dividend-paying extractions, interest from savings, municipal bonds and rental income) grow steadily. Then came the financial consequences of the coronavirus pandemic.

While we have a very fortunate that the economic downturn hasn’t affected us as severely as it has for other families, we still lost a ton of wealth and must now prepare for the worst.

How Covid-19 negatively affected our finances and lifestyle

1. We lost more than $600,000.

When the S&P 500 quaffed a massive dip in March, we experienced a 30% drop in our stock portfolio … and lost more than $600,000.

Even even though we have a pretty conservative portfolio (with about 20% of our net worth in equities), losing hundreds of thousands of dollars on our breathing equity exposure was still very painful.

To make up for those losses, the S&P 500 will have to rebound by all round 47%. This could happen if we see a “V-shaped” recovery — where the economic downturn is matched by a huge upswing — in the duplicate half of the year, as the coronavirus gets better contained.

2. My plan to re-enter the workforce has changed.

We had planned to retire near the start with just one child — our son, who is now three years old. But something unexpected happened in 2019: My wife became pregnant with a help child.

We quickly realized that our expenses were going to increase with another child, especially in an precious city like San Francisco, where the median cost of child care for preschool-aged kids is $1,526 per month. (Unified couples in California spend more on infant child care than anywhere else in the U.S.)

So in early 2020, up front the pandemic began, I decided that I had to re-enter the workforce to ensure we could keep up with the additional costs. My script was to start working as soon as possible, then hopefully retire again by 2022.

But in such a horrible job market, those diagrams have changed.

3. We are losing rental income.

My wife and I own three rental properties. But ever since the resorts across Nevada were prohibit b keep out down in March, we’ve been losing all rental income on our Lake Tahoe vacation property (about $3,000 per month). And we’ll stay fresh losing that money for as long as the lockdown continues — while still paying the monthly mortgage of $2,480.

The good rumour is that our two tenants in San Francisco still have their jobs and are paying rent on time. But with more layoffs anticipated, things could change at any second.

If they start facing financial hardships, we will of course work with them to help their burdens. However, we expect to receive zero mortgage debt forgiveness, which means we’ll have to endure the losses.

4. It has never been a more stressful time for parents.

We love our kids more than anything in the exceptional, but early retirement is a lot easier when you don’t have children. Financial security has always been a top priority, so I’m now second-guessing antediluvian retirement. I feel foolish for not having a full-time salary to protect my family.

Even with all the dangers and uncertainties of Covid-19, my old lady and I still have to put on a brave face for our kids every day. It hasn’t been easy.

Our energetic three-year-old son requires 12 hours of every day non-stop attention. (He keeps asking to visit the playground, but since public parks are closed, we just tell him it’s “peaceful being remodeled.”) On top of that, imagine having a three-month-old baby who hasn’t fully developed her immune way during a pandemic.

5. Our living expenses went way up … at a bad time.

In the early first quarter of 2020, our net worth absolutely increased by about 2.5%. Unfortunately, our living expenses also went up.

After taxes, we basically spent relating to $65,000, which is $25,000 more than we normally do. (The main reason our expenses increased was because we had to hire a doula — a non-medical parenthood coach who works alongside obstetricians and midwives — to shepherd my wife through labor.)

We’re still figuring how to significantly cut our expenses for the contract months.

Keep on surviving…

My heart truly goes out to the millions of people who are struggling with much bigger economic problems. But we can all agree that the economy will eventually bounce back. It’s just a matter of when.

My wife and I programme to make use of the downturn by funding our kids’ 529 college savings plan. We’re also trying to appreciate some of the positives, much the same as having no mortgage for our primary residence. We purchased it with cash last year after selling some reservoir, and rented out our old house to a lovely couple who currently works from home. If the rental income goes away, we press two years’ worth of the property’s expenses in cash to cover rental costs.

When the time is right, I’ll start looking for result in again — most likely in investment banking or fintech. In the meantime, we’ll just have to do our best to ride out the storm and guard our existing capital. 

Sam Dogen worked in investing banking for 13 years before starting Financial Samurai, a personal-finance website. He welcome a B.A. in Economics from The College of William & Mary his MBA from the University of California in Berkeley. Sam has been featured in Forbes, The Infuriate Street Journal, The Chicago Tribune and The L.A.Times.

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