Semi-Retirement Update – Q2/2022

Time for another quarterly update where we share our coasting journey from Flamingo FI to full Financial Independence (and beyond).

If you are new to the blog and not familiar with our plan you can find an overview here.

Life Update

The three months since our last update went by really quickly. The kids are certainly keeping us busy and life gets pretty hectic at times – I’m sure most readers with young families can relate.

I often think about the common parenting quote “the days are long but the years are short”. I know it’s just a phrase, but it is so true. Being a parent gets hard and exhausting at times. The days are often long. But at the same time the years since our first was born have gone by in the blink of an eye.

We are definitely grateful we are in a position that allows us to work less and spend more spend a lot of quality with our kids while they are young (despite the fact that they drive us absolutely crazy at times!).

In May we visited friends in Adelaide. I hadn’t been to Adelaide since I first visited Australia as a backpacker in 2005 (showing my age here!). It has a European feel about it which I really like. We had a great time and especially enjoyed visiting the Adelaide Hills and the beach (really different to our beaches here in Sydney – no waves for surfing but beautiful sunsets).

Next month we are off to Europe for six weeks to see family and friends and for a family wedding. I haven’t been back home in three years (thanks Covid) and am really looking forward to seeing everyone. I also recently became an aunt and can’t wait to meet my little nephew. No one in my family (except my parents) has ever met Baby Flamingo #2 (who is now almost two years old), so this is a long overdue family reunion. We will also travel around a bit while we are in Europe but haven’t decided where we want to go yet.

An update on our house hunt: As I shared with subscribers a little while ago we are in the final stages of buying a house. The contract became unconditional at the end of June but settlement won’t happen for another two months. The sellers will have to do some significant repairs as a condition of the settlement, so fingers crossed they’ll get it done in time.

I have to say that I find the whole home buying process pretty annoying. This was our fifth attempt to buy a house since we started looking in April. We got outbid by cash buyers or buyers with better terms a few times. On another occasion, a house that looked great in the pictures turned out to be a total dump when we received the building and pest report. I know this is all part of the process but I have to say I can’t wait for this to be over and the masses of paperwork to stop.

Work-wise I’ve also been pretty busy – in a good way. I still work a couple of days per week in my old job, mainly for the social factor. I enjoy having to be somewhere, catching up for coffee/lunch with colleagues, and having the odd “water cooler” conversation. Oh and I don’t mind the work itself either.

I really believe the benefits of the social factor a job can offer are often underestimated. My part-time job, in combination with my coaching work (which is extremely rewarding but less social), is a pretty good blend for me personally. I am also in the process of starting a small consulting business together with a former colleague. It’s in a field that brings together our professional training and work/personal experience. It’s early days still but I’m excited about starting something new.

I love having the flexibility to design my work life in a way that suits me and my family. It’s nice to try out different things and start projects without financial pressure. It’s one of the best perks of semi-retirement in my opinion.

As you can see my semi-retired life is far from the cocktails-on-the-beach retirement stereotype – although I do go for walks on the beach most days, does that count? 😉

FIRE and Net Worth Update

Another rocky quarter for the financial markets with lots of doom and gloom in the news headlines.

We always knew that we would probably be in for a bumpy ride when we decided to stop saving and investing for retirement after we hit Flamingo FI. When you choose a coasting path to FI you are completely dependent on compound interest and market performance. It’s one of the tradeoffs we were happy to make to achieve a fantastic work-life balance now instead of at some random date in the future.

After hearing all about massive market losses on the news I was surprised how well our nest egg held up over the last quarter. Overall, our portfolio went from 20.4x our annual living expenses in retirement down to 19.8x.

Note: Instead of using dollar amounts, we like to display our net worth and portfolio value in years of living expenses. Real wealth is about time, not money, so I find this way to look at things much more useful. I increase these annual amounts with inflation on a quarterly basis by the way.

The reason the value didn’t decrease more than that is that we are broadly diversified across multiple asset classes. I can’t go into more detail (thanks to the new ASIC guidelines), but what I can say is that the individual components that make up our FIRE portfolio definitely showed a lot of movement (downwards in some and upwards in other cases).

I am definitely happy with this quarterly result considering the talk about a looming recession and a lot of uncertainty all over the world.

The chart below shows our overall net worth position, which includes our FIRE portfolio and all of the funds (like cash savings, etc.) we own outside of the portfolio:

Our total net worth amounts to 25.3x our annual expenses in retirement. So does that mean we’ve reached FIRE (25x expenses)? Well, if we took all the additional funds and added them to our retirement portfolio then yes, we could call ourselves financially independent.

However, this money includes the deposit for our house and savings for emergencies and holidays, so of course, we won’t invest it. Neither of us is interested in stopping to work anytime soon (in fact, we both enjoy work so much these days) anyway. However, it’s pretty cool to know that we could FIRE if we really really wanted to!

Thanks for reading, see you back here for the next quarterly update! 🙂